American Express 2007 Annual Report Download - page 83

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN EXPRESS COMPANY
NOTE 3 ACCOUNTS RECEIVABLE
Accounts receivable at December 31 consisted of:
(Millions) 2007 2006
USCS $21,418 $20,586
ICS 6,616 6,013
GCS 11,411 10,297
GNMS(a) 627 471
Cardmember receivables, gross(b) 40,072 37,367
Less: Cardmember reserve for losses 1,149 981
Cardmember receivables, net $38,923 $36,386
Other receivables, gross(c) $ 3,118 $ 2,314
Less: Other reserve for losses 36 35
Other receivables, net $ 3,082 $ 2,279
(a) Includes receivables primarily related to certain of the Company’s business
partners and International Currency Card portfolios.
(b) Includes approximately $12.4 billion and $10.9 billion of cardmember
receivables outside the United States as of December 31, 2007 and 2006,
respectively.
(c) Other receivables primarily represent amounts due from the Company’s
travel customers, third party card issuing partners, accrued interest on
investments, and other receivables due to the Company in the ordinary
course of business. For 2007, other receivables also includes $1.13 billion
related to the Company’s litigation settlement with Visa Inc., Visa USA
and Visa International (collectively Visa) which is expected to be paid by
March 31, 2008.
The following table presents changes in the cardmember
receivable reserve for losses:
(Millions) 2007 2006 2005
Balance, January 1 $ 981 $ 942 $ 806
Additions:
Cardmember receivables
provision 1,140 935 1,038
Deductions:
Cardmember receivables net
write-offs(a) (907) (810) (820)
Cardmember receivables
other(b) (65) (86) (82)
Balance, December 31 $1,149 $ 981 $ 942
(a) Represents write-offs of charge card balances consisting of principal (resulting
from authorized and unauthorized transactions) and fee components, less
recoveries of $203 million, $177 million, and $159 million for 2007, 2006,
and 2005, respectively.
(b) Primarily includes other adjustments to cardmember receivables such as
waived fees.
NOTE 4 INVESTMENTS
The following is a summary of investments at December 31:
(Millions) 2007 2006
Available-for-Sale, at estimated fair value:
State and municipal obligations $ 6,761 $ 6,863
U.S. Government and agencies
obligations(a) 5,110 5,075
Mortgage and other asset-backed
securities(b) 79 3,051
Corporate debt securities 282 1,948
Foreign government bonds and
obligations 53 23
Other(c) 929 994
Total Available-for-Sale, at estimated
fair value 13,214 17,954
Trading, at estimated fair value(d) 2,650 —
Total $15,864 $17,954
(a) U.S. Government and agencies obligations at December 31, 2007 and 2006,
included $970 million and $716 million, respectively, of securities loaned out
on an overnight basis to financial institutions under the securities lending
program described on page 83.
(b) At December 31, 2007, $79 million represents Fannie Mae securities and
does not include the Company’s subordinated securities tranche that is
discussed on page 85.
(c) Consists primarily of short-term money market and state tax exempt
securities (totaling $833 million and $891 million at December 31, 2007
and 2006, respectively) as well as investment of subordinated securities from
securitizations ($78 million at December 31, 2007).
(d) Refer to page 83 for additional discussion regarding the Trading
investments.
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