American Express 2007 Annual Report Download - page 110

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN EXPRESS COMPANY
NOTE 20 EARNINGS PER COMMON SHARE (EPS)
Basic EPS is computed using the average actual shares
outstanding during the period. Diluted EPS is basic EPS
adjusted for the dilutive effect of stock options, RSAs, and
other financial instruments that may be converted into common
shares. The computations of basic and diluted EPS for the years
ended December 31 were as follows:
(Millions, except per share amounts) 2007 2006 2005
Numerator:
Income from continuing
operations $4,048 $3,611 $3,062
(Loss) Income from
discontinued operations, net
of tax (36) 96 672
Net income $4,012 $3,707 $3,734
Denominator:
Basic: Weighted-average
shares outstanding during
the period 1,173 1,212 1,233
Add: Dilutive effect of stock
options, restricted stock
awards and other dilutive
securities 23 26 25
Diluted 1,196 1,238 1,258
Basic EPS:
Income from continuing
operations $ 3.45 $ 2.98 $ 2.48
(Loss) Income from
discontinued operations (0.03) 0.08 0.55
Net income $ 3.42 $ 3.06 $ 3.03
Diluted EPS:
Income from continuing
operations $ 3.39 $ 2.92 $ 2.43
(Loss) Income from
discontinued operations (0.03) 0.07 0.54
Net income $ 3.36 $ 2.99 $ 2.97
For the years ended December 31, 2007, 2006, and 2005, the
dilutive effect of unexercised stock options excludes 8 million,
6 million, and 14 million options, respectively, from the
computation of EPS because inclusion of the options would
have been anti-dilutive.
The Subordinated Debentures, discussed in Note 9, would
affect the EPS computation only in the unlikely event the
Company fails to achieve specified performance measures related
to the Company’s tangible common equity and consolidated net
income. In that circumstance the Company would reflect the
additional common shares in the EPS computation.
NOTE 21 REPORTABLE OPERATING SEGMENTS
AND GEOGRAPHIC OPERATIONS
REPORTABLE OPERATING SEGMENTS
The Company is a leading global payments, network, and
travel company. The Company’s businesses are organized into
two customer-focused groups, the Global Consumer Group
and the Global Business-to-Business Group. During 2007,
the Company’s segments were realigned within the two major
customer groups. Accordingly, U.S. Card Services (USCS) and
International Card Services (ICS) are aligned within the Global
Consumer Group and Global Commercial Services (GCS) and
Global Network & Merchant Services (GNMS) are aligned
within the Global Business-to-Business Group. The Company
has reclassified the prior period amounts to be consistent with
the new reportable operating segments.
The Company considers a combination of factors when
evaluating the composition of its reportable operating segments,
including the results reviewed by the chief operating decision
maker, economic characteristics, products and services offered,
classes of customers, product distribution channels, geographic
considerations (primarily U.S. versus international), and
regulatory environment considerations.
U.S. Card Services issues a wide range of card products
and services to consumers and small businesses in the United
States, and provides consumer travel services to cardmembers
and other consumers.
International Card Services issues proprietary consumer
and small business cards outside the United States.
Global Commercial Services offers global corporate
payment and travel-related products and services to large and
mid-sized companies.
Global Network & Merchant Services segment operates a
global general-purpose charge and credit card network, which
includes both proprietary cards and cards issued under network
partnership agreements. It also manages merchant services
globally, which includes signing merchants to accept cards
as well as processing and settling card transactions for those
merchants. This segment also offers merchants point-of-sale
and back-office products, services and marketing programs.
Corporate & Other consists of corporate functions and
auxiliary businesses, including the Company’s publishing
business, Travelers Cheques and other prepaid products, and
AEIDC and the continuing portions of AEB not being sold to
Standard Chartered.
108