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notes to consolidated financial statements
american express company
80
note 3
accounts receivable
Accounts receivable at December 31 consisted of:
(Millions) 2008 2007
U.S. Card Services $17,822 $21,418
International Card Services 5,582 6,616
Global Commercial Services 9,397 11,411
Global Network & Merchant Services(a)(b) 187 627
Cardmember receivables, gross(c) 32,988 40,072
Less: Cardmember reserve for losses 810 1,149
Cardmember receivables, net $32,178 $38,923
Other receivables, gross(b)(d) $ 4,511 $ 3,163
Less: Other reserve for losses 118 92
Other receivables, net $ 4,393 $ 3,071
(a) Includes receivables primarily related to certain of the Company’s business
partners and International Currency Card portfolios.
(b) At December 31, 2007, Global Network & Merchant Services cardmember
receivables also included receivables purchased from joint ventures of
$429 million that were reclassified to other receivables during 2008.
(c) Includes approximately $9.9 billion and $12.4 billion of cardmember receivables
outside the United States as of December 31, 2008 and 2007, respectively.
(d) Other receivables primarily represent amounts due from the tax authorities,
travel customers and suppliers, third party card issuing partners, and
other receivables due to the Company in the ordinary course of business.
This amount also includes accrued interest on investments, and accruals
for the Company’s litigation settlement with Visa. Other receivables at
December 31, 2008, also include acquisition of other receivables of CPS.
The following table presents changes in the cardmember
receivable reserve for losses for years ended December 31:
(Millions) 2008 2007 2006
Balance, January 1 $ 1,149 $ 981 $ 942
Additions:
Cardmember receivables
provision(a) 1,363 1,140 935
Deductions:
Cardmember receivables net
write-offs(a) (1,552) (907) (810)
Cardmember receivables other(b) (150) (65) (86)
Balance, December 31 $ 810 $1,149 $ 981
(a) Represents write-offs of charge card balances consisting of principal (resulting
from authorized and unauthorized transactions) and fee components, less
recoveries of $187 million, $203 million, and $177 million for 2008, 2007,
and 2006, respectively.
(b) Includes foreign currency translation and other adjustments primarily related to
the reclassification of waived fee reserves to a contra-cardmember receivable.
See Note 4 for a discussion of impaired cardmember receivables at
December 31, 2008 and 2007.
note 4
loans
Loans at December 31 consisted of:
(Millions) 2008 2007
U.S. Card Services $32,684 $43,253
International Card Services 9,499 11,155
Global Commercial Services 28 —
Cardmember lending, gross 42,211 54,408
Less: Cardmember lending reserve for losses 2,570 1,831
Cardmember lending, net $39,641 $52,577
Other loans, gross(a) $ 1,057 $ 807
Less: Other reserve for losses 39 45
Other loans, net $ 1,018 $ 762
(a) Other loans primarily represent small business installment loans. Other
loans at December 31, 2008, also includes the acquisition of a storecard
portfolio in the third quarter of 2008 whose billed business is not processed
on the Company’s network, a loan to an affiliate in discontinued operations,
and small business loans associated with the CPS acquisition.
The following table presents changes in the cardmember
lending reserve for losses for the years ended December 31:
(Millions) 2008 2007 2006
Balance, January 1 $ 1,831 $ 1,171 $ 996
Additions:
Cardmember lending
provisions(a) 4,106 2,615 1,507
Cardmember lending other(b) 125 146 116
Total provision 4,231 2,761 1,623
Deductions:
Cardmember lending net
write-offs – principal(c) (2,643) (1,636) (1,201)
Cardmember lending net
write-offs – interest and fees(c) (580) (354) (158)
Cardmember lending other(d) (269) (111) (89)
Balance, December 31 $ 2,570 $ 1,831 $ 1,171
(a) Represents loss provisions for cardmember lending consisting of principal
(resulting from authorized transactions), interest, and fee reserves
components.
(b) Primarily represents adjustments to cardmember lending receivables
resulting from unauthorized transactions and other items such as waived
fees.
(c) Cardmember lending net write-offs – principal for 2008, 2007, and
2006 include recoveries of $301 million, $295 million, and $187 million,
respectively. Recoveries of interest and fees were de minimis.
(d) Includes foreign currency translation and other adjustments primarily
related to the reclassification of waived fee reserves to a contra-cardmember
receivable.