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 U.S. 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:
Corporate functions and auxiliary businesses, including the Company's Enterprise Growth Group (including Global Payment Options) and other Company operations, are included in Corporate & Other.
The following table presents certain selected financial information as of or for the years ended December 31, 2013, 2012 and 2011:
| Corporate & | ||||||||||||||||||
| (Millions, except where indicated) | USCS | ICS | GCS | GNMS | Other | (a) | Consolidated | |||||||||||
| 2013 | ||||||||||||||||||
| Non-interest revenues | $ | 12,123 | $ | 4,644 | $ | 5,085 | $ | 5,229 | $ | 846 | $ | 27,927 | ||||||
| Interest income | 5,565 | 1,118 | 13 | 32 | 277 | 7,005 | ||||||||||||
| Interest expense | 693 | 361 | 245 | (252) | 911 | 1,958 | ||||||||||||
| Total revenues net of interest expense | 16,995 | 5,401 | 4,853 | 5,513 | 212 | 32,974 | ||||||||||||
| Total provision | 1,417 | 444 | 159 | 69 | 21 | 2,110 | ||||||||||||
| Pretax income (loss) from continuing operations | 4,994 | 643 | 1,244 | 2,469 | (1,462) | 7,888 | ||||||||||||
| Income tax provision (benefit) | 1,801 | 12 | 384 | 894 | (562) | 2,529 | ||||||||||||
| Income (loss) from continuing operations | 3,193 | 631 | 860 | 1,575 | (900) | 5,359 | ||||||||||||
| Total equity (billions) | 9.3 | 3.1 | 3.7 | 2.0 | 1.4 | 19.5 | ||||||||||||
| 2012 | ||||||||||||||||||
| Non-interest revenues | 11,469 | 4,561 | 4,995 | 5,005 | 897 | 26,927 | ||||||||||||
| Interest income | 5,342 | 1,147 | 11 | 23 | 331 | 6,854 | ||||||||||||
| Interest expense | 765 | 402 | 257 | (243) | 1,045 | 2,226 | ||||||||||||
| Total revenues net of interest expense | 16,046 | 5,306 | 4,749 | 5,271 | 183 | 31,555 | ||||||||||||
| Total provision | 1,429 | 330 | 136 | 74 | 21 | 1,990 | ||||||||||||
| Pretax income (loss) from continuing operations | 4,069 | 659 | 960 | 2,219 | (1,456) | 6,451 | ||||||||||||
| Income tax provision (benefit) | 1,477 | 25 | 316 | 776 | (625) | 1,969 | ||||||||||||
| Income (loss) from continuing operations | 2,592 | 634 | 644 | 1,443 | (831) | 4,482 | ||||||||||||
| Total equity (billions) | 8.7 | 2.9 | 3.6 | 2.0 | 1.7 | 18.9 | ||||||||||||
| 2011 | ||||||||||||||||||
| Non-interest revenues | 10,804 | 4,470 | 4,880 | 4,713 | 719 | 25,586 | ||||||||||||
| Interest income | 5,074 | 1,195 | 9 | 5 | 413 | 6,696 | ||||||||||||
| 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 | 1075 | 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 | $ | 1.6 | $ | 18.8 | ||||||
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 reflects 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 reflected 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 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 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. 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) | U.S. | EMEA | (a) | JAPA | (a) | LACC | (a) | Other Unallocated | (b) | Consolidated | |||||||||
| 2013(c) | |||||||||||||||||||
| Total revenues net of interest expense | $ | 23,745 | $ | 3,700 | $ | 2,952 | $ | 2,900 | $ | (323) | $ | 32,974 | |||||||
| Pretax income (loss) from continuing operations | 7,679 | 524 | 488 | 701 | (1,504) | 7,888 | |||||||||||||
| 2012(c) | |||||||||||||||||||
| Total revenues net of interest expense | $ | 22,631 | $ | 3,594 | $ | 3,106 | $ | 2,774 | $ | (550) | $ | 31,555 | |||||||
| Pretax income (loss) from continuing operations | 6,468 | 505 | 426 | 605 | (1,553) | 6,451 | |||||||||||||
| 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 | |||||||||||||