<PAGE>
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 September 30, 1995
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 October 31, 1995
- - ---------------------------------------- -------------------------------
Common Shares (par value $.60 per share) 484,404,630 shares
<PAGE>
AMERICAN EXPRESS COMPANY
FORM 10-Q
INDEX
Part I. Financial Information:
Consolidated Statement of Income--Three and 1-2
nine months ended September 30, 1995 and 1994
Consolidated Balance Sheet--September 30, 3
1995 and December 31, 1994
Consolidated Statement of Cash Flows--Nine 4
months ended September 30, 1995 and 1994
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of 6-15
Financial Condition and Results of Operations
Independent Accountants Review Report 16
Part II. Other Information 19
<PAGE>
PART I--FINANCIAL INFORMATION
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENT OF INCOME
(dollars in millions, except per share amounts)
(Unaudited)
Three Months Ended
September 30,
-------------------
1995 1994
------ ------
Revenues:
Interest and dividends, net $ 1,166 $ 1,046
Discount revenue 1,116 996
Net card fees 439 435
Travel commissions and fees 316 233
Management and distribution fees 241 200
Other commissions and fees 323 293
Life insurance premiums 218 209
Other 235 192
------ ------
Total 4,054 3,604
------ ------
Expenses:
Human resources 1,010 958
Provisions for losses and benefits:
Annuities and investment certificates 358 295
Credit, banking and other 356 249
Life insurance 209 201
Interest 310 251
Marketing and promotion 261 280
Occupancy and equipment 271 243
Professional services 208 173
Communications 101 92
Other 399 364
------ ------
Total 3,483 3,106
------ ------
Pretax income 571 498
Income tax provision 155 129
------ ------
Net income $ 416 $ 369
====== ======
Net income per common share $ 0.83 $ 0.71
====== ======
Weighted average number of common
shares outstanding (000's) 496,516 512,579
======= =======
Cash dividends declared per
common share $ 0.225 $ 0.225
======= =======
See notes to Consolidated Financial Statements.
1
<PAGE>
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENT OF INCOME
(dollars in millions, except per share amounts)
(Unaudited)
Nine Months Ended
September 30,
------------------
1995 1994
------ ------
Revenues:
Interest and dividends, net $ 3,400 $ 3,078
Discount revenue 3,246 2,885
Net card fees 1,311 1,297
Travel commissions and fees 931 639
Management and distribution fees 673 604
Other commissions and fees 959 828
Life insurance premiums 634 585
Other 638 564
------ ------
Total 11,792 10,480
------ ------
Expenses:
Human resources 3,000 2,751
Provisions for losses and benefits:
Annuities and investment certificates 1,037 867
Credit, banking and other 980 777
Life insurance 607 563
Interest 932 741
Marketing and promotion 755 794
Occupancy and equipment 795 728
Professional services 584 485
Communications 301 272
Other 1,160 1,086
------ ------
Total 10,151 9,064
------ ------
Pretax income from continuing operations 1,641 1,416
Income tax provision 462 371
------ ------
Income from continuing operations 1,179 1,045
Discontinued operations, net of
income taxes - 33
------ ------
Net income $ 1,179 $ 1,078
====== ======
Income per common share
from continuing operations $ 2.34 $ 2.02
Income per common share
from discontinued operations - 0.07
------ ------
Net income per common share $ 2.34 $ 2.09
====== ======
Weighted average number of common
shares outstanding (000's) 499,430 510,672
======= =======
Cash dividends declared per
common share $ 0.675 $ 0.675
======= =======
See notes to Consolidated Financial Statements.
2
<PAGE>
<TABLE>
<CAPTION>
AMERICAN EXPRESS COMPANY
CONSOLIDATED BALANCE SHEET
(millions)
(Unaudited)
September 30, December 31,
Assets 1995 1994
- - ------ ------------- ------------
<S> <C> <C>
Cash and cash equivalents $ 4,577 $ 3,433
Accounts receivable and accrued interest, less
reserves: 1995, $798; 1994, $807 18,480 17,147
Investments 43,075 40,108
Loans and discounts, less reserves:
1995, $569; 1994, $545 15,498 14,722
Land, buildings and equipment--at cost, less
accumulated depreciation: 1995, $1,759;
1994, $1,563 1,827 1,840
Assets held in segregated asset accounts 14,120 10,881
Deferred acquisition costs 2,421 2,280
Other assets 6,314 6,595
------- -------
Total assets $ 106,312 $ 97,006
======= =======
Liabilities and Shareholders' Equity
- - ------------------------------------
Customers' deposits and credit balances $ 9,556 $ 10,013
Travelers Cheques outstanding 6,707 5,271
Accounts payable 4,375 4,228
Insurance and annuity reserves:
Fixed annuities 21,292 20,163
Life and disability policies 5,106 4,686
Investment certificate reserves 3,651 2,866
Short-term debt 17,163 14,810
Long-term debt 6,284 7,162
Liabilities related to segregated asset accounts 14,120 10,881
Other liabilities 10,616 10,493
------- -------
Total liabilities 98,870 90,573
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
Common shares, $.60 par value, authorized
1,200,000,000 shares; issued and outstanding
486,361,984 shares in 1995 and 495,865,678
shares in 1994 292 298
Capital surplus 3,764 3,651
Net unrealized securities gains/(losses) 197 (389)
Foreign currency translation adjustment (68) (77)
Retained earnings 3,057 2,750
------- -------
Total shareholders' equity 7,442 6,433
------- -------
Total liabilities and shareholders' equity $ 106,312 $ 97,006
======= =======
</TABLE>
See notes to Consolidated Financial Statements.
3
<PAGE>
<TABLE>
<CAPTION>
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(millions)
(Unaudited)
Nine Months Ended
September 30,
-----------------
1995 1994
---- ----
<S> <C> <C>
Cash Flows from Operating Activities
Income from continuing operations $1,179 $1,045
Adjustments to reconcile income from continuing operations
to net cash provided by operating activities:
Provisions for losses and benefits 1,463 1,061
Depreciation, amortization, deferred taxes and other 237 188
Changes in operating assets and liabilities, net of
effects of acquisitions/dispositions:
Accounts receivable and accrued interest (410) (529)
Other assets (32) 855
Accounts payable and other liabilities (352) 552
Increase in Travelers Cheques outstanding 1,438 953
Increase in insurance reserves 364 352
Net cash flows used by operating activities of
discontinued operations - (3,656)
------ ------
Net cash provided by operating activities 3,887 821
------ ------
Cash Flows from Investing Activities
Sale of investments 2,015 3,678
Maturity and redemption of investments 3,538 5,802
Purchase of investments (7,200) (10,480)
Net increase in Cardmember receivables (2,009) (887)
Cardmember accounts receivable sold to Trust - 900
Proceeds from repayment of loans 15,963 15,731
Issuance of loans (16,869) (15,309)
Purchase of land, buildings and equipment (224) (193)
Sale of land, buildings and equipment 19 87
(Acquisitions) dispositions, net of cash acquired/sold (7) (375)
Net cash flows used by investing activities of
discontinued operations - (36)
------ ------
Net cash used by investing activities (4,774) (1,082)
------ ------
Cash Flows from Financing Activities
Net decrease in customers' deposits and credit balances (604) (95)
Sale of annuities and investment certificates 4,907 4,281
Redemption of annuities and investment certificates (3,166) (3,993)
Net (decrease) increase in debt with maturities of
3 months or less (4,732) 5,948
Issuance of debt 15,412 3,220
Principal payments on debt (9,064) (8,018)
Issuance of American Express common shares 245 173
Repurchase of American Express common shares (665) (137)
Cash infusion to Lehman Brothers - (904)
Dividends paid (344) (386)
Net cash flows provided by financing activities of
discontinued operations - 3,737
------ ------
Net cash provided by financing activities 1,989 3,826
Net change in cash and cash equivalents of
discontinued operations - 45
Effect of exchange rate changes on cash 42 127
------ ------
Net increase in cash and cash equivalents 1,144 3,647
Cash and cash equivalents at beginning of period 3,433 3,312
------ ------
Cash and cash equivalents at end of period $4,577 $6,959
====== ======
</TABLE>
See notes to Consolidated Financial Statements.
4
<PAGE>
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, 1994. Certain prior year's amounts have been
reclassified to conform to the current year's presentation. Significant
accounting policies disclosed therein have not changed.
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 September 30, 1995 and December 31, 1994, the
consolidated results of its operations for the three and nine months ended
September 30, 1995 and 1994 and cash flows for the nine months ended
September 30, 1995 and 1994. 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
$266 million and $240 million of interest expense for the three months
ended September 30, 1995 and 1994, respectively, and $818 million and
$668 million for the nine months ended September 30, 1995 and 1994,
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. As a result of this transaction, Lehman Brothers'
results are reported as a discontinued operation in the Consolidated
Statement of Income through May 31, 1994. Cash dividends declared per
share for the nine months ended September 30, 1994 have been adjusted to
reflect the Lehman Brothers' spin-off.
4. The following is a summary of investments:
September 30, December 31,
(In millions) 1995 1994
------------- ------------
Held to Maturity, at amortized
cost (fair value: 1995,
$22,681; 1994, $21,387) $22,004 $21,909
Available for Sale, at fair value
(cost: 1995, $17,645; 1994,
$15,912) 17,956 15,293
Trading 153 225
Investment mortgage loans 2,962 2,681
------------- ------------
$43,075 $40,108
============= ============
5. As of January 1, 1995, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 114, ``Accounting by Creditors for
Impairment of a Loan,'' as amended by SFAS No. 118, ``Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures.''
The adoption of the new rules did not have a material impact on the
Company's results of operations or financial condition.
6. Net income taxes paid during the nine months ended September 30, 1995 and
1994 were approximately $475 million and $131 million, respectively.
Interest paid during the nine months ended September 30, 1995 and 1994 was
approximately $1.8 billion and $1.3 billion, respectively.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Consolidated Results Of Operations For The Three and Nine Months
Ended September 30, 1995 and 1994
The Company's consolidated net income increased 13 percent in the third
quarter of 1995 compared with a year ago. Third quarter net income per share
increased 17 percent compared with last year.
The Company's consolidated net income increased 13 percent in the first nine
months of 1995, compared with income from continuing operations during the
same period last year. Net income increased 9.4 percent compared with last
year, which included the results of Lehman Brothers Holdings Inc. (Lehman
Brothers). Net income per share for the first nine months of 1995 increased
16 percent, compared with per share income from continuing operations a year
ago.
Consolidated Liquidity and Capital Resources
On March 27, 1995, the Company's Board of Directors approved a plan to
repurchase up to 40 million common shares over the next two to three years,
from time to time as market conditions allow. This authorization is in
addition to a plan announced in September 1994, whereby the Company was
authorized to repurchase up to 20 million common shares. A portion of the
share repurchases is being used to offset share issuances under employee
compensation plans. The authorized share repurchases were intended to reduce
the number of outstanding common shares and common share equivalents to less
than 500 million and maintain the number of shares below that level. The
number of outstanding common shares and common share equivalents totaled 497
million for the quarter ended September 30, 1995. The repurchase plans will
help the Company achieve its goal of building shareholder value while
maintaining appropriate capital levels. Since inception of the initial plan,
the Company has repurchased approximately 36.5 million shares at an average
price of $34.40 through October 31, 1995.
In the second quarter of 1995, in connection with the share repurchase
program, the Company sold three million put options with maturities up to
twelve months and a weighted average strike price of $35.52 per share. Upon
the sale of these put options, the Company received premiums totaling $5.7
million. During the first nine months of 1995, 2.5 million put options
expired unexercised. At September 30, 1995, the Company had a total of 4.7
million put options outstanding with a weighted average strike price of
$36.29 per share.
During the second quarter of 1995, the parent company paid down $700 million
of a $945 million Floating Medium-Term Note due 1996 in exchange for an
extension and modification of terms on the remaining balance through the year
2000. In addition, the parent company restructured its $1.2 billion multi-
purpose credit facility, reducing the cost of the facility and extending the
multi-year portion from three years to five years under more favorable terms.
The $586 million increase in Net Unrealized Securities Gains/(Losses) was due
to declining medium- and long-term interest rates.
6
<PAGE>
Travel Related Services
Results of Operations For The Three and Nine Months Ended September 30, 1995
and 1994
<TABLE>
<CAPTION>
Statement of Income
(Unaudited)
(Amounts in millions, except percentages)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------- Percentage ------------------ Percentage
1995 1994 Inc/(Dec) 1995 1994 Inc/(Dec)
----------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Revenues:
Discount Revenue $1,116 $996 12.0% 3,246 $2,886 12.5%
Net Card Fees 439 435 0.8 1,311 1,297 1.1
Travel Commissions and Fees 316 233 35.4 931 639 45.7
Interest and Dividends 261 206 26.9 761 567 34.2
Other Revenues 570 494 15.5 1,608 1,374 17.1
-------------- ---------------
2,702 2,364 14.3 7,857 6,763 16.2
-------------- ---------------
Lending:
Finance Charge Revenue 396 317 25.1 1,126 912 23.4
Interest Expense 126 80 57.6 368 212 73.7
-------------- ---------------
Net Finance Charge Revenue 270 237 14.2 758 700 8.2
-------------- ---------------
Total Net Revenues 2,972 2,601 14.3 8,615 7,463 15.4
-------------- ---------------
Expenses:
Marketing and Promotion 252 274 (7.9) 731 776 (5.7)
Provision for Losses and Claims:
Charge Card 207 153 35.6 571 478 19.4
Lending 132 81 62.8 364 258 41.2
Other 137 131 3.9 382 355 7.6
-------------- --------------
Total 476 365 30.3 1,317 1,091 20.7
-------------- --------------
Interest Expense:
Charge Card 169 132 28.5 495 392 26.2
Other Interest Expense 114 76 49.0 338 208 62.5
-------------- --------------
Total 283 208 36.0 833 600 38.8
Net Discount Expense * 101 93 9.3 309 228 35.2
Human Resources 700 651 7.5 2,098 1,863 12.6
Other Operating Expenses 752 646 16.3 2,119 1,850 14.5
------------- --------------
Total Expenses 2,564 2,237 14.6 7,407 6,408 15.6
------------- --------------
Pretax Income 408 364 12.1 1,208 1,055 14.5
Income Tax Provision 111 100 11.1 349 293 19.1
------------- --------------
Net Income $297 $264 12.5 $859 $762 12.7
============= ==============
</TABLE>
* The impact of Net Discount Expense (related to TRS' securitized
receivables) was to:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Increase Net Card Fees - $9 - - $9 -
Decrease the Provision for
Losses and Claims -
Charge Card $40 30 34.2 $124 86 43.7
Decrease Interest Expense -
Charge Card 41 29 42.7 122 76 60.4
Increase Other Revenues 20 25 (19.4) 63 57 9.6
------------ --------------
Total Net Discount Expense $101 $93 9.3 $309 $228 35.2
============ ==============
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Selected Statistical Information
(Unaudited)
(Amounts in millions, except percentages and where indicated)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- Percentage ------------ Percentage
1995 1994 Inc/(Dec) 1995 1994 Inc/(Dec)
----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Total Cards in Force:
United States 25.9 24.7 5.0% 25.9 24.7 5.0%
Outside the United States 11.1 10.9 1.9 11.1 10.9 1.9
--------------- ---------------
Total 37.0 35.6 4.0 37.0 35.6 4.0
=============== ===============
Basic Cards in Force:
United States 19.4 18.1 7.4 19.4 18.1 7.4
Outside the United States 8.6 8.0 7.1 8.6 8.0 7.1
--------------- --------------
Total 28.0 26.1 7.3 28.0 26.1 7.3
=============== ==============
Card Billed Business (billions):
United States $29.2 $25.2 15.9 $83.9 $73.5 14.2
Outside the United States 11.6 10.3 12.8 34.0 28.4 19.9
--------------- --------------
Total $40.8 $35.5 15.0 $117.9 $101.9 15.8
=============== ==============
Travelers Cheque Sales
(billions) $8.3 $8.4 (1.6) $20.5 $19.8 3.7
Average Travelers Cheques
Outstanding (billions) $6.7 $5.9 13.0 $6.0 $5.3 13.4
Travel Sales (billions) $3.7 $2.5 44.2 $11.0 $7.2 53.4
</TABLE>
Travel Related Services' (TRS) net revenues increased for the three and nine
months ended September 30, 1995 reflecting an increase in worldwide billed
business and higher business travel sales. The increase in worldwide billed
business resulted from higher spending per Cardmember, due in part to
increased merchant coverage and the benefits of rewards programs, as well as
an increase in the number of Cards outstanding. The rate of growth in
discount revenue for the three and nine months ended September 30, 1995 is
below the growth in worldwide billed business, reflecting a change in the mix
of Cardmember spending, as well as increasing electronic merchant data
capture in selected international markets. Higher business travel sales
resulted from acquisitions and growth. Lending net finance charge revenue
for the three and nine months ended September 30, 1995 increased reflecting
higher average receivables, which were partially offset by lower net interest
spreads.
The increase in the worldwide charge Card provision in the third quarter of
1995 was primarily related to higher loss rates in Latin America, which is
expected to continue in the fourth quarter. The increase in the worldwide
charge Card provision for the nine month period also reflected the increase
in billed business, partly offset by a higher level of securitized
receivables. The worldwide lending provision for losses for the three and
nine months ended September 30, 1995 was higher in part due to portfolio
growth, since TRS reserves for losses at the time receivables are recorded.
Charge Card interest expense in both periods increased reflecting higher
rates and increased volume. The increase in human resources expense for the
three and nine months ended September 30, 1995 primarily reflected the impact
of business travel acquisitions and growth to support increased business
volumes. The rate of growth in human resources expense for the third quarter
of 1995 was below the year-to-date growth rate reflecting a reduction in the
number of employees beginning in the second quarter. Other operating
expenses in both periods increased primarily reflecting business travel
acquisitions and growth, as well as continuing investments in certain
business initiatives. The decline in the U.S. dollar relative to other
currencies increased, to a limited extent, both revenues and expenses in the
three and nine months ended September 30, 1995, but had essentially no effect
on net income.
8
<PAGE>
Travel Related Services
Liquidity and Capital Resources
<TABLE>
<CAPTION>
Selected Balance Sheet Information
(Unaudited)
(Amounts in billions, except percentages)
September 30, December 31, Percentage September 30, Percentage
1995 1994 Inc/(Dec) 1994 Inc/(Dec)
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Accounts Receivable, net $18.1 $16.8 7.4% $15.4 17.6%
Investments $11.9 $10.7 11.0 $10.7 11.7
U.S. Consumer Lending
Loan Balances $9.0 $8.1 11.7 $7.6 17.9
Total Assets $47.1 $42.5 10.9 $42.2 11.7
Travelers Cheques Outstanding $6.7 $5.3 27.2 $5.8 16.6
Short-term Debt $16.9 $15.1 11.8 $15.0 13.0
Long-term Debt $3.4 $3.4 0.1 $3.0 11.6
Total Liabilities $42.3 $38.2 10.8 $38.0 11.5
Total Shareholder's Equity $4.8 $4.3 11.5 $4.2 12.9
Return on Average Equity 24.6% 24.0% - 23.9% -
</TABLE>
TRS' total assets increased from year end reflecting increases in lending and
charge Card receivables and time deposits and short-term investments, funded
by increases in short-term debt and Travelers Cheques outstanding. The
increase in U.S. Consumer Lending loan balances reflected growth in the
business as well as a transfer of balances from other business lines. During
the first nine months of 1995, TRS issued $200 million 8.125% Eurodollar
Notes due 1997, the proceeds of which were used to fund lending receivables
in replacement of maturing debt. TRS also issued $250 million 6.75% Senior
Notes due 2001 and $250 million 6.5% Senior Notes due 2000, the proceeds of
which were used to reduce short-term debt.
On October 2, 1995, TRS completed the previously announced sale of AMEX Life
Assurance Company (AMEX Life) to GE Capital Corporation. The transaction did
not have a material impact on the Company's results of operations. The sale
of AMEX Life is consistent with the Company's strategy of focusing on its
core businesses.
9
<PAGE>
American Express Financial Advisors
Results of Operations For The Three and Nine Months Ended September 30, 1995
and 1994
<TABLE>
<CAPTION>
Statement of Income
(Unaudited)
(Amounts in millions, except percentages and where indicated)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- Percentage ----------------- Percentage
1995 1994 Inc/(Dec) 1995 1994 Inc/(Dec)
------------------------------------ ------------------------------
<S> <C> C> <C> <C> <C> <C>
Revenues:
Investment Income $555 $498 11.5% $1,639 $1,498 9.4%
Management and Distribution Fees 241 200 20.4 673 604 11.5
Other Income 138 124 10.3 406 348 16.4
-------------------- ------------------
Total Revenues 934 822 13.5 2,718 2,450 10.9
-------------------- ------------------
Expenses:
Provision for Losses and Benefits:
Annuities 293 256 14.4 855 762 12.2
Insurance 99 95 4.6 296 268 10.5
Investment Certificates 55 30 84.6 150 77 96.2
-------------------- -----------------
Total 447 381 17.4 1,301 1,107 17.5
Human Resources 226 213 6.2 650 620 4.9
Other Operating Expenses 64 60 4.9 214 258 (17.0)
-------------------- -----------------
Total Expenses 737 654 12.6 2,165 1,985 9.1
-------------------- -----------------
Pretax Income 197 168 17.1 553 465 18.8
Income Tax Provision 63 54 17.2 183 151 21.1
-------------------- -----------------
Net Income $134 $114 17.0 $370 $314 17.7
==================== ==================
Selected Statistical Information
--------------------------------
Life Insurance in Force (billions) $57.6 $50.9 13.1 $57.6 $50.9 13.1
==================== ===================
Assets Owned and/or Managed (billions):
Assets managed for institutions $32.3 $26.7 21.0 $32.3 $26.7 21.0
Assets owned and managed for individuals
Owned Assets 46.2 39.2 17.8 46.2 39.2 17.8
Managed Assets 46.3 38.5 20.3 46.3 38.5 20.3
-------------------- -------------------
Total $124.8 $104.4 19.5 $124.8 $104.4 19.5
===================== ===================
Sales of Selected Products:
Mutual Funds $2,584 $2,021 27.8 $7,236 $6,871 5.3
Annuities $699 $1,088 (35.8) $2,757 $3,256 (15.4)
Investment Certificates $363 $324 11.8 $1,379 $695 98.5
Life and Other Insurance Sales $94 $78 19.8 $273 $231 18.3
Fees From Financial Plans (thousands) $9,798 $9,559 2.5 $29,842 $29,357 1.7
Number of Financial Advisors 7,930 7,847 1.1 7,930 7,847 1.1
Product Sales Generated from Financial
Plans as a Percentage of Total Sales 65.3% 63.5% - 64.3% 61.5% -
</TABLE>
10
<PAGE>
American Express Financial Advisors' revenue and earnings growth for the three
and nine months ended September 30, 1995 benefited primarily from higher fee
revenues due to an increase in managed assets, as well as an increase in life
insurance in force. These increases were partially offset by the impact of
lower investment margins, and in the nine month period, lower distribution
fees.
The increase in investment income for the three and nine months ended
September 30, 1995 reflected higher asset levels. Management and
distribution fees in both periods increased reflecting increased management
fee revenue due to a higher asset base. The increase in management fees was
partly offset by a decline in distribution fees due to the availability,
beginning in 1995's second quarter, of a broader range of rear-load funds.
The growth in managed assets reflects strong market appreciation and,
to a lesser extent, positive net sales. Other income increased in the
three and nine months ended September 30, 1995 primarily due to higher
life insurance contract charges and premiums.
Provisions for losses and benefits increased in the three and nine months
ended September 30, 1995 reflecting increased business in force and higher
accrual rates for all products. Human resources expense in both periods
increased reflecting an increase in the number of employees and financial
advisors compared with last year. Other operating expenses for the nine
months ended September 30, 1994 included accelerated amortization of deferred
acquisition costs due to surrenders as a result of an annuity exchange plan
announced during the first quarter, as well as a higher provision for
insurance industry guarantee association assessments.
11
<PAGE>
American Express Financial Advisors
Liquidity and Capital Resources
<TABLE>
<CAPTION>
Selected Balance Sheet Information
(Unaudited)
(Amounts in billions, except percentages)
September 30, December 31, Percentage September 30, Percentage
1995 1994 Inc/(Dec) 1994 Inc/(Dec)
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments $28.0 $25.2 10.9% $24.7 13.6%
Assets Held in Segregated Accounts $14.1 $10.9 29.8 $10.7 32.0
Total Assets $46.2 $40.2 15.1 $39.2 17.8
Reserves for Losses and Benefits $27.7 $25.6 8.2 $24.8 11.5
Total Liabilities $43.4 $38.0 14.1 $37.1 17.1
Total Shareholder's Equity $2.8 $2.1 32.8 $2.2 30.4
Return on Average Equity 19.8% 19.3% - 18.7% -
</TABLE>
American Express Financial Advisors' total assets increased from year end
primarily reflecting increases in assets held in segregated asset accounts
and investments. These increases reflected strong market appreciation and
positive net sales.
12
<PAGE>
American Express Bank
Results of Operations For The Three and Nine Months Ended September 30, 1995
and 1994
<TABLE>
<CAPTION>
Statement of Income
(Unaudited)
(Amounts in millions, except percentages)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- Percentage ------------------ Percentage
1995 1994 Inc/(Dec) 1995 1994 Inc/(Dec)
-------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Revenues:
Interest Income $221 $249 (11.2%) $693 $719 (3.6%)
Interest Expense 140 160 (12.3) 450 455 (1.1)
---------------------- ---------------------
Net Interest Income 81 89 (9.2) 243 264 (7.8)
Commissions, Fees and Other Revenues 59 57 4.0 180 173 4.5
Foreign Exchange Income 21 17 25.9 61 56 8.1
---------------------- ---------------------
Total Net Revenues 161 163 (1.0) 484 493 (1.7)
---------------------- ---------------------
Provision for Credit Losses 1 0 - 5 8 (34.9)
---------------------- ---------------------
Expenses:
Human Resources 62 62 (1.7) 190 187 1.8
Other Operating Expenses 65 70 (6.2) 206 204 1.1
---------------------- ---------------------
Total Expenses 127 132 (4.1) 396 391 1.5
---------------------- ---------------------
Pretax Income 33 31 8.8 83 94 (12.0)
Income Tax Provision 11 11 7.6 26 30 (13.4)
---------------------- ---------------------
Net Income $22 $20 9.5 $57 $64 (11.3)
====================== =====================
</TABLE>
American Express Bank's (the Bank) results for the three and nine months
ended September 30, 1995 reflected growth in foreign exchange income, as well
as in commissions, fees and other revenues, offset by lower net interest
income. Net interest income in both periods declined due to lower spreads on
the investment portfolio, as well as higher short-term funding costs.
Commissions, fees and other revenues in both periods increased primarily
reflecting growth in correspondent banking fee income. Foreign exchange
income in both periods increased reflecting higher client driven trading
volumes. Operating expenses for the third quarter of 1995 decreased compared
with a year ago reflecting the effect of cost containment. Operating
expenses increased in the first nine months of 1995 over the year ago level,
in part due to spending related to systems technology, which offset the
effect of cost containment.
13
<PAGE>
American Express Bank
Liquidity and Capital Resources
<TABLE>
<CAPTION>
Selected Balance Sheet Information
(Unaudited)
(Amounts in billions, except percentages and where indicated)
September 30, December 31, Percentage September 30, Percentage
1995 1994 Inc/(Dec) 1994 Inc/(Dec)
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments $2.5 $2.8 (9.5%) $2.9 (13.6%)
Total Loans $5.4 $5.0 7.9 $5.4 -
Reserve for Credit Losses
(millions) $115 $109 5.1 $118 (2.5)
Total Assets $12.5 $13.3 (5.9) $14.2 (12.2)
Deposits $8.4 $9.1 (7.7) $10.3 (18.2)
Total Liabilities $11.7 $12.5 (6.7) $13.4 (13.3)
Total Shareholder's Equity $0.8 $0.8 6.7 $0.8 7.5
Reserves as a Percentage of Total
Loans 2.1% 2.2% - 2.2% -
Total Nonperforming Loans (millions) $32 $20 62.5 $33 (3.8)
Other Nonperforming Assets (millions) $43 $56 (22.9) $57 (24.8)
Risk-Based Capital Ratios:
Tier 1 8.7% 7.5% - 6.7% -
Total 13.9% 14.7% - 13.0% -
Leverage Ratio 5.6% 4.8% - 4.2% -
Return on Average Assets* 0.57% 0.54% - 0.56% -
Return on Average Common Equity* 9.95% 10.78% - 11.43% -
* For the year-to-date period
</TABLE>
The Bank's total assets declined from year end as modest loan growth was more
than offset by declines in cash and cash equivalents and investments
reflecting a lower level of client deposits. The increase in nonperforming
loans since year end primarily reflects newly classified exposures, partly
offset by repayments. The decline in other nonperforming assets primarily
reflects the sale of a foreclosed asset. The increase in the Bank's Tier 1
Ratio primarily relates to an increase in retained earnings, a decrease in
deferred tax assets and general balance sheet reductions, particularly risk
weighted loans. The decline in the Total Capital Ratio from year end reflects
the revocation of the convertible feature of subordinated debt and the
retirement of a portion of that debt. The increase in the Leverage Ratio is
due to an increase in retained earnings and decreases in deferred tax assets
and quarterly average assets.
14
<PAGE>
Corporate and Other
Corporate and Other reported third quarter 1995 net expenses of $37 million,
compared with net expenses of $29 million a year ago.
Corporate and Other reported net expenses of $107 million in the first nine
months of 1995, compared with net expenses of $95 million last year. Results
for the first nine months of 1995 included the Company's share of the
Travelers Inc. (Travelers) revenue participation in accordance with an
agreement related to the 1993 sale of the Shearson Lehman Brothers Division
(the 1993 sale) and a gain from the sale of common stock and warrants of
Mellon Bank Corporation, which were offset by expenses primarily related to
various business building initiatives.
Results for the first nine months of 1994 included income from the Company's
share of the Travelers revenue participation, 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.
15
<PAGE>
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 September 30, 1995, and the related consolidated
statements of income for the three-month and nine-month periods ended September
30, 1995 and 1994 and the consolidated statement of cash flows for the
nine-month periods ended September 30, 1995 and 1994. 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,
1994, 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 2, 1995, 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, 1994, 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
November 13, 1995
16
<PAGE>
PART II. OTHER INFORMATION
AMERICAN EXPRESS COMPANY
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 July 24, 1995, Item 5, reporting the registrant's
earnings for the quarter ended June 30, 1995.
Form 8-K, dated September 21, 1995, Item 5, announcing the possible
sale of American Express Bank.
Form 8-K, dated September 27, 1995, Item 5, announcing the
resignation of Jeffrey Stiefler as President of American Express
Company, effective as of September 30, 1995.
Form 8-K, dated October 16, 1995, Item 5, announcing the end of
discussions of a possible sale of American Express Bank.
Form 8-K, dated October 23, 1995, Item 5, reporting the registrant's
earnings for the quarter ended September 30, 1995.
17
<PAGE>
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: November 14, 1995 By /s/ Michael P. Monaco
- - ------------------------ -------------------------
Michael P. Monaco
Executive Vice President and
Chief Financial Officer
Date: November 14, 1995 /s/ Daniel T. Henry
- - ------------------------ -------------------------
Daniel T.Henry
Senior Vice President and
Comptroller
(Chief Accounting Officer)
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this Quarterly Report:
Exhibit Description
10.1 Agreement between American Express Company and Berkshire Hathaway
Inc. and its subsidiaries dated July 20, 1995.
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.
27 Financial Data Schedule.
E-1
<PAGE>
<PAGE>
EXHIBIT 10.1
BERKSHIRE HATHAWAY INC.
1440 Kiewit Plaza
Omaha, Nebraska 68131
Telephone (402) 346-1400
July 20, 1995
American Express Company
American Express Tower
World Financial Center
New York, New York 10285-5170
Attn: Mr. Harvey Golub
Dear Mr. Golub:
As you know, Berkshire Hathaway Inc. and its subsidiaries
(collectively, "Berkshire") have made the commitments listed on Appendix A
(the "Passivity Commitments") to the Board of Governors of the Federal Reserve
System and these commitments are designed to assure that Berkshire will not
exercise or attempt to exercise a controlling influence over the management or
policies of American Express Company ("AXP") or any subsidiary of AXP for
purposes of federal and state banking laws.
I understand that Berkshire's compliance with these commitments is
important not only to Berkshire but also to AXP and that it is important to
AXP that these commitments remain in full force and effect.
Therefore, Berkshire agrees as follows with American Express, such
agreement to be in effect for such time as Berkshire shall beneficially own
10% or more of the outstanding voting securities of AXP:
1. Berkshire shall comply with the Passivity Commitments in all
respects and will not directly or indirectly take or propose any action or
enter into any relationship that conflicts with or contravenes the Passivity
Commitments. If Berkshire proposes to take an action or enter into a
relationship and either party is concerned as to whether the action or
relationship is permitted under the terms of the Passivity Commitments,
Berkshire and American Express will discuss the matter and Berkshire will not
take such action or enter into such relationship unless both parties agree
that it is in accordance with the Passivity Commitments.
<PAGE>
Mr. Harvey Golub
July 20, 1995
Page Two
2. Berkshire shall cause each of its subsidiaries that may now or
in the future own shares of AXP to comply with this Agreement.
3. Berkshire shall notify AXP immediately upon learning that the
Board of Governors of the Federal Reserve system has initiated or may initiate
a proceeding under the Bank Holding Company Act or the Change in Bank Control
Act in connection with or related to the Passivity Commitments or Berkshire's
ownership of shares of AXP, and Berkshire shall immediately inform AXP of any
communications from the Board of Governors, the Federal Deposit Insurance
Corporation, the State of Utah Department of Financial Institutions, the
Delaware Banking Department, the State of New York Department of Insurance or
the Department of Insurance of the State of Illinois to Berkshire in
connection with or related to the Passivity Commitments or Berkshire's
investment in AXP.
4. AXP, upon periodically receiving information from Berkshire as
to the entities that are subsidiaries of Berkshire, will not knowingly enter
into any relationship or transaction with such entities that will cause
Berkshire to be in violation of any of sections 8(b) through (e) of the
Passivity Commitments.
5. The parties acknowledge and agree that a breach of this
Agreement may cause irreparable injury to the non-breaching party for which
there is no adequate remedy at law and that the non-breaching party therefore
shall be entitled to specific performance, injunctive and other equitable
relief in such event in addition to all other legal rights and remedies. This
Agreement shall be governed by the internal laws of New York without regard to
its conflicts of law principles.
Very truly yours,
Berkshire Hathaway Inc.
By: /s/ Warren E. Buffet
Warren E. Buffet
Chairman of the Board
Accepted and Agreed
American Express Company
By: /s/ Harvey Golub
Harvey Golub
Chairman of the Board
WEB/km
<PAGE>
Appendix
Passivity Commitments
Berkshire Hathaway* commits that it will not, directly or indirectly:
(1) acquire or retain shares that would cause its ownership of
American Express** voting securities to equal or exceed 15% of the amount
outstanding (if at such time Berkshire Hathaway has a representative on the
Board of Directors of American Express as allowed by section 4 hereof), or
otherwise acquire or retain shares that reflect ownership or more than 17% of
the amount outstanding; _provided_ that for the purposes of this commitment
shares held by officers or directors of Berkshire Hathaway shall be aggregated
with shares held by Berkshire Hathaway;
(2) take any action causing American Express or any company controlled
by American Express to become a subsidiary of Berkshire Hathaway;
(3) propose a director or slate of directors in opposition to a
nominee or slate of nominees proposed by the management or the board of
directors or American Express or any of its subsidiaries;
(4) seek or accept representation on the board of directors of
American Express or any of its subsidiaries; _provided_ that this commitment
does not prevent Berkshire Hathaway from agreeing, if it desires to do so, to a
request by the management or board of directors of American Express to have no
more than one representative of Berkshire Hathaway be elected to the board of
directors of American Express or be nominated by management to stand for
election to the board of directors; and _further provided_ that in no event
shall any representative of Berkshire Hathaway serve as a director of any
subsidiary of American Express that accepts deposits that are insured by the
Federal Deposit Insurance Corporation ("FDIC"), or of American Express Bank
International ("AEBI");
* For purposes of these commitments, references to Berkshire Hathaway include
Berkshire Hathaway, Inc. and all of its subsidiaries.
** For purposes of these commitments, references to American Express include
American Express Company and all of its subsidiaries.
<PAGE>
-2-
(5) solicit or participate in soliciting proxies with respect to any
matter presented to the shareholders of American Express or any of its
subsidiaries (except to the extent that a representative on the board of
directors as permitted by item 4 as deemed to be part of the solicitation made
by the board);
(6) exercise or attempt to exercise a controlling influence over the
management or policies of American Express; _provided_ that this provision does
not prohibit Berkshire Hathaway from having a representative on the board of
directors of American Express if otherwise permitted by item 4 (but such person
shall exercise reasonable efforts to minimize his or her involvement with
respect to any FDIC-insured subsidiaries or AEBI, such as with respect to
membership on
board committees, or abstaining from participation and voting with respect to
those matters that are directly related to (and generally limited to) the
business or affairs of such companies, such as the selection of principal
executive officers of such companies, or the sale of such companies, or other
major decisions involving such companies);
(7) have or seek to have any director, officer, employee, affiliate
or other representative of Berkshire Hathaway serve as an officer, agent or
employee of American Express or any subsidiary of American Express;
(8) with regard to relationships with American Express and the FDIC-
insured subsidiaries of American Express, except with the prior written consent
of the FDIC and the Board of Governors of the Federal Reserve System;
(a) initiate any policy or directive mandating that any
Berkshire Hathaway subsidiary favor American Express to the exclusion of any
competing entity, except as such may be the result of generic policies favoring
best price, service or similar attributes of business relationships;
(b) obtain services or enter transactions other than in the
ordinary course of business and on terms and conditions comparable to those in
transactions with similarly situated parties that do not own American Express
securities;
(c) increase the extent of its current banking
relationships with FDIC-insured subsidiaries of American Express or with AEBI in
an amount that would be material to such subsidiaries or to Berkshire Hathaway,
including any increase in deposit relationships other than changes based on use
of credit cards issued by such FDIC-insured subsidiaries by customers of
Berkshire Hathaway subsidiaries;
<PAGE>
-3-
(d) permit the sale of any of its insurance products
through the offices or employees of American Express or of subsidiaries of
American Express; or
(e) enter into any joint venture or other profit-sharing
or similar arrangements with any FDIC-insured subsidiaries of American Express
or with AEBI under which the compensation to either Berkshire Hathaway or such
subsidiary is measured by the profitability of the service being offered or of
the enterprise in which such service is being used;
(9) dispose or threaten to dispose of shares of American Express in
any manner as a condition of specific action or nonaction by American Express or
any of its subsidiaries so as to attempt to influence American Express or any of
its subsidiaries.
<PAGE>
EXHIBIT 12.1
AMERICAN EXPRESS COMPANY
COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
Nine Months Years Ended December 31,
Ended September 30, -----------------------------
1995 1994 1993 1992 1991
------------------- ---- ---- ---- ----
Earnings:
Pretax income from
continuing operations $1,641 $1,891 $2,326 $ 896 $ 622
Interest expense 1,749 1,925 1,783 2,171 2,761
Other adjustments 62 103 88 196 142
----- ----- ----- ----- -----
Total earnings (a) $3,452 $3,919 $4,197 $3,263 $3,525
----- ----- ----- ----- -----
Fixed charges:
Interest expense $1,749 $1,925 $1,783 $2,171 $2,761
Other adjustments 101 142 130 154 147
----- ----- ----- ----- -----
Total fixed charges (b) $1,850 $2,067 $1,913 $2,325 $2,908
----- ----- ----- ----- -----
Ratio of earnings to
fixed charges (a/b) 1.87 1.90 2.19 1.40 1.21
Included in interest expense in the above computation is interest expense
related to the Company's international banking operations and Travel
Related Services' consumer lending activities, which is netted against
interest and dividends in the Consolidated Statement of Income.
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>
EXHIBIT 12.2
AMERICAN EXPRESS COMPANY
COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED SHARE DIVIDENDS
(Dollars in millions)
Nine Months Years Ended December 31,
Ended September 30, -----------------------------
1995 1994 1993 1992 1991
------------------- ---- ---- ---- ----
Earnings:
Pretax income from
continuing operations $1,641 $1,891 $2,326 $ 896 $ 622
Interest expense 1,749 1,925 1,783 2,171 2,761
Other adjustments 62 103 88 196 142
----- ----- ----- ----- -----
Total earnings (a) $3,452 $3,919 $4,197 $3,263 $3,525
----- ----- ----- ----- -----
Fixed charges and
preferred share
dividends:
Interest expense $1,749 $1,925 $1,783 $2,171 $2,761
Dividends on preferred
shares 18 50 66 65 61
Other adjustments 101 142 130 154 147
----- ----- ----- ----- -----
Total fixed charges and
preferred share
dividends (b) $1,868 $2,117 $1,979 $2,390 $2,969
----- ----- ----- ----- -----
Ratio of earnings to
fixed charges and
preferred share
dividends (a/b) 1.85 1.85 2.12 1.37 1.19
Included in interest expense in the above computation is interest expense
related to the Company's international banking operations and Travel
Related Services' consumer lending activities, which is netted against
interest and dividends in the Consolidated Statement of Income.
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>
Exhibit 15
November 14, 1995
The Shareholders and Board of Directors
American Express Company
We are aware of the incorporation by reference in the Registration Statements
(Forms S-8 No. 2-46918, No. 2-59230, No. 2-64285, No. 2-73954, No. 2-89680, No.
33-01771, No. 33-02980, No. 33-17133, No. 33-28721, No. 33-32876, No.
33-33552, No. 33-36422, No. 33-38777, No. 33-48629, No. 33-62124, No. 33-65008
and No. 33-53801; Forms S-3 No. 2-89469, No. 33-06038, No. 33-17706, No. 33-
43268, No. 33-66654 and No. 33-50997) of American Express Company of our
report dated November 13, 1995 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 nine-month periods ended September 30, 1995.
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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Consolidated Balance Sheet at September 30, 1995 and Consolidated
Statement of Income for the nine months ended September 30, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> $ 4,577
<SECURITIES> 43,075
<RECEIVABLES> 19,278
<ALLOWANCES> 798
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,586
<DEPRECIATION> 1,759
<TOTAL-ASSETS> 106,312
<CURRENT-LIABILITIES> 0
<BONDS> 23,447
<COMMON> 292
0
200
<OTHER-SE> 6,950
<TOTAL-LIABILITY-AND-EQUITY> 106,312
<SALES> 0
<TOTAL-REVENUES> 11,792
<CGS> 0
<TOTAL-COSTS> 5,435
<OTHER-EXPENSES> 1,160
<LOSS-PROVISION> 2,624
<INTEREST-EXPENSE> 932
<INCOME-PRETAX> 1,641
<INCOME-TAX> 462
<INCOME-CONTINUING> 1,179
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,179
<EPS-PRIMARY> $ 2.34
<EPS-DILUTED> 0
</TABLE>
