American Express 2011 Annual Report Download - page 104

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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents certain selected financial information as of or for the years ended December 31, 2011, 2010 and 2009.
(Millions, except where indicated) USCS ICS GCS GNMS
Corporate &
Other(a) Consolidated
2011
Non-interest revenues $ 10,648 $ 4,361 $ 4,880 $ 4,713 $ 719 $ 25,321
Interest income 5,230 1,304 9 5 413 6,961
Interest expense 807 426 264 (224) 1,047 2,320
Total revenues net of interest expense 15,071 5,239 4,625 4,942 85 29,962
Total provision 687 268 76 75 6 1,112
Pretax income (loss) from continuing operations 4,129 762 1,075 1,979 (989) 6,956
Income tax provision (benefit) 1,449 39 337 686 (454) 2,057
Income (loss) from continuing operations $ 2,680 $ 723 $ 738 $ 1,293 $ (535) $ 4,899
Total equity (billions) $8.8$2.8$3.6$2.0$1.8$19.0
2010
Non-interest revenues $ 9,884 $ 3,678 $ 4,347 $ 4,101 $ 703 $ 22,713
Interest income 5,390 1,393 7 4 498 7,292
Interest expense 812 428 227 (200) 1,156 2,423
Total revenues net of interest expense 14,462 4,643 4,127 4,305 45 27,582
Total provision 1,591 392 157 61 6 2,207
Pretax income (loss) from continuing operations 3,504 589 723 1,589 (441) 5,964
Income tax provision (benefit) 1,279 52 273 564 (261) 1,907
Income (loss) from continuing operations $ 2,225 $ 537 $ 450 $ 1,025 $ (180) $ 4,057
Total equity (billions) $ 7.4 $ 2.2 $ 3.7 $ 1.9 $ 1.0 $ 16.2
2009
Non-interest revenues $ 9,443 $ 3,442 $ 3,882 $ 3,586 $ 859 $ 21,212
Interest income 3,216 1,509 5 1 600 5,331
Interest expense 568 427 180 (177) 1,209 2,207
Total revenues net of interest expense 12,091 4,524 3,707 3,764 250 24,336
Total provision 3,769 1,211 177 135 21 5,313
Pretax income (loss) from continuing operations 575 271 475 1,449 71 2,841
Income tax provision (benefit) 171 (59) 144 510 (62) 704
Income (loss) from continuing operations $ 404 $ 330 $ 331 $ 939 $ 133 $ 2,137
Total equity (billions) $ 6.0 $ 2.3 $ 3.7 $ 1.4 $ 1.0 $ 14.4
(a) Corporate & Other includes adjustments and eliminations for intersegment activity.
Total Revenues Net of Interest Expense
The Company allocates discount revenue and certain other
revenues among segments using a transfer pricing methodology.
Segments earn discount revenue based on the volume of
merchant business generated by cardmembers. Within the USCS,
ICS and GCS segments, discount revenue reflects the issuer
component of the overall discount rate; within the GNMS
segment, discount revenue reflects the network and merchant
component of the overall discount rate. Total interest income
and net card fees are directly attributable to the segment in
which they are reported.
Provisions for Losses
The provisions for losses are directly attributable to the segment
in which they are reported.
Expenses
Marketing, promotion, rewards and cardmember services
expenses are reflected in each segment based on actual expenses
incurred, with the exception of brand advertising, which is
reflected in the GNMS segment. Rewards and cardmember
services expenses are reflected in each segment based on actual
expenses incurred within each segment. Salaries and employee
benefits and other operating expenses reflect expenses such as
professional services, occupancy and equipment and
communications incurred directly within each segment. In
addition, expenses related to the Company’s support services,
such as technology costs, are allocated to each segment based on
support service activities directly attributable to the segment.
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.
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.
102