This summary is based on the fourth quarter fiscal 2007 earnings call conducted by American Express Co. (AXP: chart) on January 28, 2008.

Management:

- Executive Vice President and Chief Financial Officer: Daniel T. Henry
- Senior Vice President, Investor Relations: Ron Stovall

Key Investors Issues

- Net revenue rose 10% from $6.7 billion a year ago to $7.4 billion.
- Net income dropped 10% to $831 million or 71 cents a share
- Income from operations was down 6% to $839 million.

Full Year Highlights:

- Revenue was up 10% to $27.7 billion from $25.2 billion in 2006.
- Net income increased 8% to $4 billion or $3.36 a share from the previous year.
- Income from continuing operations was up 11% to $4.05 billion.

Fourth Quarter Highlights

Net revenues grew 10% from $6.7 billion a year ago to $7.4 billion reflecting strong double-digit increases in a number of revenue categories, including discount revenue and cardmember lending finance revenues.

- Consolidated expenses rose 3% to $4.7 billion from $4.6 billion a year ago, and return on equity was 37.3%, up from 34.7% a year ago.
- Results included a previously announced $274 million after-tax credit-related charge in the U.S. Card Services Segment, as well as a gain of $1.13 billion ($700 million after-tax) from the Company’s settlement with Visa.
- Other significant items highlighted in recent announcement included the recognition of $89 million after-tax of incremental investments in business-building initiatives, $46 million after-tax in litigation-related costs pertaining to the lawsuit against Visa, and $31 million after-tax in contributions to the American Express Charitable Fund.

- The results for the quarter also included a previously announced $685 million ($430 million after-tax) charge related to the Company’s enhancements to its method of estimating the liability for Membership Rewards.
- During the quarter and year-to-date, the company returned 99% and 88% respectively of total capital generated to its shareholders through repurchase of shares and dividends.

Worldwide cards rose 11% and the firm added $1.7 million net new cards and $8.4 million net new cards since last year, reflecting 5% growth versus last year in proprietary cards, and 35% growth in network partner cards.

- Spending per proprietary card rose 8% worldwide and the average discount rate of 2.54% decreased slightly from last year, and consistent with seasonal patterns, declined 3 basis points versus last quarter.
- Net card fee revenues increased 14% due to strong growth in cards as well as higher average fee per card.
- Travel commissions and fees increased 14%, reflecting an 18% increase in travel sales, and the strong growth in cardmember spending generated a high level of loan growth.

Securitization income decreased 6% as higher finance charge and fee revenue, driven by a greater average balance of securitized loans.

- This was more than offset by higher write-offs and a decrease in the valuation of the interest only strip that was included in the quarter''s credit-related charge.
- Card member lending finance revenues rose 27% on growth of the owned portfolio.
- Interest expense increased 34%, and this was due to a 35% increase in funding costs within the lending business and a 33% increase within the charge card and other interest expense line.

Marketing, promotions, rewards and cardmember services expense increased 57%, reflecting the charge to increase the membership rewards reserve, the incremental investment in marketing and promotions resulting from the VISA settlement, and higher volumes related to rewards cards.

- Marketing efforts within the various segments were more focused on spending outside of the U.S. versus the more U.S.-oriented investment activity during the first half of the year.
- Human resource expense increased 6% due to merit increases, greater benefit costs, and a higher number of employees, primarily resulting from customer service initiatives and an acquisition within corporate services.

Segment Highlights:

- U.S. Card Services reported net income of $7 million, down from $473 million a year ago, principally attributed to rising credit costs and the increased expense related to Membership Rewards
- Revenues net of interest expense increased 11% to $3.7 billion, reflecting higher spending and borrowing by consumers and small businesses, which were partially offset by higher interest expense and lower securitization income, net.
- Total expenses increased 25%, and marketing, promotion, rewards and Cardmember services expenses increased 43% from the year-ago period, primarily due to charges of Membership Rewards liability estimation enhancements and business-building investments initiatives.

Human resources and other operating expenses decreased slightly, while provisions for losses increased significantly, reflecting higher write-off and delinquency rates as well as growth in loans outstanding.