American Express 2015 Annual Report Download - page 104

OTHER MATTERS
RECENTLY ISSUED ACCOUNTING STANDARDS
Refer to the Recently Issued Accounting Standards section of Note 1 to the “Consolidated Financial Statements.”
GLOSSARY OF SELECTED TERMINOLOGY
Adjusted average loans —RepresentsaverageCardMemberloansonagrossbasis,includinggrossloansclassifiedas
held for sale (i.e., not adjusted for any valuation allowance), and excluding the impact of certain non-traditional Card Member
loans and other fees.
Adjusted net interest income — Represents net interest income attributable to our Card Member loans and loans HFS,
including interest that is deemed uncollectible; excludes the impact of interest expense and interest income not attributable to
ourCardMemberloans.
Asset securitizations — Asset securitization involves the transfer and sale of receivables or loans to a special-purpose
entity created for the securitization activity, typically a trust. The trust, in turn, issues securities, commonly referred to as
asset-backed securities that are secured by the transferred receivables or loans. The trust uses the proceeds from the sale of
such securities to pay the purchase price for the underlying receivables or loans. The receivables and loans of our Charge
Trust and Lending Trust being securitized are reported as assets, and the securities issued by the Trusts are reported as
liabilities on our Consolidated Balance Sheets.
Average discount rate — This calculation is generally designed to reflect pricing at merchants accepting general-purpose
American Express cards. It represents the percentage of billed business (generated from both proprietary and GNS Card
Member spending) retained by us from merchants we acquire, or for merchants acquired by a third party on our behalf, net of
amounts retained by such third party.
Basic cards-in-force — Proprietary basic consumer cards-in-force includes basic cards issued to the primary account
owner, (i.e., not including additional supplemental cards issued on accounts). Proprietary basic small business and corporate
cards-in-force includes both basic and supplemental cards issued. Non-proprietary basic cards-in-force includes cards that
are issued and outstanding under network partnership agreements, except for supplemental cards and retail cobrand Card
Member accounts which have had no out-of-store spending activity during the prior 12-month period.
Billed business — Includes activities (including cash advances) related to proprietary cards, cards issued under network
partnership agreements (non-proprietary billed business), corporate payment services and certain insurance fees charged on
proprietary cards. In-store spending activity within retail cobrand portfolios in GNS, from which we earn no revenue, is not
included in non-proprietary billed business. Card billed business is included in the United States or outside the United States
based on where the issuer is located.
Capital ratios — Represents the minimum standards established by the regulatory agencies as a measure to determine
whether the regulated entity has sufficient capital to absorb on- and off-balance sheet losses beyond current loss accrual
estimates. Refer to the Capital Strategy section under “Consolidated Capital Resources and Liquidity” for further related
definitions under Transitional Basel III and Fully Phased-in Basel III.
Card Member — The individual holder of an issued American Express-branded charge, credit and certain prepaid cards.
Card Member loans — Represents the outstanding amount due from Card Members for charges made on their American
Express credit cards, as well as any interest charges and card-related fees. Card Member loans also include revolving balances
on certain American Express charge card products.
Card Member loans and receivables HFS — Beginning as of December 1, 2015, represents Card Member loans and
receivables related to our cobrand partnerships with Costco in the United States and Jetblue.
Card Member receivables — Represents the outstanding amount due from Card Members for charges made on their
American Express charge cards, as well as any card-related fees.
Charge cards — Represents cards that generally carry no pre-set spending limits and are primarily designed as a method
of payment and not as a means of financing purchases. Charge Card Members generally must pay the full amount billed each
month. No finance charges are assessed on charge cards. Each charge card transaction is authorized based on its likely
economics reflecting a Card Member’s most recent credit information and spend patterns. Some charge card accounts have
an additional lending-on-charge feature that allows revolving certain balances.
Credit cards — Represents cards that have a range of revolving payment terms, grace periods, and rate and fee structures.
Discount revenue — Represents revenue earned from fees generally charged to merchants who have entered into a card
acceptance agreement. The discount fee generally is deducted from our payment for Card Member purchases. Discount
revenue is reduced by incentive payments made to merchants, payments to third-party card issuing partners, cash-back
reward costs and statement credits, corporate incentive payments and other similar items.
93