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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 21, 1994
AMERICAN EXPRESS COMPANY
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(Exact name of registrant as specified in its charter)
New York 1-7657 13-4922250
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification)
American Express Tower, World Financial Center
New York, New York 10285
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 640-2000
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(Former name or former address, if changed since last report.)
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<PAGE>
Item 5. Other Events
On April 21, 1994, American Express Company issued the
following press release announcing first quarter 1994 earnings:
NEW YORK, April 21, 1994 -- American Express Company today
reported first quarter income from continuing operations of $317
million, or $0.62 per share, compared with $268 million, or $0.53
per share a year ago, before a gain of $433 million from the sale
of First Data Corporation (FDC) stock last year. Including the
FDC gain, 1993 income from continuing operations was $701
million, or $1.41 per share. Including Lehman Brothers (Lehman),
which is reflected as a discontinued operation, and the year-ago
FDC gain, American Express' first quarter 1994 net income totaled
$353 million, or $0.69 per share, compared with $243 million, or
$0.48 per share a year ago. The Lehman results for both periods
include a number of items which are discussed later. As
previously announced, the Company expects to complete the
spin-off of Lehman in the second quarter.
Travel Related Services (TRS) reported first quarter net
income of $234 million, a 12 percent increase over last year's
net income of $209 million. During last year's first quarter,
TRS sold a portion of its insurance business and other
investments and recognized a charge on the defeasance of certain
high-coupon debt. These combined transactions resulted in net
after-tax gains of $15 million.
Net revenues increased 6 percent reflecting an increase in
worldwide billed business which stemmed from higher spending per
Cardmember and an increase in the number of Cards outstanding.
This increase was partially offset by discount rate reductions
and a decrease in net Card fee revenues.
Excluding interest and the provision for losses, total
expenses increased 7 percent, primarily reflecting business
travel growth and investments in certain business initiatives.
These increases offset lower marketing and promotion expenses.
However, it is expected that for the full year, marketing and
promotion expenses will be higher than last year.
IDS Financial Services (IDS) reported record first quarter
net income of $91 million, a 22 percent increase over last year's
net income of $74 million.
Revenue and earnings growth benefited primarily from an
increase in management fees and net investment income that
resulted from higher asset levels. Results also benefited from
wider investment margins compared to year-ago levels.
IDS reported record first quarter sales of annuities,
mutual funds, and life and related insurance products. Sales of
investment certificates increased from last year.
American Express Bank (AEB) reported first quarter net
income of $24 million, a 39 percent increase over last year's net
income of $17 million.
Results for the first quarter reflect growth in private
banking fee income, a lower provision for credit losses due to
improved credit quality and a lower effective tax rate.
Increased expense levels reflected growth in revenues.
Total nonperforming loans and other nonperforming assets
(in-substance foreclosures and assets acquired in loan
settlements) of $123 million decreased $9 million from December
31, 1993.
Lehman Brothers (Lehman) results are presented as
"discontinued operations" to reflect the previously announced
spin-off to shareholders, which is expected to be completed in
the second quarter.
Excluding the items presented in the chart below, the
businesses that now comprise Lehman reported income of $73
million, compared with $55 million a year ago.
<PAGE>
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(millions, except per share amounts)
Quarter Ended
March 31
1994 1993
Income excluding items listed below: $ 73 $ 55
Severance charge (18) -
Reserve for non-core partnership
syndication activities - (21)
Change in accounting principle* (13) -
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Lehman businesses net income $ 42 $ 34
Loss on sale of Shearson - (630)
Gain on sale of The Boston Company - 165
Earnings from businesses sold - 59
Reserve for sale of non-core businesses - ( 79)
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Net income $ 42 $(451)
* Implementation of SFAS No. 112 related to accounting for
post-employment benefits.
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Excluding the businesses sold in 1993, revenues, net of
interest expense, increased slightly over last year reflecting
strong customer flow, which was partially offset by less
favorable trading results. Excluding the businesses sold, total
non-interest expenses were down slightly.
After preferred dividend requirements, American Express'
share of Lehman's results was net income of $36 million, compared
with a net loss of $458 million last year.
Corporate and Other reported first quarter net expenses of
$32 million in both the 1994 and 1993 first quarters, before a
$433 million after-tax gain from the sale of FDC stock last year.
In March 1993, the Company's ownership interest in FDC was
reduced from 54 percent to 22 percent. Lower earnings from FDC
were offset by lower corporate expenses.
The 1994 first quarter includes income from the Company's
share of the Travelers Corporation (Travelers) revenue
participation, in accordance with an agreement related to the
1993 sale of the Shearson Lehman Brothers Division, 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 spin-off, certain business-building initiatives and the
termination of the Company's Employee Stock Ownership Plan.
The impact of SFAS No. 112 is insignificant to the
Company's continuing operations.
* * *
American Express Company, a diversified travel and
financial services company founded in 1850, is a world leader in
charge cards, Travelers Cheques, travel, financial planning and
international banking.
<PAGE>
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY
(Unaudited)
(dollars in millions, except per share amounts)
Three Months Ended
March 31, Percentage
1994 1993 Inc/(Dec)
---- ---- ---------
Revenues by Industry Segment (A)
Travel Related Services (B) $2,359 $2,232 5.7%
IDS Financial Services 818 742 10.3
American Express Bank (B) 168 156 8.0
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3,345 3,130 6.9
Corporate and Other,
including adjustments and
eliminations 28 (20) -
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CONSOLIDATED REVENUES (A) $3,373 $3,110 8.5
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Pretax Income (Loss) from continuing operations
by Industry Segment
Travel Related Services (B) $326 $261 25.3%
IDS Financial Services 136 107 27.3
American Express Bank (B) 36 27 34.6
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498 395 26.5
Corporate and Other :
Corporate expenses (58) (73) 19.0
FDC Gain - 779 -
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(58) 706 -
PRETAX INCOME $440 $1,101 (60.0)
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<PAGE>
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY
(Unaudited)
(dollars in millions, except per share amounts)
Three Months Ended
March 31, Percentage
1994 1993 Inc/(Dec)
---- ---- ---------
Income (Loss) from continuing operations
by Industry Segment
Travel Related Services (B) $234 $209 12.1%
IDS Financial Services 91 74 22.0
American Express Bank (B) 24 17 39.4
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349 300 16.1
Corporate and Other :
Corporate expenses (32) (32) 2.3
FDC Gain - 433 -
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(32) 401 -
Income from continuing operations 317 701 (54.8)
Discontinued operations (net of
income taxes) (C) 36 (458) -
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NET INCOME $353 $243 45.1
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Earnings per common share:
Continuing operations $0.62 $1.41 (56.0)
Discontinued operations 0.07 (0.93) -
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NET INCOME PER COMMON SHARE $0.69 $0.48 43.8
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Cash dividends declared per
common share $0.25 $0.25
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Average shares outstanding (000's) 506,729 494,777
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(A) Revenues are reported net of interest expense, where
applicable.
(B) Prior year's amounts for Travel Related Services (TRS) and
American Express Bank (AEB) have been restated to reflect the
transfer of certain consumer financial services businesses from
TRS to AEB.
(C) In January 1994, the Company announced its plan to complete
a tax free spin - off of Lehman Brothers (LB) through a special
dividend to shareholders. The transaction is expected to occur
in the second quarter of 1994. Accordingly, LB results are
reported as Discontinued Operations for all periods presented.
The Discontinued Operations amounts in the table above represent
American Express' share of LB's results after preferred
dividends to Nippon Life Insurance Company.
Note: Certain prior year amounts have been reclassified to
conform to the current year's presentation.
<PAGE>
(Preliminary)
Travel Related Services
Statement of Income
(Unaudited)
(Amounts in millions, except percentages and where indicated)
Three Months Ended
March 31, Percentage
1994 1993 Inc/(Dec)
Revenues: ---- ---- ---------
Discount Revenue $906 $845 7.2%
Net Card Fees 431 435 (1.1)
Interest and Dividends 174 175 (0.5)
Other Revenues 620 553 12.2
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2,131 2,008 6.1
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Lending:
Finance Charge Revenue 292 294 (0.6)
Interest Expense 64 70 (8.7)
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Net Finance Charge Revenue 228 224 1.8
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Total Net Revenues 2,359 2,232 5.7
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Expenses:
Marketing and Promotion 229 246 (7.1)
Provision for Losses and Claims:
Charge Card 148 180 (17.8)
Lending 114 116 (2.1)
Other 103 96 7.5
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Total 365 392 (6.9)
Interest Expense:
Charge Card 159 176 (9.8)
Other Interest Expense 25 24 3.9
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Total 184 200 (8.2)
Net Discount Expense 67 49 39.0
Human Resources 586 529 10.6
Other Operating Expenses 602 555 8.5
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Total Expenses 2,033 1,971 3.1
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Pretax Income 326 261 25.3
Income Tax Provision 92 52 78.7
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Net Income $234 $209 12.1
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Selected Statistical Information
Total Cards in Force:
United States 24.7 24.0 2.9
Outside the United States 10.7 10.3 3.8
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Total 35.4 34.3 3.2
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Basic Cards in Force:
U.S. Charge Card 11.4 11.9 (3.8)
U.S. Corporate Card 6.7 5.3 24.7
International Charge Card 7.9 8.0 (0.7)
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Total 26.0 25.2 3.2
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Card Billed Business (billions):
United States $22.9 $20.3 12.5
Outside the United States 8.9 7.9 12.8
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Total $31.8 $28.2 12.6
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Note: Prior year's results are stated on a consistent basis with
the current year's presentation and include the impact of the
transfer of certain consumer financial services businesses to
American Express Bank.
<PAGE>
(Preliminary)
Travel Related Services (continued)
Selected Statistical Information
(Unaudited)
(Amounts in millions, except percentages and where indicated)
Three Months Ended
March 31, Percentage
1994 1993 Inc/(Dec)
---- ---- ----------
Number of Service Establishments 3.7 3.4 7.8%
Travelers Cheque Sales (billions) $4.8 $4.7 3.4
Average Travelers Cheques
Outstanding (billions) $4.8 $4.7 3.0
Travel Sales (billions) $2.1 $1.8 16.8
Return on Average Equity 23.4% 9.0% -
Return on Average Equity-Adj.* 23.5% 9.0% -
* Adjusted to exclude the impact of SFAS No. 115.
<PAGE>
(Preliminary)
IDS Financial Services
Statement of Income
(Unaudited)
(Amounts in millions, except percentages and where indicated)
Three Months Ended
March 31, Percentage
1994 1993 Inc/(Dec)
---- ---- ---------
Revenues:
Investment Income $503 $491 2.4%
Fee Income 207 165 26.0
Other Income 108 86 25.4
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Total Revenues 818 742 10.3
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Expenses:
Provision for Losses and Benefits:
Annuities 255 265 (3.8)
Insurance 88 79 11.5
Investment Certificates 22 35 (37.9)
Other 0 1 (65.1)
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Total 365 380 (4.0)
Human Resources 212 177 19.9
Other Operating Expenses 105 78 34.7
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Total Expenses 682 635 7.4
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Pretax Income 136 107 27.3
Income Tax Provision 45 33 39.5
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Net Income $91 $74 22.0
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Selected Statistical Information
Life Insurance in Force (billions) $47.7 $42.2 13.2
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Assets Owned and/or Managed (billions):
Assets managed for institutions $24.3 $21.3 14.3
Assets owned and managed for
individuals
Owned Assets 38.4 33.4 14.8
Managed Assets 36.8 32.0 15.0
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Total $99.5 $86.7 14.8
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Sales of Selected Products (millions):
Mutual Funds $2,526 $2,074 21.8
Annuities $1,010 $948 6.5
Investment Certificates $155 $141 10.1
Life and Other Insurance Sales $75 $59 26.6
Fees From Financial Plans $10,174 $8,794 15.7
Number of Financial Planners 7,719 7,398 4.3
Product Sales Generated from
Financial Plans as a
Percentage of Total Sales 59.7% 54.8% -
Return on Average Equity 17.9% 17.0% -
Return on Average Equity-Adj.* 18.1% 17.0% -
* Adjusted to exclude the impact of SFAS No. 115.
<PAGE>
(Preliminary)
American Express Bank
Statement of Income
(Unaudited)
(Amounts in millions, except percentages and where indicated)
Three Months Ended
March 31, Percentage
1994 1993 Inc/(Dec)
---- ---- ----------
Net Revenues:
Interest Income $233 $247 (6.2%)
Interest Expense 142 160 (11.5)
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Net Interest Income 91 87 3.7
Commissions, Fees and
Other Revenues 57 49 18.1
Foreign Exchange Income 20 20 1.4
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Total Net Revenues 168 156 8.0
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Provision for Credit Losses 7 13 (45.9)
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Expenses:
Human Resources 60 59 3.2
Other Operating Expenses 65 57 12.2
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Total Expenses 125 116 7.7
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Pretax Income 36 27 34.6
Income Tax Provision 12 10 25.6
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Net Income $24 $17 39.4
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Selected Statistical Information
Return on Average Assets 0.68% 0.49% -
Return on Average Equity 12.45% 10.07% -
Return on Average Equity-Adj.* 12.79% 10.07% -
Total Loans $5,658 $5,224 8.3
Reserve for Credit Losses $132 $162 (18.8)
Total Nonperforming Loans $34 $180 (81.3)
Other Nonperforming Assets $89 $79 13.5
Risk-Based Capital Ratios:
Tier 1 6.5% 5.8% -
Total 12.7% 9.4% -
Leverage Ratio 4.3% 4.5% -
* Adjusted to exclude the impact of SFAS No. 115.
Note: Prior year's results are stated on a consistent basis with
the current year's presentation and include the impact of the
transfer of certain consumer financial services businesses from
Travel Related Services.
<PAGE>
(Preliminary)
Lehman Brothers
Statement of Income
(Unaudited)
(Amounts in millions, except percentages and where indicated)
Three Months Ended
March 31,
1994
----
Revenues:
Commissions $141
Market Making & Principal
Transactions 434
Investment Banking 175
Interest & Dividends 1,527
Other 17
-----
Total Revenues 2,294
Interest Expense 1,453
-----
Net Revenues 841
-----
Non-Interest Expenses:
Compensation & Benefits 450
Communications 50
Occupancy & Equipment 42
Depreciation & Amortization 31
Advertising & Market Development 31
Brokerage, Commissions & Clearance
Fees 45
Professional Services 42
Other 29
Severance 33
Loss on Sale of SLBD 0
Reserves for Non-Core Businesses 0
-----
Total Non-Interest Expenses 753
-----
Pretax Income (Loss) from Continuing
Operations Before Accounting Change 88
Income Tax Provision 33
-----
Net Income (Loss) from Continuing
Operations Before Accounting Change
& Preferred Dividends 55
Income from Discontinued Operations, Net:
Income from Operations 0
Gain on Disposal 0
-----
Net Income (Loss) Before Accounting
Change & Preferred Dividends 55
Change in Accounting Principle, Net (13)
-----
Net Income (Loss) Before Preferred
Dividends 42
Preferred Dividends 6
-----
American Express' share of Lehman's Net
Income (Loss) $36
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<PAGE>
(Preliminary)
Lehman Brothers
Statement of Income
(Unaudited)
(Amounts in millions, except percentages and where indicated)
Three Months Ended March 31, 1993
---------------------------------
Lehman Businesses
Businesses Sold Historical
---------- ------ ----------
Revenues:
Commissions $116 $364 $480
Market Making & Principal
Transactions 433 155 588
Investment Banking 164 64 228
Interest & Dividends 1,305 66 1,371
Other 19 171 190
----- ----- -----
Total Revenues 2,037 820 2,857
Interest Expense 1,208 62 1,270
----- ----- -----
Net Revenues 829 758 1,587
----- ----- -----
Non-Interest Expenses:
Compensation & Benefits 461 509 970
Communications 46 51 97
Occupancy & Equipment 41 41 82
Depreciation & Amortization 24 20 44
Advertising & Market Development 31 16 47
Brokerage, Commissions & Clearance
Fees 39 (9) 30
Professional Services 35 17 52
Other 48 51 99
Severance 0 0 0
Loss on Sale of SLBD 0 535 535
Reserves for Non-Core Businesses 32 120 152
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Total Non-Interest Expenses 757 1,351 2,108
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Pretax Income (Loss) from
Continuing Operations Before
Accounting Change 72 (593) (521)
Income Tax Provision 38 81 119
----- ----- -----
Net Income (Loss) from Continuing
Operations Before Accounting
Change & Preferred Dividends 34 (674) (640)
Income from Discontinued
Operations, Net:
Income from Operations 0 24 24
Gain on Disposal 0 165 165
----- ----- -----
Net Income (Loss) Before
Accounting Change &
Preferred Dividends 34 (485) (451)
Change in Accounting Principle, Net 0 0 0
----- ----- -----
Net Income (Loss) Before Preferred
Dividends 34 (485) (451)
Preferred Dividends 7 0 7
----- ----- -----
American Express' share of Lehman's
Net Income (Loss) $27 ($485) ($458)
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<PAGE>
(Preliminary)
Lehman Brothers
Statement of Income
(Unaudited)
(Amounts in millions, except percentages and where indicated)
Percentage Inc/(Dec)
--------------------
Lehman
Businesses Historical
---------- ----------
Revenues:
Commissions 21.6% (70.6%)
Market Making & Principal
Transactions 0.2 (26.2)
Investment Banking 6.7 (23.2)
Interest & Dividends 17.0 11.4
Other (10.5) (91.1)
Total Revenues 12.6 (19.7)
Interest Expense 20.3 14.4
Net Revenues 1.4 (47.0)
Non-Interest Expenses:
Compensation & Benefits (2.4) (53.6)
Communications 8.7 (48.5)
Occupancy & Equipment 2.4 (48.8)
Depreciation & Amortization 29.2 (29.5)
Advertising & Market Development - (34.0)
Brokerage, Commissions & Clearance Fees 15.4 50.0
Professional Services 20.0 (19.2)
Other (39.6) (70.7)
Severance - -
Loss on Sale of SLBD - -
Reserves for Non-Core Businesses - -
Total Non-Interest Expenses (0.5) (64.3)
Pretax Income (Loss) from Continuing
Operations Before Accounting Change 22.2 -
Income Tax Provision (13.2) (72.3)
Net Income (Loss) from Continuing
Operations Before Accounting Change
& Preferred Dividends 61.8 -
Income from Discontinued Operations, Net:
Income from Operations - -
Gain on Disposal - -
Net Income (Loss) Before Accounting
Change & Preferred Dividends 61.8 -
Change in Accounting Principle, Net - -
Net Income (Loss) Before Preferred
Dividends 23.5 -
Preferred Dividends - -
American Express' share of Lehman's Net
Income (Loss) 30.8 -
Note: Certain prior year amounts have been reclassified/restated
to conform to the current year's presentation.
<PAGE>
(Preliminary)
Lehman Brothers (continued)
Selected Statistical Information
(Unaudited)
(Amounts in millions, except percentages and where indicated)
Three Months Ended
March 31, Percentage
1994 1993 Inc/(Dec)
---- ---- ---------
Total Stockholders' Equity $2,033 $1,906 6.7%
Tangible Equity $1,762 $1,609 9.5
Return on Average Equity* 10.8% - -
* Calculated before the accounting change.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
AMERICAN EXPRESS COMPANY
By: /s/ Stephen P. Norman
-----------------------
Name: Stephen P. Norman
Title: Secretary
Dated: April 25, 1994
