American Express 2010 Annual Report Download - page 77

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CLASSIFICATION OF CASH BALANCES
The Company determined that in periods prior to June 30, 2010,
the Company misclassified certain book overdraft balances
against cash balances on its Consolidated Balance Sheets.
Such overdraft balances, which arise in the normal course of
the Company’s business activities, should have been classified as
either accounts payable or other liabilities, depending on the
underlying nature of the account. The Company has evaluated
the effects of these misclassifications and concluded that they
are not, individually or in the aggregate, material to any of the
Company’s previously issued quarterly or annual Consolidated
Financial Statements. Nevertheless, the Company has elected to
revise in this report and future filings its Consolidated Balance
Sheet and Consolidated Statements of Cash Flows to correct the
effects of these misclassifications.
The amounts on the Consolidated Balance Sheet as of
December 31, 2009 that have been revised are
summarized below:
(Millions) Previously Reported As Revised
Cash and cash equivalents $ 15,542 $ 16,599
Accounts payable 8,926 9,063
Other liabilities 13,810 14,730
These balance sheet misclassifications further impacted
amounts previously reported in prior period Consolidated
Statements of Cash Flows, as summarized below:
(Billions)
As
Previously
Reported
As
Revised
As
Previously
Reported
As
Revised
Year Ended
December 31, 2009
Year Ended
December 31, 2008
Change in accounts payable
and other liabilities $ — $ (0.1) $ 0.9 $ 0.5
Net cash provided by operating
activities 6.4 6.3 8.1 7.8
Net (decrease) increase in cash
and cash equivalents (5.0) (5.1) 5.3 4.9
Certain other reclassifications of prior period amounts have
been made to conform to the current presentation.
NOTE 2
ACQUISITIONS AND
DISCONTINUED OPERATIONS
ACQUISITIONS
During the course of the year, the Company purchased Accertify
(November 10, 2010) and Revolution Money (January 15,
2010) for a total consideration of $151 million and
$305 million, respectively. Accertify is an on-line fraud
solution provider and Revolution Money is a provider of
secure person-to-person payment services through an
internet-based platform. These acquisitions did not have a
significant impact on either the Company’s consolidated
results of operations or the segments in which they are
reflected for the year ended December 31, 2010.
On March 28, 2008, the Company purchased Corporate
Payment Services (CPS), General Electric Company’s
commercial card and corporate purchasing business unit.
The following table summarizes the assets acquired and
liabilities assumed for these acquisitions as of the
acquisition dates:
(Millions) Accertify
Revolution
Money
Corporate
Payment
Services
Goodwill $ 131 $ 184 $ 818
Definite-lived intangible assets 15 119 232
Other assets 11 7 1,259
Total assets 157 310 2,309
Total liabilities 6 5 65
Net assets acquired $ 151 $ 305 $ 2,244
Corporate
Reportable operating segment GNMS & Other GCS
(a)
(a) An insignificant portion of the receivables and intangible assets are also
allocated to the USCS reportable operating segment.
DISCONTINUED OPERATIONS
On September 18, 2007, the Company entered into an
agreement to sell its international banking subsidiary,
American Express Bank Ltd. (AEB) to Standard Chartered
PLC (Standard Chartered) and to sell American Express
International Deposit Company (AEIDC) through a put/call
agreement to Standard Chartered 18 months after the close of
the AEB sale. The sale of AEB was completed on February 29,
2008. In the third quarter of 2008, AEIDC qualified to be
reported as a discontinued operation. The sale of AEIDC was
completed on September 10, 2009.
As of and for the years ended December 31, 2009 and 2008, all
of the operating results, assets and liabilities, and cash flows of
AEB (except for certain components of AEB that were not sold)
and AEIDC have been removed from the Corporate & Other
segment and are presented separately in discontinued
operations in the Company’s Consolidated Financial
Statements. The Notes to the Consolidated Financial
Statements have been adjusted to exclude discontinued
operations unless otherwise noted.
75
AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS