NOTE 1 - Summary of Significant Accounting Policies
The accompanying Consolidated Financial Statements include the accounts of American Express Company and its subsidiaries (the company). All significant intercompany transactions are eliminated. Some amounts are based on estimates and assumptions, e. g., reserves for Cardmember Receivables and Loans, Deferred Acquisition Costs, and Insurance and Annuity Reserves. These reflect the best judgment of management and actual results could differ.
Certain amounts from prior years have been reclassified to conform to the current presentation.
REVENUES
Cardmember Lending Net Finance Charge Revenue is presented net of interest expense of $674 million, $653 million and $604 million for the years ended December 31, 1999, 1998 and 1997, respectively. Interest and Dividends is presented net of interest expense related primarily to the company’s international banking activities of $453 million, $572 million and $588 million for the years ended December 31, 1999, 1998 and 1997, respectively.
MARKETING AND PROMOTION
The company expenses advertising costs in the year in which the advertising first takes place.
CASH AND CASH EQUIVALENTS
The company has defined cash equivalents to include time deposits with original maturities of 90 days or less, excluding those that are restricted by law or regulation.
SEPARATE ACCOUNT ASSETS AND LIABILITIES
Separate account assets and liabilities are funds held for the exclusive benefit of variable annuity and variable life insurance contract holders. The company receives investment management fees, mortality and expense assurance fees, minimum death benefit guarantee fees and cost of insurance charges from the related accounts.
ACCOUNTING CHANGES
The company adopted Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," prospectively as of January 1, 1999. This SOP requires the capitalization of certain costs incurred after the date of adoption to develop or obtain software for internal use. The company’s policy had been to expense such costs as incurred. The amounts capitalized are amortized on a straight-line basis over a period not to exceed five years. During the year ended December 31, 1999, this change resulted in a pretax benefit of $263 million. See the Other Reporting Matters section of the Financial Review for further discussion.
