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Reportable Operating Segment
 12 Months Ended
Dec. 31, 2011
Segment Reporting Disclosure [Abstract]  
Reportable Operating Segments

NOTE 25

reportable operating segments and geographic operations

reportable operating segments

The Company is a leading global payments and travel company that is principally engaged in businesses comprising four reportable operating segments: USCS, ICS, GCS and GNMS.

The Company considers a combination of factors when evaluating the composition of its reportable operating segments, including the results reviewed by the chief operating decision maker, economic characteristics, products and services offered, classes of customers, product distribution channels, geographic considerations (primarily United States versus non-U.S.), and regulatory environment considerations. The following is a brief description of the primary business activities of the Company's four reportable operating segments:

  • USCS issues a wide range of card products and services to consumers and small businesses in the United States, and provides consumer travel services to cardmembers and other consumers.
  • ICS issues proprietary consumer and small business cards outside the United States.
  • GCS offers global corporate payment and travel-related products and services to large and mid-sized companies.
  • GNMS operates a global payments network which processes and settles proprietary and non-proprietary card transactions. GNMS acquires merchants and provides point-of-sale products, multi-channel marketing programs and capabilities, services and data, leveraging the Company's global closed-loop network. It provides ATM services and enters into partnership agreements with third-party card issuers and acquirers, licensing the American Express brand and extending the reach of the global network.

 

Corporate functions and auxiliary businesses, including the Company's publishing business, the Enterprise Growth Group (including the Global Prepaid Group), as well as other company operations are included in Corporate & Other.

Beginning in the first quarter of 2011, the Company changed its segment allocation methodology to better align segment reporting with the Company's previously announced management reorganization, which had been implemented over the several prior quarters. The reorganization included the formation of the Enterprise Growth Group, which is reported in Corporate & Other. The group consists of three core business units: Online and Mobile, Fee Based Services and Global Payment Options (formerly known as Global Prepaid). Starting in the first quarter of 2011, certain business activities such as LoyaltyEdge and Foreign Exchange Services (formerly known as Global Foreign Exchange Services) that were previously managed and reported in the USCS and GCS operating segments, respectively, are now managed by Enterprise Growth. The reorganization also included consolidation of certain corporate support functions into the Global Services organization. Greater centralization of activities has led to modifications in the costs being allocated from Corporate & Other to the reportable operating segments starting in the first quarter of 2011. Prior period segment results have been revised for these changes.

The following table presents certain selected financial information as of or for the years ended December 31, 2011, 2010 and 2009.

              Corporate &   
(Millions, except where indicated) USCS ICS GCS GNMS Other (a)Consolidated
2011                  
Non-interest revenues $ 10,648 $ 4,361 $ 4,880 $ 4,713 $ 719 $ 25,321
Interest income   5,230   1,304   9   5   413   6,961
Interest expense   807   426   264   (224)   1,047   2,320
Total revenues net of interest expense   15,071   5,239   4,625   4,942   85   29,962
Total provision   687   268   76   75   6   1,112
Pretax income (loss) from continuing operations   4,129   762   1,075   1,979   (989)   6,956
Income tax provision (benefit)   1,449   39   337   686   (454)   2,057
Income (loss) from continuing operations $ 2,680 $ 723 $ 738 $ 1,293 $ (535) $ 4,899
Total equity (billions) $8.8 $2.8 $3.6 $2.0 $1.8 $19.0
2010                  
Non-interest revenues $9,884 $3,678 $4,347 $4,101 $ 703 $22,713
Interest income  5,390  1,393  7  4   498  7,292
Interest expense  812  428  227  (200)   1,156  2,423
Total revenues net of interest expense  14,462  4,643  4,127  4,305   45  27,582
Total provision  1,591  392  157  61   6  2,207
Pretax income (loss) from continuing operations  3,504  589  723  1,589   (441)  5,964
Income tax provision (benefit)  1,279  52  273  564   (261)  1,907
Income (loss) from continuing operations $2,225 $537 $450 $1,025 $ (180) $4,057
Total equity (billions) $7.4 $2.2 $3.7 $1.9 $1.0 $16.2
2009                  
Non-interest revenues $9,443 $3,442 $3,882 $3,586 $ 859 $21,212
Interest income  3,216  1,509  5  1  600  5,331
Interest expense  568  427  180   (177)   1,209  2,207
Total revenues net of interest expense  12,091  4,524  3,707  3,764  250  24,336
Total provision  3,769  1,211  177  135  21  5,313
Pretax income (loss) from continuing operations  575  271  475  1,449  71  2,841
Income tax provision (benefit)  171   (59)  144  510   (62)  704
Income (loss) from continuing operations $404 $330 $331 $939 $133 $2,137
Total equity (billions) $6.0 $2.3 $3.7 $1.4 $1.0 $14.4

  • Corporate & Other includes adjustments and eliminations for intersegment activity.

Total Revenues Net of Interest Expense

The Company allocates discount revenue and certain other revenues among segments using a transfer pricing methodology. Segments earn discount revenue based on the volume of merchant business generated by cardmembers. Within the USCS, ICS and GCS segments, discount revenue reflects the issuer component of the overall discount rate; within the GNMS segment, discount revenue reflects the network and merchant component of the overall discount rate. Total interest income and net card fees are directly attributable to the segment in which they are reported.

 

Provisions for Losses

The provisions for losses are directly attributable to the segment in which they are reported.

 

Expenses

Marketing, promotion, rewards and cardmember services expenses are reflected in each segment based on actual expenses incurred, with the exception of brand advertising, which is reflected in the GNMS segment. Rewards and cardmember services expenses are reflected in each segment based on actual expenses incurred within each segment. Salaries and employee benefits and other operating expenses reflect expenses such as professional services, occupancy and equipment and communications incurred directly within each segment. In addition, expenses related to the Company's support services, such as technology costs, are allocated to each segment based on support service activities directly attributable to the segment.

 

Other overhead expenses, such as staff group support functions, are allocated from Corporate & Other to the other segments based on each segment's relative level of pretax income. Financing requirements are managed on a consolidated basis. Funding costs are allocated based on segment funding requirements.

 

Capital

Each business segment is allocated capital based on established business model operating requirements, risk measures and regulatory capital requirements. Business model operating requirements include capital needed to support operations and specific balance sheet items. The risk measures include considerations for credit, market and operational risk.

Income Taxes

Income tax provision (benefit) is allocated to each business segment based on the effective tax rates applicable to various businesses that make up the segment.

geographic operations

The following table presents the Company's total revenues net of interest expense and pretax income (loss) from continuing operations in different geographic regions:

(Millions) United States EMEA (a)JAPA (a)LACC (a)Other Unallocated (b)Consolidated
2011(c)                  
 Total revenues net of interest expense $ 21,254 $ 3,551 $ 3,071 $ 2,706 $ (620) $ 29,962
 Pretax income (loss) from continuing operations $ 6,971 $ 620 $ 430 $ 583 $ (1,648) $ 6,956
2010(c)                  
 Total revenues net of interest expense $ 19,976 $ 3,132 $ 2,630 $ 2,451 $ (607) $27,582
 Pretax income (loss) from continuing operations $ 6,137 $ 444 $ 273 $ 469 $ (1,359) $5,964
2009(c)                  
 Total revenues net of interest expense $ 17,328 $ 3,152 $ 2,229 $ 2,314 $ (687) $24,336
 Pretax income (loss) from continuing operations $ 3,194 $ 319 $ 187 $ 276 $ (1,135) $2,841

  • EMEA represents Europe, Middle East and Africa; JAPA represents Japan, Asia/Pacific and Australia; and LACC represents Latin America, Canada and Caribbean.
  • Other Unallocated includes net costs which are not directly allocable to specific geographic regions, including costs related to the net negative interest spread on excess liquidity funding and executive office operations expenses.
  • The data in the above table is, in part, based upon internal allocations, which necessarily involve management's judgment. Certain revisions and reclassifications have been made to prior years' amounts to conform to 2011 presentation and internal allocation methodology.