RNS Number:3697K
American Express Co
24 April 2003
Contacts: Molly Faust Michael J. O'Neill
212/640-0624 212/640-5951
molly.faust@aexp.com mike.o'neill@aexp.com
AMERICAN EXPRESS REPORTS RECORD FIRST QUARTER NET INCOME OF $692 MILLION
Results Reflect Solid Growth in Cardmember Spending and Lending as well as
Strong Credit Quality
--------------------------------------------------------------------------------
(Dollars in millions, except per share amounts)
Quarters Ended Percentage
March 31 INC/(DEC)
------------------------------ -----------
2003 2002
---- ----
Net Income $ 692 $ 618 12%
Revenues $6,023 $5,759 5%
Per Share Net Income
Basic $ 0.53 $ 0.47 13%
Diluted $ 0.53 $ 0.46 15%
Average Common Shares
Outstanding
Basic 1,297 1,325 (2%)
Diluted 1,305 1,335 (2%)
Return on Average Equity* 20.7% 11.5% -
----------------------------------------------------------------------------------------------------------
*Computed on a trailing 12-month basis.
NEW YORK - April 24, 2003 - American Express Company today reported record first
quarter net income of $692 million, up 12 percent from $618 million a year ago.
Diluted earnings per share (EPS) rose to $0.53, up 15 percent from $0.46 a year
ago.
The company's return on equity was 20.7 percent.
Revenues on a GAAP basis totaled $6.0 billion, up five percent from $5.8 billion
a year ago. A 10 percent rise in spending on American Express cards and a
similar increase in cardmember lending balances more than offset the impact of
weak financial markets on revenues at American Express Financial Advisors
(AEFA).
Consolidated expenses on a GAAP basis totaled $5.0 billion, up three percent
from $4.9 billion a year ago. This increase reflects in part higher cardmember
loyalty expenses and increased card marketing programs. The increase was
partially offset by a lower provision for losses, reflecting further improvement
in credit quality as well as the benefit of lower interest rates.
"Despite a severe slowdown in the travel sector, continued pressure on corporate
cardmember spending and weak financial markets, we generated our highest-ever
first quarter earnings," said Kenneth I. Chenault, Chairman and CEO.
"The results for the quarter illustrated some of the fundamental changes we've
been making over the last two years to adapt our business to a more difficult
economic environment. Key factors included:
*Higher cardmember revenues from retail and everyday spending, which offset
weakness in our traditional travel and entertainment sector.
*Growth in the cardmember lending portfolio, which provided a strong complement
to our traditional charge card business.
*Expanded rewards programs, which helped to strengthen cardmember loyalty and
distinguish our products from the competition.
*Our strong risk management capability, which contributed to industry-leading
credit indicators in the card business.
*Re-engineering programs, which helped lower our expenses and gave us the
flexibility to re-invest these savings in business-building initiatives.
*The shift from the corporate to consumer market, which is producing stronger
and more consistent results at American Express Bank (AEB).
*An improved risk profile, stronger investment performance and tighter expense
control, which are helping AEFA through prolonged market weakness and setting
the foundation for a turnaround when conditions improve."
Mr. Chenault added, "Despite some specific areas of weakness, we are seeing good
overall momentum in our business. Fortunately, we entered 2003 with a business
plan that took a cautious approach, with no expectation that economic conditions
would significantly improve."
The first quarter revenue growth reflected increases of seven percent at
American Express Travel Related Services (TRS) and 11 percent at AEB, partially
offset by a two percent decline at AEFA. More specifically,
*Discount revenue from cardmember spending increased seven percent.
*Net finance charge revenue increased 13 percent from strong growth in the
cardmember lending portfolio.
*Securitization income rose 27 percent, reflecting a higher level of securitized
lending balances and improved spreads for this portfolio.
*Investment income and insurance-related revenue rose at AEFA.
These items were partially offset by:
*A 13 percent decline in management and distribution fees reflecting a decrease
in the assets managed for AEFA clients.
The rise in first quarter expenses reflected an increase of three percent at
TRS, four percent at AEFA, and six percent at AEB. More specifically, the
overall increase reflected:
*An 11 percent increase in other operating expenses, including an 11 percent
increase at TRS. This increase was driven in part by higher loyalty program
costs and the impact of technology and service-related outsourcing, which
transferred certain costs that had previously been included in human resources
expense.
*A one percent increase in marketing and promotion expenses, including a seven
percent increase at TRS.
*A one percent increase in human resources expense, as increased costs related
to employee benefits were partially offset by lower staffing levels and
outsourcing.
These items were partially offset by:
*A 15 percent decline in interest expense, primarily reflecting the same percent
decline in charge card interest expense at TRS.
*A four percent decrease in total provision for losses. Credit quality remained
very strong in TRS' charge and credit card portfolios as charge card provision
declined 17 percent and lending provision declined four percent. Reserve
coverage ratios remained strong.
Travel Related Services (TRS) reported first quarter 2003 net income of $584
million, up 25 percent from $467 million a year ago.
On a GAAP basis, TRS' results for both periods included net cardmember lending
securitization gains. Gains for the 2003 quarter totaled $43 million ($28
million after-tax) compared with gains of $42 million ($27 million after-tax) a
year ago.
The following discussion of first quarter results presents TRS segment results
on a "managed basis", as if there had been no cardmember lending securitization
transactions. This is the basis used by management to evaluate operations and is
consistent with industry practice. For further information about managed basis
and reconciliation of GAAP and managed TRS information, see the "Managed Basis"
section below. The AEFA, AEB and Corporate and Other sections below are
presented on a GAAP basis.
Total net revenues increased seven percent from the year-ago period, reflecting
solid increases in spending and borrowing on American Express cards.
Higher cardmember spending contributed to a seven percent rise in discount
revenue. This was driven by strong growth in the retail and everyday spending
categories. The increase also reflected growth in the number of American Express
Cards, higher average cardmember spending and the continued benefit of rewards
programs.
Net finance charge revenue increased 10 percent, reflecting continued growth in
loan balances. Net card fees also increased.
Total expenses increased three percent. Marketing and promotion expenses rose
eight percent from year-ago levels, reflecting the continued expansion of card-
acquisition programs.
Human resources expense increased two percent as increased costs related to
employee benefits were partially offset by lower staffing levels and
outsourcing. Other operating expenses increased due in part to higher cardmember
loyalty program costs and the impact of technology and service-related
outsourcing, which transferred certain costs that had previously been included
in human resources expense.
The total provision for losses declined seven percent, reflecting very strong
overall credit quality in both the charge card and lending portfolios. Despite
the strong credit quality, reserve coverage of lending receivables was
strengthened in light of continued uncertainty within the economic environment.
Charge card interest expense decreased 13 percent largely due to lower funding
costs.
American Express Financial Advisors (AEFA) reported first quarter 2003 net
income of $133 million, down 27 percent from $182 million a year ago. Total
revenues decreased two percent.
Continued weakness in the equity markets along with outflows of managed assets
contributed to lower levels of assets under management and management fees
compared with year-ago levels.
On a net basis during the first quarter, AEFA realized a gain of $5 million in
its investment portfolio. Year-ago investment gains essentially offset losses.
On a gross basis for the first quarter 2003, AEFA realized gains of $187 million
versus $182 million of impairments and losses, the most significant of which
were airline-related exposures.
Total expenses increased four percent. Human resources expense decreased four
percent, reflecting lower sales-related compensation and continued benefits of
re-engineering and cost controls. Other operating expenses increased 17 percent.
This reflected in part higher expenses resulting from fewer capitalized costs
due to the ongoing impact of the comprehensive review of Deferred Acquisition
Costs-related practices discussed in the third quarter of 2002.
American Express Bank (AEB) reported net income for the first quarter of 2003 of
$19 million up 55 percent from $13 million a year ago.
AEB's results reflect higher foreign currency-related and other revenues, lower
funding costs, and lower provisions for losses primarily due to the
stabilization of write-offs in the consumer lending portfolio. These benefits
were partially offset by higher technology and human resources expenses.
Corporate and Other reported first quarter net expenses of $44 million in both
2003 and 2002. Results for 2002 include a preferred stock dividend of $46
million ($39 million after-tax) based on earnings from Lehman Brothers, which
was offset by expenses related to business-building initiatives.
As previously announced, the company began expensing options in 2003. The effect
was not material.
* * *
Managed Basis - TRS
Managed basis means the presentation assumes there have been no securitization
transactions, i.e. all securitized cardmember loans and related income effects
are reflected in the company's balance sheet and income statement, respectively.
The company presents TRS information on a managed basis because that is the way
the company's management views and manages the business. Management believes
that a full picture of trends in the company's cardmember lending business can
only be derived by evaluating the performance of both securitized and non-
securitized cardmember loans.
Asset securitization is just one of several ways for the company to fund
cardmember loans. Use of a managed basis presentation, including non-securitized
and securitized cardmember loans, presents a more accurate picture of the key
dynamics of the cardmember lending business, avoiding distortions due to the mix
of funding sources at any particular point in time.
For example, irrespective of the funding mix, it is important for management and
investors to see metrics, such as changes in delinquencies and write-off rates,
for the entire cardmember lending portfolio because they are more representative
of the economics of the aggregate cardmember relationships and ongoing business
performance and trends over time. It is also important for investors to see the
overall growth of cardmember loans and related revenue and changes in market
share, which are all significant metrics in evaluating the company's performance
and which can only be properly assessed when all non-securitized and securitized
cardmember loans are viewed together on a managed basis.
The Consolidated Section of this press release and attachments provide the GAAP
presentation for items described on a managed basis.
The following table reconciles the GAAP-basis TRS income statements to the
managed basis information.
Travel Related Services
Selected Financial Information
(Unaudited) Quarters Ended March 31,
(Dollars in millions)
Preliminary
Securitization
GAAP Basis Effect Managed Basis
--------------------------------- ---------------- ---------------------------
Percentage Percentage
2003 2002 Inc/(Dec) 2003 2002 2003 2002 Inc/(Dec)
--------------------------------- ---------------- ---------------------------
Net Revenues:
Discount Revenue $ 1,976 $ 1,845 7.1%
Net Card Fees 451 423 6.6
Lending:
Finance Charge Revenue 587 532 10.4 $ 583 $ 567 $ 1,170 $ 1,099 6.5%
Interest Expense 129 127 1.6 64 80 193 207 (6.9)
-------- -------- ------- ------- -------- --------
Net Finance Charge Revenue 458 405 13.1 519 487 977 892 9.6
Travel Commissions and Fees 340 328 3.7
Travelers Cheque Investment
Income 92 90 2.0
Securitization Income 486 383 26.9 (486) (383) - - -
Other Revenues 683 725 (5.8) 231 149 914 874 4.6
-------- -------- ------- ------- -------- --------
Total Net Revenues 4,486 4,199 6.8 264 253 4,750 4,452 6.7
-------- -------- ------- ------- -------- --------
Expenses:
Marketing and Promotion 350 326 7.2 (26) (25) 324 301 7.8
Provision for Losses and
Claims:
Charge Card 208 252 (17.2)
Lending 331 346 (4.3) 307 298 638 644 (1.0)
Other 31 48 (36.5)
-------- -------- ------- ------- -------- --------
Total 570 646 (11.7) 307 298 877 944 (7.1)
Charge Card Interest Expense 209 244 (14.6) - (3) 209 241 (13.5)
Human Resources 916 901 1.7
Other Operating Expenses 1,583 1,429 10.7 (17) (17) 1,566 1,412 10.9
Restructuring Charges - (13) -
-------- -------- ------- ------- -------- --------
Total Expenses 3,628 3,533 2.7 $ 264 $ 253 $ 3,892 $ 3,786 2.8
-------- -------- ------- ------- -------- --------
Pretax Income 858 666 28.9
Income Tax Provision 274 199 37.8
-------- --------
Net Income $ 584 $ 467 25.2
***
American Express Company, founded in 1850, is a global travel, financial and
network services provider.
***
Note: The 2003 First Quarter Earnings Supplement, as well as CFO Gary
Crittenden's presentation from the investor conference call referred to below,
will be available today on this web site. An investor conference call to discuss
first quarter earnings results, operating performance and other topics that may
be raised during the discussion will be held at 5:00 p.m. (ET) today. Live audio
of the conference call will be accessible to the general public at
http://ir.americanexpress.com. A replay of the conference call also will be
available today at the same web site address.
***
--------------------------------------------------------------------------------
This release includes forward-looking statements, which are subject to risks and
uncertainties. The words "believe," "expect," "anticipate," "optimistic,"
"intend," "plan," "aim," "will," "should," "could," "likely," and similar
expressions are intended to identify forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date on which they are made. The company undertakes no
obligation to update or revise any forward-looking statements. Factors that
could cause actual results to differ materially from these forward-looking
statements include, but are not limited to: the company's ability to
successfully implement a business model that allows for significant earnings
growth based on revenue growth that is lower than historical levels, including
the ability to improve its operating expense to revenue ratio both in the short-
term and over time, which will depend in part on the effectiveness of
reengineering and other cost control initiatives, as well as factors impacting
the company's revenues; the company's ability to grow its business and meet or
exceed its return on equity target by reinvesting approximately 35% of annually-
generated capital, and returning approximately 65% of such capital to
shareholders, over time, which will depend on the company's ability to manage
its capital needs and the effect of business mix, acquisitions and rating agency
requirements; the ability to increase investment spending, which will depend in
part on the equity markets and other factors affecting revenues, and the ability
to capitalize on such investments to improve business metrics; management of
credit risk related to consumer debt, business loans, merchant bankruptcies and
other credit exposures both in the U.S. and internationally; the accuracy of
certain critical accounting estimates, including the provision for credit losses
in the company's outstanding portfolio of loans and receivables, the fair value
of the assets in the company's investment portfolio (including those investments
that are not readily marketable) and the provision for the cost of Membership
Rewards(R); fluctuation in the equity and fixed income markets, which can affect
the amount and types of investment products sold by AEFA, the market value of
its managed assets, management, distribution and other fees received based on
the value of those assets, AEFA's ability to recover DAC, as well as the timing
of such DAC amortization, in connection with the sale of annuity, insurance and
certain mutual fund products, and the level of guaranteed minimum death benefits
paid to clients; changes in assumptions relating to DAC, which could impact the
amount of DAC amortization; potential deterioration in AEFA's high-yield and
other investments, which could result in further losses in AEFA's investment
portfolio; the ability of AEFA to sell certain high-yield investments at
expected values and within anticipated timeframes and to maintain its high-yield
portfolio at certain levels in the future; developments relating to AEFA's
platform structure for financial advisors, including the ability to increase
advisor productivity (including adding new clients), increase the growth of
productive new advisors and create efficiencies in the infrastructure; AEFA's
ability to roll out new and attractive products in a timely manner and
effectively manage the economics in selling a growing volume of non-proprietary
products; the ability to improve investment performance in AEFA's businesses,
including attracting and retaining high-quality personnel; the success,
timeliness and financial impact, including costs, cost savings and other
benefits, of reengineering initiatives being implemented or considered by the
company, including cost management, structural and strategic measures such as
vendor, process, facilities and operations consolidation, outsourcing
(including, among others, technologies operations), relocating certain functions
to lower cost overseas locations, moving internal and external functions to the
Internet to save costs, the scale-back of corporate lending in certain regions,
and planned staff reductions relating to certain of such reengineering actions;
the ability to control and manage operating, infrastructure, advertising and
promotion and other expenses as business expands or changes, including balancing
the need for longer-term investment spending; the impact on the company's
businesses and uncertainty created by the September 11th terrorist attacks, and
the potential negative effect on the company's businesses and infrastructure,
including information technology systems, of terrorist attacks or disasters in
the future; the impact on the company's businesses resulting from the recent war
in Iraq and its aftermath and other geopolitical uncertainty; the company's
ability to recover under its insurance policies for losses resulting from the
September 11th terrorist attacks; the overall level of consumer confidence;
consumer and business spending on the company's travel related services
products, particularly credit and charge cards and growth in card lending
balances, which depend in part on the ability to issue new and enhanced card
products and increase revenues from such products, attract new Cardholders,
capture a greater share of existing Cardholders' spending, sustain premium
discount rates, increase merchant coverage, retain Cardmembers after low
introductory lending rates have expired, and expand the global network services
business; the impact of severe acute respiratory syndrome (SARS) on consumer and
business spending on travel; the ability to execute the company's global
corporate services strategy, including greater penetration of middle market
companies, increasing capture of non-T&E spending through greater use of the
company's purchasing card and other means, and further globalizing business
capabilities; the ability to manage and expand Cardmember benefits, including
Membership Rewards(R), in a cost effective manner; relationships with third-
party providers of various computer systems and other services integral to the
operations of the company's businesses; the triggering of obligations to make
payments to certain co-brand partners, merchants, vendors and customers under
contractual arrangements with such parties under certain circumstances;
successfully expanding the company's on-line and off-line distribution channels
and cross-selling financial, travel, card and other products and services to its
customer base, both in the U.S. and internationally; effectively leveraging the
company's assets, such as its brand, customers and international presence, in
the Internet environment; investing in and competing at the leading edge of
technology across all businesses; a downturn in the company's businesses and/or
negative changes in the company's and its subsidiaries' credit ratings, which
could result in contingent payments under contracts, decreased liquidity and
higher borrowing costs; increasing competition in all of the company's major
businesses; fluctuations in interest rates, which impact the company's borrowing
costs, return on lending products and spreads in the investment and insurance
businesses; credit trends and the rate of bankruptcies, which can affect
spending on card products, debt payments by individual and corporate customers
and businesses that accept the company's card products and returns on the
company's investment portfolios; fluctuations in foreign currency exchange
rates; political or economic instability in certain regions or countries, which
could affect lending and other commercial activities, among other businesses, or
restrictions on convertibility of certain currencies; changes in laws or
government regulations, including tax laws affecting the company's businesses or
that may affect the sales of the products and services that it offers, and
regulatory activity in the areas of customer privacy, consumer protection,
business continuity and data protection; the costs and integration of
acquisitions; the adoption of recently issued accounting rules related to the
consolidation of variable interest entities, including those involving
collateralized debt obligations and secured loan trusts, mutual funds, hedge
funds and limited partnerships that the company manages and/or invests in, which
could affect both the company's balance sheet and results of operations; and
outcomes and costs associated with litigation and compliance and regulatory
matters. A further description of these and other risks and uncertainties can be
found in the company's Annual Report on Form 10-K for the year ended December
31, 2002, and its other reports filed with the SEC.
***
ALL INFORMATION IN THE FOLLOWING TABLES IS PRESENTED ON A GAAP BASIS, UNLESS
OTHERWISE INDICATED.
(PRELIMINARY)
AMERICAN EXPRESS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(MILLIONS)
QUARTERS ENDED
MARCH 31,
-------------------------------------- PERCENTAGE
2003 2002 INC/(DEC)
----------------- ---------------- -----------------
REVENUES
DISCOUNT REVENUE $ 1,976 $ 1,845 7.1 %
INTEREST AND DIVIDENDS, NET 767 758 1.2
MANAGEMENT AND DISTRIBUTION FEES 520 597 (12.9)
SECURITIZATION INCOME 486 383 26.9
NET CARD FEES 451 423 6.6
CARDMEMBER LENDING NET FINANCE CHARGE REVENUE 458 405 13.1
TRAVEL COMMISSIONS AND FEES 340 328 3.7
OTHER REVENUES 1,025 1,020 0.5
----------------- ----------------
TOTAL REVENUES 6,023 5,759 4.6
EXPENSES
HUMAN RESOURCES 1,490 1,478 0.8
PROVISION FOR LOSSES AND BENEFITS 1,110 1,159 (4.1)
MARKETING AND PROMOTION 364 362 0.7
INTEREST 230 271 (14.9)
OTHER OPERATING EXPENSES 1,833 1,644 11.4
RESTRUCTURING CHARGES - (13) -
----------------- ----------------
TOTAL EXPENSES 5,027 4,901 2.6
----------------- ----------------
PRETAX INCOME 996 858 16.0
INCOME TAX PROVISION 304 240 26.4
----------------- ----------------
NET INCOME $ 692 $ 618 12.0 %
================= ================
(PRELIMINARY)
AMERICAN EXPRESS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(BILLIONS)
MARCH 31, DECEMBER 31,
2003 2002
----------------- ----------------
ASSETS
CASH AND CASH EQUIVALENTS $ 8 $ 10
ACCOUNTS RECEIVABLE 28 29
INVESTMENTS 54 54
LOANS 27 28
SEPARATE ACCOUNT ASSETS 21 22
OTHER ASSETS 15 14
----------------- ----------------
TOTAL ASSETS $ 153 $ 157
================= ================
LIABILITIES AND SHAREHOLDERS' EQUITY
SEPARATE ACCOUNT LIABILITIES $ 21 $ 22
SHORT-TERM DEBT 18 21
LONG-TERM DEBT 17 16
OTHER LIABILITIES 83 84
----------------- ----------------
TOTAL LIABILITIES 139 143
----------------- ----------------
SHAREHOLDERS' EQUITY 14 14
----------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 153 $ 157
================= ================
NOTE: CERTAIN PRIOR PERIOD AMOUNTS HAVE BEEN RESTATED TO CONFORM TO CURRENT
YEAR PRESENTATION.
(PRELIMINARY)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY
(UNAUDITED)
(MILLIONS)
QUARTERS ENDED
MARCH 31,
-------------------------------------- PERCENTAGE
2003 2002 INC/(DEC)
----------------- ---------------- -----------------
REVENUES (A)
TRAVEL RELATED SERVICES $ 4,486 $ 4,199 7 %
AMERICAN EXPRESS FINANCIAL ADVISORS 1,411 1,434 (2)
AMERICAN EXPRESS BANK 197 178 11
----------------- ----------------
6,094 5,811 5
CORPORATE AND OTHER,
INCLUDING ADJUSTMENTS AND ELIMINATIONS (71) (52) (38)
----------------- ----------------
CONSOLIDATED REVENUES $ 6,023 $ 5,759 5 %
================= ================
PRETAX INCOME (LOSS)
TRAVEL RELATED SERVICES $ 858 $ 666 29 %
AMERICAN EXPRESS FINANCIAL ADVISORS 178 252 (30)
AMERICAN EXPRESS BANK 29 20 51
----------------- ----------------
1,065 938 14
CORPORATE AND OTHER (69) (80) 12
----------------- ----------------
PRETAX INCOME $ 996 $ 858 16 %
================= ================
NET INCOME (LOSS)
TRAVEL RELATED SERVICES $ 584 $ 467 25 %
AMERICAN EXPRESS FINANCIAL ADVISORS 133 182 (27)
AMERICAN EXPRESS BANK 19 13 55
----------------- ----------------
736 662 11
CORPORATE AND OTHER (44) (44) (3)
----------------- ----------------
NET INCOME $ 692 $ 618 12 %
================= ================
(A) MANAGED NET REVENUES ARE REPORTED NET OF AMERICAN EXPRESS FINANCIAL
ADVISORS' PROVISION FOR LOSSES AND BENEFITS AND EXCLUDE THE EFFECT OF
TRS' SECURITIZATION ACTIVITIES. THE FOLLOWING TABLE RECONCILES
CONSOLIDATED GAAP REVENUES TO MANAGED BASIS NET REVENUES:
GAAP REVENUES $ 6,023 $ 5,759 5 %
EFFECT OF TRS SECURITIZATIONS 264 253 4
EFFECT OF AEFA PROVISIONS (506) (470) 8
----------------- ----------------
MANAGED NET REVENUES $ 5,781 $ 5,542 4 %
(PRELIMINARY)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY (CONTINUED)
(UNAUDITED)
QUARTERS ENDED
MARCH 31,
-------------------------------------- PERCENTAGE
2003 2002 INC/(DEC)
----------------- ---------------- -----------------
EARNINGS PER SHARE
BASIC
EARNINGS PER COMMON SHARE $ 0.53 $ 0.47 13 %
================= ================
AVERAGE COMMON SHARES OUTSTANDING (MILLIONS) 1,297 1,325 (2)%
================= ================
DILUTED
EARNINGS PER COMMON SHARE $ 0.53 $ 0.46 15 %
================= ================
AVERAGE COMMON SHARES OUTSTANDING (MILLIONS) 1,305 1,335 (2)%
================= ================
CASH DIVIDENDS DECLARED PER COMMON SHARE $ 0.08 $ 0.08 -
================= ================
SELECTED STATISTICAL INFORMATION
(UNAUDITED)
QUARTERS ENDED
MARCH 31,
-------------------------------------- PERCENTAGE
2003 2002 INC/(DEC)
----------------- ---------------- -----------------
RETURN ON AVERAGE EQUITY* 20.7% 11.5% -
COMMON SHARES OUTSTANDING (MILLIONS) 1,298 1,329 (2)%
BOOK VALUE PER COMMON SHARE:
ACTUAL $ 10.84 $ 9.40 15 %
EXCLUDING THE EFFECT ON SHAREHOLDERS' EQUITY
OF SFAS NO. 115 AND SFAS NO. 133 $ 10.39 $ 9.46 10 %
SHAREHOLDERS' EQUITY (BILLIONS) $ 14.1 $ 12.5 13 %
* COMPUTED ON A TRAILING 12-MONTH BASIS EXCLUDING THE EFFECT ON SHAREHOLDERS'
EQUITY OF UNREALIZED GAINS OR LOSSES RELATED TO SFAS NO. 115, "ACCOUNTING
FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES," AND SFAS NO. 133,
"ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES."
(PRELIMINARY)
AMERICAN EXPRESS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(MILLIONS)
QUARTERS ENDED
----------------------------------------------------------------------------
MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2003 2002 2002 2002 2002
---------- ---------- ---------- ---------- ----------
REVENUES
DISCOUNT REVENUE $ 1,976 $ 2,122 $ 1,967 $ 1,997 $ 1,845
INTEREST AND DIVIDENDS, NET 767 816 759 658 758
MANAGEMENT AND DISTRIBUTION FEES 520 528 551 609 597
SECURITIZATION INCOME 486 518 500 540 383
NET CARD FEES 451 435 439 429 423
CARDMEMBER LENDING NET FINANCE CHARGE REVENUE 458 382 332 366 405
TRAVEL COMMISSIONS AND FEES 340 369 342 369 328
OTHER REVENUES 1,025 1,026 1,017 977 1,020
---------- ---------- ---------- ---------- ----------
TOTAL REVENUES 6,023 6,196 5,907 5,945 5,759
EXPENSES
HUMAN RESOURCES 1,490 1,379 1,414 1,454 1,478
PROVISION FOR LOSSES AND BENEFITS 1,110 1,250 1,073 1,104 1,159
MARKETING AND PROMOTION 364 397 403 386 362
INTEREST 230 270 264 277 271
OTHER OPERATING EXPENSES 1,833 1,937 1,796 1,776 1,644
RESTRUCTURING CHARGES - 14 (2) (6) (13)
DISASTER RECOVERY CHARGE - - - (7) -
---------- ---------- ---------- ---------- ----------
TOTAL EXPENSES 5,027 5,247 4,948 4,984 4,901
---------- ---------- ---------- ---------- ----------
PRETAX INCOME 996 949 959 961 858
INCOME TAX PROVISION 304 266 272 278 240
---------- ---------- ---------- ---------- ----------
NET INCOME $ 692 $ 683 $ 687 $ 683 $ 618
========== ========== ========== ========== ==========
(PRELIMINARY)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY
(UNAUDITED)
(MILLIONS)
QUARTERS ENDED
----------------------------------------------------------------------
MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2003 2002 2002 2002 2002
---------- ---------- ---------- ---------- ----------
REVENUES (A)
TRAVEL RELATED SERVICES $ 4,486 $ 4,665 $ 4,395 $ 4,462 $ 4,199
AMERICAN EXPRESS FINANCIAL ADVISORS 1,411 1,444 1,388 1,351 1,434
AMERICAN EXPRESS BANK 197 188 199 180 178
---------- ---------- ---------- ---------- ----------
6,094 6,297 5,982 5,993 5,811
CORPORATE AND OTHER,
INCLUDING ADJUSTMENTS AND ELIMINATIONS (71) (101) (75) (48) (52)
---------- ---------- ---------- ---------- ----------
CONSOLIDATED REVENUES $ 6,023 $ 6,196 $ 5,907 $ 5,945 $ 5,759
========== ========== ========== ========== ==========
PRETAX INCOME (LOSS)
TRAVEL RELATED SERVICES $ 858 $ 794 $ 798 $ 822 $ 666
AMERICAN EXPRESS FINANCIAL ADVISORS 178 206 205 202 252
AMERICAN EXPRESS BANK 29 36 38 27 20
---------- ---------- ---------- ---------- ----------
1,065 1,036 1,041 1,051 938
CORPORATE AND OTHER (69) (87) (82) (90) (80)
---------- ---------- ---------- ---------- ----------
PRETAX INCOME $ 996 $ 949 $ 959 $ 961 $ 858
========== ========== ========== ========== ==========
NET INCOME (LOSS)
TRAVEL RELATED SERVICES $ 584 $ 550 $ 553 $ 565 $ 467
AMERICAN EXPRESS FINANCIAL ADVISORS 133 153 152 145 182
AMERICAN EXPRESS BANK 19 24 25 18 13
---------- ----------- ---------- ---------- ----------
736 727 730 728 662
CORPORATE AND OTHER (44) (44) (43) (45) (44)
---------- ----------- ---------- ---------- ----------
NET INCOME $ 692 $ 683 $ 687 $ 683 $ 618
========== =========== ========== ========== ==========
(A) MANAGED NET REVENUES ARE REPORTED NET OF AMERICAN EXPRESS FINANCIAL
ADVISORS' PROVISION FOR LOSSES AND BENEFITS AND EXCLUDE THE EFFECT OF
TRS' SECURITIZATION ACTIVITIES. THE FOLLOWING TABLE RECONCILES
CONSOLIDATED GAAP REVENUES TO MANAGED BASIS NET REVENUES:
GAAP REVENUES $ 6,023 $ 6,196 $ 5,907 $ 5,945 $ 5,759
EFFECT OF TRS SECURITIZATIONS 264 224 278 193 253
EFFECT OF AEFA PROVISIONS (506) (539) (487) (458) (470)
---------- ---------- ---------- ---------- ----------
MANAGED NET REVENUES $ 5,781 $ 5,881 $ 5,698 $ 5,680 $ 5,542
========== ========== ========== ========== ==========
(PRELIMINARY)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY (CONTINUED)
(UNAUDITED)
QUARTERS ENDED
----------------------------------------------------------------------
MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2003 2002 2002 2002 2002
---------- ---------- ---------- ---------- ----------
EARNINGS PER SHARE
BASIC
EARNINGS PER COMMON SHARE $ 0.53 $ 0.52 $ 0.52 $ 0.52 $ 0.47
========== ========== ========== ========== ==========
AVERAGE COMMON SHARES OUTSTANDING (MILLIONS) 1,297 1,309 1,323 1,325 1,325
========== ========== ========== ========== ==========
DILUTED
EARNINGS PER COMMON SHARE $ 0.53 $ 0.52 $ 0.52 $ 0.51 $ 0.46
========== ========== ========== ========== ==========
AVERAGE COMMON SHARES OUTSTANDING (MILLIONS) 1,305 1,317 1,330 1,341 1,335
========== ========== ========== ========== ==========
CASH DIVIDENDS DECLARED PER COMMON SHARE $ 0.08 $ 0.08 $ 0.08 $ 0.08 $ 0.08
========== ========== ========== ========== ==========
SELECTED STATISTICAL INFORMATION
(UNAUDITED)
QUARTERS ENDED
----------------------------------------------------------------------
MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2003 2002 2002 2002 2002
---------- ---------- ---------- ---------- ----------
RETURN ON AVERAGE EQUITY* 20.7% 20.6% 18.1% 15.4% 11.5%
COMMON SHARES OUTSTANDING (MILLIONS) 1,298 1,305 1,325 1,332 1,329
BOOK VALUE PER COMMON SHARE:
ACTUAL $ 10.84 $ 10.63 $ 10.55 $ 9.98 $ 9.40
EXCLUDING THE EFFECT ON SHAREHOLDERS' EQUITY
OF SFAS NO. 115 AND SFAS NO. 133 $ 10.39 $ 10.19 $ 10.00 $ 9.79 $ 9.46
SHAREHOLDERS' EQUITY (BILLIONS) $ 14.1 $ 13.9 $ 14.0 $ 13.3 $ 12.5
* COMPUTED ON A TRAILING 12-MONTH BASIS EXCLUDING THE EFFECT ON SHAREHOLDERS'
EQUITY OF UNREALIZED GAINS OR LOSSES RELATED TO SFAS NO. 115, "ACCOUNTING
FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES," AND SFAS NO. 133,
"ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES."
19
(PRELIMINARY)
TRAVEL RELATED SERVICES
STATEMENTS OF INCOME
(UNAUDITED)
(MILLIONS)
QUARTERS ENDED
MARCH 31,
------------------------------------- PERCENTAGE
2003 2002 INC/(DEC)
---------------- ----------------- -----------------
NET REVENUES:
DISCOUNT REVENUE $ 1,976 $ 1,845 7.1%
NET CARD FEES 451 423 6.6
LENDING:
FINANCE CHARGE REVENUE 587 532 10.4
INTEREST EXPENSE 129 127 1.6
---------------- -----------------
NET FINANCE CHARGE REVENUE 458 405 13.1
TRAVEL COMMISSIONS AND FEES 340 328 3.7
TRAVELERS CHEQUE INVESTMENT INCOME 92 90 2.0
SECURITIZATION INCOME 486 383 26.9
OTHER REVENUES 683 725 (5.8)
---------------- -----------------
TOTAL NET REVENUES 4,486 4,199 6.8
---------------- -----------------
EXPENSES:
MARKETING AND PROMOTION 350 326 7.2
PROVISION FOR LOSSES AND CLAIMS:
CHARGE CARD 208 252 (17.2)
LENDING 331 346 (4.3)
OTHER 31 48 (36.5)
---------------- -----------------
TOTAL 570 646 (11.7)
CHARGE CARD INTEREST EXPENSE 209 244 (14.6)
HUMAN RESOURCES 916 901 1.7
OTHER OPERATING EXPENSES 1,583 1,429 10.7
RESTRUCTURING CHARGES - (13) -
---------------- -----------------
TOTAL EXPENSES 3,628 3,533 2.7
---------------- -----------------
PRETAX INCOME 858 666 28.9
INCOME TAX PROVISION 274 199 37.8
---------------- -----------------
NET INCOME $ 584 $ 467 25.2%
================ =================
20
(PRELIMINARY)
TRAVEL RELATED SERVICES
SELECTED FINANCIAL INFORMATION
(UNAUDITED)
QUARTERS ENDED MARCH 31,
(MILLIONS)
GAAP BASIS SECURITIZATION EFFECT
----------------------------------- PERCENTAGE -----------------------------
2003 2002 INC/(DEC) 2003 2002
----------------- ---------------- ----------------- -------------- -------------
NET REVENUES:
DISCOUNT REVENUE $ 1,976 $ 1,845 7.1 %
NET CARD FEES 451 423 6.6
LENDING:
FINANCE CHARGE REVENUE 587 532 10.4 $ 583 $ 567
INTEREST EXPENSE 129 127 1.6 64 80
----------------- ---------------- -------------- -------------
NET FINANCE CHARGE REVENUE 458 405 13.1 519 487
TRAVEL COMMISSIONS AND FEES 340 328 3.7
TRAVELERS CHEQUE INVESTMENT INCOME 92 90 2.0
SECURITIZATION INCOME 486 383 26.9 (486) (383)
OTHER REVENUES 683 725 (5.8) 231 149
----------------- ---------------- -------------- -------------
TOTAL NET REVENUES 4,486 4,199 6.8 264 253
----------------- ---------------- -------------- -------------
EXPENSES:
MARKETING AND PROMOTION 350 326 7.2 (26) (25)
PROVISION FOR LOSSES AND CLAIMS:
CHARGE CARD 208 252 (17.2)
LENDING 331 346 (4.3) 307 298
OTHER 31 48 (36.5)
----------------- ---------------- -------------- -------------
TOTAL 570 646 (11.7) 307 298
CHARGE CARD INTEREST EXPENSE 209 244 (14.6) - (3)
HUMAN RESOURCES 916 901 1.7
OTHER OPERATING EXPENSES 1,583 1,429 10.7 (17) (17)
RESTRUCTURING CHARGES - (13) -
----------------- ---------------- -------------- -------------
TOTAL EXPENSES 3,628 3,533 2.7 $ 264 $ 253
----------------- ---------------- -------------- -------------
PRETAX INCOME 858 666 28.9
INCOME TAX PROVISION 274 199 37.8
----------------- ----------------
NET INCOME $ 584 $ 467 25.2 %
================= ================
MANAGED BASIS
------------------------------------ PERCENTAGE
2003 2002 INC/(DEC)
----------------- ----------------- ----------------
NET REVENUES:
DISCOUNT REVENUE
NET CARD FEES
LENDING:
FINANCE CHARGE REVENUE $ 1,170 $ 1,099 6.5 %
INTEREST EXPENSE 193 207 (6.9)
----------------- -----------------
NET FINANCE CHARGE REVENUE 977 892 9.6
TRAVEL COMMISSIONS AND FEES
TRAVELERS CHEQUE INVESTMENT INCOME
SECURITIZATION INCOME - - -
OTHER REVENUES 914 874 4.6
----------------- -----------------
TOTAL NET REVENUES 4,750 4,452 6.7
----------------- -----------------
EXPENSES:
MARKETING AND PROMOTION 324 301 7.8
PROVISION FOR LOSSES AND CLAIMS:
CHARGE CARD
LENDING 638 644 (1.0)
OTHER
----------------- -----------------
TOTAL EXPENSES 877 944 (7.1)
CHARGE CARD INTEREST EXPENSE 209 241 (13.5)
HUMAN RESOURCES
OTHER OPERATING EXPENSES 1,566 1,412 10.9
RESTRUCTURING CHARGES
----------------- -----------------
TOTAL EXPENSES $ 3,892 $ 3,786 2.8
----------------- -----------------
MANAGEMENT VIEWS THE GAINS FROM SECURITIZATIONS AS DISCRETIONARY BENEFITS TO BE
USED FOR CARD ACQUISITION EXPENSES, WHICH ARE REFLECTED IN MARKETING AND
PROMOTION EXPENSE AND OTHER OPERATING EXPENSES. CONSEQUENTLY, THE ABOVE MANAGED
SELECTED FINANCIAL INFORMATION FOR THE QUARTERS ENDED MARCH 31, 2003 AND 2002
ASSUME THAT GAINS OF $43 MILLION AND $42 MILLION, RESPECTIVELY, FROM LENDING
SECURITIZATIONS WERE OFFSET BY HIGHER MARKETING AND PROMOTION EXPENSE OF $26
MILLION AND $25 MILLION, RESPECTIVELY, AND OTHER OPERATING EXPENSE OF $17
MILLION IN BOTH PERIODS. ACCORDINGLY, THE INCREMENTAL EXPENSES, AS WELL AS THE
GAINS, HAVE BEEN ELIMINATED.
(PRELIMINARY)
TRAVEL RELATED SERVICES
SELECTED FINANCIAL INFORMATION
(UNAUDITED)
QUARTERS ENDED
(MILLIONS)
GAAP BASIS SECURITIZATION EFFECT
---------------------------------------- ----------------------------------------
DECEMBER 31, SEPTEMBER 30, JUNE 30, DECEMBER 31, SEPTEMBER 30, JUNE 30,
2002 2002 2002 2002 2002 2002
---------- ---------- ---------- ---------- ---------- ----------
NET REVENUES:
DISCOUNT REVENUE $ 2,122 $ 1,967 $ 1,997
NET CARD FEES 435 439 429
LENDING:
FINANCE CHARGE REVENUE 514 456 493 $ 641 $ 678 $ 623
INTEREST EXPENSE 132 124 127 89 98 73
---------- ---------- ---------- ---------- ---------- ----------
NET FINANCE CHARGE REVENUE 382 332 366 552 580 550
TRAVEL COMMISSIONS AND FEES 369 342 369
TRAVELERS CHEQUE INVESTMENT INCOME 94 96 95
SECURITIZATION INCOME 518 500 540 (518) (500)
(540)
OTHER REVENUES 745 719 666 190 198 183
---------- ---------- ---------- ---------- ---------- ----------
TOTAL NET REVENUES 4,665 4,395 4,462 224 278 193
---------- ---------- ---------- ---------- ---------- ----------
EXPENSES:
MARKETING AND PROMOTION 371 394 365 - (5)
(51)
PROVISION FOR LOSSES AND CLAIMS:
CHARGE CARD 237 191 280
LENDING 414 319 290 227 291 282
OTHER 26 38 37
---------- ---------- ---------- ---------- ---------- ----------
TOTAL 677 548 607 227 291 282
CHARGE CARD INTEREST EXPENSE 252 249 256 (3) (4)
(4)
HUMAN RESOURCES 852 871 879
OTHER OPERATING EXPENSES 1,704 1,535 1,539 - (4)
(34)
RESTRUCTURING CHARGES 15 - (6)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL EXPENSES 3,871 3,597 3,640 $ 224 $ 278 $ 193
---------- ---------- ---------- ---------- ---------- ----------
PRETAX INCOME 794 798 822
INCOME TAX PROVISION 244 245 257
---------- ---------- ----------
NET INCOME $ 550 $ 553 $ 565
========== ========== ==========
MANAGED BASIS
--------------------------------------------------
DECEMBER 31, SEPTEMBER 30, JUNE 30,
2002 2002 2002
-------------- --------------- --------------
NET REVENUES:
DISCOUNT REVENUE
NET CARD FEES
LENDING:
FINANCE CHARGE REVENUE $ 1,155 $ 1,134 $ 1,116
INTEREST EXPENSE 221 222 200
-------------- --------------- --------------
NET FINANCE CHARGE REVENUE 934 912 916
TRAVEL COMMISSIONS AND FEES
TRAVELERS CHEQUE INVESTMENT INCOME
SECURITIZATION INCOME - - -
OTHER REVENUES 935 917 849
-------------- --------------- --------------
TOTAL NET REVENUES 4,889 4,673 4,655
-------------- --------------- --------------
EXPENSES:
MARKETING AND PROMOTION 371 389 314
PROVISION FOR LOSSES AND CLAIMS:
CHARGE CARD
LENDING 641 610 572
OTHER
-------------- --------------- --------------
TOTAL 904 839 889
CHARGE CARD INTEREST EXPENSE 249 245 252
HUMAN RESOURCES
OTHER OPERATING EXPENSES 1,704 1,531 1,505
RESTRUCTURING CHARGES
-------------- --------------- --------------
TOTAL EXPENSES $ 4,095 $ 3,875 $ 3,833
-------------- --------------- --------------
MANAGEMENT VIEWS THE GAINS FROM SECURITIZATIONS AS DISCRETIONARY BENEFITS TO BE
USED FOR CARD ACQUISITION EXPENSES, WHICH ARE REFLECTED IN MARKETING AND
PROMOTION EXPENSE AND OTHER OPERATING EXPENSES. CONSEQUENTLY, THE ABOVE MANAGED
SELECTED FINANCIAL INFORMATION FOR THE QUARTERS ENDED SEPTEMBER 30, 2002 AND
JUNE 30, 2002 ASSUME THAT GAINS OF $9 MILLION AND $85 MILLION, RESPECTIVELY,
FROM LENDING SECURITIZATIONS WERE OFFSET BY HIGHER MARKETING AND PROMOTION
EXPENSE OF $5 MILLION AND $51 MILLION, RESPECTIVELY, AND OTHER OPERATING EXPENSE
OF $4 MILLION AND $34 MILLION, RESPECTIVELY. ACCORDINGLY, THE INCREMENTAL
EXPENSES, AS WELL AS THE GAINS, HAVE BEEN ELIMINATED.
(PRELIMINARY)
TRAVEL RELATED SERVICES
SELECTED STATISTICAL INFORMATION
(UNAUDITED)
(BILLIONS, EXCEPT PERCENTAGES AND WHERE INDICATED)
QUARTERS ENDED
MARCH 31,
--------------------------------- PERCENTAGE
2003 2002 INC/(DEC)
-------------- -------------- ---------------
TOTAL CARDS-IN-FORCE (MILLIONS):
UNITED STATES 35.4 34.8 1.7 %
OUTSIDE THE UNITED STATES (A) 22.4 20.8 7.8
-------------- --------------
TOTAL 57.8 55.6 4.0 %
============== ==============
BASIC CARDS-IN-FORCE (MILLIONS):
UNITED STATES 27.1 26.9 0.9 %
OUTSIDE THE UNITED STATES (A) 18.5 15.8 8.0 (A)
-------------- --------------
TOTAL 45.6 42.7 3.7 %(A)
============== ==============
CARD BILLED BUSINESS
UNITED STATES $ 58.9 $ 54.3 8.4 %
OUTSIDE THE UNITED STATES 19.9 17.3 15.2
-------------- --------------
TOTAL $ 78.8 $ 71.6 10.0 %
============== ==============
AVERAGE DISCOUNT RATE (A) 2.60% 2.66% -
AVERAGE BASIC CARDMEMBER SPENDING (DOLLARS) (A) $ 1,894 $ 1,825 7.2 %(A)
AVERAGE FEE PER CARD - MANAGED (DOLLARS) (A) $ 35 $ 33 -
NON-AMEX BRAND (B):
CARDS-IN-FORCE (MILLIONS) 0.7 0.7 0.2 %
BILLED BUSINESS $ 0.9 $ 0.9 (0.6)%
TRAVEL SALES $ 3.7 $ 3.7 (1.3)%
TRAVEL COMMISSIONS AND FEES/SALES (C) 9.3% 8.8% -
TRAVELERS CHEQUE:
SALES $ 4.1 $ 4.6 (9.8)%
AVERAGE OUTSTANDING $ 6.5 $ 6.2 4.9 %
AVERAGE INVESTMENTS $ 6.9 $ 6.6 4.1 %
TAX EQUIVALENT YIELD 8.6% 8.8% -
TOTAL DEBT $ 34.1 $ 34.5 (1.2)%
SHAREHOLDER'S EQUITY $ 7.5 $ 7.0 8.0 %
RETURN ON AVERAGE EQUITY (D) 30.8% 20.6% -
RETURN ON AVERAGE ASSETS (E) 3.3% 2.1% -
(A) CARDS-IN-FORCE INCLUDE PROPRIETARY CARDS AND CARDS ISSUED UNDER NETWORK
PARTNERSHIP AGREEMENTS OUTSIDE THE U.S. AVERAGE DISCOUNT RATE, AVERAGE
BASIC CARDMEMBER SPENDING AND AVERAGE FEE PER CARD ARE COMPUTED FROM
PROPRIETARY CARD ACTIVITIES ONLY. AT SEPTEMBER 30, 2002, 1.5 MILLION OF
CANADIAN LENDING CARDS WERE TRANSFERRED TO BASIC (THOUGH THESE TYPES OF
CARDS WERE AVAILABLE UNDER A SUPPLEMENTAL CARD PROGRAM) AS THE SPECIFIC
CARDS WERE ISSUED UNDER A STAND-ALONE OFFER. THE IMPACT OF THIS TRANSFER
ON THE QUARTER ENDED MARCH 31, 2002 WOULD HAVE BEEN TO INCREASE BASIC
CARDS-IN-FORCE OUTSIDE THE U.S. TO 17.1 MILLION AND DECREASE AVERAGE BASIC
CARDMEMBER SPENDING TO $1,766. PERCENTAGES OF INCREASE ARE CALCULATED
ASSUMING THE TRANSFER HAD OCCURRED AT THE TIME THE CARDS WERE ISSUED.
(B) THIS DATA RELATES TO VISA AND EUROCARDS ISSUED IN CONNECTION WITH JOINT
VENTURE ACTIVITIES.
(C) COMPUTED FROM INFORMATION PROVIDED HEREIN.
(D) COMPUTED ON A TRAILING 12-MONTH BASIS EXCLUDING THE EFFECT ON
SHAREHOLDER'S EQUITY OF UNREALIZED GAINS OR LOSSES RELATED TO SFAS NO.
115, "ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES,"
AND SFAS NO. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES."
(E) COMPUTED ON A TRAILING 12-MONTH BASIS EXCLUDING THE EFFECT ON TOTAL
ASSETS OF UNREALIZED GAINS OR LOSSES RELATED TO SFAS NO. 115, "ACCOUNTING
FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES," AND SFAS NO. 133,
"ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES," TO THE
EXTENT THAT THEY DIRECTLY AFFECT SHAREHOLDER'S EQUITY.
(PRELIMINARY)
TRAVEL RELATED SERVICES
SELECTED STATISTICAL INFORMATION (CONTINUED)
(UNAUDITED)
(BILLIONS, EXCEPT PERCENTAGES AND WHERE INDICATED)
QUARTERS ENDED
MARCH 31,
------------------------------------- PERCENTAGE
2003 2002 INC/(DEC)
---------------- ---------------- ---------------
CHARGE CARD RECEIVABLES:
TOTAL RECEIVABLES $ 24.3 $ 24.2 0.6 %
90 DAYS PAST DUE AS A % OF TOTAL 2.4% 3.1% -
LOSS RESERVES (MILLIONS) $ 923 $ 1,031 (10.5)%
% OF RECEIVABLES 3.8% 4.3% -
% OF 90 DAYS PAST DUE 159% 138% -
NET LOSS RATIO 0.28% 0.39% -
U.S. LENDING (OWNED BASIS):
TOTAL LOANS $ 16.5 $ 15.6 5.7 %
PAST DUE LOANS AS A % OF TOTAL:
30-89 DAYS 1.9% 2.2% -
90+ DAYS 1.2% 1.4% -
LOSS RESERVES (MILLIONS):
BEGINNING BALANCE $ 798 $ 668 19.5 %
PROVISION 200 243 (17.6)
NET CHARGE-OFFS/OTHER (208) (235) (11.5)
---------------- ----------------
ENDING BALANCE $ 790 $ 676 16.9 %
================ ================
% OF LOANS 4.8% 4.3% -
% OF PAST DUE 155% 120% -
AVERAGE LOANS $ 16.6 $ 16.2 2.5 %
NET WRITE-OFF RATE 5.4% 6.7% -
U.S. LENDING - MANAGED BASIS:
TOTAL LOANS $ 34.6 $ 31.3 10.3 %
PAST DUE LOANS AS A % OF TOTAL:
30-89 DAYS 1.9% 2.1% -
90+ DAYS 1.2% 1.3% -
LOSS RESERVES (MILLIONS):
BEGINNING BALANCE $ 1,297 $ 1,077 20.5 %
PROVISION 507 541 (6.3)
NET CHARGE-OFFS/OTHER (457) (474) (3.5)
---------------- ----------------
ENDING BALANCE $ 1,347 $ 1,144 17.7 %
================ ================
% OF LOANS 3.9% 3.7% -
% OF PAST DUE 127% 107% -
AVERAGE LOANS $ 34.2 $ 31.5 8.5 %
NET WRITE-OFF RATE 5.5% 6.5% -
NET INTEREST YIELD 9.4% 9.6% -
(PRELIMINARY)
TRAVEL RELATED SERVICES
STATEMENTS OF INCOME
(UNAUDITED)
(MILLIONS)
QUARTERS ENDED
--------------------------------------------------------------------------------------------
MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2003 2002 2002 2002 2002
---------------- ---------------- ---------------- ---------------- ----------------
NET REVENUES:
DISCOUNT REVENUE $ 1,976 $ 2,122 $ 1,967 $ 1,997 $ 1,845
NET CARD FEES 451 435 439 429 423
LENDING:
FINANCE CHARGE REVENUE 587 514 456 493 532
INTEREST EXPENSE 129 132 124 127 127
---------------- ---------------- ---------------- ---------------- ----------------
NET FINANCE CHARGE REVENUE 458 382 332 366 405
TRAVEL COMMISSIONS AND FEES 340 369 342 369 328
TRAVELERS CHEQUE INVESTMENT INCOME 92 94 96 95 90
SECURITIZATION INCOME 486 518 500 540 383
OTHER REVENUES 683 745 719 666 725
---------------- ---------------- ---------------- ---------------- ----------------
TOTAL NET REVENUES 4,486 4,665 4,395 4,462 4,199
---------------- ---------------- ---------------- ---------------- ----------------
EXPENSES:
MARKETING AND PROMOTION 350 371 394 365 326
PROVISION FOR LOSSES AND CLAIMS:
CHARGE CARD 208 237 191 280 252
LENDING 331 414 319 290 346
OTHER 31 26 38 37 48
---------------- ---------------- ---------------- ---------------- ----------------
TOTAL 570 677 548 607 646
CHARGE CARD INTEREST EXPENSE 209 252 249 256 244
HUMAN RESOURCES 916 852 871 879 901
OTHER OPERATING EXPENSES 1,583 1,704 1,535 1,539 1,429
RESTRUCTURING CHARGES - 15 - (6) (13)
---------------- ---------------- ---------------- ---------------- ----------------
TOTAL EXPENSES 3,628 3,871 3,597 3,640 3,533
---------------- ---------------- ---------------- ---------------- ----------------
PRETAX INCOME 858 794 798 822 666
INCOME TAX PROVISION 274 244 245 257 199
---------------- ---------------- ---------------- ---------------- ----------------
NET INCOME $ 584 $ 550 $ 553 $ 565 $ 467
================ ================ ================ ================ ================
(PRELIMINARY)
TRAVEL RELATED SERVICES
SELECTED MANAGED BASIS INFORMATION
(UNAUDITED)
(MILLIONS) QUARTERS ENDED
-------------------------------------------------------------------------------------
MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2003 2002 2002 2002 2002
------------- ------------- ------------- ------------- -------------
LENDING FINANCE CHARGE REVENUE $ 1,170 $ 1,155 $ 1,134 $ 1,116 $ 1,099
LENDING INTEREST EXPENSE 193 221 222 200 207
OTHER REVENUES 914 935 917 849 874
MARKETING AND PROMOTION 324 371 389 314 301
LENDING PROVISION 638 641 610 572 644
CHARGE CARD INTEREST EXPENSE 209 249 245 252 241
OTHER OPERATING EXPENSES 1,566 1,704 1,531 1,505 1,412
(PRELIMINARY)
TRAVEL RELATED SERVICES
SELECTED STATISTICAL INFORMATION
(UNAUDITED)
(BILLIONS, EXCEPT PERCENTAGES AND WHERE INDICATED)
QUARTERS ENDED
---------------------------------------------------------------------------------
MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2003 2002 2002 2002 2002
------------- ------------- ------------- ------------- -------------
TOTAL CARDS-IN-FORCE (MILLIONS):
UNITED STATES 35.4 35.1 34.8 34.8 34.8
OUTSIDE THE UNITED STATES (A) 22.4 22.2 21.6 21.1 20.8
------------- ------------- ------------- ------------- -------------
TOTAL 57.8 57.3 56.4 55.9 55.6
============= ============= ============= ============= =============
BASIC CARDS-IN-FORCE (MILLIONS):
UNITED STATES 27.1 26.9 26.7 26.7 26.9
OUTSIDE THE UNITED STATES (A) 18.5 18.3 17.8 16.1 15.8
------------- ------------- ------------- ------------- -------------
TOTAL 45.6 45.2 44.5 42.8 42.7
============= ============= ============= ============= =============
CARD BILLED BUSINESS
UNITED STATES $ 58.9 $ 62.9 $ 58.2 $ 58.7 $ 54.3
OUTSIDE THE UNITED STATES 19.9 21.2 19.4 19.4 17.3
------------- ------------- ------------- ------------- -------------
TOTAL $ 78.8 $ 84.1 $ 77.6 $ 78.1 $ 71.6
============= ============= ============= ============= =============
AVERAGE DISCOUNT RATE (A) 2.60% 2.62% 2.63% 2.65% 2.66%
AVERAGE BASIC CARDMEMBER SPENDING
(DOLLARS) (A) $ 1,894 $ 2,050 $ 1,906 $ 1,993 $ 1,825
AVERAGE FEE PER CARD - MANAGED
(DOLLARS) (A) $ 35 $ 34 $ 34 $ 34 $ 33
NON-AMEX BRAND (B):
CARDS-IN-FORCE (MILLIONS) 0.7 0.7 0.7 0.7 0.7
BILLED BUSINESS $ 0.9 $ 1.0 $ 0.9 $ 0.9 $ 0.9
TRAVEL SALES $ 3.7 $ 3.8 $ 3.7 $ 4.3 $ 3.7
TRAVEL COMMISSIONS AND
FEES/SALES (C) 9.3% 9.6% 9.3% 8.7% 8.8%
TRAVELERS CHEQUE:
SALES $ 4.1 $ 4.8 $ 6.9 $ 5.8 $ 4.6
AVERAGE OUTSTANDING $ 6.5 $ 6.5 $ 7.0 $ 6.4 $ 6.2
AVERAGE INVESTMENTS $ 6.9 $ 6.8 $ 7.3 $ 6.7 $ 6.6
TAX EQUIVALENT YIELD 8.6% 8.7% 8.4% 8.8% 8.8%
TOTAL DEBT $ 34.1 $ 36.4 $ 33.2 $ 34.1 $ 34.5
SHAREHOLDER'S EQUITY $ 7.5 $ 7.3 $ 7.4 $ 6.8 $ 7.0
RETURN ON AVERAGE EQUITY (D) 30.8% 29.9% 25.2% 21.0% 20.6%
RETURN ON AVERAGE ASSETS (E) 3.3% 3.2% 2.6% 2.2% 2.1%
(A) CARDS-IN-FORCE INCLUDE PROPRIETARY CARDS AND CARDS ISSUED UNDER NETWORK
PARTNERSHIP AGREEMENTS OUTSIDE THE U.S. AVERAGE DISCOUNT RATE, AVERAGE BASIC
CARDMEMBER SPENDING AND AVERAGE FEE PER CARD ARE COMPUTED FROM PROPRIETARY
CARD ACTIVITIES ONLY. AT SEPTEMBER 30, 2002, 1.5 MILLION OF CANADIAN LENDING
CARDS WERE TRANSFERRED TO BASIC (THOUGH THESE TYPES OF CARDS WERE AVAILABLE
UNDER A SUPPLEMENTAL CARD PROGRAM) AS THE SPECIFIC CARDS WERE ISSUED UNDER A
STAND-ALONE OFFER. THE IMPACT OF THIS TRANSFER ON THE QUARTERS ENDED JUNE 30,
2002 AND MARCH 31, 2002 WOULD HAVE BEEN TO INCREASE BASIC CARDS-IN-FORCE
OUTSIDE THE U.S. TO 17.4 MILLION AND 17.1 MILLION, RESPECTIVELY, AND DECREASE
AVERAGE BASIC CARDMEMBER SPENDING TO $1,926 AND $1,766, RESPECTIVELY.
PERCENTAGES OF INCREASE ARE CALCULATED ASSUMING THE TRANSFER HAD OCCURRED AT
THE TIME THE CARDS WERE ISSUED.
(B) THIS DATA RELATES TO VISA AND EUROCARDS ISSUED IN CONNECTION WITH JOINT
VENTURE ACTIVITIES.
(C) COMPUTED FROM INFORMATION PROVIDED HEREIN.
(D) COMPUTED ON A TRAILING 12-MONTH BASIS EXCLUDING THE EFFECT ON
SHAREHOLDER'S EQUITY OF UNREALIZED GAINS OR LOSSES RELATED TO SFAS NO. 115,
"ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES," AND SFAS
NO. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES."
(E) COMPUTED ON A TRAILING 12-MONTH BASIS EXCLUDING THE EFFECT ON TOTAL ASSETS
OF UNREALIZED GAINS OR LOSSES RELATED TO SFAS NO. 115, "ACCOUNTING FOR CERTAIN
INVESTMENTS IN DEBT AND EQUITY SECURITIES," AND SFAS NO. 133, "ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES," TO THE EXTENT THAT THEY
DIRECTLY AFFECT SHAREHOLDER'S EQUITY.
(PRELIMINARY)
TRAVEL RELATED SERVICES
SELECTED STATISTICAL INFORMATION (CONTINUED)
(UNAUDITED)
(BILLIONS, EXCEPT PERCENTAGES AND WHERE INDICATED)
QUARTERS ENDED
-----------------------------------------------------------------------------------
MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2003 2002 2002 2002 2002
------------- ------------- ------------- ------------- -------------
CHARGE CARD RECEIVABLES:
TOTAL RECEIVABLES $ 24.3 $ 26.3 $ 24.1 $ 24.6 $ 24.2
90 DAYS PAST DUE AS A % OF TOTAL 2.4% 2.2% 2.4% 2.6% 3.1%
LOSS RESERVES (MILLIONS) $ 923 $ 930 $ 934 (A) $ 1,039 $ 1,031
% OF RECEIVABLES 3.8% 3.5% 3.9% 4.2% 4.3%
% OF 90 DAYS PAST DUE 159% 162% 161% 164% 138%
NET LOSS RATIO 0.28% 0.32% 0.40% 0.40% 0.39%
U.S. LENDING (OWNED BASIS):
TOTAL LOANS $ 16.5 $ 17.1 $ 14.9 $ 14.1 $ 15.6
PAST DUE LOANS AS A % OF TOTAL:
30-89 DAYS 1.9% 2.0% 2.0% 1.9% 2.2%
90+ DAYS 1.2% 1.3% 1.2% 1.2% 1.4%
LOSS RESERVES (MILLIONS):
BEGINNING BALANCE $ 798 $ 669 $ 627 $ 676 $ 668
PROVISION 200 318 217 176 243
NET CHARGE-OFFS/OTHER (208) (189) (175) (225) (235)
------------- ------------- ------------- ------------- -------------
ENDING BALANCE $ 790 $ 798 $ 669 $ 627 $ 676
============= ============= ============= ============= =============
% OF LOANS 4.8% 4.7% 4.5% 4.4% 4.3%
% OF PAST DUE 155% 143% 139% 140% 120%
AVERAGE LOANS $ 16.6 $ 15.7 $ 14.2 $ 14.7 $ 16.2
NET WRITE-OFF RATE 5.4% 5.2% 5.5% 6.3% 6.7%
U.S. LENDING - MANAGED BASIS:
TOTAL LOANS $ 34.6 $ 34.3 $ 32.2 $ 31.6 $ 31.3
PAST DUE LOANS AS A % OF TOTAL:
30-89 DAYS 1.9% 1.9% 2.0% 1.9% 2.1%
90+ DAYS 1.2% 1.2% 1.2% 1.2% 1.3%
LOSS RESERVES (MILLIONS):
BEGINNING BALANCE $ 1,297 $ 1,193 $ 1,121 $ 1,144 $ 1,077
PROVISION 507 547 507 458 541
NET CHARGE-OFFS/OTHER (457) (443) (435)(A) (481) (474)
------------- ------------- ------------- ------------- -------------
ENDING BALANCE $ 1,347 $ 1,297 $ 1,193 (A) $ 1,121 $ 1,144
============= ============= ============= ============= =============
% OF LOANS 3.9% 3.8% 3.7% 3.5% 3.7%
% OF PAST DUE 127% 120% 118%(A) 115% 107%
AVERAGE LOANS $ 34.2 $ 32.9 $ 32.2 $ 31.8 $ 31.5
NET WRITE-OFF RATE 5.5% 5.5% 5.7%(A) 6.2% 6.5%
NET INTEREST YIELD 9.4% 9.8% 9.7% 9.8% 9.6%
(A) REVISED AS PER THE 8-K FILED WITH THE SEC ON DECEMBER 16, 2002.
(PRELIMINARY)
AMERICAN EXPRESS FINANCIAL ADVISORS
STATEMENTS OF INCOME
(UNAUDITED)
(MILLIONS)
QUARTERS ENDED
MARCH 31,
------------------------------- PERCENTAGE
2003 2002 INC/(DEC)
------------- ------------- -------------
REVENUES:
INVESTMENT INCOME $ 558 $ 529 5.4 %
MANAGEMENT AND DISTRIBUTION FEES 522 597 (12.6)
OTHER REVENUES 331 308 7.8
------------- -------------
TOTAL REVENUES 1,411 1,434 (1.6)
------------- -------------
EXPENSES:
PROVISION FOR LOSSES AND BENEFITS:
ANNUITIES 273 247 10.4
INSURANCE 192 171 12.0
INVESTMENT CERTIFICATES 41 52 (20.6)
------------- -------------
TOTAL 506 470 7.5
HUMAN RESOURCES 479 499 (3.8)
OTHER OPERATING EXPENSES 248 213 16.8
------------- -------------
TOTAL EXPENSES 1,233 1,182 4.4
------------- -------------
PRETAX INCOME 178 252 (29.5)
INCOME TAX PROVISION 45 70 (36.8)
------------- -------------
NET INCOME $ 133 $ 182 (26.7)%
============= =============
(PRELIMINARY)
AMERICAN EXPRESS FINANCIAL ADVISORS
SELECTED STATISTICAL INFORMATION
(UNAUDITED)
(MILLIONS, EXCEPT WHERE INDICATED)
QUARTERS ENDED
MARCH 31,
------------------------------- PERCENTAGE
2003 2002 INC/(DEC)
------------- ------------- -------------
INVESTMENTS (BILLIONS)* $ 40.3 $ 33.1 21.7 %
CLIENT CONTRACT RESERVES (BILLIONS) $ 38.6 $ 32.9 17.2 %
SHAREHOLDER'S EQUITY (BILLIONS) $ 6.3 $ 5.3 18.5 %
RETURN ON AVERAGE EQUITY ** 10.6% 3.6% -
LIFE INSURANCE INFORCE (BILLIONS) $ 121.4 $ 110.9 9.4 %
ASSETS OWNED, MANAGED OR
ADMINISTERED (BILLIONS):
ASSETS MANAGED FOR INSTITUTIONS $ 41.4 $ 49.2 (15.9)%
ASSETS OWNED, MANAGED OR ADMINISTERED
FOR INDIVIDUALS:
OWNED ASSETS:
SEPARATE ACCOUNT ASSETS 21.3 27.2 (21.9)%
OTHER OWNED ASSETS 51.5 42.8 20.6
------------- -------------
TOTAL OWNED ASSETS 72.8 70.0 4.1
MANAGED ASSETS 79.9 98.6 (19.0)
ADMINISTERED ASSETS 34.0 36.4 (6.6)
------------- -------------
TOTAL $ 228.1 $ 254.2 (10.3)%
============= =============
MARKET APPRECIATION (DEPRECIATION) DURING
THE PERIOD:
OWNED ASSETS:
SEPARATE ACCOUNT ASSETS $ (471) $ (279) (68.8)%
OTHER OWNED ASSETS $ 20 $ (278) #
MANAGED ASSETS $ (1,145) $ 14 #
CASH SALES:
MUTUAL FUNDS $ 6,800 $ 8,749 (22.3)%
ANNUITIES 2,205 1,548 42.4
INVESTMENT CERTIFICATES 1,067 643 65.8
LIFE AND OTHER INSURANCE PRODUCTS 162 184 (11.8)
INSTITUTIONAL 1,036 1,815 (42.9)
OTHER 1,683 1,028 63.9
------------- -------------
TOTAL CASH SALES $ 12,953 $ 13,967 (7.3)%
============= =============
NUMBER OF FINANCIAL ADVISORS 11,606 11,502 0.9 %
FEES FROM FINANCIAL PLANS AND ADVICE SERVICES $ 31.7 $ 29.7 6.8 %
PERCENTAGE OF TOTAL SALES FROM FINANCIAL PLANS
AND ADVICE SERVICES 75.6% 73.2% -
# - DENOTES A VARIANCE OF MORE THAN 100%.
* EXCLUDES CASH, DERIVATIVES, SHORT-TERM AND OTHER INVESTMENTS.
** COMPUTED ON A TRAILING 12-MONTH BASIS EXCLUDING THE EFFECT ON
SHAREHOLDER'S EQUITY OF UNREALIZED GAINS OR LOSSES RELATED TO SFAS NO.
115, "ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES,"
AND SFAS NO. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES."
(PRELIMINARY)
AMERICAN EXPRESS FINANCIAL ADVISORS
STATEMENTS OF INCOME
(UNAUDITED)
(MILLIONS)
QUARTERS ENDED
---------------------------------------------------------------------------------
MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2003 2002 2002 2002 2002
------------- ------------- ------------- ------------- -------------
REVENUES:
INVESTMENT INCOME $ 558 $ 577 $ 517 $ 435 $ 529
MANAGEMENT AND DISTRIBUTION FEES 522 535 551 609 597
OTHER REVENUES 331 332 320 307 308
------------- ------------- ------------- ------------- -------------
TOTAL REVENUES 1,411 1,444 1,388 1,351 1,434
------------- ------------- ------------- ------------- -------------
EXPENSES:
PROVISION FOR LOSSES AND BENEFITS:
ANNUITIES 273 283 259 245 247
INSURANCE 192 203 182 181 171
INVESTMENT CERTIFICATES 41 53 46 32 52
------------- ------------- ------------- ------------- -------------
TOTAL 506 539 487 458 470
HUMAN RESOURCES 479 449 457 493 499
OTHER OPERATING EXPENSES 248 250 239 205 213
DISASTER RECOVERY CHARGE - - - (7) -
------------- ------------- ------------- ------------- -------------
TOTAL EXPENSES 1,233 1,238 1,183 1,149 1,182
------------- ------------- ------------- ------------- -------------
PRETAX INCOME 178 206 205 202 252
INCOME TAX PROVISION 45 53 53 57 70
------------- ------------- ------------- ------------- -------------
NET INCOME $ 133 $ 153 $ 152 $ 145 $ 182
============= ============= ============= ============= =============
(PRELIMINARY)
AMERICAN EXPRESS FINANCIAL ADVISORS
SELECTED STATISTICAL INFORMATION
(UNAUDITED)
(MILLIONS)
QUARTERS ENDED
---------------------------------------------------------------------------------
MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2003 2002 2002 2002 2002
------------- ------------- ------------- ------------- -------------
INVESTMENTS (BILLIONS)* $ 40.3 $ 38.2 $ 35.8 $ 33.9 $ 33.1
CLIENT CONTRACT RESERVES (BILLIONS) $ 38.6 $ 37.3 $ 36.1 $ 34.0 $ 32.9
SHAREHOLDER'S EQUITY (BILLIONS) $ 6.3 $ 6.3 $ 6.2 $ 5.7 $ 5.3
RETURN ON AVERAGE EQUITY ** 10.6% 11.6% 11.9% 12.1% 3.6%
LIFE INSURANCE INFORCE (BILLIONS) $ 121.4 $ 119.0 $ 116.3 $ 114.2 $ 110.9
ASSETS OWNED, MANAGED OR
ADMINISTERED (BILLIONS):
ASSETS MANAGED FOR INSTITUTIONS $ 41.4 $ 42.3 $ 43.3 $ 46.5 $ 49.2
ASSETS OWNED, MANAGED OR ADMINISTERED
FOR INDIVIDUALS:
OWNED ASSETS:
SEPARATE ACCOUNT ASSETS 21.3 22.0 21.1 24.6 27.2
OTHER OWNED ASSETS 51.5 51.7 47.8 44.4 42.8
------------- ------------- ------------- ------------- -------------
TOTAL OWNED ASSETS 72.8 73.7 68.9 69.0 70.0
MANAGED ASSETS 79.9 81.6 79.4 89.7 98.6
ADMINISTERED ASSETS 34.0 33.0 29.9 32.9 36.4
------------- ------------- ------------- ------------- -------------
TOTAL $ 228.1 $ 230.6 $ 221.5 $ 238.1 $ 254.2
============= ============= ============= ============= =============
MARKET APPRECIATION (DEPRECIATION) DURING
THE PERIOD:
OWNED ASSETS:
SEPARATE ACCOUNT ASSETS $ (471) $ 1,040 $ (3,143) $ (2,675) $ (279)
OTHER OWNED ASSETS $ 20 $ 23 $ 637 $ 516 $ (278)
MANAGED ASSETS $ (1,145) $ 3,334 $ (11,013) $ (9,123) $ 14
CASH SALES:
MUTUAL FUNDS $ 6,800 $ 6,563 $ 7,693 $ 8,940 $ 8,749
ANNUITIES 2,205 2,284 2,656 2,054 1,548
INVESTMENT CERTIFICATES 1,067 959 1,299 1,186 643
LIFE AND OTHER INSURANCE PRODUCTS 162 182 170 175 184
INSTITUTIONAL 1,036 756 781 376 1,815
OTHER 1,683 1,269 1,399 1,504 1,028
------------- ------------- ------------- ------------- -------------
TOTAL CASH SALES $ 12,953 $ 12,013 $ 13,998 $ 14,235 $ 13,967
============= ============= ============= ============= =============
NUMBER OF FINANCIAL ADVISORS 11,606 11,689 11,353 11,360 11,502
FEES FROM FINANCIAL PLANS AND
ADVICE SERVICES $ 31.7 $ 26.8 $ 27.4 $ 30.0 $ 29.7
PERCENTAGE OF TOTAL SALES FROM
FINANCIAL PLANS AND ADVICE SERVICES 75.6% 74.4% 73.0% 72.7% 73.2%
* EXCLUDES CASH, DERIVATIVES, SHORT-TERM AND OTHER INVESTMENTS.
** COMPUTED ON A TRAILING 12-MONTH BASIS EXCLUDING THE EFFECT ON
SHAREHOLDER'S EQUITY OF UNREALIZED GAINS OR LOSSES RELATED TO SFAS NO.
115, "ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES,"
AND SFAS NO. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES."
(PRELIMINARY)
AMERICAN EXPRESS BANK
STATEMENTS OF INCOME
(UNAUDITED)
(MILLIONS)
QUARTERS ENDED
MARCH 31,
------------------------------- PERCENTAGE
2003 2002 INC/(DEC)
------------- ------------- -------------
NET REVENUES:
INTEREST INCOME $ 149 $ 143 4.6 %
INTEREST EXPENSE 60 58 3.6
------------- -------------
NET INTEREST INCOME 89 85 5.2
COMMISSIONS AND FEES 55 50 8.5
FOREIGN EXCHANGE INCOME & OTHER REVENUES 53 43 24.2
------------- -------------
TOTAL NET REVENUES 197 178 10.7
------------- -------------
EXPENSES:
HUMAN RESOURCES 61 55 9.1
OTHER OPERATING EXPENSES 73 62 18.0
PROVISION FOR LOSSES 34 41 (17.0)
------------- -------------
TOTAL EXPENSES 168 158 5.8
------------- -------------
PRETAX INCOME 29 20 50.7
INCOME TAX PROVISION 10 7 43.4
------------- -------------
NET INCOME $ 19 $ 13 54.9 %
============= =============
(PRELIMINARY)
AMERICAN EXPRESS BANK
SELECTED STATISTICAL INFORMATION
(UNAUDITED)
(BILLIONS, EXCEPT WHERE INDICATED)
QUARTERS ENDED
MARCH 31,
------------------------------- PERCENTAGE
2003 2002 INC/(DEC)
------------- ------------- -------------
TOTAL SHAREHOLDER'S EQUITY (MILLIONS) $ 918 $ 767 19.7 %
RETURN ON AVERAGE COMMON EQUITY (A) 12.1% (1.4)% -
RETURN ON AVERAGE ASSETS (B) 0.71% (0.08)% -
TOTAL LOANS $ 5.7 $ 5.3 8.9 %
TOTAL NON-PERFORMING LOANS (MILLIONS) (C) $ 106 $ 128 (17.1)%
OTHER NON-PERFORMING ASSETS (MILLIONS) $ 15 $ 2 #
RESERVE FOR CREDIT LOSSES (MILLIONS) (D) $ 155 $ 160 (3.6)%
LOAN LOSS RESERVES AS A % OF TOTAL LOANS 2.5% 2.9% -
TOTAL PERSONAL FINANCIAL SERVICES (PFS) LOANS $ 1.5 $ 1.7 (10.4)%
30+ DAYS PAST DUE PFS LOANS AS A % OF TOTAL 5.0% 4.5% -
DEPOSITS $ 9.5 $ 8.2 15.6 %
ASSETS MANAGED (E) / ADMINISTERED $ 13.1 $ 11.8 11.3 %
ASSETS OF NON-CONSOLIDATED JOINT
VENTURES $ 1.7 $ 1.9 (7.4)%
RISK-BASED CAPITAL RATIOS:
TIER 1 10.8% 10.7% -
TOTAL 11.0% 11.0% -
LEVERAGE RATIO 5.5% 5.2% -
# DENOTES A VARIANCE OF MORE THAN 100%.
(A) COMPUTED ON A TRAILING 12-MONTH BASIS EXCLUDING THE EFFECT ON
SHAREHOLDER'S EQUITY OF UNREALIZED GAINS OR LOSSES RELATED TO SFAS NO.
115, "ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES,"
AND SFAS NO. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES."
(B) COMPUTED ON A TRAILING 12-MONTH BASIS EXCLUDING THE EFFECT ON TOTAL ASSETS
OF UNREALIZED GAINS OR LOSSES RELATED TO SFAS NO. 115, "ACCOUNTING FOR
CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES," AND SFAS NO. 133,
"ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES," TO THE
EXTENT THAT THEY DIRECTLY AFFECT SHAREHOLDER'S EQUITY.
(C) AEB DEFINES NON-PERFORMING LOANS AS LOANS (OTHER THAN CERTAIN
SMALLER-BALANCE CONSUMER LOANS) ON WHICH THE ACCRUAL OF INTEREST IS
DISCONTINUED BECAUSE THE CONTRACTUAL PAYMENT OF PRINCIPAL OR INTEREST HAS
BECOME 90 DAYS PAST DUE OR IF, IN MANAGEMENT'S OPINION, THE BORROWER IS
UNLIKELY TO MEET ITS CONTRACTUAL OBLIGATIONS. FOR SMALLER-BALANCE CONSUMER
LOANS, MANAGEMENT ESTABLISHES RESERVES IT BELIEVES TO BE ADEQUATE TO
ABSORB CREDIT LOSSES INHERENT IN THE PORTFOLIO. GENERALLY, THESE LOANS ARE
WRITTEN OFF IN FULL WHEN AN IMPAIRMENT IS DETERMINED OR WHEN THE LOAN
BECOMES 120 OR 180 DAYS PAST DUE, DEPENDING ON LOAN TYPE.
(D) ALLOCATION (MILLIONS):
LOANS $ 145 $ 154
OTHER ASSETS, PRIMARILY FOREIGN EXCHANGE
AND DERIVATIVES 5 5
UNFUNDED CONTINGENTS 5 1
------------- -------------
TOTAL RESERVE FOR CREDIT LOSSES $ 155 $ 160
============= =============
(E) INCLUDES ASSETS MANAGED BY AMERICAN EXPRESS FINANCIAL ADVISORS.
(PRELIMINARY)
AMERICAN EXPRESS BANK
STATEMENTS OF INCOME
(UNAUDITED)
(MILLIONS)
QUARTERS ENDED
---------------------------------------------------------------------------------
MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2003 2002 2002 2002 2002
------------- ------------- ------------- ------------- -------------
NET REVENUES:
INTEREST INCOME $ 149 $ 156 $ 158 $ 149 $ 143
INTEREST EXPENSE 60 65 63 60 58
------------- ------------- ------------- ------------- -------------
NET INTEREST INCOME 89 91 95 89 85
COMMISSIONS AND FEES 55 58 54 53 50
FOREIGN EXCHANGE INCOME & OTHER
REVENUES 53 39 50 38 43
------------- ------------- ------------- ------------- -------------
TOTAL NET REVENUES 197 188 199 180 178
------------- ------------- ------------- ------------- -------------
EXPENSES:
HUMAN RESOURCES 61 59 62 60 55
OTHER OPERATING EXPENSES 73 63 64 55 62
PROVISION FOR LOSSES 34 31 37 38 41
RESTRUCTURING CHARGES* - (1) (2) - -
------------- ------------- ------------- ------------- -------------
TOTAL EXPENSES 168 152 161 153 158
------------- ------------- ------------- ------------- -------------
PRETAX INCOME 29 36 38 27 20
INCOME TAX PROVISION 10 12 13 9 7
------------- ------------- ------------- ------------- -------------
NET INCOME $ 19 $ 24 $ 25 $ 18 $ 13
============= ============= ============= ============= =============
* THE FOURTH AND THIRD QUARTER 2002 RESTRUCTURING CHARGE AMOUNTS REPRESENT
REVERSALS OF 2001 CHARGES OF $2.5 MILLION ($1.6 MILLION AFTER-TAX) AND
$5.9 MILLION ($3.8 MILLION AFTER-TAX), RESPECTIVELY. THESE AMOUNTS WERE
PARTIALLY OFFSET BY FOURTH AND THIRD QUARTER 2002 RESTRUCTURING CHARGES OF
$1.5 MILLION ($0.7 MILLION AFTER-TAX) AND $3.9 MILLION ($2.4 MILLION
AFTER-TAX), RESPECTIVELY. THE FOURTH QUARTER RESTRUCTURING CHARGE WAS
COMPRISED OF PRIMARILY SEVERANCE COSTS. THE THIRD QUARTER RESTRUCTURING
CHARGE WAS COMPRISED OF $2.0 MILLION PRETAX OF SEVERANCE COSTS AND $1.9
MILLION PRETAX OF OTHER CHARGES.
(PRELIMINARY)
AMERICAN EXPRESS BANK
SELECTED STATISTICAL INFORMATION
(UNAUDITED)
(BILLIONS, EXCEPT WHERE INDICATED)
QUARTERS ENDED
---------------------------------------------------------------------------------
MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2003 2002 2002 2002 2002
------------- ------------- ------------- ------------- -------------
TOTAL SHAREHOLDER'S EQUITY (MILLIONS)$ 918 $ 947 $ 899 $ 812 $ 767
RETURN ON AVERAGE COMMON EQUITY (A) 12.1% 11.5% 9.8% (0.4)% (1.4)%
RETURN ON AVERAGE ASSETS (B) 0.71% 0.67% 0.55% (0.02)% (0.08)%
TOTAL LOANS $ 5.7 $ 5.6 $ 5.5 $ 5.6 $ 5.3
TOTAL NON-PERFORMING LOANS
(MILLIONS) (C) $ 106 $ 119 $ 120 $ 121 $ 128
OTHER NON-PERFORMING ASSETS
(MILLIONS) $ 15 $ 15 $ 17 $ 2 $ 2
RESERVE FOR CREDIT LOSSES
(MILLIONS) (D) $ 155 $ 158 $ 166 $ 160 $ 160
LOAN LOSS RESERVES AS A % OF
TOTAL LOANS 2.5% 2.7% 2.8% 2.8% 2.9%
TOTAL PERSONAL FINANCIAL SERVICES
(PFS) LOANS $ 1.5 $ 1.6 $ 1.6 $ 1.8 $ 1.7
30+ DAYS PAST DUE PFS LOANS AS A
% OF TOTAL 5.0% 5.4% 4.9% 4.6% 4.5%
DEPOSITS $ 9.5 $ 9.5 $ 8.6 $ 8.7 $ 8.2
ASSETS MANAGED (E) / ADMINISTERED $ 13.1 $ 12.5 $ 12.2 $ 12.4 $ 11.8
ASSETS OF NON-CONSOLIDATED JOINT
VENTURES $ 1.7 $ 1.8 $ 1.8 $ 1.9 $ 1.9
RISK-BASED CAPITAL RATIOS:
TIER 1 10.8% 10.9% 10.2% 10.1% 10.7%
TOTAL 11.0% 11.4% 10.9% 10.6% 11.0%
LEVERAGE RATIO 5.5% 5.3% 5.3% 5.2% 5.2%
(A) COMPUTED ON A TRAILING 12-MONTH BASIS EXCLUDING THE EFFECT ON
SHAREHOLDER'S EQUITY OF UNREALIZED GAINS OR LOSSES RELATED TO SFAS NO.
115, "ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES,"
AND SFAS NO. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES."
(B) COMPUTED ON A TRAILING 12-MONTH BASIS EXCLUDING THE EFFECT ON TOTAL ASSETS
OF UNREALIZED GAINS OR LOSSES RELATED TO SFAS NO. 115, "ACCOUNTING FOR
CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES," AND SFAS NO. 133,
"ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES," TO THE
EXTENT THAT THEY DIRECTLY AFFECT SHAREHOLDER'S EQUITY.
(C) AEB DEFINES NON-PERFORMING LOANS AS LOANS (OTHER THAN CERTAIN
SMALLER-BALANCE CONSUMER LOANS) ON WHICH THE ACCRUAL OF INTEREST IS
DISCONTINUED BECAUSE THE CONTRACTUAL PAYMENT OF PRINCIPAL OR INTEREST HAS
BECOME 90 DAYS PAST DUE OR IF, IN MANAGEMENT'S OPINION, THE BORROWER IS
UNLIKELY TO MEET ITS CONTRACTUAL OBLIGATIONS. FOR SMALLER-BALANCE CONSUMER
LOANS, MANAGEMENT ESTABLISHES RESERVES IT BELIEVES TO BE ADEQUATE TO
ABSORB CREDIT LOSSES INHERENT IN THE PORTFOLIO. GENERALLY, THESE LOANS ARE
WRITTEN OFF IN FULL WHEN AN IMPAIRMENT IS DETERMINED OR WHEN THE LOAN
BECOMES 120 OR 180 DAYS PAST DUE, DEPENDING ON LOAN TYPE.
(D) ALLOCATION (MILLIONS):
LOANS $ 145 $ 151 $ 156 $ 153 $ 154
OTHER ASSETS, PRIMARILY FOREIGN
EXCHANGE AND DERIVATIVES 5 6 9 6 5
UNFUNDED CONTINGENTS 5 1 1 1 1
------------- ------------- ------------- ------------- -------------
TOTAL RESERVE FOR CREDIT LOSSES $ 155 $ 158 $ 166 $ 160 $ 160
============= ============= ============= ============= =============
(E) INCLUDES ASSETS MANAGED BY AMERICAN EXPRESS FINANCIAL ADVISORS.
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFILFSTSDISFIV