American Express 2012 Annual Report Download - page 26

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AMERICAN EXPRESS COMPANY
2012 FINANCIAL REVIEW
items, including cash rebate rewards and corporate client
incentives. Discount revenue increased $1.9 billion or 12 percent
in 2011 as compared to the prior year, primarily due to a 15
percent increase in worldwide billed business, partially offset by a
slightly lower average discount rate. The lower revenue growth
versus total billed business growth reflects the relatively faster
growth in billed business related to GNS, where discount revenue
is shared with card-issuing partners, and higher contra-revenue
items, including cash rewards, corporate incentive payments and
partner payments. The 15 percent increase in worldwide billed
business in 2011 reflected an increase in proprietary billed
business of 13 percent. The average discount rate was 2.52
percent and 2.54 percent for 2012 and 2011, respectively. Over
time, certain pricing initiatives, changes in the mix of spending
by location and industry, an increase in the amount of prepaid
products and volume-related pricing discounts and strategic
investments will likely result in further erosion of the average
discount rate.
U.S. billed business and billed business outside the United
States increased 9 percent and 7 percent, respectively, in 2012 as
compared to the prior year, reflecting increases in average
spending per proprietary basic card and basic cards-in-force.
The table below summarizes selected statistics for billed business and average spend:
2012 2011
Percentage
Increase
(Decrease)
Percentage Increase
(Decrease) Assuming
No Changes in
Foreign Exchange
Rates(a)
Percentage
Increase
(Decrease)
Percentage Increase
(Decrease) Assuming
No Changes in
Foreign Exchange
Rates(a)
Worldwide(b)
Billed business 8% 9% 15% 13%
Proprietary billed business 8813 12
GNS billed business(c) 10 14 27 22
Airline-related volume
(10% of worldwide billed business for both 2012 and 2011) 3415 13
United States(b)
Billed business 913
Proprietary consumer card billed business(d) 811
Proprietary small business billed business(d) 12 14
Proprietary Corporate Services billed business(e) 11 14
T&E-related volume
(27% and 28% of U.S. billed business for 2012 and 2011, respectively) 612
Non-T&E-related volume
(73% and 72% of U.S. billed business for 2012 and 2011, respectively) 10 14
Airline-related volume
(9% and 10% of U.S. billed business for 2012 and 2011, respectively) 413
Outside the United States(b)
Billed business 71019 13
Japan, Asia Pacific & Australia (JAPA) billed business 12 12 28 18
Latin America & Canada (LACC) billed business 71217 14
Europe, the Middle East & Africa (EMEA) billed business —513 8
Proprietary consumer and small business billed business(f) 4615 9
JAPA billed business 7719 9
LACC billed business 5813 10
EMEA billed business (1) 4 13 7
Proprietary Corporate Services billed business(e) 3719 13
(a) The foreign currency adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S.
dollars (i.e., assumes the foreign exchange rates used to determine results for the current year apply to the corresponding year-earlier period against which such results
are being compared). The Company believes the presentation of information on a foreign currency adjusted basis is helpful to investors by making it easier to
compare the Company’s performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates.
(b) Captions in the table above not designated as “proprietary” or “GNS” include both proprietary and GNS data.
(c) Included in the GNMS segment.
(d) Included in the USCS segment.
(e) Included in the GCS segment.
(f) Included in the ICS segment.
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