American Express 2013 Annual Report Download - page 29

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AMERICAN EXPRESS COMPANY
2013 FINANCIAL REVIEW
Salaries and employee benefits and other operating expenses
decreased $237 million or 6 percent in 2013 as compared to the prior
year, reflecting lower Card Member reimbursement costs, as
compared to the prior year. The 2013 decrease also reflects the
restructuring charge in the fourth quarter of 2012. Salaries and
employee benefits and other operating expenses increased $334
million or 9 percent in 2012 as compared to the prior year, primarily
driven by higher other operating expenses related to Card Member
reimbursement costs, an increase in expenses related to higher costs
associated with hedging the Company’s fixed rate debt exposures and
higher restructuring charges.
INCOME TAXES
The tax rate in all periods reflects the benefits from the resolution of
certain prior years’ tax items and the relationship of recurring
permanent tax benefits to varying levels of pretax income.
TABLE 10: USCS SELECTED STATISTICAL INFORMATION
As of or for the Years Ended December 31,
(Millions, except percentages and where indicated) 2013 2012 2011
Change
2013 vs. 2012
Change
2012 vs. 2011
Card billed business (billions) $ 501.0 $ 462.3 $ 424.3 8% 9%
Total cards-in-force 43.7 42.2 40.9 4 3
Basic cards-in-force 32.5 31.3 30.4 4 3
Average basic Card Member spending (dollars)*$ 15,689 $ 14,986 $ 14,124 5 6
U.S. Consumer Travel:
Travel sales $ 3,967 $ 4,042 $ 3,603 (2) 12
Travel commissions and fees/sales 7.1% 7.6% 8.3%
Total segment assets (billions) $ 103.5 $ 98.3 $ 97.8 5 1
Segment capital $ 9,269 $ 8,714 $ 8,804 6 (1)
Return on average segment capital(a) 35.6% 28.8% 33.0%
Return on average tangible segment capital(a) 37.0% 30.1% 34.8%
Card Member receivables:
Total receivables (billions) $ 21.8 $ 21.1 $ 20.6 3 2
30 days past due as a % of total 1.6% 1.8% 1.9%
Average receivables (billions) $ 20.6 $ 19.8 $ 18.8 4 5
Net write-off rate – principal only(b) 1.7% 1.9% 1.7%
Net write-off rate – principal, interest and fees(b) 1.9% 2.1% 1.9%
Card Member loans:
Total loans (billions) $ 58.4 $ 56.0 $ 53.7 4% 4%
30 days past due loans as a % of total 1.1% 1.2% 1.4%
Net write-off rate – principal only(b) 1.8% 2.1% 2.9%
Net write-off rate – principal, interest and fees(b) 2.0% 2.3% 3.2%
Calculation of Net Interest Yield on Card Member Loans:
Net interest income $ 4,872 $ 4,577 $ 4,267
Exclude:
Interest expense not attributable to the Company’s Card Member loan portfolio 183 204 233
Interest income not attributable to the Company’s Card Member loan portfolio (9) (9) (10)
Adjusted net interest income(c) $ 5,046 $ 4,772 $ 4,490
Average loans (billions) $ 54.7 $ 52.8 $ 50.3
Exclude:
Unamortized deferred card fees, net of direct acquisition costs of Card Member
loans (billions) ———
Adjusted average loans (billions)(c) $ 54.7 $ 52.8 $ 50.3
Net interest income divided by average loans 8.9% 8.7% 8.5%
Net interest yield on Card Member loans(c) 9.2% 9.0% 8.9%
* Proprietary cards only.
(a) Return on average segment capital is calculated by dividing (i) one-year period segment income ($3.2 billion, $2.6 billion and $2.7 billion for 2013, 2012 and 2011,
respectively) by (ii) one-year average segment capital ($9.0 billion for both 2013 and 2012 and $8.1 billion for 2011). Return on average tangible segment capital, a
non-GAAP measure, is computed in the same manner as return on average segment capital except the computation of average tangible segment capital, a non-GAAP
measure, excludes from average segment capital average goodwill and other intangibles of $334 million, $379 million and $425 million as of December 31, 2013, 2012
and 2011, respectively. The Company believes return on average tangible segment capital is a useful measure of the profitability of its business.
(b) Refer to Table 7 footnote (e) on page 24.
(c) Adjusted net interest income, adjusted average loans and net interest yield on Card Member loans are non-GAAP measures. Refer to “Glossary of Selected
Terminology” for the definitions of these terms. The Company believes adjusted net interest income and adjusted average loans are useful to investors because they
are components of net interest yield on Card Member loans, which provides a measure of profitability of the Company’s Card Member loan portfolio.
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