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Reportable Operating Segment
 12 Months Ended
Dec. 31, 2015
Disclosure Text Block Abstract  
Reportable Operating Segments

NOTE 25

Reportable Operating Segments and Geographic Operations

Reportable Operating Segments

The Company is a global services company that is principally engaged in businesses comprising four reportable operating segments: USCS, ICS, GCS and Global Network & Merchant Services (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 outside the United States), and regulatory environment considerations.

The following is a brief description of the primary business activities of the Company’s four reportable operating segments:

  • USCS offers a wide range of card products and services to consumers and small businesses in the United States, provides travel services to Card Members and other consumers, and operates a coalition loyalty business.
  • ICS offers a wide range of card products and services to consumers and small businesses outside the United States, provides travel services to Card Members and other consumers, and operates a coalition loyalty business in various countries.
  • GCS offers global corporate payment services to large and mid-sized companies. The Company’s business travel operations, which had been included in GCS, were deconsolidated effective June 30, 2014 in connection with the formation of the GBT JV, discussed previously. Therefore, there is a lack of comparability against periods prior to the deconsolidation. The Company’s proportional share of the GBT JV net income or loss is reported within Other revenues.
  • GNMS operates a global payments network that processes and settles proprietary and non-proprietary card transactions. GNMS acquires merchants; leverages the Company’s global closed-loop network to offer multi-channel marketing programs and capabilities, services and reporting and analytical data to the Company’s merchants around the world; and provides financing products for qualified merchants. It also enters into partnership agreements with third-party card issuers and acquirers to license the American Express brand and broaden the Card Member and merchant base for the Company’s network worldwide.

Corporate functions and certain other businesses, including the Company’s EG business, as well as other Company operations are included in Corporate & Other.

The following table presents certain selected financial information for the Company’s reportable operating segments and Corporate & Other as of or for the years ended December 31, 2015, 2014 and 2013:

    Corporate &
(Millions, except where indicated)USCSICSGCSGNMSOther(a)Consolidated
2015    
Non-interest revenues$13,180  $4,321$3,513  $5,236$646$26,896
Interest income6,267  93914  982277,545
Interest expense654  242185  (194)7361,623
Total revenues net of interest expense18,793  5,0183,342  5,52813732,818
Total provisions (b)1,453  329148  5441,988
Pretax income (loss) from continuing operations5,355  5081,073  2,775(1,773)7,938
Income tax provision (benefit)1,942  87407  1,004(665)2,775
Net income (loss)3,413  421666  1,771(1,108)5,163
Total assets (billions)(c)117351824(33)161
Total equity (billions)10.3  2.93.7  2.41.420.7
2014    
Non-interest revenues12,628  4,7375,173  5,42675228,716
Interest income5,786  1,08515  522417,179
Interest expense604  330240  (269)8021,707
Total revenues net of interest expense17,810  5,4924,948  5,74719134,188
Total provisions1,396  370180  9352,044
Pretax income (loss) from continuing operations5,100  4492,408  2,620(1,586)8,991
Income tax provision (benefit)1,900  38865  960(657)3,106
Net income (loss)3,200  4111,543  1,660(929)5,885
Total assets (billions)(c)113311918(22)159
Total equity (billions)10.4  3.03.8  2.01.520.7
2013    
Non-interest revenues12,019  4,6445,085  5,22984627,823
Interest income5,565  1,11813  322777,005
Interest expense693  361245  (252)9111,958
Total revenues net of interest expense16,891  5,4014,853  5,51321232,870
Total provisions1,250  388129  67(2)1,832
Pretax income (loss) from continuing operations4,9946431,244  2,469(1,462)7,888
Income tax provision (benefit)1,801  12384  894(562)2,529
Net income (loss)3,193  631860  1,575(900)5,359
Total assets (billions)(c)$104  $31$19  $17$(18)$153
Total equity (billions)$9.3  $3.1$3.7  $2.0$1.4$19.5

  • Corporate & Other includes adjustments and eliminations for intersegment activity.
  • Effective December 1, 2015, in the USCS segment, total provisions does not include credit costs related to Card Member loans and receivables HFS, which are now reported in Other expenses through a valuation allowance adjustment.
  • As of September 30,

Total Revenues Net of Interest Expense

The Company allocates discount revenue and certain other revenues among segments using a transfer pricing methodology. Within the USCS, ICS and GCS segments, discount revenue reflects the issuer component of the overall discount revenue generated by each segment’s Card Members; within the GNMS segment, discount revenue reflects the network and acquirer component of the overall discount revenue. Net card fees and travel commissions and fees are directly attributable to the segment in which they are reported.

Interest and fees on loans and certain investment income is directly attributable to the segment in which it is reported. Interest expense represents an allocated funding cost based on a combination of segment funding requirements and internal funding rates.

Provisions for Losses

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

Expenses

Marketing and promotion expenses are included in each segment based on actual expenses incurred, with the exception of brand advertising, which is primarily reflected in the GNMS and USCS segments. Rewards and Card Member services expenses are included in each segment based on actual expenses incurred within each segment.

Salaries and employee benefits and other operating expenses includes expenses such as professional services, occupancy and equipment and communications incurred directly within each segment. In addition, expenses related to support services, such as technology costs, are allocated to each segment primarily 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 a mix of each segment’s direct consumption of services and relative level of pretax income.

Capital

Each business segment is allocated capital based on established business model operating requirements, risk measures and regulatory capital requirements. The 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

An income tax provision (benefit) is allocated to each business segment based on the effective tax rates applicable to various businesses that comprise 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
2015(c)    
Total revenues net of interest expense  $24,791  $3,161$2,649$2,384$(167)$32,818
Pretax income (loss) from continuing operations  8,010  534456658(1,720)7,938
2014(c)    
Total revenues net of interest expense  $24,751  $3,767$2,934$2,888$(152)$34,188
Pretax income (loss) from continuing operations  8,869  525463683(1,549)8,991
2013(c)    
Total revenues net of interest expense  $23,641  $3,700$2,952$2,900$(323)$32,870
Pretax income (loss) from continuing operations  7,679  524488701(1,504)7,888

  • EMEA represents Europe, the Middle East and Africa; JAPA represents Japan, Asia/Pacific and Australia; and LACC represents Latin America, Canada and the 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.