UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ________________ to _____________________
Commission file number 1-7657
AMERICAN EXPRESS COMPANY
(Exact name of registrant as specified in its charter)
New York State 13-4922250
-------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
American Express Tower, World Financial Center, New York, NY 10285
- - -------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 640-2000
----------------------
None
- - -------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 31, 1994
- - ---------------------------------------- ----------------------------
Common Shares (par value $.60 per share) 494,924,260 shares
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AMERICAN EXPRESS COMPANY
FORM 10-Q
INDEX
Part I. Financial Information:
Consolidated Statement of Income--Three and 1-2
six months ended June 30, 1994 and 1993
Consolidated Balance Sheet--June 30, 1994 3
and December 31, 1993
Consolidated Statement of Cash Flows--Six 4
months ended June 30, 1994 and 1993
Notes to Consolidated Financial Statements 5-6
Management's Discussion and Analysis of 7-15
Financial Condition and Results of
Operations
Review Report of Independent Auditors 16
Part II. Other Information 17
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PART I--FINANCIAL INFORMATION
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENT OF INCOME
(millions, except per share amounts)
(Unaudited)
Three Months Ended
June 30,
-------------------
1994 1993
------ ------
Net Revenues:
Commissions and fees $ 2,105 $ 1,931
Interest and dividends, net 1,018 1,005
Life insurance premiums 192 177
Other 193 184
----- -----
Total 3,508 3,297
----- -----
Expenses:
Human resources 914 814
Provisions for losses and benefits:
Annuities and investment certificates 286 331
Banking, credit and other 257 317
Life insurance 182 133
Marketing and promotion 280 271
Interest 257 210
Occupancy and equipment 242 233
Professional services 174 140
Communications 91 88
Other 347 343
----- -----
Total 3,030 2,880
----- -----
Pretax income from continuing operations 478 417
Income tax provision 119 116
----- -----
Income from continuing operations 359 301
Discontinued operations, net of
income taxes (2) 115
----- -----
Net income $ 357 $ 416
===== =====
Income per common share
from continuing operations $ 0.70 $ 0.60
Income (loss) per common share
from discontinued operations (0.01) 0.23
----- -----
Net income per common share $ 0.69 $ 0.83
===== =====
Weighted average number of common
shares outstanding (000's) 511,283 498,640
======= =======
Cash dividends declared per
common share $ 0.225 $ 0.25
======= =======
See notes to Consolidated Financial Statements.
1
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AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENT OF INCOME
(millions, except per share amounts)
(Unaudited)
Six Months Ended
June 30,
--------------------
1994 1993
------- --------
Net Revenues:
Commissions and fees $ 4,101 $ 3,783
Interest and dividends, net 2,032 1,955
Life insurance premiums 376 343
Other 372 326
----- -----
Total 6,881 6,407
----- -----
Expenses:
Human resources 1,799 1,614
Provisions for losses and benefits:
Annuities and investment certificates 572 649
Banking, credit and other 528 639
Life insurance 362 279
Marketing and promotion 514 521
Interest 490 421
Occupancy and equipment 485 463
Professional services 312 272
Communications 180 173
Other 721 637
Gain on sale of FDC - (779)
----- -----
Total 5,963 4,889
----- -----
Pretax income from continuing operations 918 1,518
Income tax provision 241 517
----- -----
Income from continuing operations 677 1,001
Discontinued operations, net of
income taxes 33 (342)
----- -----
Net income $ 710 $ 659
===== =====
Income per common share
from continuing operations $ 1.31 $ 2.01
Income (loss) per common share
from discontinued operations 0.07 (0.70)
----- -----
Net income per common share $ 1.38 $ 1.31
===== =====
Weighted average number of common
shares outstanding (000's) 509,284 496,744
======= =======
Cash dividends declared per
common share $ 0.475 $ 0.50
======= =======
See notes to Consolidated Financial Statements.
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AMERICAN EXPRESS COMPANY
CONSOLIDATED BALANCE SHEET
(millions)
(Unaudited)
June 30, December 31,
Assets 1994 1993
- - ------ --------- ------------
Cash and cash equivalents $ 4,633 $ 3,312
Accounts receivable and accrued interest, less
reserves: 1994, $781; 1993, $796 16,087 16,142
Investments 39,016 39,308
Loans and discounts, less reserves:
1994, $530; 1993, $655 14,584 14,796
Land, buildings and equipment--at cost, less
accumulated depreciation: 1994, $1,528;
1993, $1,441 1,959 1,976
Assets held in segregated asset accounts 9,796 8,992
Deferred acquisition costs 2,132 2,025
Other assets 7,292 7,581
------ ------
Total assets $ 95,499 $94,132
====== ======
Liabilities and Shareholders' Equity
Customers' deposits and credit balances $ 11,292 $11,131
Travelers Cheques outstanding 5,817 4,800
Accounts payable 3,788 3,737
Insurance and annuity reserves:
Fixed annuities 19,255 19,149
Life and disability policies 4,458 4,257
Investment certificate reserves 2,651 2,752
Short-term debt 12,864 12,489
Long-term debt 8,565 8,561
Liabilities related to segregated asset accounts 9,796 8,992
Other liabilities 10,256 9,530
------ ------
Total liabilities 88,742 85,398
Shareholders' equity:
Preferred shares, $1.66 2/3 par value,
authorized 20,000,000 shares
Convertible Exchangeable Preferred shares,
issued and outstanding 4,000,000 shares,
stated at liquidation value 200 200
$216.75 CAP Preferred shares, issued and
outstanding 122,448.98 shares, stated at
par value (liquidation value of $300) 1 1
Common shares, $.60 par value, authorized
1,200,000,000 shares; issued and outstanding
494,703,115 shares in 1994 and 489,827,852
shares in 1993 297 294
Capital surplus 3,938 3,784
Net unrealized securities gains (losses) (147) 7
Foreign currency translation adjustment (57) (73)
Deferred compensation (119) (128)
Retained earnings 2,644 4,649
------ ------
Total shareholders' equity 6,757 8,734
------ ------
Total liabilities and shareholders' equity $ 95,499 $94,132
====== ======
See notes to Consolidated Financial Statements.
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AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(millions)
(Unaudited)
Six Months Ended
June 30,
----------------
1994 1993
---- ----
Cash Flows from Operating Activities
Income from continuing operations $ 677 $1,001
Adjustments to reconcile income from continuing operations
to net cash (used) provided by operating activities:
Provisions for losses and benefits 718 842
Depreciation, amortization, deferred taxes and other 70 337
Changes in operating assets and liabilities, net of effects of
acquisitions/dispositions:
Accounts receivable and accrued interest 2 137
Other assets (648) 298
Accounts payable and other liabilities (128) 393
Increase in Travelers Cheques outstanding 1,018 684
Increase in insurance reserves 206 103
Gain on sale of FDC - (779)
Net cash flows (used) provided by operating activities of
discontinued operations (3,656) 1,669
------ ------
Net cash (used) provided by operating activities (1,741) 4,685
------ ------
Cash Flows from Investing Activities
Proceeds from FDC public offerings, net of
cash sold in 1993 - 871
Sale of investments 2,553 1,721
Maturity and redemption of investments 3,701 3,894
Purchase of investments (6,495) (7,208)
Net increase in Cardmember receivables (261) (939)
Proceeds from repayment of loans 10,756 8,687
Issuance of loans (10,023) (8,671)
Sale of land, buildings and equipment 30 22
Purchase of land, buildings and equipment (138) (173)
Acquisitions/dispositions, net of cash acquired/sold (15) (33)
Net cash flows (used) provided by investing activities of
discontinued operations (36) 49
------ ------
Net cash provided (used) by investing activities 72 (1,780)
------ ------
Cash Flows from Financing Activities
Net increase in customers' deposits and credit balances 49 238
Sale of investment and annuity certificates 2,667 2,644
Redemption of investment and annuity certificates (2,721) (1,866)
Net increase in debt with maturities of 3 months or less 4,520 69
Issuance of debt 2,864 4,628
Principal payments on debt (7,011) (5,022)
Issuance of American Express common shares 132 131
Repurchase of American Express common shares (111) -
Cash infusion to Lehman Brothers (904) -
Dividends paid (267) (262)
Net cash flows provided (used) by financing activities of
discontinued operations 3,737 (966)
------ ------
Net cash provided (used) by financing activities 2,955 (406)
Net change in cash and cash equivalents of
discontinued operations 45 752
Effect of exchange rate changes on cash 80 (79)
------ ------
Net increase in cash and cash equivalents 1,321 1,668
Cash and cash equivalents at beginning of period 3,312 3,408
------ ------
Cash and cash equivalents at end of period $4,633 $5,076
====== ======
See notes to Consolidated Financial Statements.
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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
1. The consolidated financial statements should be read in conjunction
with the financial statements presented in the Annual Report on Form
10-K of American Express Company (the Company or American Express) for
the year ended December 31, 1993. Certain prior year's amounts have
been reclassified to conform to the current year's presentation.
Significant accounting policies disclosed therein have not changed,
except as disclosed in Note 4.
The consolidated financial statements are unaudited; however, in the
opinion of management, they include all normal recurring adjustments
necessary for a fair presentation of the consolidated financial
position of the Company at June 30, 1994 and December 31, 1993, the
consolidated results of its operations for the three and six months
ended June 30, 1994 and 1993 and cash flows for the six months ended
June 30, 1994 and 1993. Results of operations reported for interim
periods are not necessarily indicative of results for the entire year.
2. Interest and dividends, net, reflects gross interest and dividends, net
of $222 million and $206 million of interest expense for the quarters
ended June 30, 1994 and June 30, 1993, respectively, and $428 million
and $436 million for the six months ended June 30, 1994 and June 30,
1993, respectively, related to the Company's international banking
operations and Travel Related Services' consumer lending activities.
3. On May 31, 1994, the Company completed the spin-off of Lehman Brothers
Holdings Inc. (Lehman Brothers) through a dividend to its common
shareholders of all of the Lehman Brothers common stock held by
American Express on that date. See Consolidated Financial Condition,
which is incorporated herein by reference. As a result of this
transaction, Lehman Brothers' results are reported as a discontinued
operation in the Consolidated Financial Statements through May 31,
1994. For the period ended December 31, 1993, the assets and
liabilities of Lehman Brothers have been reported in the Consolidated
Balance Sheet as net assets of discontinued operations and are included
in Other Assets.
4. As of January 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". Under SFAS No. 115, debt
securities for which the Company has both the positive intent and the
ability to hold to maturity are carried at amortized cost. Other debt
securities and all marketable equity securities are classified as
either Available for Sale or Trading and are carried at fair value.
Unrealized holding gains and losses on securities classified as
Available for Sale are reported as a separate component of
Shareholders' Equity. Unrealized holding gains and losses on
securities classified as Trading are recognized in earnings.
5
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The following is a summary of investments at June 30, 1994
(in millions):
Held to Maturity, at amortized cost $ 22,302
(fair value $22,295)
Available for Sale, at fair value 13,956
(cost $14,182)
Trading 312
Mortgage loans 2,446
------
$39,016
======
5. Net income taxes paid during the six months ended June 30, 1994 and
1993 were approximately $79 million and $354 million, respectively.
Interest paid during the six months ended June 30, 1994 and 1993 was
approximately $783 million and $732 million, respectively.
6. In the first quarter of 1993, the Company reduced its 54 percent
ownership of First Data Corporation (FDC) to 22 percent through a
public offering of FDC shares. The Company recognized a gain from the
sale of $433 million ($779 million pretax), which is included in the
Consolidated Statement of Income for the six months ended June 30,
1993. The Company's ownership of FDC was reduced to approximately 21
percent in the second quarter of 1994 due to the Company's contribution
of FDC shares to the American Express Foundation.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Consolidated Financial Condition
On April 29, 1994, the Company's Board of Directors declared a dividend to
its common shareholders of all of the Lehman Brothers Holdings Inc. (Lehman
Brothers) common stock held by American Express on the dividend
distribution date. The dividend was distributed on May 31, 1994 to
shareholders of record on May 20, 1994 and represented approximately
98.2 million shares of Lehman Brothers common stock. Shareholders of
American Express received one share of Lehman Brothers common stock for
each five common shares of American Express that they held on the record
date. Prior to the distribution, the Company added approximately
$1.1 billion of additional equity capital to Lehman Brothers representing:
The Company's purchase of approximately $903.8 million of Lehman
Brothers common stock, which was included in the dividend to
American Express common shareholders. The Company sold
approximately $11.1 million of Lehman Brothers common stock from
its holdings to certain Lehman Brothers executive officers; and
The Company's purchase of $200 million of Lehman Brothers
cumulative voting preferred stock which is being held for
investment purposes.
In addition, approximately $57 million of Lehman Brothers common stock was
acquired by Lehman Brothers employees through an existing employee
ownership plan, and approximately $89.2 million of the common stock was
acquired by Nippon Life Insurance Company (Nippon Life). The Company also
purchased 928 shares and Nippon Life purchased 72 shares of Lehman Brothers
redeemable voting preferred stock for a nominal dollar amount. The
redeemable voting preferred stock entitles its holders to receive an
aggregate annual dividend of 50 percent of Lehman Brothers net income over
$400 million for each of the next eight years, with a maximum of
$50 million in any one year. In addition, the Company and Nippon Life will
be entitled to receive 92.8 percent and 7.2 percent, respectively, of
certain contingent revenue and earnings related payouts from Travelers
Corporation (Travelers), which was assigned by Lehman Brothers to American
Express and Nippon Life in connection with the spin-off transaction. The
Travelers participations will yield a maximum of $50 million pretax
annually for three years (of which the first installment was received in
the first quarter), depending on the revenues of Smith Barney plus 10
percent of after-tax profits of Smith Barney in excess of $250 million per
year over a five-year period.
As a result of this transaction, Lehman Brothers' results are reported as a
discontinued operation in the Consolidated Financial Statements through the
spin-off date. The assets and liabilities of Lehman Brothers have been
reported in the Consolidated Balance Sheet as net assets of discontinued
operations and are included in Other Assets for the period ended December
31, 1993.
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On June 27, 1994, the Company's Board of Directors declared a quarterly
dividend of $0.225 per common share, payable August 10, 1994 to
shareholders of record on July 8, 1994, adjusting its prior quarterly
dividend rate of $0.25 per share to reflect the Lehman Brothers spin-off.
During the second quarter of 1994, the Company purchased approximately four
million of its common shares in the open market in order to offset any
dilution resulting from the 1994 conversions of American Express Company 9%
Convertible Notes Series A-G, convertible prior to April 1, 1994 at
$17.755. Of the $160 million in Notes originally issued, $58 million was
outstanding at December 31, 1993 and was converted into approximately
3.3 million shares during the first quarter.
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", as of January 1, 1994. See Note 4 which is incorporated
herein by reference. At June 30, 1994, approximately 38 percent, or
$14.0 billion, of the Company's securities were classified as Available for
Sale. This does not mean that the Company expects to sell these
securities, but that under SFAS No. 115 positive intent criteria, these
securities are available to meet possible liquidity needs should there be
significant changes in market interest rates, customer demand, funding
sources and terms, or foreign currency risk.
The following sections discuss changes during the six months ended June 30,
1994 in the financial condition of each of the Company's business segments.
Except where indicated otherwise, comparisons of June 30, 1994 balance
sheet amounts are made with comparable amounts at December 31, 1993.
Travel Related Services (TRS)
TRS' total assets were $41.9 billion at June 30, 1994 and $38.8 billion at
December 31, 1993. The increase in total assets reflects seasonal growth
in the Travelers Cheque portfolio and increased liquidity. Accounts
receivable and accrued interest totaled $15.7 billion at June 30,1994 and
December 31, 1993. Loans and discounts were $8.4 billion at June 30, 1994
and $8.2 billion at December 31, 1993. In 1994, TRS plans to issue the
first of a series of stand-alone revolving credit products which are
expected to increase significantly the size of its lending portfolio over
time. TRS does not believe this action will have a material impact on its
capital, liquidity, or results of operations in 1994 and 1995. TRS' prior
year's assets have been restated to reflect the transfer of certain
international consumer financial services businesses to American Express Bank.
IDS Financial Services (IDS)
IDS' total assets owned increased to $37.8 billion at June 30, 1994 from
$37.4 billion at December 31, 1993. This growth primarily reflects an
increase in assets held in segregated asset accounts, partially offset by
declines in investment securities due to market value declines. Assets
held in segregated accounts totaled $9.8 billion and $9.0 billion at
June 30, 1994 and December 31, 1993, respectively. These assets, primarily
investments carried at market value, are held for the exclusive benefit of
variable annuity and variable life insurance contract holders. IDS earns
investment management and administration fees from the related funds.
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Assets under management increased to $62.8 billion at June 30, 1994 from
$62.3 billion at December 31, 1993, reflecting strong net sales, partially
offset by market depreciation.
During the first six months of 1994, IDS Financial Corporation issued and
sold $70 million of 6.5% Medium-Term Notes due 2004 and $50 million of
6.625% Medium-Term Notes due 2006. The Notes were sold in private
placements to institutional investors. The proceeds from these issuances
were used for general corporate purposes.
American Express Bank (the Bank)
The Bank's assets totaled $14.4 billion and $14.1 billion at June 30, 1994
and December 31, 1993, respectively. The Bank's prior year's assets have
been restated to reflect the transfer of certain international consumer
financial services businesses from TRS.
Total loans were $5.6 billion at both June 30, 1994 and year-end 1993. The
reserve for credit losses was $115 million at June 30, 1994, compared with
$126 million at December 31, 1993. The Bank's credit loss reserve coverage
was 2.0 percent of total loans at June 30, 1994, compared with 2.2 percent
at December 31, 1993. Total loan write-offs, net of recoveries, were
$20 million during both the first six months of 1994 and 1993.
Nonperforming loans totaled $34 million at June 30, 1994 and $43 million at
December 31, 1993. The Bank's other nonperforming assets totaled
$59 million at June 30, 1994, compared with $89 million at year-end 1993.
The decline in nonperforming loans and other nonperforming assets primarily
reflects write-offs and the sale of a foreclosed property, respectively.
American Express Bank Ltd.'s (AEBL) risk-based capital ratios were
6.6 percent for Tier 1 Capital and 13.0 percent for Total Capital at June
30, 1994, compared with 6.3 percent and 10.2 percent, respectively, at
year-end 1993. AEBL's leverage ratio was 4.2 percent at June 30, 1994
and 4.4 percent at December 31, 1993. The increase in the Total Capital
ratio at June 30, 1994 was primarily due to the issuance and sale outside
the United States of $250 million of Floating Rate Subordinated Notes due
2004. The proceeds of this issuance were used for general corporate
purposes.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1994 and 1993
The Company reported consolidated income from continuing operations of
$359 million in the second quarter of 1994, compared with $301 million last
year. On May 31, 1994, the Company completed the spin-off of Lehman
Brothers. Including Lehman Brothers as a discontinued operation through
the spin-off date, second quarter 1994 net income totaled $357 million
compared with $416 million last year. Consolidated net revenues totaled
$3.5 billion in the second quarter of 1994, compared with $3.3 billion a
year ago.
The Company's effective tax rate was 25 percent in the second quarter of
1994, compared with 28 percent a year ago. Both years' rates were reduced
by tax-advantaged investment income.
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Six Months Ended June 30, 1994 and 1993
The Company reported consolidated net income from continuing operations of
$677 million for the first six months of 1994, compared with $1.0 billion
last year, including the 1993 gain of $433 million ($779 million pretax) on
the sale of First Data Corporation (FDC) stock. Including Lehman Brothers,
which is reflected as a discontinued operation through the spin-off date,
net income for the first half of 1994 totaled $710 million, compared with
$659 million a year ago. Consolidated net revenues for the first six
months of 1994 were $6.9 billion, compared with $6.4 billion last year.
The Company's effective tax rate was 26 percent in the first half of 1994,
compared with 34 percent a year ago. This year's rate was reduced by tax-
advantaged investment income, while the prior year's rate reflects the tax
effects of the FDC gain, partially offset by tax-advantaged investment
income.
Travel Related Services
Three Months Ended June 30, 1994 and 1993
TRS reported net income of $263 million in the second quarter of 1994,
compared with $233 million last year. Pretax income totaled $365 million,
compared with $319 million a year ago. TRS' prior year's results have been
restated to reflect the transfer of certain international consumer
financial services businesses to the Bank.
Worldwide Card billed business increased to $34.6 billion in the second
quarter of 1994 from $31.0 billion last year, reflecting higher spending
per Cardmember and an increase in the number of Cards outstanding. U.S.
Card billed business was $25.3 billion, compared with $22.5 billion a year
ago. Non-U.S. Card billed business totaled $9.3 billion, compared with
$8.5 billion last year. Worldwide Cards in force totaled 35.6 million,
compared with 34.0 million a year ago. U.S. Cards in force totaled
24.8 million, compared with 23.8 million last year. Non-U.S. Cards in
force were 10.8 million at June 30, 1994, compared with 10.2 million a year
ago. Basic Cards in force totaled 26.1 million, compared with 25.1 million
last year. The increase in worldwide Cards in force reflects the addition
of approximately 1.1 million Cards issued to U.S. Government employees
beginning late in 1993. The number of service establishments (SE)
increased 6.6 percent to 3.7 million from 3.5 million last year.
Travelers Cheque sales totaled $6.5 billion in the second quarter of 1994,
compared with $6.2 billion last year. Average Travelers Cheques
outstanding totaled $5.3 billion, compared with $5.0 billion a year ago.
Net revenues (total revenues net of lending interest expense) increased
7.0 percent to $2.5 billion, reflecting the increase in worldwide Card
billed business and growth in Business Travel sales. This increase was
partially offset by discount rate reductions from SE repricing implemented
throughout 1993. Discount revenue increased to $983 million from
$899 million last year. Net Card fees totaled $431 million, compared with
$433 million a year ago, reflecting a change in the mix of Card products.
Lending finance charge revenue increased to $304 million from $302 million
a year ago. Lending net finance charge revenue decreased 1.3 percent to
$235 million. Interest and dividend revenue increased to $187 million from
$177 million last year. Other revenues increased 13 percent to
$667 million primarily due to increased travel commissions.
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Total expenses, excluding lending interest expense, rose 5.9 percent to
$2.1 billion for the second quarter of 1994, compared with $2.0 billion in
the second quarter of 1993. The provision for losses and claims declined
7.5 percent to $360 million from $390 million a year ago. The worldwide
charge Card provision declined to $177 million in the second quarter of
1994 from $192 million last year, reflecting continued improvement in Card
credit experience, partially offset by an increase in billed business. The
worldwide lending provision was $63 million, compared to $97 million a year
ago, reflecting a continued decline in write-offs. Interest expense,
excluding lending interest expense which is included in net revenues above,
totaled $209 million in the second quarter of 1994, up from $198 million
last year. Worldwide charge Card interest expense totaled $168 million,
compared with $171 million last year. Excluding interest and the provision
for losses, total expenses increased 9.6 percent reflecting, in part,
business travel growth and investments in certain business initiatives.
Human resources expense increased to $625 million in the second quarter of
1994 from $537 million a year ago, primarily reflecting growth in the
Business Travel and Corporate Card businesses. Marketing and promotion
expense increased 3.5 percent to $273 million in the second quarter of 1994
from $264 million last year.
Six Months Ended June 30, 1994 and 1993
TRS' net income increased 13 percent to $498 million in the first six
months of 1994, compared with $442 million last year. Pretax income
totaled $691 million, compared with $580 million a year ago.
Worldwide Card billed business increased to $66.4 billion in the first half
of 1994 from $59.2 billion last year, reflecting higher spending per
Cardmember, growth in Corporate Card billed business and an increase in the
number of Cards outstanding. U.S. Card billed business was $48.3 billion,
compared with $42.9 billion a year ago. Non-U.S. Card billed business
totaled $18.1 billion, compared with $16.4 billion last year.
Travelers Cheque sales increased to $11.4 billion in the first six months
of 1994 from $10.9 billion last year. Average Travelers Cheques
outstanding totaled $5.1 billion, compared with $4.9 billion a year ago.
Net revenues increased 6.4 percent to $4.9 billion, reflecting the increase
in worldwide Card billed business and growth in Business Travel sales.
This increase was partially offset by discount rate reductions from SE
repricing implemented throughout 1993 and a decrease in net Card fee
revenues. Discount revenue increased to $1.9 billion from $1.7 billion
last year. Net Card fees totaled $862 million, compared with $869 million
a year ago, reflecting a change in the mix of Card products. Interest and
dividend revenue increased to $361 million from $352 million last year.
Lending finance charge revenue remained flat at $596 million. Lending net
finance charge revenue increased slightly to $464 million from $463 million
last year. Other revenues increased 12 percent to $1.3 billion primarily
due to increased travel commissions.
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Total expenses, excluding lending interest expense, increased 4.5 percent
to $4.2 billion for the first half of 1994, compared with $4.0 billion last
year. The provision for losses and claims declined 7.2 percent to
$726 million from $782 million a year ago. The worldwide charge Card
provision declined to $325 million in the first six months of 1994 from
$372 million last year, reflecting continued improvement in Card credit
experience partially offset by an increase in billed business. The
worldwide lending provision was $177 million, compared to $213 million a
year ago, reflecting a continued decline in write-offs. Interest expense,
excluding lending interest expense which is included in net revenues above,
totaled $392 million for the first six months of 1994, down from
$398 million last year, reflecting lower borrowing rates, partially offset
by increased funding requirements. Worldwide charge Card interest expense
totaled $326 million, compared with $347 million last year. Excluding
interest and the provision for losses, total expenses increased 8.6
percent, in part reflecting business travel growth and investments in
certain business initiatives. Human resources expense increased 14 percent
to $1.2 billion in the first half of 1994 from $1.1 billion a year ago,
primarily reflecting growth in the Business Travel and Corporate Card
businesses. Marketing and promotion expense decreased slightly to
$502 million in the first six months of 1994 from $510 million last year.
IDS Financial Services
Three Months Ended June 30, 1994 and 1993
IDS' net income increased 21 percent to $109 million in the second quarter of
1994 from $90 million last year. Revenues increased 3.0 percent to
$815 million in the second quarter of 1994 from $791 million a year ago.
Revenue and earnings growth benefited primarily from an increase in management
fees and net investment income resulting from higher asset levels. Results
also benefited from wider investment margins compared to year-ago levels.
Pretax income totaled $161 million, compared with $132 million last year.
IDS' financial planning field force totaled 7,780 at June 30, 1994, compared
with 7,655 and 7,439 at December 31, 1993 and June 30, 1993, respectively.
Total product sales increased in the second quarter of 1994 compared to last
year. Product sales generated from financial plans were approximately
62 percent of total sales, compared with approximately 57 percent a year ago.
Fees from financial plans were $9.6 million in the second quarter of 1994,
compared with $8.9 million last year. Mutual fund sales totaled $2.3 billion
in the second quarter of 1994, up 12 percent from $2.1 billion last year.
This increase reflects higher sales of equity funds. Annuity sales increased
13 percent in the second quarter of 1994 to $1.2 billion from $1.0 billion a
year ago, reflecting increased sales of annuities with variable investment
options. Sales of investment certificates totaled $215 million in the second
quarter of 1994, up from $157 million last year. Life and other insurance
sales totaled $77 million in the second quarter of 1994, up from $70 million a
year ago. Life insurance in force increased 13 percent to $49.3 billion at
June 30, 1994 from $43.5 billion at June 30, 1993.
Investment income decreased to $497 million in the second quarter of 1994
from $516 million last year, reflecting lower yields, partially offset by
higher invested assets. Commissions and fees totaled $201 million in the
second quarter of 1994, up from $177 million a year ago, reflecting
management fees earned on a higher asset base.
12
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Total expenses were $654 million in the second quarter of 1994, compared
with $659 million last year. The provision for annuity benefits, the
largest component of expenses, decreased to $252 million from $266 million
a year ago, reflecting lower accrual rates, partially offset by higher
annuities in force. The provision for insurance benefits increased to
$85 million from $78 million a year ago. The provision for investment
certificates totaled $25 million, down from $32 million last year,
reflecting lower investment certificates in force and lower accrual rates.
Human resources expense increased to $201 million from $183 million a year
ago, reflecting an increase in the number of employees and financial
planners, and increased commissionable sales. Other operating expenses
decreased to $91 million in the second quarter of 1994 from $98 million
last year, reflecting a lower provision for insurance industry guarantee
association assessments.
Six Months Ended June 30, 1994 and 1993
IDS' net income increased 21 percent to $200 million in the first six months
of 1994 from $165 million last year. Revenues increased 6.5 percent to
$1.6 billion in the first half of 1994 from $1.5 billion a year ago. Revenue
and earnings growth benefited primarily from an increase in management fees
and net investment income resulting from higher asset levels. Results also
benefited from wider investment margins compared to year-ago levels. Pretax
income totaled $297 million, compared with $239 million last year.
Total product sales increased during the first six months of 1994 compared
to last year. Product sales generated from financial plans were
approximately 61 percent of total sales, compared with approximately
56 percent a year ago. Fees from financial plans were $19.8 million in the
first six months of 1994, compared with $17.7 million last year. Mutual
fund sales totaled $4.9 billion in the first half of 1994, up 17 percent
from $4.2 billion last year. This increase reflects higher sales of equity
funds. Annuity sales increased 9.9 percent in the first half of 1994 to
$2.2 billion from $2.0 billion a year ago, reflecting increased sales of
annuities with variable investment options. Sales of investment
certificates totaled $370 million in the first six months of 1994, up from
$298 million last year. Life and other insurance sales totaled
$152 million in the first six months of 1994, up 9.9 percent from
$139 million a year ago, reflecting increased sales of universal life
insurance.
Investment income of $1.0 billion in the first six months of 1994 remained
unchanged from last year. Commissions and fees totaled $409 million in the
first half of 1994, up from $341 million a year ago, reflecting management
fees earned on a higher asset base and distribution fees earned on higher
mutual fund sales.
Total expenses were $1.3 billion in the first six months of 1994 and 1993.
The provision for annuity benefits, the largest component of expenses,
decreased to $506 million from $531 million a year ago, reflecting lower
accrual rates, partially offset by higher annuities in force. The
provision for insurance benefits increased to $173 million from
$157 million a year ago. The provision for investment certificates totaled
$47 million, down from $67 million last year, reflecting lower investment
certificates in force and lower accrual rates. Human resources expense
increased to $413 million from $360 million a year ago, reflecting an
increase in the number of employees and financial planners, and increased
commissionable sales. Other operating expenses increased to $196 million
in the first six months of 1994 from $176 million last year, reflecting
13
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increased amortization of deferred acquisition costs and surrenders as a
result of an annuity exchange plan announced during the first quarter,
partly offset by a lower provision for insurance industry guarantee
association assessments.
American Express Bank
Three Months Ended June 30, 1994 and 1993
The Bank reported net income of $19 million in the second quarter of 1994,
compared with $21 million a year ago. The Bank's results for the second
quarter of 1994 reflect a decline in net interest income, primarily due to
higher short-term funding costs and lower investment income, as well as
higher operating expenses. Partially offsetting this decline was a lower
provision for credit losses and a lower effective tax rate. Increased
expenses primarily reflected spending related to systems technology.
Pretax income totaled $28 million, compared with $35 million last year.
The Bank's prior year's results have been restated to reflect the transfer
of certain international consumer financial services businesses from TRS to
the Bank.
Net interest income totaled $84 million in the second quarter of 1994,
compared with $94 million a year ago. Noninterest income, consisting
primarily of commissions, fees and other revenues, increased to $78 million
in the second quarter of 1994 from $77 million last year. Noninterest
expenses, excluding the provision for credit losses, totaled $132 million
in the second quarter of 1994, compared with $123 million a year ago. The
provision for credit losses was $1.5 million in the second quarter of 1994,
compared with $13 million a year ago.
Six Months Ended June 30, 1994 and 1993
The Bank's net income totaled $44 million in the first six months of 1994,
compared with $39 million a year ago. The Bank's results for the first
half of 1994 reflected growth in fee income, a lower provision for credit
losses and a lower effective tax rate, partially offset by lower net
interest income and higher operating expenses. Pretax income totaled
$64 million, compared with $62 million last year.
Net interest income totaled $175 million in the first six months of 1994,
compared with $181 million a year ago, reflecting higher short-term funding
costs and lower investment income. Noninterest income increased to
$155 million in the first half of 1994 from $146 million last year,
primarily reflecting growth in fee income. Noninterest expenses, excluding
the provision for credit losses, totaled $258 million in the first six
months of 1994, compared with $239 million a year ago. Increased expense
levels primarily reflected spending related to systems technology and
higher human resources expense. The provision for credit losses was
$8.3 million in the first six months of 1994, compared with $26 million a
year ago, reflecting a lower level of nonperforming loans.
Corporate and Other
Three Months Ended June 30, 1994 and 1993
Corporate and Other reported second quarter net expenses of $32 million in
1994, compared with $43 million in 1993.
14
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Six Months Ended June 30, 1994 and 1993
Corporate and Other reported net expenses of $65 million in the first six
months of 1994, compared with $78 million in 1993, before a $433 million
($779 million pretax) gain from the sale of FDC stock last year.
Results for the first half of 1994 include income from the Company's share
of the Travelers revenue participation, in accordance with an agreement
related to the 1993 sale of SLB, as well as a capital gain on the sale of
Travelers preferred stock and warrants which were acquired as part of the
1993 sale. These gains were offset by the Company's costs associated with
the Lehman Brothers spin-off and certain business building initiatives.
Results for the first six months of 1993 included the first quarter gain on
the sale of FDC stock mentioned above, which reduced the Company's
ownership in FDC from 54 percent to approximately 22 percent.
15
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INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Shareholders and Board of Directors
American Express Company
We have reviewed the accompanying consolidated balance sheet of American
Express Company (the "Company") as of June 30, 1994, the related consolidated
statements of income for the three-month and six-month periods ended June 30,
1994 and 1993 and the consolidated statement of cash flows for the six-month
periods ended June 30, 1994 and 1993. These financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which will
be performed for the full year with the objective of expressing an opinion
regarding the consolidated financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company as of December 31,
1993, and the related consolidated statements of income, shareholders' equity,
and cash flows for the year then ended (not presented herein), and in our
report dated February 3, 1994, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the accompanying consolidated balance sheet as of December 31, 1993, is
fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
ERNST & YOUNG LLP
/s/Ernst & Young LLP
New York, New York
August 12, 1994
16
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PART II. OTHER INFORMATION
AMERICAN EXPRESS COMPANY
Item 1. Legal Proceedings
On June 2, 1994, two former employees of American Express Bank
International ("AEBI"), a wholly-owned subsidiary of American Express Bank
Ltd. ("AEB"), were convicted in a federal district court in Texas of money
laundering, bank fraud and misapplication of funds in connection with the
account of a Mexican client. AEBI was not a party in this case. However, the
United States Attorney's Office and a federal grand jury in the Southern
District of Texas are continuing the investigation, and a subpoena for the
production of documents has been issued to AEBI. AEBI is cooperating in the
investigation. If AEBI were charged with a violation of law, fines, civil
penalties and possibly criminal sanctions could result. A criminal charge and
conviction could also have adverse collateral consequences for AEB and AEBI,
as well as certain of the registrant's other businesses.
Item 4. Submission of Matters to a Vote of Securities Holders
For information relating to the matters voted upon at the registrant's
annual meeting for shareholders held on April 25, 1994, see Item 4 on page 16
of the registrant's Quarterly Report on Form 10-Q for the quarter ended March
31, 1994, which is incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index on page E-1 hereof.
(b) Reports on Form 8-K:
Form 8-K, dated April 5, 1994, Item 5, reporting the filing of a
registration statement covering common shares of Lehman Brothers
Holdings Inc.
Form 8-K, dated April 21, 1994, Item 5, reporting the
registrant's earnings for the quarter ended March 31, 1994.
Form 8-K, dated May 31, 1994, Item 5, reporting the completion of
the distribution of Lehman Brothers common stock.
Form 8-K, dated July 25, 1994, Item 5, reporting the registrant's
earnings for the quarter ended June 30, 1994.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned,
thereunto duly authorized.
AMERICAN EXPRESS COMPANY
(Registrant)
Date: August 15, 1994 By /s/ Michael P. Monaco
-------------------------
Michael P. Monaco
Executive Vice President,
Chief Financial Officer and
Treasurer
Date: August 15, 1994 /s/ Daniel T. Henry
-------------------------
Daniel T. Henry
Senior Vice President and
Comptroller
(Chief Accounting Officer)
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EXHIBIT INDEX
The following exhibits are filed as part of this Quarterly Report:
Exhibit Description
3.2 Registrant's By-laws, as amended on June 27, 1994.
10.1 American Express Senior Executive Severance Plan.
12.1 Computation in Support of Ratio of Earnings to Fixed Charges.
12.2 Computation in Support of Ratio of Earnings to Fixed Charges
and Preferred Share Dividends.
15 Letter re Unaudited Interim Financial Information.
E-1
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Exhibit 3.2
BY-LAWS
OF
AMERICAN EXPRESS COMPANY
(A New York Corporation)
(As Amended through June 27, 1994)
PAGE
<PAGE>
BY-LAWS
OF
AMERICAN EXPRESS COMPANY
ARTICLE I
OFFICES
SECTION 1.1 Principal Office. The principal office of the corporation
within the State of New York shall be located in the City of New York, County
of New York.
SECTION 1.2 Other Offices. The corporation may have such other offices
and places of business within and without the State of New York as the
business of the corporation may require.
ARTICLE II
SHAREHOLDERS
SECTION 2.1 Annual Meeting. The annual meeting of the shareholders for
the election of directors and for the transaction of other business shall be
held at the principal office of the corporation within the State of New York,
or at such other place either within or without the State of New York as may
be fixed by the Board of Directors (hereinafter referred to as the "Board")
from time to time. The annual meeting shall be held on such full business day
in each year not earlier than March 15 nor later than April 30 and at such
hour as shall be fixed by the Board. If the election of directors shall not
be held on the date so fixed for the annual meeting, a special meeting of the
shareholders for the election of directors shall be called forthwith in the
manner provided herein for special meetings, or as may otherwise be provided
by law. (B.C.L. Section 602.)<F1>
SECTION 2.2 Special Meetings. Special meetings of the shareholders may
be held either within or without the State of New York, at such time and place
and for such purpose or purposes (other than for the election of directors,
except as provided in Section 2.1) as shall be specified in a call for such
meeting made by resolution of the Board or by a majority of the directors then
in office or by the Chief Executive Officer, or by the holders of a majority
of the shares then outstanding and entitled to vote in the election of any
directors. (B.C.L. Section 602(c).)
SECTION 2.3 Notice of Meetings. Notice of all meetings of shareholders
shall be in writing and shall state the place, date and hour of the meeting
and such other matters as may be required by law. Notice of any special
meeting shall also state the purpose or purposes for which the meeting is
called and shall indicate that it is being issued by or at the direction of
the person or persons calling the meeting. A copy of the notice of any
meeting, shall be given, personally or by mail, not less than ten nor more
than fifty days before the date of the meeting to each shareholder entitled to
vote at such meeting. If mailed, such notice shall be deemed given when
deposited in the United States mail, with postage thereon prepaid, directed to
the shareholder at his address as it appears on the record of shareholders,
or, if he shall have filed with the Secretary of the corporation a written
[FN]
- - -----------------------
<F1> This and other references to the New York Business
Corporation Law are not part of the by-laws, but are
included solely for convenience in locating relevant
portions of the statute.
PAGE
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request that notices to him be mailed at some other address, then directed to
him at such other address. Notice of any adjourned meeting of the shareholders
shall not be required if the time and place to which the meeting is adjourned
are announced at the meeting at which the adjournment is taken, but if after
the adjournment the Board or Chief Executive Officer fixes a new record date
for the adjourned meeting, notice of the adjourned meeting shall be given to
each shareholder of record on the new record date. (B.C.L. Section 605.)
SECTION 2.4 Quorum and Voting. Except as otherwise provided by law or
the certificate of incorporation, the holders of a majority of the shares
entitled to vote thereat shall constitute a quorum at any meeting of the
shareholders for the transaction of any business, but a lesser interest may
adjourn any meeting from time to time and from place to place until a quorum
is obtained. Any business may be transacted at any adjourned meeting that
might have been transacted at the original meeting. When a quorum is once
present to organize a meeting of shareholders, it is not broken by the
subsequent withdrawal of any shareholders. Directors shall, except as
otherwise required by law or the certificate of incorporation, be elected by a
plurality of the votes cast at a meeting of shareholders by the holders of
shares entitled to vote in the election. Any other corporate action taken by
vote of the shareholders shall, except as otherwise required by law or the
certificate of incorporation, be authorized by a majority of the votes cast at
a meeting of shareholders by the holders of shares entitled to vote thereon.
Every shareholder of record shall be entitled at every meeting of shareholders
to one vote for each share standing in his name on the record of shareholders,
unless otherwise provided in the certificate of incorporation. Neither
treasury shares, nor shares held by any other corporation, if a majority of
the shares entitled to vote in the election of directors of such other
corporation is held by the corporation, shall be voted at any meeting or
counted in determining the total number of outstanding shares then entitled to
vote. (B.C.L. Sections 608, 614.)
SECTION 2.5 Proxies. Every shareholder entitled to vote at a meeting of
the shareholders may authorize another person to act for him by proxy. Every
proxy must be in writing and signed by the shareholder or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven
months from the date thereof, unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the shareholder executing it,
except that a proxy which is entitled "irrevocable proxy" and which states
that it is irrevocable shall be irrevocable when and to the extent permitted
by law. (B.C.L. Section 609.)
SECTION 2.6 List of Shareholders at Meetings. A list of shareholders as
of the record date, certified by the Secretary or by the transfer agent of the
corporation, shall be produced at any meeting of shareholders upon the request
thereat or prior thereto of any shareholder. If the right to vote at any
meeting is challenged, the inspectors of election or person presiding thereat
shall require such list of shareholders to be produced as evidence of the
right of the persons challenged to vote at such meeting, and all persons who
appear from such list to be shareholders entitled to vote thereat may vote at
such meeting. (B.C.L. Section 607.)
SECTION 2.7 Waiver of Notice. Notice of a shareholders'
meeting need not be given to any shareholder who submits a signed waiver of
notice, in person or by proxy, whether before or after the meeting. The
attendance of any shareholder at a meeting, in person or by proxy, without
protesting prior to the conclusion of the meeting the lack of notice of such
meeting, shall constitute a waiver of notice by him. (B.C.L. Section 606.)
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SECTION 2.8 Inspectors at Shareholders' Meetings. The Board, in advance
of any shareholders' meeting, may appoint one or more inspectors to act at the
meeting or any adjournment thereof and to perform such duties thereat as are
prescribed by law. If inspectors are not so appointed, the person presiding
at a shareholders' meeting shall appoint one or more inspectors. In case any
person appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board in advance of the meeting or at the meeting by
the person presiding thereat. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector at such meeting with strict impartiality and according to
the best of his ability. (B.C.L. Section 610.)
SECTION 2.9 Business to Be Transacted at Shareholders' Meetings. No
business shall be transacted at any annual meeting of shareholders, except as
may be (i) specified in the notice of the meeting given by or at the direction
of the Board (including, if so specified, any shareholder proposal submitted
pursuant to the rules and regulations of the Securities and Exchange
Commission), (ii) otherwise brought before the meeting by or at the direction
of the Board or (iii) otherwise brought before the meeting in accordance with
the procedure set forth in the following paragraph, by a shareholder of the
corporation entitled to vote at such meeting.
For business to be brought by a shareholder before an annual meeting of
shareholders pursuant to clause (iii) above, the shareholder must have given
written notice thereof to the Secretary of the corporation, such notice to be
received at the principal executive offices of the corporation not less than
90 nor more than 120 days prior to the one year anniversary of the date of the
annual meeting of shareholders of the previous year; provided, however, that
in the event that the annual meeting of shareholders is called for a date that
is not within 30 days before or after such anniversary date, notice by the
shareholder must be received at the principal executive offices of the
corporation not later than the close of business on the tenth day following
the day on which the corporation's notice of the date of the meeting is first
given or made to the shareholders or disclosed to the general public (which
disclosure may be effected by means of a publicly available filing with the
Securities and Exchange Commission), whichever occurs first. A shareholder's
notice to the Secretary shall set forth, as to each matter the shareholder
proposes to bring before the annual meeting of shareholders, (i) a brief
description of the business proposed to be brought before the annual meeting
of shareholders and of the reasons for bringing such business before the
meeting and, if such business includes a proposal to amend either the
certificate of incorporation or these by-laws, the text of the proposed
amendment, (ii) the name and record address of the shareholder proposing such
business, (iii) the number of shares of each class of stock of the corporation
that are beneficially owned by such shareholder, (iv) any material interest of
the shareholder in such business and (v) such other information relating to
the proposal that is required to be disclosed in solicitations pursuant to the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Securities and Exchange Commission or other applicable law.
Notwithstanding anything in these by-laws to the contrary, no business shall
be conducted at an annual meeting of shareholders except in accordance with
the procedures set forth in this Section 2.9; provided, however, that nothing
in this Section 2.9 shall be deemed to preclude discussion by any shareholder
of any business properly brought before the annual meeting of shareholders in
accordance with such procedures. The chairman of an annual meeting of
shareholders shall, if the facts warrant, determine and declare to the meeting
that the business was not properly brought before the meeting in accordance
with the provisions of this Section 2.9, and if he should so determine, he
shall so declare to the meeting and any such business not properly brought
before the annual meeting of shareholders shall not be transacted.
PAGE
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ARTICLE III
DIRECTORS
SECTION 3.1 Powers, Number, Qualifications and Term of Office. The
business of the corporation shall be managed by its Board, which shall consist
of not less than seven persons, each of whom shall be at least twenty-one
years of age. Subject to such limitation, the number of directors shall be
fixed and may be increased or decreased from time to time by a majority of the
entire Board. Directors need not be shareholders. Except as otherwise
provided by law or these by-laws, the directors shall be elected at the annual
meetings of the shareholders, and each director shall hold office until the
next annual meeting of shareholders, and until his successor has been elected
and qualified. Newly created directorships resulting from an increase in the
number of directors and any vacancies occurring in the Board for any reason,
including vacancies occurring by reason of the removal of any of the directors
with or without cause, may be filled by vote of a majority of the directors
then in office, although less than a quorum exists. No decrease in the number
of directors shall shorten the terms of any incumbent director. A director
elected to fill a vacancy shall be elected to hold office for the unexpired
term of his predecessor. If the Board has not elected a Chairman of the Board
as an officer, it may choose a Chairman of the Board from among its members to
preside at its meetings. (B.C.L. Sections 701,702,703,705.)
SECTION 3.2 Regular Meetings. There shall be regular meetings of the
Board, which may be held on such dates and without notice or upon such notice
as the Board may from time to time determine. Regular meetings shall be held
at the principal office of the corporation within the State of New York or at
such other place either within or without the State of New York and at such
specific time as may be fixed by the Board from time to time. There shall
also be a regular meeting of the Board, which may be held without notice or
upon such notice as the Board may from time to time determine, after the
annual meeting of the shareholders or any special meeting of the shareholders
at which an election of directors is held. (B.C.L. Sections 710, 711.)
SECTION 3.3 Special Meetings. Special meetings of the Board may be held
at any place within or without the State of New York at any time when called
by the Chairman of the Board or the President or four or more directors.
Notice of the time and place of special meetings shall be given to each
director by serving such notice upon him personally within the City of New
York at least one day prior to the time fixed for such meeting, or by mailing
or telegraphing it, prepaid, addressed to him at his post office address, as
it appears on the books of the corporation, at least three days prior to the
time fixed for such meeting. Neither the call or notice nor any waiver of
notice need specify the purpose of any meeting of the Board. (B.C.L. Sections
710, 711.)
SECTION 3.4 Waiver of Notice. Notice of a meeting need not be given to
any director who signs a waiver of notice whether before or after the meeting,
or who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to him. (B.C.L. Section 711(c).)
SECTION 3.5 Quorum and Voting. One-third of the entire Board shall
constitute a quorum. A majority of the directors present, whether or not a
quorum is present, may adjourn any meeting to another time and place. Notice
of any adjournment shall be given to the directors who were not present at the
time of the adjournment and, unless the time and place of such adjournment are
announced at the meeting, to the other directors. The vote of a majority of
the directors present at the time of the vote, if a quorum is present at such
time, shall be the act of the Board, except where a larger vote is required by
law, the certificate of incorporation or these by-laws. (B.C.L. Sections 701,
708, 711(d).)
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SECTION 3.6 Action by the Board. Any reference in these by-laws to
corporate action to be taken by the Board shall mean such action at a meeting
of the Board. However, any action required or permitted to be taken by the
Board or any committee thereof may be taken without a meeting if all members
of the Board or the committee consent in writing to the adoption of a
resolution authorizing the action. The resolution and the written consent
thereto by the members of the Board or committee shall be filed with the
minutes of the proceedings of the Board or committee. Any one or more members
of the Board or any committee thereof may participate in a meeting of such
Board or committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall
constitute presence in person at the meeting. (B.C.L. Section 708.)
SECTION 3.7 Committees of the Board. The Board by resolution adopted by
a majority of the entire Board may designate from among its members one or
more committees, each consisting of three or more directors. Each such
committee shall have all the authority of the Board to the extent provided in
such resolution, except as limited by law. No such committee shall exercise
its authority in a manner inconsistent with any action, direction, or
instruction of the Board.
The Board may appoint a Chairman of any committee (except for the
Executive Committee, if one is established, in the case where the Chairman of
the Executive Committee has been elected pursuant to Section 4.1 of these
by-laws), who shall preside at meetings of their respective committees. The
Board may fill any vacancy in any committee and may designate one or more
directors as alternate members of such committee, who may replace any absent
member or members at any meeting of such committee. Each such committee shall
serve at the pleasure of the Board, but in no event beyond its first meeting
following the annual meeting of the shareholders.
All acts done and powers conferred by any committee pursuant to the
foregoing authorization shall be deemed to be and may be certified as being
done or conferred under authority of the Board.
A record of the proceedings of each committee shall be kept and
submitted at the next regular meeting of the Board.
At least one-third but not less than two of the members of any committee
shall constitute a quorum for the transaction of business, and the vote of a
majority of the members present at the time of the vote, if a quorum is
present at such time, shall be the act of the committee. If a committee or
the Board shall establish regular meetings of any committee, such meetings may
be held without notice or upon such notice as the committee may from time to
time determine. Notice of the time and place of special meetings of any
committee shall be given to each member of the committee in the same manner as
in the case of special meetings of the Board. Notice of a meeting need not be
given to any member of a committee who signs a waiver of notice whether before
or after the meeting, or who attends the meeting without protesting, prior
thereto or at its commencement, the lack of notice to him. Except as
otherwise provided in these by-laws, each committee shall adopt its own rules
of procedure. (B.C.L. Section 712.)
SECTION 3.8 Compensation of Directors. The Board shall have authority
to fix the compensation of directors for services in any capacity. (B.C.L.
Section 713(e).)
SECTION 3.9 Resignation and Removal of Directors. Any director may
resign at any time by giving written notice thereof to the Chief Executive
Officer or to the Board, and such resignation shall take effect at the time
therein specified without the necessity of further action. Any director may
be removed with or without cause by vote of the shareholders, or with cause by
action of the Board. (B.C.L. Section 706.)
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SECTION 3.10 The "Entire Board". As used in these by-laws the term "the
entire Board" or "the entire Board of Directors" means the total number of
directors which the corporation would have if there were no vacancies.
(B.C.L Section 702.)
SECTION 3.11 Nomination of Directors. Subject to the rights of holders
of any class or series of stock having a preference over the common shares as
to dividends or upon liquidation, nominations for the election of directors
may only be made (i) by the Board or a committee appointed by the Board or
(ii) by a shareholder of the corporation entitled to vote at the meeting at
which a person is to be nominated in accordance with the procedure set forth
in the following paragraph.
A shareholder may nominate a person or persons for election as directors
only if the shareholder has given written notice of its intent to make such
nomination to the Secretary of the corporation, such notice to be received at
the principal executive offices of the corporation (i) with respect to an
annual meeting of shareholders, not less than 90 nor more than 120 days prior
to the one year anniversary of the date of the annual meeting of shareholders
of the previous year; provided, however, that in the event that the annual
meeting of shareholders is called for a date that is not within 30 days before
or after such anniversary date, notice by the shareholder must be received at
the principal executive offices of the corporation not later than the close of
business on the tenth day following the day on which the corporation's notice
of the date of the meeting is first given or made to the shareholders or
disclosed to the general public (which disclosure may be effected by means of
a publicly available filing with the Securities and Exchange Commission),
whichever occurs first and (ii) with respect to a special meeting of
shareholders called for the purpose of electing directors, not later than the
close of business on the tenth day following the day on which the
corporation's notice of the date of the meeting is first given or made to the
shareholders or disclosed to the general public (which disclosure may be
effected by means of a publicly available filing with the Securities and
Exchange Commission), whichever occurs first. A shareholder's notice to the
Secretary shall set forth (i) the name and record address of the shareholder
who intends to make such nomination, (ii) the name, age, business and
residence addresses and principal occupation of each person to be nominated,
(iii) the number of shares of each class of stock of the corporation that are
beneficially owned by the shareholder, (iv) a description of all arrangements
and understandings between the shareholder and each proposed nominee and any
other person or persons (including their names) pursuant to which the
nomination(s) are to be made by such shareholder, (v) such other information
relating to the person(s) that is required to be disclosed in solicitations
for proxies for election of directors pursuant to the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Securities and
Exchange Commission or other applicable law and (vi) the written consent of
each proposed nominee to be named as a nominee and to serve as a director of
the corporation if elected, together with an undertaking, signed by each
proposed nominee, to furnish to the corporation any information it may request
upon the advice of counsel for the purpose of determining such proposed
nominee's eligibility to serve as a director. The chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the foregoing procedures and if he
should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
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ARTICLE IV
OFFICERS AND OFFICIALS
SECTION 4.1 Officers. The Board shall elect a Chairman of the Board or
a President or both, and a Secretary, a Treasurer and a Comptroller and may
elect such other officers, including a Chairman of the Executive Committee and
one or more Vice Chairmen of the Board, as the Board shall determine. Each
officer shall have such powers and perform such duties as are provided in
these by-laws and as may be provided from time to time by the Board or by the
Chief Executive Officer. Each officer shall at all times be subject to the
control of the Board, and any power or duty assigned to an officer by these
by-laws or the Board or the Chief Executive Officer shall be subject to
control, withdrawal or limitation by the Board. (B.C.L. Section 715.)
SECTION 4.2 Qualifications. Any person may hold two or more offices,
except that neither the Chairman nor the President shall be Secretary or
Treasurer. The Board may require any officer to give security for the
faithful performance of his duties. (B.C.L. Sections 715(e) and (f).)
SECTION 4.3 Election and Termination. The Board shall elect officers at
the meeting of the Board following the annual meeting of the shareholders and
may elect additional officers and fill vacancies at any other time. Unless
the Board shall otherwise specify, each officer shall hold office until the
meeting of the Board following the next annual meeting of the shareholders,
and until his successor has been elected and qualified, except as hereinafter
provided. The Board may remove any officer or terminate his duties and
powers, at any time, with or without cause. Any officer may resign at any
time by giving written notice thereof to the Chief Executive Officer or to the
Board, or by retiring or by leaving the employ of the corporation (without
being employed by a subsidiary or affiliate) and any such action shall take
effect as a resignation without necessity of further action. The Chief
Executive Officer may suspend any officer until the next meeting of the Board.
(B.C.L. Sections 715, 716.)
SECTION 4.4 Delegation of Powers. Each officer may delegate to any
other officer and to any official, employee or agent of the corporation, such
portions of his powers as he shall deem appropriate, subject to such
limitations and expirations as he shall specify, and may revoke such
delegation at any time.
SECTION 4.5 Chairman of the Board. The Chairman of the Board may be,
but need not be, a person other than the Chief Executive Officer of the
corporation. The Chairman of the Board may be, but need not be, an officer or
employee of the corporation. The Chairman of the Board shall preside at
meetings of the Board of Directors and shall establish agendas for such
meetings. In addition, he shall assure that matters of significant interest
to shareholders and the investment community are addressed by management. The
Chairman of the Board shall be an ex-officio member of each of the standing
committees of the Board, except for the Executive Committee, of which he shall
be a member.
SECTION 4.6 Chief Executive Officer. The Chief Executive Officer shall,
subject to the direction of the Board, have general and active control of the
affairs and business of the corporation and general supervision of its
officers, officials, employees and agents. He shall preside at all meetings
of the shareholders. He shall also preside at all meetings of the Board and
any committee thereof of which he is a member, unless the Board or such
committee shall have chosen another chairman. He shall see that all orders
and resolutions of the Board are carried into effect, and in addition he shall
have all the powers and perform all the duties generally appertaining to the
office of the Chief Executive Officer of a corporation.
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The Chief Executive Officer shall designate the person or persons who
shall exercise his powers and perform his duties in his absence or disability
and the absence or disability of the President.
SECTION 4.7 President. The President may be Chief Executive Officer if
so designated by the Board. If not, he shall have such powers and perform
such duties as are prescribed by the Chief Executive Officer or by the Board,
and, in the absence or disability of the Chief Executive Officer, he shall
have the powers and perform the duties of the Chief Executive Officer, except
to the extent that the Board shall have otherwise provided.
SECTION 4.8 Chairman of the Executive Committee. The Chairman of the
Executive Committee shall be a member of the Executive Committee. He shall
preside at meetings of the Executive Committee and shall have such other
powers and perform such other duties as are prescribed by the Board or by the
Chief Executive Officer.
SECTION 4.9 Vice Chairman of the Board. Each Vice Chairman of the Board
shall have such powers and perform such duties as are prescribed by the Chief
Executive Officer or by the Board.
SECTION 4.10 Secretary. The Secretary shall attend all meetings and
keep the minutes of all proceedings of the shareholders, the Board, the
Executive Committee and any other committee unless it shall have chosen
another secretary. He shall give notice of all such meetings and all other
notices required by law or by these by-laws. He shall have custody of the
seal of the corporation and shall have power to affix it to any instrument and
to attest thereto. He shall have charge of the record of shareholders
required by law, which may be kept by any transfer agent or agents under his
direction. He shall maintain the records of directors and officers as
required by law. He shall have charge of all documents and other records,
except those for which some other officer or agent is properly accountable,
and shall generally perform all duties appertaining to the office of secretary
of a corporation. (B.C.L. Sections 605, 624, 718.)
SECTION 4.11 Treasurer. The Treasurer shall have the care and custody
of all of the funds, securities and other valuables of the corporation, except
to the extent they shall be entrusted to other officers, employees or agents
by direction of the Chief Executive Officer or the Board. The Treasurer may
hold the funds, securities and other valuables in his care in such vaults or
safe deposit facilities, or may deposit them in and entrust them to such bank,
trust companies and other depositories, all as he shall determine with the
written concurrence of the Chief Executive Officer or his delegate. The
Treasurer shall account regularly to the Comptroller for all of his receipts,
disbursements and deliveries of funds, securities and other valuables.
The Treasurer or his delegate, jointly with the Chief Executive Officer
or his delegate, may designate in writing and certify to any bank, trust
company, safe deposit company or other depository the persons (including
themselves) who are authorized, singly or jointly as they shall specify in
each case, to open accounts in the name of the corporation with banks, trust
companies and other depositories, to deposit therein funds, instruments and
securities belonging to the corporation, to draw checks or drafts on such
accounts in amounts not exceeding the credit balances therein, to order the
delivery of securities therefrom, to rent safe deposit boxes or vaults in the
name of the corporation, to have access to such facility and to deposit
therein and remove therefrom securities and other valuables. Any such
designation and certification shall contain the regulations, terms and
conditions applicable to such authority and may be amended or terminated at
any time.
Such powers may also be granted to any other officer, official, employee
or agent of the corporation by resolution of the Board or by power of attorney
authorized by the Board.<PAGE>
SECTION 4.12 Comptroller. The Comptroller shall be the chief accounting
officer of the corporation and shall have control of all its books of account.
He shall see that correct and complete books and records of account are kept
as required by law, showing fully, in such form as he shall prescribe, all
transactions of the corporation, and he shall require, keep and preserve all
vouchers relating thereto for such period as may be necessary.
The Comptroller shall render periodically such financial statements and
such other reports relating to the corporation's business as may be required
by the Chief Executive Officer or the Board. He shall generally perform all
duties appertaining to the office of comptroller of a corporation. (B.C.L.
Section 624.)
SECTION 4.13 Officials and Agents. The Chief Executive Officer or his
delegate may appoint such officials and agents of the corporation as the
conduct of its business may require and assign to them such titles, powers,
duties and compensation as he shall see fit and may remove or suspend or
modify such titles, powers, duties or compensation at any time with or without
cause.
ARTICLE V
SHARES
SECTION 5.1 Certificates. The shares of the corporation shall be
represented by certificates in such form, consistent with law, as prescribed
by the Board, and signed and sealed as provided by law. (B.C.L. Section 508.)
SECTION 5.2 Transfer of Shares. Except as provided in the certificate
of incorporation, upon surrender to the corporation or to its transfer agent
of a certificate representing shares, duly endorsed or accompanied with proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto and to cancel the old certificate. The corporation shall be entitled
to treat the holder of record of any shares as the holder in fact thereof,
and, accordingly, shall not be bound to recognize any equitable or other claim
to or interest in such shares on the part of any other person, whether or not
the corporation shall have express or other notice thereof, except as may be
required by law. (B.C.L. Section 508(d).)
SECTION 5.3 Record of Shareholders. The corporation shall keep at its
principal office within the State of New York, or at the office of its
transfer agent or registrar in the State of New York, a record in written
form, or in any other form capable of being converted into written form within
a reasonable time, which shall contain the names and addresses of all
shareholders, the numbers and class of shares held by each, and the dates when
they respectively became the owners of record thereof. (B.C.L. Section 624(a).)
SECTION 5.4 Lost or Destroyed Certificates. In case of the alleged
loss, destruction or mutilation of a certificate or certificates representing
shares, the Board may direct the issuance of a new certificate or certificates
in lieu thereof upon such terms and conditions in conformity with law as the
Board may prescribe. (B.C.L. Section 508(e).)
SECTION 5.5 Fixing Record Date. The Board or the Chief Executive
Officer may fix, in advance, a date as the record date for the purpose of
determining the shareholders entitled to notice of or to vote at any meeting
of shareholders or any adjournment thereof, or for the purpose of determining
shareholders entitled to receive payment of any dividend or the allotment of
any rights, or for the purpose of any other action. Such date shall not be
more than fifty nor less than ten days before the date of such meeting, nor
more than fifty days prior to any other action. (B.C.L. Section 604.)
<PAGE>
ARTICLE VI
INDEMNIFICATION OF CORPORATION PERSONNEL
SECTION 6.1 Directors and Officers. The corporation shall, to the
fullest extent permitted by applicable law as the same exists or may hereafter
be in effect, indemnify any person who is or was or has agreed to become a
director or officer of the corporation and who is or was made or threatened to
be made a party to, and may, in its discretion, indemnify, any person who is
or was or has agreed to become a director or officer and is otherwise involved
in, any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, legislative or investigative, including an
action by or in the right of the corporation to procure a judgment in its
favor and an action by or in the right of any other corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, which such person is serving or has served
or has agreed to serve in any capacity at the request of the corporation, by
reason of the fact that he is or was or has agreed to become a director or
officer of the corporation, or is or was serving or has agreed to serve such
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise in any capacity, against judgments, fines, amounts paid or to
be paid in settlement, penalties, costs, charges and expenses, including
attorneys' fees, incurred in connection with such action or proceeding or any
appeal thereof; provided, however, that no indemnification shall be provided
to any such person if a judgment or other final adjudication adverse to the
director or officer establishes that (i) his acts were committed in bad faith
or were the result of active and deliberate dishonesty and, in either case,
were material to the cause of action so adjudicated, or (ii) he personally
gained in fact a financial profit or other advantage to which he was not
legally entitled. The benefits of this Section 6.1 shall extend to the heirs,
executors, administrators and legal representatives of any person entitled to
indemnification under this Section. (B.C.L. Sections 721, 722.)
SECTION 6.2 Other Personnel. The Board in its discretion may authorize
the corporation to indemnity any person, other than a director or officer, for
expenses incurred or other amounts paid in any civil or criminal action, suit
or proceeding, to which such person was, or was threatened to be, made a party
by reason of the fact that he, his testator or intestate is or was an employee
of the corporation.
SECTION 6.3 Other Indemnification. The corporation may indemnify any
person to whom the corporation is permitted by applicable law or these by-laws
to provide indemnification or the advancement of expenses, whether pursuant to
rights granted pursuant to, or provided by, the New York Business Corporation
Law or any other law or these by-laws or other rights created by (i) a
resolution of shareholders, (ii) a resolution of directors, or (iii) an
agreement providing for such indemnification, it being expressly intended that
these by-laws authorize the creation of other rights in any such manner. The
right to be indemnified and to the reimbursement or advancement of expenses
incurred in defending a proceeding in advance of its final disposition
authorized by this Section 6.3, shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the certificate of incorporation, by-laws, agreement, vote of shareholders or
disinterested directors or otherwise. (B.C.L. Sections 721, 723(c).)
SECTION 6.4 Miscellaneous. The right to indemnification conferred by
Section 6.1, and any indemnification extended under Section 6.3, (i) is a
contract right pursuant to which the person entitled thereto may bring suit as
if the provisions thereof were set forth in a separate written contract
between the corporation and such person, (ii) is intended to be retroactive to
events occurring prior to the adoption of this Article VI, to the fullest
extent permitted by applicable law, and (iii) shall continue to exist after
the rescission or restrictive modification thereof with respect to events
occurring prior thereto.<PAGE>
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Fiscal Year. The fiscal year of the corporation shall be
the calendar year.
SECTION 7.2 Voting of Shares of Other Corporations. The Board may
authorize any officer, agent or proxy to vote shares of any domestic or
foreign corporation of any type or kind standing in the name of this
corporation and to execute written consents respecting the same, but in the
absence of such specific authorization the Chief Executive Officer of this
corporation or his delegate may vote such shares and may execute proxies and
written consents with relation thereto.
ARTICLE VIII
AMENDMENTS
SECTION 8.1 General. Except as otherwise provided by law, these by-
laws may be amended or repealed or new by-laws may be adopted by the Board of
Directors, or by vote of the holders of the shares at the time entitled to
vote in the election of any directors, except that the Board may not amend or
repeal any by-law, or adopt any new by-law with respect to the subject matter
of any by-law, which specifically states that it may be amended or repealed
only by the shareholders. (B.C.L. Section 601.)
SECTION 8.2 Amendment of this Article. This Article VIII may be amended
or repealed only by the shareholders entitled to vote hereon as provided in
Section 8.1 above.
PAGE
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Exhibit 10.1
AMERICAN EXPRESS SENIOR EXECUTIVE SEVERANCE PLAN
EFFECTIVE JANUARY 1, 1994
PAGE
<PAGE>
AMERICAN EXPRESS SENIOR EXECUTIVE SEVERANCE PLAN
INTRODUCTION
The Board of Directors of American Express Company established the American
Express Senior Executive Severance Plan (hereinafter referred to as the
"Plan") effective as of January 1, 1994, to provide for severance benefits for
certain eligible executive officers of American Express Company and its
participating subsidiaries whose employment is terminated under certain
conditions. Severance benefits under the Plan are to be provided to such
eligible executives in exchange for a signed agreement and release.
ARTICLE ONE
DEFINITIONS
1.1 "Administration Committee" means the Committee established and
appointed by the Board of Directors or by a committee of the Board of
Directors.
1.2 "Affiliated Company" means any corporation which is a member of a
controlled group of corporations (determined in accordance with
Section 4l4(b) of the Code) of which the Company is a member and any
other trade or business (whether or not incorporated) which is
controlled by, or under common control (determined in accordance with
Section 4l4(c) of the Code) with the Company, but which has not been
admitted to participation in the Plan.
1.3 "Base Salary" means the regular basic cash remuneration before
deductions for taxes and other items withheld, payable to an Employee
for services rendered to an Employing Company, but not including pay
for bonuses, incentive compensation, special pay, awards or
commissions.
1.4 "Board of Directors" means the board of directors of the Company.
1.5 "Bonus" means annual incentive compensation paid to an Employee over
and above Base Salary earned and paid in cash or otherwise under any
executive bonus or sales incentive plan or program of an Employing
Company.
1.6 "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
1.7 "Company" means American Express Company, a New York corporation, its
successors and assigns.
1.8 "Comparable Position" means a job with the Company, an Employing
Company, an Affiliated Company or successor company at the same or
higher Base Salary as an Employee's current job and at a work
location within reasonable commuting distance from an Employee's
home, as determined by such Employee's Employing Company.
1.9 "Completed Year of Service" means the period of time beginning with
an Employee's date of hire or the anniversary of such date of hire
and ending twelve months thereafter.
1.10 "CBN Committee" means the Compensation, Benefits and Nominating
Committee of the Board of Directors of the Company.
1.11 "Employee" means any person, at the senior executive level as defined
by the Administration Committee, employed on a regular full-time
PAGE
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basis (i.e., an employee whose scheduled workweek is consistent with
the standard workweek schedule of a business unit or department) or
regular part-time basis (i.e., an employee who is scheduled to work
at least 14 hours per week, but fewer than the hours of a regular
full-time employee) by an Employing Company (i) within the United
States or (ii) outside the United States if a career expatriate in
the Employing Company's international expatriate program, who
receives from an Employing Company a regular stated compensation paid
in whole or in part in United States currency. Independent
contractors and employees of independent contractors who render
services to an Employing Company shall not be considered Employees
under the Plan.
1.12 "Employing Company" means the Company and such of its subsidiaries
and affiliated companies and other trades or businesses as have
adopted the Plan and have been admitted to participation by the CBN
Committee or any one or more of them, and any corporation or other
entity succeeding to the rights and assuming the obligations of any
such company hereunder in the manner described in Section 6.1.
1.13 "Employment" means Credited Service as an employee with an Employing
Company, an Affiliated Company or a Predecessor Company.
1.14 "ERISA" means the Employee Retirement Income Security Act of l974, as
amended from time to time.
1.15 "Leave of Absence" means the period during which an Employee is
absent from work pursuant to a leave of absence granted by an
Employing Company.
1.16 "Plan" means the American Express Senior Executive Severance Plan, as
set forth herein and as hereafter amended from time to time.
1.17 "Predecessor Company" means any corporation or unincorporated entity
heretofore or hereafter merged or consolidated with or otherwise
absorbed by an Employing Company or any substantial part of the
business of which has been or shall be acquired by an Employing
Company.
1.18 "Plan Year" means calendar year 1994 and any subsequent calendar
year.
1.19 "Retirement" means early, normal or deferred retirement as defined in
and meeting the terms and conditions of the American Express
Retirement Plan or IDS Retirement Plan, as amended, or any successor
plans.
1.20 "Separation Period" means the period of time over which an Employee
receives severance benefits under the Plan in biweekly or other
installment payments.
1.21 "Termination of Active Employment" means the date on which an
Employee ceases performing services for an Employing Company.
1.22 The masculine pronoun shall be construed to mean the feminine and the
singular shall be construed to mean the plural, wherever appropriate
herein.
1.23 Headings in this document are for identification purposes only and do
not constitute a part of the Plan.
-2-<PAGE>
ARTICLE TWO
PARTICIPATION
2.1 Eligibility for Participation. Each Employee shall be eligible to
participate in the Plan in the event his employment is terminated by
an Employing Company for one of the following reasons:
2.1.1 Reduction in force;
2.1.2 Position elimination;
2.1.3 Office closing;
2.1.4 Inability to perform position requirements;
2.1.5 Poor performance;
2.1.6 Mutually satisfactory resignation;
2.1.7 Transfer to unsuitable position; or
2.1.8 Relocation, provided Employee continues at work through
transition period.
The CBN Committee may, in its discretion, grant participation
eligibility to any Employee or group of Employees employed in a
business unit of the Company or an Employing Company who terminate
employment due to a sale of such business unit not later than six
months following such sale.
2.2 Limitation on Eligibility. In the event an Employee who is otherwise
eligible for participation in the Plan is offered a Comparable
Position (whether the position is accepted or rejected by the
Employee), he will not be eligible to participate in the Plan with
respect to the resultant termination of employment for failure to
accept such Comparable Position.
2.3 Ineligibility for Participation. An Employee is ineligible to
participate in the Plan in the event his employment by an Employing
Company terminates for a reason other than those enumerated in
Section 2.1 above, including, but not limited to, the following:
2.3.1 Voluntary resignation;
2.3.2 Failure to report for work;
2.3.3 Failure to return from leave;
2.3.4 Return from a Leave of Absence which extends beyond the
policy reinstatement period, if applicable, and no
position is available;
2.3.5 Excessive absenteeism or lateness;
2.3.6 Merger, acquisition, sale, transfer or reorganization of
all or part of the Employing Company where employment is
offered by a Successor Company, whether affiliated or
unaffiliated with the Employing Company;
2.3.7 Violation of a policy or procedure of the Employing
Company, insubordination, unwillingness to perform the
duties of a position, suspected dishonesty, or other
misconduct;
2.3.8 Retirement, including the acceptance of any Employing
Company sponsored retirement incentive; provided,
however, that in the event an Employee is otherwise
eligible for a severance pay benefit in accordance with
Section 2.1 above and also eligible for Retirement, the
Employee shall be eligible to participate in the Plan in
accordance with Article 3 below; or
2.3.9 Death.
-3-<PAGE>
ARTICLE THREE
AMOUNT OF BENEFITS
3.1 Amount of Benefits. The severance benefit payable to an eligible
Employee under the Plan shall be based on his Completed Years of
Service with the Company, Employing Company or an Affiliated Company.
The formula for determining an Employee's severance benefit payment
shall be calculated by first adding together (i) the Employee's
annual Base Salary in effect immediately prior to the date of
Termination of Active Employment and (ii) the Employee's annual Bonus
approved for the performance year completed prior to the date of
Termination of Active Employment, or the annual Bonus applicable to
the performance year completed prior to the date of notification by
the Employing Company of Termination of Active Employment, or the
annual Bonus applicable to the performance year of the date of
Termination of Active Employment, all as determined by the
Administration Committee. In the case of a recently hired Employee
who has not yet received a Bonus, the Employee's designated target
Bonus may be used as the subparagraph (ii) portion of the calculation
above. The sum of subparagraphs (i) and (ii) above shall then be
divided by 52 to calculate the weekly severance benefit. The amount
of the total severance benefit shall be determined according to the
following schedule:
Schedule for Severance Pay Benefits
Number of Weekly
Number of Weekly Severance Benefit
Severance Benefit Payments:
Completed Years of Payments: Planning and Policy
Service Executives Committee
12 or fewer 52 104
13 56 104
14 60 104
15 65 104
16 69 104
17 73 104
18 or more 78 Maximum 104 Maximum
3.2 Limitations on Amount of Severance Benefits. The number of weeks of
severance benefits payable to any eligible Employee under the Plan
shall not exceed 104 weeks. Such benefits payable under the Plan
shall be inclusive of and offset by any other severance or
termination payment made by an Employing Company, including, but not
limited to, any amounts paid pursuant to federal, state, local or
foreign government worker notification (e.g., Worker Adjustment and
Retraining Notification Act) or office closing requirements.
3.3 Reemployment. In the event an Employee is reemployed by the
Employing Company or an Affiliated Company within the period covered
by the schedule of severance benefits in Section 3.1 above, the
severance benefits, if any, that are in excess of the number of weeks
between the prior active Employment termination date and the rehire
date shall be repaid by the Employee or withheld by the Employing
Company, as the case may be. In the further event an eligible
Employee who is receiving severance benefits under the Plan is later
rehired by an Employing Company or an Affiliated Company, and
Employment later terminates under conditions making such Employee
-4-<PAGE>
eligible for severance benefits under the Plan, the amount of the
second severance benefit will be based on such Employee's rehire date
and not the original date of Employment; provided, however, that any
benefits withheld or repaid in accordance with the preceding sentence
shall be additionally paid to the terminating Employee.
3.4 Withholding Tax. The Employing Company shall deduct from the amount
of any severance benefits payable under the Plan, any amount required
to be withheld by the Employing Company by reason of any law or
regulation, for the payment of taxes or otherwise to any federal,
state, local or foreign government. In determining the amount of any
applicable tax, the Employing Company shall be entitled to rely on
the number of personal exemptions on the official form(s) filed by
the Employee with the Employing Company for purposes of income tax
withholding on regular wages.
3.5 Requirement of Signed Agreement and Release. Payment of severance
benefits under the Plan is conditioned upon the Employee signing an
Agreement and Release with his Employing Company including
appropriate restrictive covenants in a form satisfactory to the
Company.
ARTICLE FOUR
METHOD OF PAYMENT
4.1 Payment. A severance benefit under the Plan may be paid in biweekly
or other installments as determined by the Administration Committee
during the Separation Period.
4.2 Inactive Employment Status. During the Separation Period (where
severance benefits are paid in biweekly or other installments) the
Employee receiving such payments will remain in an inactive
Employment status until receipt of such payments is completed, at
which time Employment will be terminated. During the Separation
Period, certain other employee benefits may be continued, payment for
which shall be deducted from such severance payments in accordance
with the Employee's previously elected benefit coverage.
4.3 Limitations on Severance Payments. In no event shall the period of
time during which an Employee receives severance payments exceed 104
weeks. Nothing in this Section shall affect the total number of
weeks payable under the Plan pursuant to Section 3.1, including, but
not limited to, the 104-week maximum payment.
4.4 Death. In the event an Employee dies before full receipt of
severance benefits payable under the Plan, the remaining severance
benefits will be paid to the legal representative of such Employee's
estate in a lump sum as soon as practicable after receipt of notice
of such death and evidence satisfactory to the Company of the payment
or provision for the payment of any estate, transfer, inheritance or
death taxes which may be payable with respect thereto.
ARTICLE FIVE
ADMINISTRATION OF THE PLAN
5.1 Powers of the Employing Company. The Employing Company shall have
such powers, authorities and discretion as are necessary or
-5-<PAGE>
appropriate in order to carry out its duties under the Plan,
including, but not limited to, the power:
5.1.1 To obtain such information as it shall deem necessary or
appropriate in order to carry out its duties under the Plan;
5.1.2 To make determinations with respect to the grounds for
termination of employment of any Employee; and
5.1.3 To establish and maintain necessary records.
5.2 Employing Company Authority. Nothing contained in the Plan shall be
deemed to qualify, limit or alter in any manner the Employing
Company's sole and complete authority and discretion to establish,
regulate, determine or modify at any time, the terms and conditions
of employment, including, but not limited to, levels of employment,
hours of work, the extent of hiring and employment termination, when
and where work shall be done, marketing of its products, or any other
matter related to the conduct of its business or the manner in which
its business is to be maintained or carried on, in the same manner
and to the same extent as if the Plan were not in existence.
5.3 Administration Committee Duties and Powers. The Administration
Committee shall be responsible for the general administration and
interpretation of the Plan and the proper execution of its provisions
and shall have full discretion to carry out its duties. The
Administration Committee shall be the "Administrator" of the Plan and
shall be, in its capacity as Administrator, a "Named Fiduciary," as
such terms are defined or used in ERISA. For the purposes of
carrying out its duties as Administrator, the Administration
Committee may, in its sole discretion, allocate its responsibilities
under the Plan among its members, and may, in its sole discretion,
designate persons other than members of the Administration Committee
to carry out such of its responsibilities under the Plan as it may
deem fit. In addition to the powers of the Administration Committee
specified elsewhere in the Plan, the Administration Committee shall
have all discretionary powers necessary to discharge its duties under
the Plan, including, but not limited to, the following discretionary
powers and duties:
5.3.1 To interpret or construe the Plan, and resolve
ambiguities, inconsistencies and omissions;
5.3.2 To make and enforce such rules and regulations and
prescribe the use of such forms as it deems necessary or appropriate
for the efficient administration of the Plan; and
5.3.3 To decide all questions on appeal concerning the Plan
and the eligibility of any person to participate in the Plan.
5.4 Determinations. The determination of the Administration Committee as
to any question involving the general administration and
interpretation or construction of the Plan shall be within its sole
discretion and shall be final, conclusive and binding on all persons,
except as otherwise provided herein or by law.
5.5 Claims Review Procedure. Consistent with the requirements of ERISA
and the regulations thereunder as promulgated by the Secretary of
Labor from time to time, the following claims review procedure shall
-6-<PAGE>
be followed with respect to the denial of severance benefits to any
Employee:
5.5.1 Within thirty (30) days from the date of an Employee's
termination of active Employment, the Employing Company shall furnish
such Employee either an agreement and release offering severance
benefits under the Plan or notice of such Employee's ineligibility
for or denial of severance benefits, either in whole or in part.
Such notice from the Employing Company will be in writing and sent to
the Employee or the legal representatives of his estate stating the
reasons for such ineligibility or denial and, if applicable, a
description of additional information that might cause a
reconsideration by the Administration Committee or its delegate of
the decision and an explanation of the Plan's claims review
procedure. In the event such notice is not furnished within thirty
(30) days, any claim for severance benefits shall be deemed denied
and the Employee shall be permitted to proceed to Section 5.5.2
below.
5.5.2 Within sixty (60) days after receiving notice of such
denial or ineligibility or within ninety (90) days after employment
termination if no notice is received, the Employee, the legal
representatives of his estate or a duly authorized representative may
then submit to the Administration Committee a written request for a
review of such decision of denial.
5.5.3 The Administration Committee will review the claim and
within sixty (60) days (or one hundred twenty (120) days in special
circumstances) provide a written response to the appeal setting forth
specific reasons for such decision. In the event the decision on
review is not furnished within such time period, the claim shall be
deemed denied.
ARTICLE SIX
SUCCESSOR COMPANIES AND PLAN MERGERS
6.1 Successor Companies. Any corporation which succeeds to the business
and assets of the Company or any part of its operations, may by
appropriate resolution adopt the Plan and shall thereupon succeed to
such rights and assume such obligations hereunder as the Company and
said corporation shall have agreed upon in writing. Any corporation
which succeeds to the business of any Employing Company other than
the Company, or any part of the operations of such Employing Company,
may by appropriate resolution adopt the Plan and shall thereupon
succeed to such rights and assume such obligations hereunder as such
Employing Company and said corporation shall have agreed upon in
writing; provided, however, that such adoption and the terms thereof
agreed upon in such writing have been approved by the Company.
ARTICLE SEVEN
AMENDMENT AND TERMINATION
7.1 Right to Amend or Terminate. The Company reserves the right, by
action of the Board of Directors or the CBN Committee, to amend or
terminate this Plan in whole or in part at any time and from time to
time, and any amendment or effective date of termination may be given
retroactive effect.
-7-<PAGE>
7.2 Termination by an Employing Company. Any Employing Company other
than the Company may withdraw from participation in the Plan at any
time by delivering to the Administration Committee written
notification to that effect signed by such Employing Company's chief
executive officer or his delegate. Withdrawal by any Employing
Company pursuant to this paragraph or complete discontinuance of
severance benefits under the Plan by any Employing Company other than
the Company, shall constitute termination of the Plan with respect to
such Employing Company.
7.3 Limitation on Benefits. In the event any Employing Company withdraws
from participation or the Company terminates the Plan as provided in
this Article Seven, no Employee shall be entitled to receive benefits
hereunder for Employment either before or after such action.
ARTICLE EIGHT
FINANCIAL PROVISIONS
8.1 Funding. All severance benefits payable under the Plan shall be
payable and provided for solely from the general assets of the
Employing Company in accordance with the Plan, at the time such
severance benefits are payable, unless otherwise determined by the
Employing Company. The Employing Company shall not be required to
establish any special or separate fund or to make any other
segregation of assets to assure the payment of any severance benefits
under the Plan.
ARTICLE NINE
LIABILITY AND INDEMNIFICATION
9.1 Standard of Conduct. To the extent permitted by ERISA and other
applicable law, no member (which term, as used in this Article Nine,
shall include any employee of any Employing Company designated to
carry out any responsibility of the Administration Committee pursuant
to Section 5.3 above) of the Administration Committee shall be liable
for anything done or omitted to be done by him in connection with the
Plan, unless the act or omission claimed to be the basis for
liability amounted to a failure to act in good faith for a purpose
which such member reasonably believed to be in accordance with the
intent of the Plan. The Company or Employing Company as applicable
hereby indemnifies each person made, or threatened to be made, a
party to an action or proceeding, whether civil or criminal, or
against whom any claim or demand is made, by reason of the fact that
he, his testator or intestate, was or is a member of the
Administration Committee, against judgments, fines, amounts paid in
settlement and reasonable expenses (including attorney's fees)
actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein, or as a result of such claim or
demand, if such member of the Administration Committee acted in good
faith for a purpose which he reasonably believed to be in accordance
with the intent of the Plan and, in criminal actions or proceedings,
in addition, had no reasonable cause to believe that his conduct was
unlawful.
9.2 Presumption of Good Faith. The termination of any such civil or
criminal action or proceeding or the disposition of any such claim or
demand, by judgment, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not in itself create a
-8-<PAGE>
presumption that any such member of the Administration Committee did
not act in good faith for a purpose which he reasonably believed to
be in accordance with the intent of the Plan or that he had
reasonable cause to believe that his conduct was unlawful.
9.3 Successful Defense. A person who has been wholly successful, on the
merits or otherwise, in the defense of a civil or criminal action or
proceeding or claim or demand of the character described in Section
9.1 above shall be entitled to indemnification as authorized in such
Section 9.1.
9.4 Unsuccessful Defense. Except as provided in Section 9.3 above, any
indemnification under Sections 9.1 and 9.2 above, unless ordered by a
court of competent jurisdiction, shall be made by the Company only if
authorized in the specific case:
9.4.1 By the Board of Directors acting by a quorum
consisting of directors who are not parties to such
action, proceeding, claim or demand, upon a finding
that the member of the Administration Committee has
met the standard of conduct set forth in Section 9.1
above; or
9.4.2 If a quorum under Section 9.4.1 above is not
obtainable with due diligence:
9.4.2.1 By the Board of Directors upon the
opinion in writing of independent
legal counsel (who may be counsel to
any Employing Company) that
indemnification is proper in the
circumstances because the standard of
conduct set forth in Section 9.1 above
has been met by such member of the
Administration Committee; or
9.4.2.2 By the shareholders of the Company
upon a finding that the member of the
Administration Committee has met the
standard of conduct set forth in such
Section 9.1 above.
9.5 Advance Payments. Expenses incurred in defending a civil or criminal
action or proceeding or claim or demand may be paid by the Company or
Employing Company as applicable in advance of the final disposition
of such action or proceeding, claim or demand, if authorized in the
manner specified in Section 9.4 above, except that, in view of the
obligation of repayment set forth in Section 9.6 below, there need be
no finding or opinion that the required standard of conduct has been
met.
9.6 Repayment of Advance Payments. All expenses incurred in defending a
civil or criminal action or proceeding, claim or demand, which are
advanced by the Company or Employing Company as applicable under
Section 9.5 above shall be repaid in case the person receiving such
advance is ultimately found, under the procedures set forth in this
Article Nine, not to be entitled to indemnification or, where
indemnification is granted, to the extent the expenses so advanced by
the Company exceed the indemnification to which he is entitled.
-9-<PAGE>
9.7 Right to Indemnification. Notwithstanding the failure of the Company
or Employing Company as applicable to provide indemnification in the
manner set forth in Section 9.4 or 9.5 above, and despite any
contrary resolution of the Board of Directors or of the shareholders
in the specific case, if the member of the Administration Committee
has met the standard of conduct set forth in Section 9.1 above, the
person made or threatened to be made a party to the action or
proceeding or against whom the claim or demand has been made, shall
have the legal right to indemnification from the Company or Employing
Company as applicable as a matter of contract by virtue of this Plan,
it being the intention that each such person shall have the right to
enforce such right of indemnification against the Company or
Employing Company as applicable in any court of competent
jurisdiction.
ARTICLE TEN
MISCELLANEOUS
10.1 No Right to Continued Employment. Nothing in the Plan shall be
construed as giving any Employee the right to be retained in the
employ of any Employing Company or any right to any payment
whatsoever, except to the extent of the severance benefits provided
for by the Plan. Each Employing Company expressly reserves the right
to dismiss any Employee at any time and for any reason without
liability for the effect which such dismissal might have upon him as
a participant of the Plan.
10.2 Construction. This Plan shall be governed by and construed in
accordance with the substantive laws but not the choice of law rules
of the state of New York, except to the extent that such laws have
been superseded by federal law.
10.3 Expenses of the Plan. The expenses of establishment and
administration of the Plan shall be paid by the Employing Companies.
Any expenses paid by the Company pursuant to this Section 10.3 and
indemnification under Article Nine shall be subject to reimbursement
by the other Employing Companies of their proportionate shares of
such expenses and indemnification, as determined by the
Administration Committee in its sole discretion.
10.4 Discretionary Acts. Any discretionary acts to be taken under the
Plan by the Company, any Employing Company or the Administration
Committee with respect to classification of employees, severance
benefits or elections shall be uniform in their nature with respect
to those who are similarly situated, and no discretionary act shall
be taken which shall be discriminatory under the provisions of the
Code or ERISA applicable to similar plans.
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EXHIBIT 12.1
AMERICAN EXPRESS COMPANY
COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
Six Months
Ended June 30, Years Ended December 31,
1994 1993 1992 1991 1990
-------------- ---- ---- ---- ----
Earnings:
Pretax income from
continuing operations $ 918 $2,326 $ 896 $ 622 $1,578
Interest expense 918 1,783 2,171 2,761 3,160
Other adjustments 67 88 196 142 209
----- ----- ----- ----- -----
Total earnings (a) $1,903 $4,197 $3,263 $3,525 $4,947
----- ----- ----- ----- -----
Fixed charges:
Interest expense $ 918 $1,783 $2,171 $2,761 $3,160
Other adjustments 64 130 154 147 143
----- ----- ----- ----- -----
Total fixed charges (b) $ 982 $1,913 $2,325 $2,908 $3,303
----- ----- ----- ----- -----
Ratio of earnings to
fixed charges (a/b) 1.94 2.19 1.40 1.21 1.50
For purposes of the "earnings" computation, other adjustments include
adding the amortization of capitalized interest, the net loss of
affiliates accounted for at equity whose debt is not guaranteed by the
Company, the minority interest in the earnings of majority-owned
subsidiaries with fixed charges, and the interest component of rental
expense and subtracting undistributed net income of affiliates accounted
for at equity.
For purposes of the "fixed charges" computation, other adjustments
include capitalized interest costs and the interest component of rental
expense.
On May 31, 1994, the Company completed the spin-off of Lehman Brothers
through a dividend to American Express common shareholders.
Accordingly, Lehman Brothers' results are reported as a discontinued
operation and are excluded from the above computation for all periods
presented. In March 1993, the Company reduced its ownership in First
Data Corporation to approximately 22 percent through a public offering.
As a result, beginning in 1993 FDC is reported as an equity investment
in the above computation.
PAGE
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EXHIBIT 12.2
AMERICAN EXPRESS COMPANY
COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED SHARE DIVIDENDS
(Dollars in millions)
Six Months
Ended June 30, Years Ended December 31,
1994 1993 1992 1991 1990
-------------- ---- ---- ---- ----
Earnings:
Pretax income from
continuing operations $ 918 $2,326 $ 896 $ 622 $1,578
Interest expense 918 1,783 2,171 2,761 3,160
Other adjustments 67 88 196 142 209
----- ----- ----- ----- -----
Total earnings (a) $1,903 $4,197 $3,263 $3,525 $4,947
----- ----- ----- ----- -----
Fixed charges and
preferred share
dividends:
Interest expense $ 918 $1,783 $2,171 $2,761 $3,160
Dividends on preferred
shares 32 66 65 61 74
Other adjustments 64 130 154 147 143
----- ----- ----- ----- -----
Total fixed charges and
preferred share
dividends (b) $1,014 $1,979 $2,390 $2,969 $3,377
----- ----- ----- ----- -----
Ratio of earnings to
fixed charges and
preferred share
dividends (a/b) 1.88 2.12 1.37 1.19 1.46
For purposes of the "earnings" computation, other adjustments include
adding the amortization of capitalized interest, the net loss of
affiliates accounted for at equity whose debt is not guaranteed by the
Company, the minority interest in the earnings of majority-owned
subsidiaries with fixed charges, and the interest component of rental
expense and subtracting undistributed net income of affiliates accounted
for at equity.
For purposes of the "fixed charges and preferred share dividends"
computation, dividends on outstanding preferred shares have been
increased to an amount representing the pretax earnings required to
cover such dividend requirements. Other adjustments include capitalized
interest costs and the interest component of rental expense.
On May 31, 1994, the Company completed the spin-off of Lehman Brothers
through a dividend to American Express common shareholders.
Accordingly, Lehman Brothers' results are reported as a discontinued
operation and are excluded from the above computation for all periods
presented. In March 1993, the Company reduced its ownership in First
Data Corporation to approximately 22 percent through a public offering.
As a result, beginning in 1993 FDC is reported as an equity investment
in the above computation.
PAGE
<PAGE>
Exhibit 15
August 15, 1994
The Shareholders and Board of Directors
American Express Company
We are aware of the incorporation by reference in Registration Statements
(Forms S-8 No. 2-46918, No. 2-59230, No. 2-64285, No. 2-73954,
No. 2-74368, No. 2-89115, No. 2-89680, No. 2-93654, No. 2-97617, No. 33-01771,
No. 33-02980, No. 33-05875, No. 33-06350, No. 33-17133, No. 33-19724,
No. 33-24675, No. 33-28721, No. 33-32876, No. 33-33552, No. 33-34005,
No. 33-34625, No. 33-36422, No. 33-37882, No. 33-38777, No. 33-43671,
No. 33-43695, No. 33-45584, No. 33-48629, No. 33-55344, No. 33-62124 and
33-65008; Forms S-3 No. 2-89469, No. 2-95771, No. 33-06038, No. 33-07435,
No. 33-17706, No. 33-40636, No. 33-43268, No. 33-66654 and No. 33-50997) of
American Express Company of our report dated August 12, 1994 relating to the
unaudited consolidated interim financial statements of American Express
Company which are included in its Form 10-Q for the three-month and six-month
periods ended June 30, 1994.
Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a
part of the registration statement prepared or certified by accountants within
the meaning of Section 7 or 11 of the Securities Act of 1933.
/s/Ernst & Young LLP
New York, New York
PAGE
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