EX-99.2 3 exhibit99_2jan.txt FINANCIALS EXHIBIT 99.2 All information in the following tables is presented on a basis prepared in accordance with U.S. generally accepted accounting principles (GAAP), unless otherwise indicated. The information presented herein reflects discontinued operations presentation for the spin-off of Ameriprise effective as of September 30, 2005 and certain dispositions, and is revised from previously reported results. (Preliminary) AMERICAN EXPRESS COMPANY CONSOLIDATED STATEMENTS OF INCOME (Millions)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2005 2004 Inc/(Dec) 2005 2004 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Revenues Discount revenue $ 3,172 $ 2,817 12.6% $ 11,730 $ 10,249 14.4% Cardmember lending net finance charge revenue 703 560 25.5 2,580 2,224 16.1 Net card fees 518 491 5.4 2,033 1,909 6.5 Travel commissions and fees 435 484 (10.1) 1,780 1,795 (0.8) Other commissions and fees 640 616 4.0 2,456 2,284 7.2 Securitization income, net 295 325 (9.2) 1,260 1,132 11.4 Other investment and interest income 279 261 6.8 1,055 997 5.8 Other 395 349 13.3 1,373 1,374 (0.1) ---------- ---------- ---------- ---------- Total 6,437 5,903 9.1 24,267 21,964 10.5 ---------- ---------- ---------- ---------- Expenses Human resources 1,177 1,232 (4.4) 4,829 4,538 6.4 Marketing, promotion, rewards and cardmember services 1,581 1,420 11.2 5,841 4,965 17.6 Provision for losses and benefits Charge card 290 240 21.1 1,038 833 24.7 Cardmember lending 415 296 40.3 1,349 1,130 19.4 Investment certificates and other 108 71 52.1 386 301 27.8 ---------- ---------- ---------- ---------- Total 813 607 34.1 2,773 2,264 22.5 Professional services 714 647 10.3 2,308 2,141 7.8 Occupancy and equipment 390 379 2.9 1,428 1,353 5.6 Interest 249 222 12.5 920 814 13.1 Communications 115 120 (5.2) 457 474 (3.7) Other 439 356 24.2 1,463 1,584 (7.5) ---------- ---------- ---------- ---------- Total 5,478 4,983 10.0 20,019 18,133 10.4 ---------- ---------- ---------- ---------- Pretax income from continuing operations before accounting change 959 920 4.2 4,248 3,831 10.9 Income tax provision 208 251 (17.4) 1,027 1,145 (10.4) ---------- ---------- ---------- ---------- Income from continuing operations before accounting change 751 669 12.2 3,221 2,686 19.9 Income/(Loss) from discontinued operations, net of tax (6) 227 # 513 830 (38.2) ---------- ---------- ---------- ---------- Income before cumulative effect of accounting change 745 896 (16.9) 3,734 3,516 6.2 Cumulative effect of accounting change - - - - (71)(A) # ---------- ---------- ---------- ---------- Net income $ 745 $ 896 (16.9) $ 3,734 $ 3,445 8.4 ========== ========== ========== ==========
# - Denotes a variance of more than 100%. (A) Reflects a $109 million non-cash pretax charge ($71 million after-tax) associated with discontinued operations related to the January 1, 2004 adoption of SOP 03-1. -1- (Preliminary) AMERICAN EXPRESS COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Billions)
December 31, December 31, 2005 2004 ------------ ------------ Assets Cash and cash equivalents $ 7 $ 8 Accounts receivable 35 32 Investments 21 22 Loans 41 34 Other assets 10 11 Assets of discontinued operations - 87 ------------ ------------ Total assets $ 114 $ 194 ============ ============ Liabilities and Shareholders' Equity Short-term debt $ 16 $ 14 Long-term debt 31 33 Other liabilities 56 50 Liabilities of discontinued operations - 81 ------------ ------------ Total liabilities 103 178 ------------ ------------ Shareholders' Equity* 11 16 ------------ ------------ Total liabilities and shareholders' equity $ 114 $ 194 ============ ============
* Total Shareholders' Equity at December 31, 2004 includes discontinued operations reflected in the Company's historical Consolidated Financial Statements. -2- (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (Millions)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2005 2004 Inc/(Dec) 2005 2004 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- REVENUES U.S. Card Services $ 3,177 $ 2,811 13.1% $ 11,949 $ 10,395 15.0% International Card & Global Commercial Services 2,340 2,265 3.2 9,038 8,429 7.2 Global Network & Merchant Services 745 703 6.0 2,842 2,639 7.8 ---------- ---------- ---------- ---------- 6,262 5,779 8.3 23,829 21,463 11.0 Corporate & Other, including adjustments and eliminations 175 124 44.0 438 501 (13.0) ---------- ---------- ---------- ---------- CONSOLIDATED REVENUES $ 6,437 $ 5,903 9.1 $ 24,267 $ 21,964 10.5 ========== ========== ========== ========== PRETAX INCOME (LOSS) FROM CONTINUING OPERATIONS U.S. Card Services $ 533 $ 499 6.6 $ 2,599 $ 2,140 21.4 International Card & Global Commercial Services 303 236 27.9 1,149 1,116 3.1 Global Network & Merchant Services 242 211 15.0 870 904 (3.7) ---------- ---------- ---------- ---------- 1,078 946 13.8 4,618 4,160 11.0 Corporate & Other (119) (26) # (370) (329) 13.0 ---------- ---------- ---------- ---------- PRETAX INCOME FROM CONTINUING OPERATIONS BEFORE ACCOUNTING CHANGE $ 959 $ 920 4.2 $ 4,248 $ 3,831 10.9 ========== ========== ========== ========== NET INCOME (LOSS) U.S. Card Services $ 411 $ 363 13.1 $ 1,834 $ 1,518 20.8 International Card & Global Commercial Services 241 184 30.0 934 781 19.5 Global Network & Merchant Services 159 134 18.7 564 574 (1.9) ---------- ---------- ---------- ---------- 811 681 18.8 3,332 2,873 15.9 Corporate & Other (60) (12) # (111) (187) (41.4) ---------- ---------- ---------- ---------- Income from continuing operations before accounting change 751 669 12.2 3,221 2,686 19.9 Income/(Loss) from discontinued operations, net of tax (6) 227 # 513 830 (38.2) Cumulative effect of accounting change - - - - (71)(A) # ---------- ---------- ---------- ---------- NET INCOME $ 745 $ 896 (16.9) $ 3,734 $ 3,445 8.4 ========== ========== ========== ==========
# - Denotes a variance of more than 100%. (A) Reflects a $109 million non-cash pretax charge ($71 million after-tax) associated with discontinued operations related to the January 1, 2004 adoption of SOP 03-1. -3- (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (CONTINUED)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2005 2004 Inc/(Dec) 2005 2004 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- EARNINGS PER COMMON SHARE BASIC Income from continuing operations $ 0.61 $ 0.54 13.0% $ 2.61 $ 2.13 22.5% Income/(Loss) from discontinued operations (0.01) 0.18 # 0.42 0.66 (36.4)% Cumulative effect of accounting change - - - - (0.05)(A) # ---------- ---------- ---------- ---------- Net income $ 0.60 $ 0.72 (16.7)% $ 3.03 $ 2.74 10.6% ========== ========== ========== ========== Average common shares outstanding (millions) 1,232 1,242 (0.8)% 1,233 1,259 (2.0)% ========== ========== ========== ========== DILUTED Income from continuing operations $ 0.60 $ 0.53 13.2% $ 2.56 $ 2.09 22.5% Income/(Loss) from discontinued operations (0.01) 0.18 # 0.41 0.65 (36.9)% Cumulative effect of accounting change - - - - (0.06)(A) # ---------- ---------- ---------- ---------- Net income $ 0.59 $ 0.71 (16.9)% $ 2.97 $ 2.68 10.8% ========== ========== ========== ========== Average common shares outstanding (millions) 1,258 1,270 (1.0)% 1,258 1,285 (2.1)% ========== ========== ========== ========== Cash dividends declared per common share $ 0.12 $ 0.12 - $ 0.48 $ 0.44 9.1% ========== ========== ========== ==========
SELECTED STATISTICAL INFORMATION
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2005 2004 Inc/(Dec) 2005 2004 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Return on average total shareholders' equity (B) 25.4% 22.0% 25.4% 22.0% Common shares outstanding (millions) 1,241 1,249 (0.7)% 1,241 1,249 (0.7)% Book value per common share* $ 8.49 $ 12.83 (33.8)% $ 8.49 $ 12.83 (33.8)% Shareholders' equity (billions)* $ 10.5 $ 16.0 (34.3)% $ 10.5 $ 16.0 (34.3)%
# - Denotes a variance of more than 100%. (A) Reflects a $109 million non-cash pretax charge ($71 million after-tax), or $0.05 on a basic per share basis and $0.06 on a diluted per share basis, associated with discontinued operations related to the January 1, 2004 adoption of SOP 03-1. (B) Computed on a trailing 12-month basis using net income and total shareholders' equity (including discontinued operations) as included in the historical Consolidated Financial Statements prepared in accordance with GAAP. * Total shareholders' equity and book value per common share amounts prior to September 30, 2005 include discontinued operations reflected in the Company's historical Consolidated Financial Statements. -4- (Preliminary) AMERICAN EXPRESS COMPANY SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2005 2004 Inc/(Dec) 2005 2004 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Card billed business (A): United States $ 93 $ 84 15.5% $ 350 $ 305 16.2% Outside the United States 39 32 13.0 134 111 17.1 ---------- ---------- ---------- ---------- Total $ 132 $ 116 14.8 $ 484 $ 416 16.4 ========== ========== ========== ========== Total cards-in-force (millions): United States 43.0 39.9 8.0% 43.0 39.9 8.0% Outside the United States 28.0 25.5 9.6 28.0 25.5 9.6 ---------- ---------- ---------- ---------- Total 71.0 65.4 8.6 71.0 65.4 8.6 ========== ========== ========== ========== Basic cards-in-force (millions): United States 32.8 30.3 8.2% 32.8 30.3 8.2% Outside the United States 23.2 21.0 10.3 23.2 21.0 10.3 ---------- ---------- ---------- ---------- Total 56.0 51.3 9.1 56.0 51.3 9.1 ========== ========== ========== ========== Average discount rate (B) 2.54% 2.58% 2.57% 2.60% Average basic cardmember spending (dollars) (A) $ 2,778 $ 2,589 7.3% $ 10,445 $ 9,460 10.4% Average fee per card - managed (dollars) (A) $ 35 $ 35 -% $ 35 $ 34 2.9% Travel sales $ 5.2 $ 5.3 (3.5)% $ 20.6 $ 19.9 3.5% Travel commissions and fees/sales (C) 8.4% 9.1% 8.6% 9.0% Worldwide Travelers Cheque and prepaid products: Sales $ 4.8 $ 4.9 (1.5)% $ 19.7 $ 19.9 (0.7)% Average outstanding $ 6.9 $ 7.0 (1.3)% $ 7.1 $ 7.0 2.3% Average investments $ 7.6 $ 7.6 0.1% $ 7.8 $ 7.5 3.9% Investment yield 5.1% 5.4% 5.1% 5.4% Tax equivalent yield 7.9% 8.3% 7.9% 8.4% International banking Total loans $ 7.1 $ 6.9 3.5% $ 7.1 $ 6.9 3.5% Private banking holdings $ 20.3 $ 18.6 9.5% $ 20.3 $ 18.6 9.5%
(A) Card billed business includes activities related to proprietary cards, cards issued under network partnership agreements, cash advances on proprietary cards and certain insurance fees charged on proprietary cards. Cards-in-force include proprietary cards and cards issued under network partnership agreements. Average basic cardmember spending and average fee per card are computed from proprietary card activities only. (B) Computed as follows: Discount Revenue from all card spending (proprietary and Global Network Services) at merchants divided by all billed business (proprietary and Global Network Services) generating discount revenue at such merchants. Only merchants acquired by the Company are included in the computation. Discount rates have been retrospectively adjusted on a historical basis from those previously disclosed, primarily to retain in the computation the Global Network Services partner portion of discount revenue, as well as the Company's portion of discount revenue. (C) Computed from information provided herein. -5- (Preliminary) AMERICAN EXPRESS COMPANY SELECTED STATISTICAL INFORMATION (CONTINUED) (Billions, except percentages and where indicated)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2005 2004 Inc/(Dec) 2005 2004 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Worldwide cardmember receivables: Total receivables $ 34.2 $ 31.1 9.9% $ 34.2 $ 31.1 9.9% 90 days past due as a % of total 1.6% 1.8% 1.6% 1.8% Loss reserves (millions): $ 942 $ 806 16.9% $ 942 $ 806 16.9% % of receivables 2.8% 2.6% 2.8% 2.6% % of 90 days past due 177% 146% 177% 146% Net loss ratio as a % of charge volume 0.29% 0.25% 0.26% 0.26% Worldwide cardmember lending - owned basis: Total loans $ 33.1 $ 26.9 23.0% $ 33.1 $ 26.9 23.0% 30 days past due loans as a % of total 2.5% 2.4% 2.5% 2.4% Loss reserves (millions): Beginning balance $ 952 $ 1,008 (5.6)% $ 972 $ 998 (2.6)% Provision 374 272 37.4 1,227 1,016 20.8 Net write-offs (323) (254) 27.5 (1,155) (1,040) (11.1) Other (7) (54) (87.5) (48) (2) # ---------- ---------- ---------- ---------- Ending balance $ 996 $ 972 2.5 $ 996 $ 972 2.5 ========== ========== ========== ========== % of loans 3.0% 3.6% 3.0% 3.6% % of past due 122% 151% 122% 151% Average loans $ 31.0 $ 26.2 18.5% $ 28.3 $ 25.9 10.0% Net write-off rate 4.2% 3.9% 4.1% 4.0% Net finance charge revenue*/average loans 9.0% 8.6% 9.1% 8.6% Worldwide cardmember lending - managed basis: Total loans $ 54.3 $ 47.2 15.0% $ 54.3 $ 47.2 15.0% 30 days past due loans as a % of total 2.4% 2.4% 2.4% 2.4% Loss reserves (millions): Beginning balance $ 1,401 $ 1,537 (8.9)% $ 1,475 $ 1,541 (4.3)% Provision 671 463 45.0 2,097 1,931 8.6 Net write-offs (596) (471) (26.7) (2,055) (1,957) (5.0) Other (7) (54) (87.5) (48) (40) 19.3 ---------- ---------- ---------- ---------- Ending balance $ 1,469 $ 1,475 (0.4) $ 1,469 $ 1,475 (0.4) ========== ========== ========== ========== % of loans 2.7% 3.1% 2.7% 3.1% % of past due 114% 129% 114% 129% Average loans $ 51.9 $ 46.5 11.7% $ 48.9 $ 45.4 8.7% Net write-off rate 4.6% 4.1% 4.2% 4.3% Net finance charge revenue*/average loans 9.4% 9.0% 9.3% 9.0%
# - Denotes a variance of more than 100%. * - Computed on an annualized basis. -6- (Preliminary) AMERICAN EXPRESS COMPANY CONSOLIDATED STATEMENTS OF INCOME (Millions)
Quarters Ended ------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2005 2005 2005 2005 2004 ------------ ------------- ---------- ---------- ------------ Revenues Discount revenue $ 3,172 $ 2,945 $ 2,941 $ 2,672 $ 2,817 Cardmember lending net finance charge revenue 703 648 637 592 560 Net card fees 518 511 506 498 491 Travel commissions and fees 435 421 502 422 484 Other commissions and fees 640 628 611 577 616 Securitization income, net 295 353 296 316 325 Other investment and interest income 279 246 269 261 261 Other 395 316 328 334 349 ---------- ---------- ---------- ---------- ---------- Total 6,437 6,068 6,090 5,672 5,903 ---------- ---------- ---------- ---------- ---------- Expenses Human resources 1,177 1,197 1,268 1,187 1,232 Marketing, promotion, rewards and cardmember services 1,581 1,492 1,445 1,323 1,420 Provision for losses and benefits Charge card 290 299 234 215 240 Cardmember lending 415 364 275 295 296 Investment certificates and other 108 76 123 79 71 ---------- ---------- ---------- ---------- ---------- Total 813 739 632 589 607 Professional services 714 563 544 487 647 Occupancy and equipment 390 346 356 336 379 Interest 249 238 232 201 222 Communications 115 112 113 117 120 Other 439 301 379 344 356 ---------- ---------- ---------- ---------- ---------- Total 5,478 4,988 4,969 4,584 4,983 ---------- ---------- ---------- ---------- ---------- Pretax income from continuing operations 959 1,080 1,121 1,088 920 Income tax provision 208 215 261 343 251 ---------- ---------- ---------- ---------- ---------- Income from continuing operations 751 865 860 745 669 Income/(Loss) from discontinued operations, net of tax (6) 165 153 201 227 ---------- ---------- ---------- ---------- ---------- Net income $ 745 $ 1,030 $ 1,013 $ 946 $ 896 ========== ========== ========== ========== ==========
-7- (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (Millions)
Quarters Ended ------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2005 2005 2005 2005 2004 ------------ ------------- ---------- ---------- ------------ REVENUES U.S. Card Services $ 3,177 $ 3,035 $ 2,968 $ 2,769 $ 2,811 International Card & Global Commercial Services 2,340 2,238 2,299 2,161 2,265 Global Network & Merchant Services 745 716 718 663 703 ---------- ---------- ---------- ---------- ---------- 6,262 5,989 5,985 5,593 5,779 Corporate & Other, including adjustments and eliminations 175 79 105 79 124 ---------- ---------- ---------- ---------- ---------- CONSOLIDATED REVENUES $ 6,437 $ 6,068 $ 6,090 $ 5,672 $ 5,903 ========== ========== ========== ========== ========== PRETAX INCOME (LOSS) FROM CONTINUING OPERATIONS U.S. Card Services $ 533 $ 638 $ 710 $ 718 $ 499 International Card & Global Commercial Services 303 325 263 258 236 Global Network & Merchant Services 242 214 244 170 211 ---------- ---------- ---------- ---------- ---------- 1,078 1,177 1,217 1,146 946 Corporate & Other (119) (97) (96) (58) (26) ---------- ---------- ---------- ---------- ---------- PRETAX INCOME FROM CONTINUING OPERATIONS $ 959 $ 1,080 $ 1,121 $ 1,088 $ 920 ========== ========== ========== ========== ========== NET INCOME (LOSS) U.S. Card Services $ 411 $ 446 $ 485 $ 492 $ 363 International Card & Global Commercial Services 241 254 237 202 184 Global Network & Merchant Services 159 141 154 110 134 ---------- ---------- ---------- ---------- ---------- 811 841 876 804 681 Corporate & Other (60) 24 (16) (59) (12) ---------- ---------- ---------- ---------- ---------- Income from continuing operations 751 865 860 745 669 Income/(Loss) from discontinued operations, net of tax (6) 165 153 201 227 ---------- ---------- ---------- ---------- ---------- NET INCOME $ 745 $ 1,030 $ 1,013 $ 946 $ 896 ========== ========== ========== ========== ==========
-8- (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (CONTINUED)
Quarters Ended ------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2005 2005 2005 2005 2004 ------------ ------------- ---------- ---------- ------------ EARNINGS PER COMMON SHARE BASIC Income from continuing operations $ 0.61 $ 0.70 $ 0.70 $ 0.60 $ 0.54 Income/(Loss) from discontinued operations (0.01) 0.14 0.12 0.16 0.18 ---------- ---------- ---------- ---------- ---------- Net income $ 0.60 $ 0.84 $ 0.82 $ 0.76 $ 0.72 ========== ========== ========== ========== ========== Average common shares outstanding (millions) 1,232 1,229 1,231 1,239 1,242 ========== ========== ========== ========== ========== DILUTED Income from continuing operations $ 0.60 $ 0.69 $ 0.69 $ 0.59 $ 0.53 Income/(Loss) from discontinued operations (0.01) 0.13 0.12 0.16 0.18 ---------- ---------- ---------- ---------- ---------- Net income $ 0.59 $ 0.82 $ 0.81 $ 0.75 $ 0.71 ========== ========== ========== ========== ========== Average common shares outstanding (millions) 1,258 1,254 1,254 1,264 1,270 ========== ========== ========== ========== ========== Cash dividends declared per common share $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.12 ========== ========== ========== ========== ==========
SELECTED STATISTICAL INFORMATION
Quarters Ended ------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2005 2005 2005 2005 2004 ------------ ------------- ---------- ---------- ------------ Return on average total shareholders' equity (A) 25.4% 24.2% 23.1% 22.8% 22.0% Common shares outstanding (millions) 1,241 1,239 1,240 1,245 1,249 Book value per common share* $ 8.49 $ 7.99 $ 13.84 $ 12.95 $ 12.83 Shareholders' equity (billions)* $ 10.5 $ 9.9 $ 17.2 $ 16.1 $ 16.0
(A) Computed on a trailing 12-month basis using net income and total shareholders' equity (including discontinued operations) as included in the Consolidated Financial Statements prepared in accordance with GAAP. * Total shareholders' equity and book value per common share amounts prior to September 30, 2005 include discontinued operations reflected in the Company's historical Consolidated Financial Statements. -9- (Preliminary) AMERICAN EXPRESS COMPANY SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended ---------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2005 2005 2005 2005 2004 ------------ ------------- -------- --------- ------------ Card billed business (A): United States $ 93 $ 89 $ 89 $ 79 $ 84 Outside the United States 39 33 32 30 32 ------------ ------------- -------- --------- ------------ Total $ 132 $ 122 $ 121 $ 109 $ 116 ============ ============= ======== ========= ============ Total cards-in-force (millions): United States 43.0 42.0 41.0 40.3 39.9 Outside the United States 28.0 27.0 26.3 25.8 25.5 ------------ ------------- -------- --------- ------------ Total 71.0 69.0 67.3 66.1 65.4 ============ ============= ======== ========= ============ Basic cards-in-force (millions): United States 32.8 31.9 31.1 30.6 30.3 Outside the United States 23.2 22.4 21.8 21.3 21.0 ------------ ------------- -------- --------- ------------ Total 56.0 54.3 52.9 51.9 51.3 ============ ============= ======== ========= ============ Average discount rate (B) 2.54% 2.57% 2.58% 2.60% 2.58% Average quarterly basic cardmember spending (dollars) (A) $ 2,778 $ 2,610 $ 2,640 $ 2,412 $ 2,589 Average fee per card - managed (dollars) (A) $ 35 $ 35 $ 35 $ 35 $ 35 Travel sales $ 5.2 $ 4.8 $ 5.6 $ 5.0 $ 5.3 Travel commissions and fees/sales (C) 8.4% 8.7% 8.9% 8.4% 9.1% Worldwide Travelers Cheque and prepaid products: Sales $ 4.8 $ 5.8 $ 4.9 $ 4.2 $ 4.9 Average outstanding $ 6.9 $ 7.3 $ 7.1 $ 7.1 $ 7.0 Average investments $ 7.6 $ 7.9 $ 7.7 $ 7.8 $ 7.6 Investment yield 5.1% 5.1% 5.2% 5.2% 5.4% Tax equivalent yield 7.9% 7.8% 8.0% 8.0% 8.3% International banking Total loans $ 7.1 $ 6.9 $ 7.0 $ 7.0 $ 6.9 Private banking holdings $ 20.3 $ 20.2 $ 19.8 $ 18.9 $ 18.6
(A) Card billed business includes activities related to proprietary cards, cards issued under network partnership agreements, cash advances on proprietary cards and certain insurance fees charged on proprietary cards. Cards-in-force include proprietary cards and cards issued under network partnership agreements. Average basic cardmember spending and average fee per card are computed from proprietary card activities only. (B) Computed as follows: Discount Revenue from all card spending (proprietary and Global Network Services) at merchants divided by all billed business (proprietary and Global Network Services) generating discount revenue at such merchants. Only merchants acquired by the Company are included in the computation. Discount rates have been retrospectively adjusted on a historical basis from those previously disclosed, primarily to retain in the computation the Global Network Services partner portion of discount revenue, as well as the Company's portion of discount revenue. (C) Computed from information provided herein. -10- (Preliminary) AMERICAN EXPRESS COMPANY SELECTED STATISTICAL INFORMATION (CONTINUED) (Billions, except percentages and where indicated)
Quarters Ended -------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2005 2005 2005 2005 2004 ------------ ------------- -------- --------- ------------ Worldwide cardmember receivables: Total receivables $ 34.2 $ 31.9 $ 31.5 $ 30.0 $ 31.1 90 days past due as a % of total 1.6% 1.7% 1.7% 1.9% 1.8% Loss reserves (millions): $ 942 $ 909 $ 848 $ 831 $ 806 % of receivables 2.8% 2.9% 2.7% 2.8% 2.6% % of 90 days past due 177% 173% 160% 147% 146% Net loss ratio as a % of charge volume 0.29% 0.27% 0.25% 0.23% 0.25% Worldwide cardmember lending - owned basis: Total loans $ 33.1 $ 29.9 $ 28.1 $ 25.9 $ 26.9 30 days past due loans as a % of total 2.5% 2.5% 2.4% 2.7% 2.4% Loss reserves (millions): Beginning balance $ 952 $ 888 $ 918 $ 972 $ 1,008 Provision 374 325 262 266 272 Net write-offs (323) (280) (285) (267) (254) Other (7) 19 (7) (53) (54) ------------ ------------- -------- --------- ------------ Ending balance $ 996 $ 952 $ 888 $ 918 $ 972 ============ ============= ======== ========= ============ % of loans 3.0% 3.2% 3.2% 3.6% 3.6% % of past due 122% 128% 133% 134% 151% Average loans $ 31.0 $ 28.3 $ 27.5 $ 26.3 $ 26.2 Net write-off rate 4.2% 4.0% 4.1% 4.1% 3.9% Net finance charge revenue*/average loans 9.0% 9.2% 9.3% 9.0% 8.6% Worldwide cardmember lending - managed basis: Total loans $ 54.3 $ 50.6 $ 48.8 $ 46.3 $ 47.2 30 days past due loans as a % of total 2.4% 2.4% 2.3% 2.6% 2.4% Loss reserves (millions): Beginning balance $ 1,401 $ 1,367 $ 1,419 $ 1,475 $ 1,537 Provision 671 510 445 471 463 Net write-offs (596) (494) (490) (474) (471) Other (7) 18 (7) (53) (54) ------------ ------------- -------- --------- ------------ Ending balance $ 1,469 $ 1,401 $ 1,367 $ 1,419 $ 1,475 ============ ============= ======== ========= ============ % of loans 2.7% 2.8% 2.8% 3.1% 3.1% % of past due 114% 114% 121% 120% 129% Average loans $ 51.9 $ 49.6 $ 47.5 $ 46.4 $ 46.5 Net write-off rate 4.6% 4.0% 4.1% 4.1% 4.1% Net finance charge revenue*/average loans 9.4% 9.4% 9.2% 9.1% 9.0%
* - Computed on an annualized basis. -11- (Preliminary) U.S. CARD SERVICES STATEMENTS OF INCOME (Millions)
Quarters Ended Year Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2005 2004 Inc/(Dec) 2005 2004 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Revenues: Discount revenue, net card fees and other $ 2,397 $ 2,127 12.7% $ 8,897 $ 7,893 12.7% Cardmember lending: Finance charge revenue 685 455 50.8 2,408 1,776 35.6 Interest expense 200 96 # 616 406 51.6 ---------- ---------- ---------- ---------- Net finance charge revenue 485 359 35.5 1,792 1,370 30.8 Securitization income, net 295 325 (9.3) 1,260 1,132 11.3 ---------- ---------- ---------- ---------- Total 3,177 2,811 13.0 11,949 10,395 14.9 ---------- ---------- ---------- ---------- Expenses: Marketing, promotion, rewards and cardmember services 1,097 976 12.5 3,911 3,325 17.7 Provision for losses 509 386 31.7 1,676 1,508 11.1 Human resources and other operating expenses 1,038 950 9.3 3,763 3,422 10.0 ---------- ---------- ---------- ---------- Total 2,644 2,312 14.4 9,350 8,255 13.3 ---------- ---------- ---------- ---------- Pretax segment income 533 499 6.6 2,599 2,140 21.4 Income tax provision 122 136 (11.0) 765 622 22.9 ---------- ---------- ---------- ---------- Segment income $ 411 $ 363 13.1 $ 1,834 $ 1,518 20.7 ========== ========== ========== ==========
# - Denotes a variance of more than 100%. -12- (Preliminary) U.S. CARD SERVICES SELECTED FINANCIAL INFORMATION Quarters Ended December 31, (Millions)
GAAP Basis Securitization Effect Tax Equivalent Effect ----------------- Percentage --------------------- --------------------- 2005 2004 Inc/(Dec) 2005 2004 2005 2004 ------- ------- ---------- -------- --------- --------- --------- Revenues: Discount revenue, net card fees and other $ 2,397 $ 2,127 12.7% $ 53 $ 54 $ 56 $ 57 Cardmember lending: Finance charge revenue 685 455 50.8 744 621 Interest expense 200 96 # 226 132 ------- ------- -------- --------- Net finance charge revenue 485 359 35.5 518 489 Securitization income, net 295 325 (9.3) (295) (325) ------- ------- -------- --------- --------- --------- Total 3,177 2,811 13.0 276 218 56 57 ------- ------- -------- --------- --------- --------- Expenses: Marketing, promotion, rewards and cardmember services 1,097 976 12.5 (6) - Provision for losses 509 386 31.7 287 218 Human resources and other operating expenses 1,038 950 9.3 (5) - ------- ------- -------- --------- Total 2,644 2,312 14.4 $ 276 $ 218 ------- ------- -------- --------- --------- --------- Pretax segment income 533 499 6.6 56 57 Income tax provision 122 136 (11.0) $ 56 $ 57 ------- ------- --------- --------- Segment income $ 411 $ 363 13.1 ======= ======= Managed Basis ----------------- Percentage 2005 2004 Inc/(Dec) ------- ------- ---------- Revenues: Discount revenue, net card fees and other $ 2,506 $ 2,238 11.9% Cardmember lending: Finance charge revenue 1,429 1,076 32.9 Interest expense 426 228 86.8 ------- ------- Net finance charge revenue 1,003 848 18.4 Securitization income, net - - - ------- ------- Total 3,509 3,086 13.7 ------- ------- Expenses: Marketing, promotion, rewards and cardmember services 1,091 976 11.9 Provision for losses 796 604 31.7 Human resources and other operating expenses 1,033 950 8.9 ------- ------- Total 2,920 2,530 15.5 ------- ------- Pretax segment income 589 556 5.7 Income tax provision $ 178 $ 193 (8.1) ------- ------- Segment income
The tables above reconcile the GAAP basis for certain income statement line items to the managed basis information, where different. Securitization income, net represents the non-credit provision components of the net gains and charges from securitization activities, the amortization and related impairment charges, if any, of the related interest-only strip, excess spread related to securitized loans, net finance charge revenue on retained interests in securitized loans and servicing income, net of related discounts or fees. Management views any net gains from securitizations as discretionary benefits to be used for card acquisition expenses, which are reflected in both marketing, promotion, rewards and cardmember services expenses and other operating expenses. Consequently, the managed Selected Financial Information above for the quarters ended December 31, 2005 and 2004 assumes that gains from new issuances and charges from the amortization and maturities of outstanding lending securitization transactions of $11 million are offset by higher marketing, promotion, rewards and cardmember services expenses of $6 million and other operating expenses of $5 million. Accordingly, the incremental expenses, as well as the impact of this net activity, have been eliminated. The tax equivalent effect represents an increase to interest income recorded to enable management to evaluate tax exempt investments on a basis consistent with taxable investment securities. On a GAAP basis, interest income associated with tax exempt investments is recorded based on amounts earned. Accordingly, the managed Selected Financial Information above for the quarters ended December 31, 2005 and 2004 assumes that tax exempt securities earned income at rates as if the securities produced taxable income with a corresponding increase in the provision for income taxes. # - Denotes a variance of more than 100%. -13- (Preliminary) U.S. CARD SERVICES SELECTED FINANCIAL INFORMATION Years Ended December 31, (Millions)
GAAP Basis Securitization Effect Tax Equivalent Effect ----------------- Percentage --------------------- --------------------- 2005 2004 Inc/(Dec) 2005 2004 2005 2004 ------- ------- ---------- --------- ------- -------- ---------- Revenues: Discount revenue, net card fees and other $ 8,897 $ 7,893 12.7% $ 210 $ 210 $ 226 $ 228 Cardmember lending: Finance charge revenue 2,408 1,776 35.6 2,692 2,222 Interest expense 616 406 51.6 739 384 ------- ------- --------- -------- Net finance charge revenue 1,792 1,370 30.8 1,953 1,838 Securitization income, net 1,260 1,132 11.3 (1,260) (1,132) ------- ------- --------- -------- -------- ---------- Total 11,949 10,395 14.9 903 916 226 228 ------- ------- --------- -------- -------- ---------- Expenses: Marketing, promotion, rewards and cardmember services 3,911 3,325 17.7 (13) (16) Provision for losses 1,676 1,508 11.1 924 942 Human resources and other operating expenses 3,763 3,422 10.0 (8) (10) ------- ------- --------- -------- Total 9,350 8,255 13.3 $ 903 $ 916 ------- ------- --------- -------- -------- ---------- Pretax segment income 2,599 2,140 21.4 226 228 Income tax provision 765 622 22.9 $ 226 $ 228 ------- ------- -------- ---------- Segment income $ 1,834 $ 1,518 20.7 ======= ======= Managed Basis ----------------- Percentage 2005 2004 Inc/(Dec) ------- ------- ---------- Revenues: Discount revenue, net card fees and other $ 9,333 $ 8,331 12.0% Cardmember lending: Finance charge revenue 5,100 3,998 27.6 Interest expense 1,355 790 71.4 ------- ------- Net finance charge revenue 3,745 3,208 16.8 Securitization income, net - - - ------- ------- Total 13,078 11,539 13.3 ------- ------- Expenses: Marketing, promotion, rewards and cardmember services 3,898 3,309 17.8 Provision for losses 2,600 2,450 6.1 Human resources and other operating expenses 3,755 3,412 10.1 ------- ------- Total 10,253 9,171 11.8 ------- ------- Pretax segment income 2,825 2,368 19.2 Income tax provision $ 991 $ 850 16.6 ------- ------- Segment income
The tables above reconcile the GAAP basis for certain income statement line items to the managed basis information, where different. Securitization income, net represents the non-credit provision components of the net gains and charges from securitization activities, the amortization and related impairment charges, if any, of the related interest-only strip, excess spread related to securitized loans, net finance charge revenue on retained interests in securitized loans and servicing income, net of related discounts or fees. Management views any net gains from securitizations as discretionary benefits to be used for card acquisition expenses, which are reflected in both marketing, promotion, rewards and cardmember services expenses and other operating expenses. Consequently, the managed Selected Financial Information above for the years ended December 31, 2005 and 2004 assumes that gains from new issuances and charges from the amortization and maturities of outstanding lending securitization transactions of $21 million and $26 million, respectively, are offset by higher marketing, promotion, rewards and cardmember services expenses of $13 million and $16 million, respectively, and other operating expenses of $8 million and $10 million, respectively. Accordingly, the incremental expenses, as well as the impact of this net activity, have been eliminated. The tax equivalent effect represents an increase to interest income recorded to enable management to evaluate tax exempt investments on a basis consistent with taxable investment securities. On a GAAP basis, interest income associated with tax exempt investments is recorded based on amounts earned. Accordingly, the managed Selected Financial Information above for the years ended December 31, 2005 and 2004 assumes that tax exempt securities earned income at rates as if the securities produced taxable income with a corresponding increase in the provision for income taxes. -14- (Preliminary) U.S. CARD SERVICES SELECTED FINANCIAL INFORMATION Quarters Ended (Millions)
GAAP Basis Securitization Effect ------------------------ ------------------------- September 30, June 30, September 30, June 30, 2005 2005 2005 2005 ------------- -------- ------------- -------- Revenues: Discount revenue, net card fees and other $ 2,224 $ 2,225 $ 53 $ 51 Cardmember lending: Finance charge revenue 614 587 721 618 Interest expense 156 140 209 164 ------------- -------- ------------- -------- Net finance charge revenue 458 447 512 454 Securitization income, net 353 296 (353) (296) ------------- -------- ------------- -------- Total 3,035 2,968 212 209 ------------- -------- ------------- -------- Expenses: Marketing, promotion, rewards and cardmember services 1,003 974 (2) (1) Provision for losses 458 367 215 210 Human resources and other operating expenses 936 917 (1) - ------------- -------- ------------- -------- Total 2,397 2,258 $ 212 $ 209 ------------- -------- ------------- -------- Pretax segment income 638 710 Income tax provision 192 225 ------------- -------- Segment income $ 446 $ 485 ============= ======== Tax Equivalent Effect Managed Basis ------------------------ ------------------------ September 30, June 30, September 30, June 30, 2005 2005 2005 2005 ------------- -------- ------------- -------- Revenues: Discount revenue, net card fees and other $ 56 $ 57 $ 2,333 $ 2,333 Cardmember lending: Finance charge revenue 1,335 1,205 Interest expense 365 304 ------------- -------- Net finance charge revenue 970 901 Securitization income, net - - ------------- -------- ------------- -------- Total 56 57 3,303 3,234 ------------- -------- ------------- -------- Expenses: Marketing, promotion, rewards and cardmember services 1,001 973 Provision for losses 673 577 Human resources and other operating expenses 935 917 ------------- -------- Total 2,609 2,467 ------------- -------- ------------- -------- Pretax segment income 56 57 694 767 Income tax provision $ 56 $ 57 $ 248 $ 282 ------------- -------- ------------- -------- Segment income
The tables above reconcile the GAAP basis for certain income statement line items to the managed basis information, where different. Securitization income, net represents the non-credit provision components of the net gains and charges from securitization activities, the amortization and related impairment charges, if any, of the related interest-only strip, excess spread related to securitized loans, net finance charge revenue on retained interests in securitized loans and servicing income, net of related discounts or fees. Management views any net gains from securitizations as discretionary benefits to be used for card acquisition expenses, which are reflected in both marketing, promotion, rewards and cardmember services expenses and other operating expenses. Consequently, the managed Selected Financial Information above for the quarters ended September 30, 2005 and June 30, 2005 assumes that gains from new issuances and charges from the amortization and maturities of outstanding lending securitization transactions of $3 million and $1 million, respectively, are offset by higher marketing, promotion, rewards and cardmember services expenses of $2 million and $1 million, respectively, and other operating expenses of $1 million and nil, respectively. Accordingly, the incremental expenses, as well as the impact of this net activity, have been eliminated. The tax equivalent effect represents an increase to interest income recorded to enable management to evaluate tax exempt investments on a basis consistent with taxable investment securities. On a GAAP basis, interest income associated with tax exempt investments is recorded based on amounts earned. Accordingly, the managed Selected Financial Information above for the quarters ended September 30, 2005 and June 30, 2005 assumes that tax exempt securities earned income at rates as if the securities produced taxable income with a corresponding increase in the provision for income taxes. -15- (Preliminary) U.S. CARD SERVICES SELECTED FINANCIAL INFORMATION Quarter Ended (Millions)
GAAP Basis Securitization Effect Tax Equivalent Effect Managed Basis ---------- --------------------- --------------------- ------------- March 31, March 31, March 31, March 31, 2005 2005 2005 2005 ---------- --------------------- --------------------- ------------- Revenues: Discount revenue, net card fees and other $ 2,051 $ 53 $ 57 $ 2,161 Cardmember lending: Finance charge revenue 522 609 1,131 Interest expense 120 140 260 ---------- --------------------- ------------- Net finance charge revenue 402 469 871 Securitization income, net 316 (316) - ---------- --------------------- --------------------- ------------- Total 2,769 206 57 3,032 ---------- --------------------- --------------------- ------------- Expenses: Marketing, promotion, rewards and cardmember services 837 (4) 833 Provision for losses 342 212 554 Human resources and other operating expenses 872 (2) 870 ---------- --------------------- ------------- Total 2,051 $ 206 2,257 ---------- --------------------- --------------------- ------------- Pretax segment income 718 57 775 Income tax provision 226 $ 57 $ 283 ---------- --------------------- ------------- Segment income $ 492 ==========
The tables above reconcile the GAAP basis for certain income statement line items to the managed basis information, where different. Securitization income, net represents the non-credit provision components of the net gains and charges from securitization activities, the amortization and related impairment charges, if any, of the related interest-only strip, excess spread related to securitized loans, net finance charge revenue on retained interests in securitized loans and servicing income, net of related discounts or fees. Management views any net gains from securitizations as discretionary benefits to be used for card acquisition expenses, which are reflected in both marketing, promotion, rewards and cardmember services expenses and other operating expenses. Consequently, the managed Selected Financial Information above for the quarter ended March 31, 2005 assumes that gains from new issuances and charges from the amortization and maturities of outstanding lending securitization transactions of $6 million are offset by higher marketing, promotion, rewards and cardmember services expenses of $4 million and other operating expenses of $2 million. Accordingly, the incremental expenses, as well as the impact of this net activity, have been eliminated. The tax equivalent effect represents an increase to interest income recorded to enable management to evaluate tax exempt investments on a basis consistent with taxable investment securities. On a GAAP basis, interest income associated with tax exempt investments is recorded based on amounts earned. Accordingly, the managed Selected Financial Information above for the quarter ended March 31, 2005 assumes that tax exempt securities earned income at rates as if the securities produced taxable income with a corresponding increase in the provision for income taxes. -16- (Preliminary) U.S. CARD SERVICES SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended Years Ended December 31, December 31, ------------------------ Percentage ----------------------- Percentage 2005 2004 Inc/(Dec) 2005 2004 Inc/(Dec) ---------- ---------- ---------- --------- ---------- ---------- Card billed business: $ 81 $ 70 15.8% $ 293 $ 252 16.3% Total cards-in-force (millions): 37.5 35.0 7.2 37.5 35.0 7.2 Basic cards-in-force (millions): 27.7 25.7 7.5 27.7 25.7 7.5 Average basic cardmember spending (dollars) $ 2,945 $ 2,734 7.7% $ 10,996 $ 10,118 8.7% U.S. Consumer Travel Travel sales $ 0.5 $ 0.3 35.7% $ 1.9 $ 1.5 29.2% Travel commissions and fees/sales 8.4% 8.9% 8.7% 8.9% Worldwide Travelers Cheque and prepaid products: Sales $ 4.8 $ 4.9 (1.5)% $ 19.7 $ 19.9 (0.7)% Average outstanding $ 6.9 $ 7.0 (1.3)% $ 7.1 $ 7.0 2.3% Average investments $ 7.6 $ 7.6 0.1% $ 7.8 $ 7.5 3.9% Investment yield 5.1% 5.4% 5.1% 5.4% Tax equivalent yield 7.9% 8.3% 7.9% 8.4% Total segment assets $ 74.0 $ 58.3 27.0% $ 74.0 $ 58.3 27.0% Segment capital $ 5.1 $ 4.5 14.2% $ 5.1 $ 4.5 14.2% Return on segment capital (A) 39.3% 38.2% 39.3% 38.2% Cardmember receivables: Total receivables $ 19.2 $ 17.4 10.6% $ 19.2 $ 17.4 10.6% 90 days past due as a % of total 1.8% 2.0% 1.8% 2.0% Net loss ratio as a % of charge volume 0.38% 0.29% 0.30% 0.30% Cardmember lending - owned basis: Total loans $ 24.8 $ 19.6 26.7% $ 24.8 $ 19.6 26.7% 30 days past due loans as a % of total 2.3% 2.4% 2.3% 2.4% Average loans $ 23.2 $ 18.1 28.2% $ 21.0 $ 17.9 17.3% Net write-off rate 4.1% 3.7% 3.9% 3.9% Net finance charge revenue*/average loans 8.4% 7.9% 8.5% 7.7% Cardmember lending - managed basis: Total loans $ 46.0 $ 39.9 15.4% $ 46.0 $ 39.9 15.4% 30 days past due loans as a % of total 2.3% 2.5% 2.3% 2.5% Average loans $ 44.1 $ 38.3 15.0% $ 41.5 $ 37.3 11.4% Net write-off rate 4.6% 4.0% 4.1% 4.3% Net finance charge revenue*/average loans 9.1% 8.8% 9.0% 8.6%
(A) Computed on a trailing 12-month basis using equity capital allocated to segments based upon specific business operational needs, risk measures and regulatory capital requirements. * Computed on an annualized basis. -17- (Preliminary) U.S. CARD SERVICES STATEMENTS OF INCOME (Millions)
Quarters Ended ------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2005 2005 2005 2005 2004 ------------ ------------- ------------ ------------ ------------ Revenues: Discount revenue, net card fees and other $ 2,397 $ 2,224 $ 2,225 $ 2,051 $ 2,127 Cardmember lending: Finance charge revenue 685 614 587 522 455 Interest expense 200 156 140 120 96 ------------ ------------- ------------ ------------ ------------ Net finance charge revenue 485 458 447 402 359 Securitization income, net 295 353 296 316 325 ------------ ------------- ------------ ------------ ------------ Total 3,177 3,035 2,968 2,769 2,811 ------------ ------------- ------------ ------------ ------------ Expenses: Marketing, promotion, rewards and cardmember services 1,097 1,003 974 837 976 Provision for losses 509 458 367 342 386 Human resources and other operating expenses 1,038 936 917 872 950 ------------ ------------- ------------ ------------ ------------ Total 2,644 2,397 2,258 2,051 2,312 ------------ ------------- ------------ ------------ ------------ Pretax segment income 533 638 710 718 499 Income tax provision 122 192 225 226 136 ------------ ------------- ------------ ------------ ------------ Segment income $ 411 $ 446 $ 485 $ 492 $ 363 ============ ============= ============ ============ ============
-18- (Preliminary) U.S. CARD SERVICES SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended --------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2005 2005 2005 2005 2004 ------------ ------------- ----------- ----------- ------------ Card billed business: $ 81 $ 74 $ 73 $ 65 $ 70 Total cards-in-force (millions): 37.5 36.9 36.1 35.5 35.0 Basic cards-in-force (millions): 27.7 27.2 26.5 26.1 25.7 Average quarterly basic cardmember spending (dollars) $ 2,945 $ 2,765 $ 2,769 $ 2,506 $ 2,734 U.S. Consumer Travel Travel sales $ 0.5 $ 0.5 $ 0.5 $ 0.4 $ 0.3 Travel commissions and fees/sales 8.4% 8.6% 8.8% 9.0% 10.3% Worldwide Travelers Cheque and prepaid products: Sales $ 4.8 $ 5.8 $ 4.9 $ 4.2 $ 4.9 Average outstanding $ 6.9 $ 7.3 $ 7.1 $ 7.1 $ 7.0 Average investments $ 7.6 $ 7.9 $ 7.7 $ 7.8 $ 7.6 Investment yield 5.1% 5.1% 5.2% 5.2% 5.4% Tax equivalent yield 7.9% 7.8% 8.0% 8.0% 8.3% Total segment assets $ 74.0 $ 65.1 $ 60.9 $ 57.7 $ 58.3 Segment capital $ 5.1 $ 4.9 $ 4.5 $ 4.4 $ 4.5 Return on segment capital (A) 39.3% 40.0% 39.4% 39.5% 38.2% Cardmember receivables: Total receivables $ 19.2 $ 16.8 $ 16.8 $ 15.7 $ 17.4 90 days past due as a % of total 1.8% 2.0% 2.0% 2.3% 2.0% Net loss ratio as a % of charge volume 0.38% 0.30% 0.29% 0.25% 0.29% Cardmember lending - owned basis: Total loans $ 24.8 $ 22.4 $ 20.9 $ 18.7 $ 19.6 30 days past due loans as a % of total 2.3% 2.4% 2.3% 2.6% 2.4% Average loans $ 23.2 $ 20.9 $ 20.3 $ 19.2 $ 18.1 Net write-off rate 4.1% 3.6% 3.9% 3.9% 3.7% Net finance charge revenue*/average loans 8.4% 8.7% 8.8% 8.4% 7.9% Cardmember lending - managed basis: Total loans $ 46.0 $ 43.0 $ 41.6 $ 39.2 $ 39.9 30 days past due loans as a % of total 2.3% 2.4% 2.2% 2.5% 2.5% Average loans $ 44.1 $ 42.3 $ 40.3 $ 39.3 $ 38.3 Net write-off rate 4.6% 3.8% 4.0% 4.1% 4.0% Net finance charge revenue*/average loans 9.1% 9.2% 8.9% 8.9% 8.8%
(A) Computed on a trailing 12-month basis using equity capital allocated to segments based upon specific business operational needs, risk measures and regulatory capital requirements. * Computed on an annualized basis. -19- (Preliminary) INTERNATIONAL CARD & GLOBAL COMMERCIAL SERVICES STATEMENTS OF INCOME (Millions)
Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2005 2004 Inc/(Dec) 2005 2004 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Revenues: Discount revenue, net card fees and other $ 2,156 $ 2,103 2.4% $ 8,354 $ 7,789 7.2% Cardmember lending: Finance charge revenue 278 240 15.6 1,035 907 14.1 Interest expense 94 78 21.1 351 267 30.7 ---------- ---------- ---------- ---------- Net finance charge revenue 184 162 13.0 684 640 7.2 ---------- ---------- ---------- ---------- Total 2,340 2,265 3.2 9,038 8,429 7.2 ---------- ---------- ---------- ---------- Expenses: Marketing, promotion, rewards and cardmember services 321 312 2.2 1,269 1,130 12.2 Provision for losses and benefits 286 199 43.5 1,023 740 38.1 Human resources and other operating expenses 1,430 1,518 (5.8) 5,597 5,443 2.9 ---------- ---------- ---------- ---------- Total 2,037 2,029 0.3 7,889 7,313 7.9 ---------- ---------- ---------- ---------- Pretax segment income 303 236 27.9 1,149 1,116 3.1 Income tax provision 62 52 20.3 215 335 (35.3) ---------- ---------- ---------- ---------- Segment income $ 241 $ 184 30.0 $ 934 $ 781 19.5 ========== ========== ========== ==========
-20- (Preliminary) INTERNATIONAL CARD & GLOBAL COMMERCIAL SERVICES SELECTED FINANCIAL INFORMATION Quarters Ended December 31, (Millions)
Foreign Exchange GAAP Basis Services Reclassification Managed Basis ----------------- Percentage --------------------------- ----------------- Percentage 2005 2004 Inc/(Dec) 2005 2004 2005 2004 Inc/(Dec) ------- ------- ---------- ------------ ------------ ------- ------- ---------- Revenues: Discount revenue, net card fees and other $ 2,156 $ 2,103 2.4% $ 32 $ 42 $ 2,188 $ 2,145 1.9% Cardmember lending: Finance charge revenue 278 240 15.6 Interest expense 94 78 21.1 ------- ------- Net finance charge revenue 184 162 13.0 ------- ------- ------------ ------------ ------- ------- Total 2,340 2,265 3.2 32 42 2,372 2,307 2.7 ------- ------- ------------ ------------ ------- ------- Expenses: Marketing, promotion, rewards and cardmember services 321 312 2.2 Provision for losses and benefits 286 199 43.5 Human resources and other operating expenses 1,430 1,518 (5.8) 32 42 1,462 1,560 (6.3) ------- ------- ------------ ------------ ------- ------- Total 2,037 2,029 0.3 $ 32 $ 42 $ 2,069 $ 2,071 (0.2) ------- ------- ------------ ------------ ------- ------- Pretax segment income 303 236 27.9 Income tax provision 62 52 20.3 ------- ------- Segment income $ 241 $ 184 30.0 ======= =======
The tables above reconcile the GAAP basis for certain income statement line items to the managed basis information, where different. The foreign exchange services reclassification reflects revenues earned related to the sale and purchase of foreign currencies for customers as part of the foreign exchange business. On a GAAP basis, these revenues are included with other foreign exchange items that are reflected in other operating expenses. Management views foreign exchange services as a revenue generating activity and makes operating decisions based upon that information. Accordingly, the managed Selected Financial Information above for the quarters ended Decemeber 31, 2005 and 2004 assumes that the amounts earned are included in other revenue with a corresponding increase in other operating expenses. -21- (Preliminary) INTERNATIONAL CARD & GLOBAL COMMERCIAL SERVICES SELECTED FINANCIAL INFORMATION Years Ended December 31, (Millions)
Foreign Exchange GAAP Basis Services Reclassification Managed Basis ----------------- Percentage --------------------------- ----------------- Percentage 2005 2004 Inc/(Dec) 2005 2004 2005 2004 Inc/(Dec) ------- ------- ---------- ------------ ------------ ------- ------- ---------- Revenues: Discount revenue, net card fees and other $ 8,354 $ 7,789 7.2% $ 135 $ 172 $ 8,489 $ 7,961 6.6% Cardmember lending: Finance charge revenue 1,035 907 14.1 Interest expense 351 267 30.7 ------- ------- Net finance charge revenue 684 640 7.2 ------- ------- ------------ ------------ ------- ------- Total 9,038 8,429 7.2 135 172 9,173 8,601 6.6 ------- ------- ------------ ------------ ------- ------- Expenses: Marketing, promotion, rewards and cardmember services 1,269 1,130 12.2 Provision for losses and benefits 1,023 740 38.1 Human resources and other operating expenses 5,597 5,443 2.9 135 172 5,732 5,615 2.1 ------- ------- ------------ ------------ ------- ------- Total 7,889 7,313 7.9 $ 135 $ 172 $ 8,024 $ 7,485 7.2 ------- ------- ------------ ------------ ------- ------- Pretax segment income 1,149 1,116 3.1 Income tax provision 215 335 (35.3) ------- ------- Segment income $ 934 $ 781 19.5 ======= =======
The tables above reconcile the GAAP basis for certain income statement line items to the managed basis information, where different. The foreign exchange services reclassification reflects revenues earned related to the sale and purchase of foreign currencies for customers as part of the foreign exchange business. On a GAAP basis, these revenues are included with other foreign exchange items that are reflected in other operating expenses. Management views foreign exchange services as a revenue generating activity and makes operating decisions based upon that information. Accordingly, the managed Selected Financial Information above for the years ended December 31, 2005 and 2004 assumes that the amounts earned are included in other revenue with a corresponding increase in other operating expenses. -22- (Preliminary) INTERNATIONAL CARD & GLOBAL COMMERCIAL SERVICES SELECTED FINANCIAL INFORMATION Quarters Ended (Millions)
Foreign Exchange GAAP Basis Services Reclassification ------------------------------------ ------------------------------------ September 30, June 30, March 31, September 30, June 30, March 31, 2005 2005 2005 2005 2005 2005 ------------- -------- --------- ------------- -------- --------- Revenues: Discount revenue, net card fees and other $ 2,067 $ 2,134 $ 1,997 $ 36 $ 36 $ 31 Cardmember lending: Finance charge revenue 259 251 247 Interest expense 88 86 83 ------------- -------- --------- Net finance charge revenue 171 165 164 ------------- -------- --------- ------------- -------- --------- Total 2,238 2,299 2,161 36 36 31 ------------- -------- --------- ------------- -------- --------- Expenses: Marketing, promotion, rewards and cardmember services 310 328 310 Provision for losses and benefits 270 239 228 Human resources and other operating expenses 1,333 1,469 1,365 36 36 31 ------------- -------- --------- ------------- -------- --------- Total 1,913 2,036 1,903 $ 36 $ 36 $ 31 ------------- -------- --------- ------------- -------- --------- Pretax segment income 325 263 258 Income tax provision 71 26 56 ------------- -------- --------- Segment income $ 254 $ 237 $ 202 ============= ======== ========= Managed Basis ------------------------------------ September 30, June 30, March 31, 2005 2005 2005 ------------- -------- --------- Revenues: Discount revenue, net card fees and other $ 2,103 $ 2,170 $ 2,028 Cardmember lending: Finance charge revenue Interest expense Net finance charge revenue ------------- -------- --------- Total 2,274 2,335 2,192 ------------- -------- --------- Expenses: Marketing, promotion, rewards and cardmember services Provision for losses and benefits Human resources and other operating expenses 1,369 1,505 1,396 ------------- -------- --------- Total $ 1,949 $ 2,072 $ 1,934 ------------- -------- --------- Pretax segment income Income tax provision Segment income
The tables above reconcile the GAAP basis for certain income statement line items to the managed basis information, where different. The foreign exchange services reclassification reflects revenues earned related to the sale and purchase of foreign currencies for customers as part of the foreign exchange business. On a GAAP basis, these revenues are included with other foreign exchange items that are reflected in other operating expenses. Management views foreign exchange services as a revenue generating activity and makes operating decisions based upon that information. Accordingly, the managed Selected Financial Information above for the quarters ended September 30, 2005, June 30, 2005 and March 31, 2005 assumes that the amounts earned are included in other revenue with a corresponding increase in other operating expenses. -23- (Preliminary) INTERNATIONAL CARD & GLOBAL COMMERCIAL SERVICES SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended Years Ended December 31, December 31, ---------------------- Percentage ---------------------- Percentage 2005 2004 Inc/(Dec) 2005 2004 Inc/(Dec) --------- --------- ---------- --------- --------- ---------- Card billed business: $ 45 $ 41 10.2% $ 168 $ 148 13.4% Total cards-in-force (millions): 22.7 21.6 5.0 22.7 21.6 5.0 Basic cards-in-force (millions): 18.0 17.2 4.7 18.0 17.2 4.7 Average basic cardmember spending (dollars) $ 2,534 $ 2,387 6.1% $ 9,641 $ 8,610 12.0% Global Corporate & International Consumer Travel Travel sales $ 4.7 $ 5.0 (6.2)% $ 18.8 $ 18.4 1.6% Travel commissions and fees/sales 8.4% 9.1% 8.6% 9.0% International banking Total loans $ 7.1 $ 6.9 3.5% $ 7.1 $ 6.9 3.5% Private banking holdings $ 20.3 $ 18.6 9.5% $ 20.3 $ 18.6 9.5% Total segment assets $ 51.7 $ 47.9 8.0% $ 51.7 $ 47.9 8.0% Segment capital $ 4.1 $ 3.8 8.5% $ 4.1 $ 3.8 8.5% Return on segment capital (A) 24.1% 22.0% 24.1% 22.0% Cardmember receivables: Total receivables $ 14.5 $ 13.7 6.0% $ 14.5 $ 13.7 6.0% 90 days past due as a % of total 1.3% 1.5% 1.3% 1.5% Net loss ratio as a % of charge volume 0.18% 0.21% 0.21% 0.19% Cardmember lending - owned basis: Total loans $ 8.3 $ 7.3 13.2% $ 8.3 $ 7.3 13.2% 30 days past due loans as a % of total 2.8% 2.3% 2.8% 2.3% Average loans $ 7.8 $ 7.0 12.5% $ 7.4 $ 6.7 11.1% Net write-off rate 4.4% 4.5% 4.7% 5.2% Net finance charge revenue*/average loans 9.4% 9.4% 9.3% 9.6%
(A) Computed on a trailing 12-month basis using equity capital allocated to segments based upon specific business operational needs, risk measures and regulatory capital requirements. * - Computed on an annualized basis. -24- (Preliminary) INTERNATIONAL CARD & GLOBAL COMMERCIAL SERVICES STATEMENTS OF INCOME (Millions)
Quarters Ended -------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2005 2005 2005 2005 2004 ------------ ------------- ------------ ------------ ------------- Revenues: Discount revenue, net card fees and other $ 2,156 $ 2,067 $ 2,134 $ 1,997 $ 2,103 Cardmember lending: Finance charge revenue 278 259 251 247 240 Interest expense 94 88 86 83 78 ------------ ------------- ------------ ------------ ------------- Net finance charge revenue 184 171 165 164 162 ------------ ------------- ------------ ------------ ------------- Total 2,340 2,238 2,299 2,161 2,265 ------------ ------------- ------------ ------------ ------------- Expenses: Marketing, promotion, rewards and cardmember services 321 310 328 310 312 Provision for losses and benefits 286 270 239 228 199 Human resources and other operating expenses 1,430 1,333 1,469 1,365 1,518 ------------ ------------- ------------ ------------ ------------- Total 2,037 1,913 2,036 1,903 2,029 ------------ ------------- ------------ ------------ ------------- Pretax segment income 303 325 263 258 236 Income tax provision 62 71 26 56 52 ------------ ------------- ------------ ------------ ------------- Segment income $ 241 $ 254 $ 237 $ 202 $ 184 ============ ============= ============ ============ =============
-25- (Preliminary) INTERNATIONAL CARD & GLOBAL COMMERCIAL SERVICES SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended ------------------------------------------------------------------------------ December 31, September 30, June 30, March 31, December 31, 2005 2005 2005 2005 2004 ------------ ------------- ------------ ------------ ------------- Card billed business: $ 45 $ 42 $ 42 $ 39 $ 41 Total cards-in-force (millions): 22.7 22.2 22.0 21.7 21.6 Basic cards-in-force (millions): 18.0 17.6 17.5 17.2 17.2 Average quarterly basic cardmember spending (dollars) $ 2,534 $ 2,384 $ 2,449 $ 2,275 $ 2,387 Global Corporate & International Consumer Travel Travel sales $ 4.7 $ 4.4 $ 5.1 $ 4.6 $ 5.0 Travel commissions and fees/sales 8.4% 8.6% 8.8% 8.4% 9.1% International banking Total loans $ 7.1 $ 6.9 $ 7.0 $ 7.0 $ 6.9 Private banking holdings $ 20.3 $ 20.2 $ 19.8 $ 18.9 $ 18.6 Total segment assets $ 51.7 $ 51.0 $ 49.7 $ 48.5 $ 47.9 Segment capital $ 4.1 $ 3.8 $ 3.9 $ 3.8 $ 3.8 Return on segment capital (A) 24.1% 23.3% 22.9% 22.3% 22.0% Cardmember receivables: Total receivables $ 14.5 $ 15.2 $ 14.7 $ 14.4 $ 13.7 90 days past due as a % of total 1.3% 1.2% 1.3% 1.4% 1.5% Net loss ratio as a % of charge volume 0.18% 0.24% 0.20% 0.22% 0.21% Cardmember lending - owned basis: Total loans $ 8.3 $ 7.5 $ 7.2 $ 7.1 $ 7.3 30 days past due loans as a % of total 2.8% 2.8% 2.7% 2.8% 2.3% Average loans $ 7.8 $ 7.3 $ 7.1 $ 7.2 $ 7.0 Net write-off rate 4.4% 5.0% 4.8% 4.3% 4.5% Net finance charge revenue*/average loans 9.4% 9.3% 9.3% 9.2% 9.4%
(A) Computed on a trailing 12-month basis using equity capital allocated to segments based upon specific business operational needs, risk measures and regulatory capital requirements. * - Computed on an annualized basis. -26- (Preliminary) GLOBAL NETWORK & MERCHANT SERVICES STATEMENTS OF INCOME (Millions)
Quarters Ended Years Ended December 31, December 31, ---------------------- Percentage ---------------------- Percentage 2005 2004 Inc/(Dec) 2005 2004 Inc/(Dec) --------- --------- ---------- --------- --------- ---------- Revenues: Discount revenue, fees and other $ 745 $ 703 6.0% $ 2,842 $ 2,639 7.8% --------- --------- --------- --------- Expenses: Marketing and promotion 141 105 34.8 604 389 55.2 Provision for losses 13 14 (7.3) 66 (2) # Human resources and other operating expenses 349 373 (6.7) 1,302 1,348 (3.3) --------- --------- --------- --------- Total 503 492 2.1 1,972 1,735 13.7 --------- --------- --------- --------- Pretax segment income 242 211 15.0 870 904 (3.7) Income tax provision 83 77 8.6 306 330 (6.8) --------- --------- --------- --------- Segment income $ 159 $ 134 18.7 $ 564 $ 574 (1.9) ========= ========= ========= =========
# - Denotes a variance of more than 100%. -27- (Preliminary) GLOBAL NETWORK & MERCHANT SERVICES SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended Years Ended December 31, December 31, ---------------------- Percentage ---------------------- Percentage 2005 2004 Inc/(Dec) 2005 2004 Inc/(Dec) --------- --------- ---------- --------- --------- ---------- Global Card billed business (A) $ 132 $ 116 14.8% $ 484 $ 416 16.4% Global Network & Merchant Services: Total segment assets $ 4.5 $ 3.9 15.6% $ 4.5 $ 3.9 15.6% Segment capital $ 1.3 $ 1.1 19.8% $ 1.3 $ 1.1 19.8% Return on segment capital (B) 48.4% 55.8% 48.4% 55.8% Global Network Services: Card billed business: $ 7 $ 5 33.5% $ 24 $ 18 35.6% Total cards-in-force (millions): 10.8 8.8 23.2% 10.8 8.8 23.2%
(A) Global Card billed business includes activities related to proprietary cards, cards issued under Network partnership agreements, cash advances on proprietary cards and certain insurance fees charged on proprietary cards. (B) Computed on a trailing 12-month basis using equity capital allocated to segments based upon specific business operational needs, risk measures and regulatory capital requirements. -28- (Preliminary) GLOBAL NETWORK & MERCHANT SERVICES STATEMENTS OF INCOME (Millions)
Quarters Ended ----------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2005 2005 2005 2005 2004 ------------ ------------- ------------ ------------ ------------- Revenues: Discount revenue, fees and other $ 745 $ 716 $ 718 $ 663 $ 703 ------------ ------------- ------------ ------------ ------------- Expenses: Marketing and promotion 141 167 131 165 105 Provision for losses 13 19 17 17 14 Human resources and other operating expenses 349 316 326 311 373 ------------ ------------- ------------ ------------ ------------- Total 503 502 474 493 492 ------------ ------------- ------------ ------------ ------------- Pretax segment income 242 214 244 170 211 Income tax provision 83 73 90 60 77 ------------ ------------- ------------ ------------ ------------- Segment income $ 159 $ 141 $ 154 $ 110 $ 134 ============ ============= ============ ============ =============
-29- (Preliminary) GLOBAL NETWORK & MERCHANT SERVICES SELECTED STATISTICAL INFORMATION (Billions, except percentages and where indicated)
Quarters Ended ------------------------------------------------------------------------------ December 31, September 30, June 30, March 31, December 31, 2005 2005 2005 2005 2004 ------------ ------------- ------------ ------------ ------------- Global Card billed business (A) $ 132 $ 122 $ 121 $ 109 $ 116 Global Network & Merchant Services: Total segment assets $ 4.5 $ 4.5 $ 4.7 $ 4.6 $ 3.9 Segment capital $ 1.3 $ 1.2 $ 1.1 $ 1.1 $ 1.1 Return on segment capital (B) 48.4% 48.7% 53.5% 53.2% 55.8% Global Network Services: Card billed business: $ 7 $ 6 $ 6 $ 5 $ 5 Total cards-in-force (millions): 10.8 9.9 9.2 8.9 8.8
(A) Global Card billed business includes activities related to proprietary cards, cards issued under Network partnership agreements, cash advances on proprietary cards and certain insurance fees charged on proprietary cards. (B) Computed on a trailing 12-month basis using equity capital allocated to segments based upon specific business operational needs, risk measures and regulatory capital requirements. -30-