The company, which is based in Manhattan, had previously alerted investors that its earnings would be taking a hit in the October-to-December period as a result of booking about $594 million in after-tax charges.

The biggest portion of the costs pertains to a revamping plan that involves cutting some 5,400 jobs, mostly from the company’s travel business. The strategy aims to put the company in better position to cater to customers increasingly turning to online and mobile devices to shop, pay bills and make travel plans.

The rest of the charges were related to the company’s cardholder rewards program and for reimbursements of interest and fees.

Expenses aside, American Express was lifted by an 8 percent increase in cardholder spending during the quarter, which coincided with the holiday season, regularly a period of heightened spending by consumers.

American Express cardholders tend to be more affluent than other credit card users, and the company has done well in the slow, bumpy recovery from the recession.

The company has noted that credit card authorization volume surpassed previous single-day volumes 12 times during the quarter.

American Express reported net income of $637 million, or 56 cents a share, for the three months ended Dec. 31. That compares with net income of $1.2 billion, or $1.01 a share, in the fourth quarter of 2011.

Excluding the after-tax charges, American Express’s earnings amounted to $1.09 a share. Analysts polled by FactSet were expecting adjusted earnings of $1.06 a share.

The company’s revenue for the quarter grew 5 percent, to $8.14 billion, in line with analysts’ forecast.

Shares of American Express rose 12 cents in after-hours trading after closing at $60.62.

Article source: http://www.nytimes.com/2013/01/18/business/american-express-income-falls-on-reorganization-costs.html?partner=rss&emc=rss