American Express 2012 Annual Report Download - page 23

AMERICAN EXPRESS COMPANY
2012 FINANCIAL REVIEW
AMERICAN EXPRESS COMPANY CONSOLIDATED RESULTS OF OPERATIONS
Refer to the “Glossary of Selected Terminology” for the definitions of certain key terms and related information appearing in the tables
within this section.
Beginning the first quarter of 2012, the Company revised the income statement reporting of annual membership card fees on lending
products, increasing net card fees and reducing interest on loans. Amounts presented in prior periods for this item and certain other
amounts have been reclassified to conform to the current period presentation. This change has no impact on total revenues net of
interest expense in the consolidated statements of income or the net interest yield on cardmember loans statistic, a non-GAAP measure,
as reported in the Company’s selected statistical tables.
SUMMARY OF THE COMPANY’S FINANCIAL PERFORMANCE
Years Ended December 31,
(Millions, except percentages, per share amounts and ratio data) 2012 2011 2010
Change
2012 vs. 2011
Change
2011 vs. 2010
Total revenues net of interest expense $ 31,582 $ 29,962 $ 27,582 $ 1,620 5 % $ 2,380 9 %
Provisions for losses $ 1,990 $ 1,112 $ 2,207 $ 878 79 % $ (1,095) (50)%
Expenses $ 23,141 $ 21,894 $ 19,411 $ 1,247 6 % $ 2,483 13 %
Income from continuing operations $ 4,482 $ 4,899 $ 4,057 $ (417) (9)% $ 842 21 %
Net income $ 4,482 $ 4,935 $ 4,057 $ (453) (9)% $ 878 22 %
Earnings per common share from continuing operations — diluted(a) $3.89$ 4.09 $ 3.35 $ (0.20) (5)% $ 0.74 22 %
Earnings per common share — diluted(a) $3.89$ 4.12 $ 3.35 $ (0.23) (6)% $ 0.77 23 %
Return on average equity(b) 23.1% 27.7% 27.5%
Return on average tangible common equity(c) 29.2% 35.8% 35.1%
(a) Earnings per common share from continuing operations — diluted and Earnings per common share — diluted were both reduced by the impact of earnings allocated
to participating share awards and other items of $49 million, $58 million and $51 million for the years ended December 31, 2012, 2011 and 2010, respectively.
(b) ROE is computed by dividing (i) one-year period net income ($4.5 billion, $4.9 billion and $4.1 billion for 2012, 2011 and 2010, respectively) by (ii) one-year average
total shareholders’ equity ($19.4 billion, $17.8 billion and $14.8 billion for 2012, 2011 and 2010, respectively).
(c) Return on average tangible common equity, a non-GAAP measure, is computed in the same manner as ROE except the computation of average tangible common
equity, a non-GAAP measure, excludes from average total shareholders’ equity, average goodwill and other intangibles of $4.2 billion, $4.2 billion and $3.3 billion as
of December 31, 2012, 2011 and 2010, respectively. The Company believes return on average tangible common equity is a useful measure of the profitability of its
business.
SELECTED STATISTICAL INFORMATION
Years Ended December 31, 2012 2011 2010
Change
2012 vs. 2011
Change
2011 vs. 2010
Card billed business: (billions)
United States $ 590.7 $ 542.8 $ 479.3 9% 13%
Outside the United States 297.7 279.4 234.0 7% 19%
Total $ 888.4 $ 822.2 $ 713.3 8% 15%
Total cards-in-force: (millions)
United States 52.0 50.6 48.9 3% 3%
Outside the United States 50.4 46.8 42.1 8% 11%
Total 102.4 97.4 91.0 5% 7%
Basic cards-in-force: (millions)
United States 40.3 39.3 37.9 3% 4%
Outside the United States 40.5 37.4 33.7 8% 11%
Total 80.8 76.7 71.6 5% 7%
Average discount rate 2.52% 2.54% 2.55%
Average basic cardmember spending (dollars)(a) $ 15,720 $ 14,881 $ 13,259 6% 12%
Average fee per card (dollars)(a) $39$ 39 $ 38 —% 3%
Average fee per card adjusted (dollars)(a) $43$ 43 $ 41 —% 5%
(a) Average basic cardmember spending and average fee per card are computed from proprietary card activities only. Average fee per card is computed based on net card
fees, including the amortization of deferred direct acquisition costs divided by average worldwide proprietary cards-in-force. The adjusted averagefeepercard,which
is a non-GAAP measure, is computed in the same manner, but excludes amortization of deferred direct acquisition costs. The amount of amortization excluded was
$257 million, $219 million and $207 million for the years ended December 31, 2012, 2011 and 2010, respectively. The Company presents adjusted average fee per card
because the Company believes this metric presents a useful indicator of card fee pricing across a range of its proprietary card products.
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