American Express 2010 Annual Report Download - page 118

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Other overhead expenses, such as staff group support
functions, are allocated from Corporate & Other to the other
segments based on each segment’s relative level of pretax
income, with the exception of certain fourth quarter 2008
severance and other related charges of $133 million from the
Company’s fourth quarter restructuring initiatives for staff
group support functions. This presentation is consistent with
how such charges were reported internally. See further
discussion in Note 16 regarding this corporate initiative.
Financing requirements are managed on a consolidated basis.
Funding costs are allocated based on segment
funding requirements.
Capital
Each business segment is allocated capital based on established
business model operating requirements, risk measures and
regulatory capital requirements. Business model operating
requirements include capital needed to support operations
and specific balance sheet items. The risk measures include
considerations for credit, market and operational risk.
Income Taxes
Income tax provision (benefit) is allocated to each business
segment based on the effective tax rates applicable to various
businesses that make up the segment.
GEOGRAPHIC OPERATIONS
The following table presents the Company’s total revenues net of interest expense and pretax income (loss) from continuing operations
in different geographic regions:
(Millions) United States EMEA
(a)
JAPA
(a)
LACC
(a)
Other
Unallocated
(b)
Consolidated
2010
(c)
Total revenues net of interest expense $ 20,246 $ 3,297 $ 2,701 $ 2,449 $ (874) $ 27,819
Pretax income (loss) from continuing operations $ 6,112 $ 572 $ 304 $ 503 $ (1,527) $ 5,964
2009
(c)
Total revenues net of interest expense $ 17,489 $ 3,286 $ 2,294 $ 2,315 $ (861) $ 24,523
Pretax income (loss) from continuing operations $ 3,131 $ 407 $ 188 $ 277 $ (1,162) $ 2,841
2008
(c)
Total revenues net of interest expense $ 19,792 $ 3,693 $ 2,414 $ 2,511 $ (45) $ 28,365
Pretax income (loss) from continuing operations $ 3,322 $ 373 $ 122 $ 291 $ (527) $ 3,581
(a) EMEA represents Europe, Middle East and Africa, JAPA represents Japan, Asia/Pacific and Australia and LACC represents Latin America, Canada and Caribbean.
(b) Other Unallocated includes net costs which are not directly allocable to specific geographic regions, including costs related to the net negative interest spread on excess
liquidity funding and executive office operations expenses.
(c) The data in the above table is, in part, based upon internal allocations, which necessarily involve management’s judgment. Certain revisions and reclassifications have
been made to 2009 and 2008 to conform to 2010 classifications and internal allocation methodology.
116
AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS