American Express 2013 Annual Report Download - page 74

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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4
ACCOUNTS RECEIVABLE AND LOANS
As described below, the Company’s charge and lending payment card
products result in the generation of Card Member receivables and
Card Member loans, respectively.
CARD MEMBER AND OTHER RECEIVABLES
Card Member receivables, representing amounts due on charge card
products, are recorded at the time a Card Member enters into a point-
of-sale transaction with a merchant. Each charge card transaction is
authorized based on its likely economics reflecting a Card Member’s
most recent credit information and spend patterns. Additionally,
global spend limits are established to limit the maximum exposure for
the Company.
Charge Card Members generally must pay the full amount billed
each month. Card Member receivable balances are presented on the
Consolidated Balance Sheets net of reserves for losses (refer to
Note 5), and include principal and any related accrued fees.
Accounts receivable as of December 31, 2013 and 2012 consisted of:
(Millions) 2013 2012
U.S. Card Services(a) $ 21,842 $ 21,124
International Card Services 7,771 7,778
Global Commercial Services(b) 14,391 13,671
Global Network & Merchant Services(c) 159 193
Card Member receivables(d) 44,163 42,766
Less: Reserve for losses 386 428
Card Member receivables, net 43,777 42,338
Other receivables, net(e) $ 3,408 $ 3,576
(a) Includes $7.3 billion and $7.5 billion of gross Card Member receivables
available to settle obligations of consolidated VIEs as of December 31, 2013
and 2012, respectively.
(b) Includes $476 million of gross Card Member receivables available to settle
obligations of a consolidated VIE as of December 31, 2012. Also includes $836
million and $913 million due from airlines, of which Delta Air Lines (Delta)
comprises $628 million and $676 million as of December 31, 2013 and 2012,
respectively.
(c) Includes receivables primarily related to the Company’s International
Currency Card portfolios.
(d) Includes approximately $13.8 billion and $13.7 billion of Card Member
receivables outside the U.S. as of December 31, 2013 and 2012, respectively.
(e) Other receivables primarily represent amounts related to (i) purchased joint
venture receivables, (ii) certain merchants for billed discount revenue, and
(iii) GNS partner banks for items such as royalty and franchise fees. Other
receivables are presented net of reserves for losses of $71 million and $86
million as of December 31, 2013 and 2012, respectively.
CARD MEMBER AND OTHER LOANS
Card Member loans, representing revolving amounts due on lending
card products, are recorded at the time a Card Member enters into a
point-of-sale transaction with a merchant, as well as amounts due
from charge Card Members who elect to revolve a portion of the
outstanding balance by entering into a revolving payment
arrangement with the Company. These loans have a range of terms
such as credit limits, interest rates, fees and payment structures, which
can be revised over time based on new information about Card
Members and in accordance with applicable regulations and the
respective product’s terms and conditions. Card Members holding
revolving loans are typically required to make monthly payments
based on pre-established amounts. The amounts that Card Members
choose to revolve are subject to finance charges.
Card Member loans are presented on the Consolidated Balance
Sheets net of reserves for losses (refer to Note 5), and include
principal, accrued interest and fees receivable. The Company’s policy
generally is to cease accruing interest on a Card Member loan at the
time the account is written off, and establish reserves for interest that
the Company believes will not be collected.
Loans as of December 31, 2013 and 2012 consisted of:
(Millions) 2013 2012
U.S. Card Services(a) $ 58,395 $ 55,953
International Card Services 8,790 9,236
Global Commercial Services 53 40
Card Member loans 67,238 65,229
Less: Reserve for losses 1,261 1,471
Card Member loans, net 65,977 63,758
Other loans, net(b) $ 608 $ 551
(a) Includes approximately $31.2 billion and $32.7 billion of gross Card Member
loans available to settle obligations of consolidated VIEs as of December 31,
2013 and 2012, respectively.
(b) Other loans primarily represent loans to merchants and a store card loan
portfolio. Other loans are presented net of reserves for losses of $13 million
and $20 million as of December 31, 2013 and 2012, respectively.
72