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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RECENTLY ISSUED ACCOUNTING STANDARDS
Accounting Standards Update (ASU) No. 2014-09, Revenue Recognition (Topic 606): Revenue from Contracts with Customers was issued on
May 28, 2014. The guidance establishes the principles to apply to determine the amount and timing of revenue recognition, specifying the
accounting for certain costs related to revenue, and requiring additional disclosures about the nature, amount, timing and uncertainty of
revenues and related cash flows. The guidance supersedes most of the current revenue recognition requirements, and will be effective
January 1, 2017. The Company is currently evaluating the impact this guidance, including the method of implementation, will have on its
financial position, results of operations and cash flows, among other items.
ASU No. 2014-01, Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable
Housing Projects was issued on January 15, 2014. Provided certain conditions are met, this standard permits entities to account for
investments in qualified affordable housing projects using the proportional amortization method, which results in amortizing the initial cost
of the investment in proportion to the tax credits and other tax benefits received, and recognizing the net investment performance in the
income statement as a component of income tax expense. Additionally, the standard requires new disclosures about all investments in
qualified affordable housing projects irrespective of the methodusedtoaccountfortheinvestments.Thestandard,whichistobe
retrospectively applied, is effective January 1, 2015, and if adopted is not expected to have a material impact on the Company’s financial
position or results of operations upon adoption.
CLASSIFICATION OF VARIOUS ITEMS
Certain reclassifications of prior period amounts have been made to conform to the current period presentation. These reclassifications did
not have a material impact on the Company’s financial position, results of operations or cash flows.
NOTE 2
ACQUISITIONS AND DIVESTITURES
GLOBAL BUSINESS TRAVEL
On June 30, 2014, the Company completed a transaction to establish a non-consolidated joint venture, GBT JV, comprising the former
Global Business Travel (GBT) operations of the Company and an external cash investment. Historically, the Company reported the GBT
operations within the Global Commercial Services (GCS) segment. The Company has retained a 50 percent ownership interest in the GBT JV
with an estimated fair value of that interest of approximately $900 million, which is accounted for as an equity method investment effective
June 30, 2014 and reported in other assets within the Consolidated Balance Sheet. In exchange for a cash contribution of $900 million paid
into the GBT JV, an unrelated investor group holds the remaining 50 percent ownership interest. The investor group’s cash contribution
provides the primary basis for the Company’s determination of the estimated fair value of its 50 percent ownership interest at June 30, 2014.
As a result of this transaction, the Company deconsolidated the GBT net assets and for the year ended December 31, 2014, recognized a
net gain of $630 million ($412 million after-tax), as a reduction to other expense. The Company recognized $626 million ($409 million after-
tax) in the second quarter and subsequently recognized the remaining closing-related amounts in the third and fourth quarters. Prior to the
deconsolidation, the carrying amount of GBT’s assets and liabilities were not material to the Company’s financial position.
The GBT JV operates under the “American Express Global Business Travel” brand, pursuant to a trademark license agreement provided
by the Company. The Company has also entered into a transition services agreement and certain other operating agreements with the GBT
JV, pursuant to which the Company and the GBT JV provide one another with certain services and that result in related-party receivables
and payables. There was no material impact to the Company during the year ended December 31, 2014, related to the GBT JV’s results of
operations or the Company’s agreements with the GBT JV.
LOYALTY PARTNER
In conjunction with the March 1, 2011 acquisition of a controlling interest in Loyalty Partner, the Company had an option to acquire the
remaining non-controlling equity interest (NCI) in the future. In November 2013, the Company entered into an agreement to extinguish a
portion of the NCI in its Loyalty Partner subsidiary, in exchange for a cash payment of $132 million and to convert the remaining NCI to an
option that is accounted for as a long-term liability with an initial value of $121 million. The Company reduced equity by $107 million in
connection with this agreement.
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