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Accounts Receivable and Loans | 6 Months Ended
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Jun. 30, 2011
Loans Notes Trade And Other Receivables Disclosure [Abstract] |
Accounts Receivable and Loans | 4. Accounts Receivable and Loans The Company's charge and lending payment card products result in the generation of cardmember receivables (from charge payment products) and cardmember loans (from lending payment products) described below. Cardmem ber and Other Receivables Cardmember receivables, representing amounts due from charge payment product customers, are recorded at the time a cardmember enters into a point-of-sale transaction with a merchant. Each charge card transaction is authorized based on its likely economics reflecting a cardmember's most recent credit information and spend patterns. Global limits are established to limit the maximum exposure for the Company from high risk and som e high spend charge cardmembers, and a ccounts of high risk, out-of-pattern charge cardmembers can be monitored even if they are current. Charge card customers generally must pay the full amount billed each month. Cardmember 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 June 30, 2011 and December 31, 2010 were as follows:
(Millions) |  | 2011 |  | 2010
| U.S. Card Services(a) |  | $ | 19,249 |  | $ | 19,155
| International Card Services |  |  | 6,872 |  |  | 6,673
| Global Commercial Services(b) |  |  | 13,814 |  |  | 11,259
| Global Network & Merchant Services(c) |  |  | 208 |  |  | 179
Cardmember receivables, gross(d) |  |  | 40,143 |  |  | 37,266
Less: Cardmember receivables reserve for losses |  |  | 415 |  |  | 386
Cardmember receivables, net |  | $ | 39,728 |  | $ | 36,880
Other receivables, net(e) |  | $ | 3,655 |  | $ | 3,554
(a) Includes $7.0 billion and $7.7 billion of gross cardmember receivables available to settle obligations of a consolidated VIE as of June 30, 2011 and December 31, 2010, respectively. (b) Includes $0.5 billion of gross cardmember receivables available to settle obligations of a consolidated VIE as of both June 30, 2011 and December 31, 2010. (c) Includes receivables primarily related to the Company's International Currency Card portfolios. (d) Includes approximately $13.1 billion and $11.7 billion of cardmember receivables outside the United States as of June 30, 2011 and December 31, 2010, respectively. (e) Other receivables primarily represent amounts for tax-related receivables, amounts due from the Company's travel customers and suppliers, purchased joint venture receivables, amounts due from third-party issuing partners, amounts due from certain merchants for billed discount revenue, accrued interest on investments and other receivables due to the Company in the ordinary course of business. Cardmember and Other Loans Cardmember loans, represent ing amounts due from lending payment product customers, are recorded at the time a cardmember enters into a point-of-sale transaction with a merchant or when a charge card customer enters into an extended payment arrangement. The Company's len ding portfolios primarily include revolving loans to cardmembers obta i ned through either their credit card accounts or the lending on charge feature of their charge card accounts. These loans have a range of terms such as credit limits, interest rates, fees and payment structures, which can be adjusted over time based on new information about cardmembers and in accordance with applicable regulations and the respective product's terms and conditions. Cardmembers holding revolving loans are typically required to make monthly payments greater than or equal to certain pre-established amounts. The amounts that cardmembers choose to revolve are subject to f inance c harges. When cardmembers fall behind their required payments, their accounts are monitored. Cardmember loans are presented on the Consolidated Balance Sheets net of reserves for losses and unamortized net card fees and include accrued interest and fees receivable. The Company's policy generally is to cease accruing for interest receivable on a cardmember loan at the time the account is written off. The Company establishes reserves for interest that the Company believes will not be collected. Loans as of June 30, 2011 and December 31, 2010 consisted of:
(Millions) |  |  | 2011 |  |  | 2010
| U.S. Card Services(a) |  | $ | 49,908 |  | $ | 51,565
| International Card Services |  |  | 8,806 |  |  | 9,255
| Global Commercial Services |  |  | 35 |  |  | 30
Cardmember loans, gross(b) |  |  | 58,749 |  |  | 60,850
Less: Cardmember loans reserve for losses |  |  | 2,560 |  |  | 3,646
Cardmember loans, net |  | $ | 56,189 |  | $ | 57,204
Other loans, net(c) |  | $ | 377 |  | $ | 412
(a) I ncludes approximately $32.1 billion and $34.7 billion of gross cardmember loans available to settle obligations of a consolidated VIE a s of June 30, 2011 and December 31, 2010, respectively. (b) Cardmember loan balance is net of u namortized net card fees of $142 million and $134 million as of June 30, 2011 and December 31, 2010, respectively. (c) Other loans primarily represent s mall business installment loans and a store card portfolio whose billed b usiness is not processed on the Company's network. Cardmember Loans and C ardmemb er Receivables A ging Generally, a cardmember account is considered past due if payment is not received within 30 days af ter the billing statement date. T he following table represents the aging of cardmember loans and receivables as of June 30, 2011 and December 31, 2010:
|  |  |  |  |  | 30-59 |  |  | 60-89 |  |  | 90+ |  |  |
|  |  |  |  |  | Days |  |  | Days |  |  | Days |  |  |
|  |  |  |  |  | Past |  |  | Past |  |  | Past |  |  |
2011(Millions) |  |  | Current |  |  | Due |  |  | Due |  |  | Due |  |  | Total
Cardmember Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 49,153 |  | $ | 209 |  | $ | 157 |  | $ | 389 |  | $ | 49,908
International Card Services |  |  | 8,625 |  |  | 61 |  |  | 38 |  |  | 82 |  |  | 8,806
Cardmember Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 18,927 |  | $ | 114 |  | $ | 62 |  | $ | 146 |  | $ | 19,249
International Card Services(a) |  |  | (b) |  |  | (b) |  |  | (b) |  |  | 71 |  |  | 6,872
Global Commercial Services(a) |  |  | (b) |  |  | (b) |  |  | (b) |  |  | 92 |  |  | 13,814
2010(Millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cardmember Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 50,508 |  | $ | 282 |  | $ | 226 |  | $ | 549 |  | $ | 51,565
International Card Services |  |  | 9,044 |  |  | 66 |  |  | 48 |  |  | 97 |  |  | 9,255
Cardmember Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 18,864 |  | $ | 104 |  | $ | 55 |  | $ | 132 |  | $ | 19,155
International Card Services(a) |  |  | (b) |  |  | (b) |  |  | (b) |  |  | 64 |  |  | 6,673
Global Commercial Services(a) |  |  | (b) |  |  | (b) |  |  | (b) |  |  | 96 |  |  | 11,259
(a) For c ardmember receivables in International Card Services (ICS) and Global Commercial Services (GCS), delinquency data is tracked based on days past billing status rather than days past due. A cardmember account is considered 90 days past billing if payment has not been received within 90 days of the cardmember's billing statement date. In addition, if the Company initiates collection procedures on an account prior to the account becoming 90 days past billing the associated cardmember receivable balance is considered as 90 days past billing. These amounts are shown above as 90+ Days Past Due for presentation purposes. (b) Historically, data for periods prior to 90 days past billing are not available due to system constraints. Therefore, it has not been utilized for risk management purposes. The balances that are current to 89 days past due can be derived as the difference between the T otal and the 90+ Days Past Due balances. Credit Quality Indicators for Loans and R eceivables The following table s prese nt the key credit quality indicators as of or for the six months ended June 30:
|  | 2011 |  | 2010 |
|  | Net Write-Off Rate |  |  |  | Net Write-Off Rate |  |  |
|  |  |  |  |  | 30 Days |  |  |  |  |  | 30 Days |
|  |  |  | Principal, |  | Past Due |  |  |  | Principal, |  | Past Due |
|  | Principal |  | Interest, & |  | as a % of |  | Principal |  | Interest, & |  | as a % of |
|  | Only | (a) | Fees | (a) | Total |  | Only | (a) | Fees | (a) | Total |
U.S. Card Services ― |  |  |  |  |  |  |  |  |  |  |  |  |
Cardmember Loans |  | 3.4 | % | 3.8 | % | 1.5 | % | 6.7 | % | 7.4 | % | 2.7 | %
International Card Services ― |  |  |  |  |  |  |  |  |  |  |  |  |
Cardmember Loans |  | 3.1 | % | 3.7 | % | 2.1 | % | 5.2 | % | 6.2 | % | 3.0 | %
U.S. Card Services ― |  |  |  |  |  |  |  |  |  |  |  |  |
Cardmember Receivables |  | 1.6 | % | 1.7 | % | 1.7 | % | 1.7 | % | 1.9 | % | 1.5 | %
|  |  |  |  |  | 2011 |  | 2010 |
|  |  |  |  |  | Net Loss |  |  |  | Net Loss |  |  |
|  |  |  |  |  | Ratio as |  | 90 Days |  | Ratio as |  | 90 Days |
|  |  |  |  |  | a % of |  | Past Billing |  | a % of |  | Past Billing |
|  |  |  |  |  | Charge |  | as a % of |  | Charge |  | as a % of |
|  |  |  |  |  | Volume |  | Receivables |  | Volume | (b) | Receivables |
International Card Services ― Cardmember Receivables |  | 0.15 | % | 1.0 | % | 0.34 | % | 1.0 | %
Global Commercial Services ― Cardmember Receivables | 0.06 | % | 0.7 | % | 0.17 | % | 1.0 | %
(a) The Company presents a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, because the Company's practice is to include uncollectible interest and/or fees as part of its total provision for losses, a net write-off rate includi ng principal, interest and/or fees is also presented. (b) In the first quarter of 2010, the Company modified its reporting in the ICS and GCS segments to write-off past due cardmember receivables when 180 days past due or earlier, versus its prior methodology of writing them off when 360 days past billing or earlier. This change is consistent with bank regulatory guidance and the write-off methodology adopted for the cardmember receivables portfo lio in the U.S. Card Services (USCS) segment in the fourth quarter of 2008. This change r esulted in approximately $60 million and $48 million of net write-offs for ICS and GCS, respe ctively, being included in the first quarter of 2010, which increased the net loss ratios and decreased the 90 days past billing metrics for these segments, but did not have a substantial impact on provisions for losses. Refer to Note 5 for other factors, including external environmental factors, that management considers as part of its evaluation process for reserves for losses. Impaired Loans and R eceivables Impaired loans and receivables are defined by GAAP as individual larger balance or homogeneous pools of smaller balance restructured loans and receivables for which it is probable that the lender will be unable to collect all amounts due according to the original contractual terms of the loan and receivable agreement. The Company considers impaired loans and receivables to include: (i) loans over 90 days past due still accruing interest, (ii) non-accrual loans, and (iii) loans and receivables modified in a troubled debt restructuring (TDR). The Company may modify, through various company sponsored programs, cardmember loans and receivables in instances where the cardmember is experiencing financial difficulty to minimize losses to the Company while providing cardmembers with temporary or permanent financial relief. The Company has classified cardmember loans and receivables in these modification programs as TDRs. Such modifications may include reducing the interest rate (as low as zero percent, in which case the loan is characterized as non-accrual in our TDR disclosures) or delinquency fees on the loans and receivables and/or placing the cardmember on a fixed payment plan not exceeding 60 months. In accordance with the modification agreement with the cardmember, loans with modified terms will revert back to their original contractual terms (including their contractual interest rate) when they exit the TDR program, either (i) when all payments have been made in accordance with the modification agreement or (ii) in the event that a payment is not made and the cardmember defaults out of the program. In either case, in accordance with its normal policy, the Company establishes a reserve for cardmember interest charges that it believes will not be collected. The performance of a TDR is closely monitored to understand its impa ct on the Company's reserve for losses. Though the ultimate success of these modification programs remains uncertain, the Company believes they improve the cumulative loss performance of such loans and receivables. Reserves for a TDR are determined by the difference between cash flows expected to be received from the cardmember discounted at the original effective interest rates and the carrying value of the cardmember loan or receivable balance. The Company determines the original effective interest rate as the interest rate in effect prior to the imposition of any penalty rate. All changes in the impairment measurement, including the component due to the passage of time, are included in the provision for losses within the Consolidated Statements of Income. The following tables provide additional information with respect to the Company's impaired cardmember loans and receivables as of June 30, 2011 and December 31, 2010:
|  |  | Loans over |  |  |  |  |  |  |  |  |  |  |  |
|  |  | 90 Days |  |  |  |  |  | Loans & |  |  | Total |  |  |
|  |  | Past Due |  |  | Non- |  |  | Receivables |  |  | Impaired |  |  | Unpaid |  |  |  |  |
(Millions) |  | & Accruing |  |  | Accrual |  |  | Modified |  |  | Loans & |  |  | Principal |  |  |  | Allowance |
2011 |  |  | Interest | (a) |  | Loans | (b) |  | as a TDR | (c) |  | Receivables |  |  | Balance | (d) |  | for TDRs | (e)
U.S. Card Services ― Cardmember Loans |  | $ | 53 |  | $ | 471 |  | $ | 898 |  | $ | 1,422 |  | $ | 1,359 |  |  | $ | 215 |
International Card Services ― Cardmember Loans |  |  | 81 |  |  | 6 |  |  | 9 |  |  | 96 |  |  | 93 |  |  |  | 4 |
U.S. Card Services ― Cardmember Receivables |  |  | ― |  |  | ― |  |  | 138 |  |  | 138 |  |  | 131 |  |  |  | 83 |
Total(f) |  | $ | 134 |  | $ | 477 |  | $ | 1,045 |  | $ | 1,656 |  | $ | 1,583 |  |  | $ | 302 |
|  |  | Loans over |  |  |  |  |  |  |  |  |  |  |  |
|  |  | 90 Days |  |  |  |  |  | Loans & |  |  | Total |  |  |
|  |  | Past Due |  |  | Non- |  |  | Receivables |  |  | Impaired |  |  | Unpaid |  |  |  |  |
(Millions) |  | & Accruing |  |  | Accrual |  |  | Modified |  |  | Loans & |  |  | Principal |  |  |  | Allowance |
2010 |  |  | Interest | (a) |  | Loans | (b) |  | as a TDR | (c) |  | Receivables |  |  | Balance | (d) |  | for TDRs | (e)
U.S. Card Services ― Cardmember Loans |  | $ | 90 |  | $ | 628 |  | $ | 1,076 |  | $ | 1,794 |  | $ | 1,704 |  |  | $ | 274 |
International Card Services ― Cardmember Loans |  |  | 95 |  |  | 8 |  |  | 11 |  |  | 114 |  |  | 112 |  |  |  | 5 |
U.S. Card Services ― Cardmember Receivables |  |  | ― |  |  | ― |  |  | 114 |  |  | 114 |  |  | 109 |  |  |  | 63 |
Total(f) |  | $ | 185 |  | $ | 636 |  | $ | 1,201 |  | $ | 2,022 |  | $ | 1,925 |  |  | $ | 342 |
(a) The Company's policy is generally to accrue inte rest through the date of charge-off (at 180 days past due). The Company establishes reserves for interest that the Company believes will not be collected. (b) Non-accrual loans not in modification programs include certain cardmember loans placed with outside collection agencies for which the Company has ceased accruing interest. The Company's policy is not to resume the accrual of interest on these loans. Payments received are applied against the recorded loan balance. Interest income is recognized on a cash basis for any payments received after the loan balance has been paid in full. (c) The total loans and receivable s modified as a TDR include $559 million and $655 mil lion that are non-accrual and $8 million and $7 million that are past due 90 days and still accruing interest as of June 30, 2011 and December 31, 2010, respectively. These amounts are excluded from the previous two columns. (d) Unpaid principal balance consists of cardmember charges billed and excludes other amounts charged directly by the Company such as int erest and fees. (e) Represents the reserve for losses for TDRs, which are evaluated separately fo r impairment. The Company record s a reserve for losses for all impaired loans. Refer to Cardmember Loans Evaluated Separately and Collectively for Impairment in Note 5 for further discussion of the reserve for losses on loans over 90 days past due and accruing interest and non-accrual loans, which are evaluated collectively for impairment. (f) These disclosures either do not apply or are not significant for cardmember receivables in ICS and GCS.

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- Definition Includes disclosure of claims held for amounts due a company. Examples include trade accounts receivables, notes receivables, loans receivables. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph k -Article 4 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 3, 4 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 7 -Article 9 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 01-6 -Paragraph 13 -Subparagraph d + Details
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