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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 March 31, 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 April 30, 1995
- ---------------------------------------- ------------------------------
Common Shares (par value $.60 per share) 495,902,617 shares
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AMERICAN EXPRESS COMPANY
FORM 10-Q
INDEX
Part I. Financial Information:
Consolidated Statement of Income--Three 1
months ended March 31, 1995 and 1994
Consolidated Balance Sheet--March 31, 1995 2
and December 31, 1994
Consolidated Statement of Cash Flows--Three 3
months ended March 31, 1995 and 1994
Notes to Consolidated Financial Statements 4
Management's Discussion and Analysis of 5-12
Financial Condition and Results of Operations
Review Report of Independent Auditors 13
Part II. Other Information 14-15
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PART I--FINANCIAL INFORMATION
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENT OF INCOME
(millions, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
------------------
1995 1994
Revenues: ------ ------
Interest and dividends, net $ 1,099 $ 1,014
Discount revenue 1,018 906
Net card fees 436 431
Travel commissions and fees 295 183
Management and distribution fees 206 205
Other commissions and fees 314 268
Life insurance premiums 207 184
Other 196 179
------ ------
Total 3,771 3,370
------ ------
Expenses:
Human resources 984 882
Provisions for losses and benefits:
Annuities and investment certificates 332 286
Credit, banking and other 284 271
Life insurance 196 180
Interest 303 233
Marketing and promotion 234 234
Occupancy and equipment 268 243
Professional services 174 138
Communications 99 89
Other 399 374
------ ------
Total 3,273 2,930
------ ------
Pretax income from continuing operations 498 440
Income tax provision 145 123
------ ------
Income from continuing operations 353 317
Discontinued operations, net of
income taxes - 36
------ ------
Net income $ 353 $ 353
====== ======
Income per common share
from continuing operations $ 0.70 $ 0.62
Income per common share
from discontinued operations - 0.07
------ ------
Net income per common share $ 0.70 $ 0.69
====== ======
Weighted average number of common
shares outstanding (000's) 502,588 506,729
======= =======
Cash dividends declared per
common share $ 0.225 $ 0.225
======= =======
See notes to Consolidated Financial Statements.
1
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AMERICAN EXPRESS COMPANY
CONSOLIDATED BALANCE SHEET
(millions)
(Unaudited)
March 31, December 31,
Assets 1995 1994
- ------ -------- -----------
Cash and cash equivalents $ 4,340 $ 3,433
Accounts receivable and accrued interest, less
reserves: 1995, $766; 1994, $807 16,182 17,147
Investments 41,204 40,108
Loans and discounts, less reserves:
1995, $530; 1994, $545 15,002 14,722
Land, buildings and equipment--at cost, less
accumulated depreciation: 1995, $1,643;
1994, $1,563 1,842 1,840
Assets held in segregated asset accounts 11,821 10,881
Deferred acquisition costs 2,334 2,280
Other assets 7,012 6,595
------ ------
Total assets $ 99,737 $ 97,006
====== ======
Liabilities and Shareholders' Equity
- ------------------------------------
Customers' deposits and credit balances $ 9,946 $ 10,013
Travelers Cheques outstanding 5,841 5,271
Accounts payable 4,407 4,228
Insurance and annuity reserves:
Fixed annuities 20,634 20,163
Life and disability policies 4,805 4,686
Investment certificate reserves 3,048 2,866
Short-term debt 14,623 14,810
Long-term debt 6,985 7,162
Liabilities related to segregated asset accounts 11,821 10,881
Other liabilities 10,644 10,493
------ ------
Total liabilities 92,754 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
495,733,251 shares in 1995 and 495,865,678
shares in 1994 297 298
Capital surplus 3,845 3,754
Net unrealized securities losses (88) (389)
Foreign currency translation adjustment (84) (77)
Deferred compensation (88) (103)
Retained earnings 2,901 2,750
------ ------
Total shareholders' equity 6,983 6,433
------ ------
Total liabilities and shareholders' equity $ 99,737 $ 97,006
====== ======
See notes to Consolidated Financial Statements.
2
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AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(millions)
(Unaudited)
Three Months Ended
March 31,
------------------
1995 1994
---- ----
Cash Flows from Operating Activities
Income from continuing operations $ 353 $ 317
Adjustments to reconcile income from continuing operations
to net cash provided (used) by operating activities:
Provisions for losses and benefits 455 424
Depreciation, amortization, deferred taxes and other 61 73
Changes in operating assets and liabilities, net of
effects of acquisitions/dispositions:
Accounts receivable and accrued interest 72 (110)
Other assets (370) 807
Accounts payable and other liabilities (158) 414
Increase in Travelers Cheques outstanding 570 187
Increase in insurance reserves 126 102
Net cash flows used by operating activities of
discontinued operations - (3,656)
------ ------
Net cash provided (used) by operating activities 1,109 (1,442)
------ ------
Cash Flows from Investing Activities
Sale of investments 769 1,714
Maturity and redemption of investments 4,980 2,182
Purchase of investments (6,308) (4,139)
Net increase in Cardmember receivables 746 744
Proceeds from repayment of loans 5,621 5,434
Issuance of loans (5,813) (5,152)
Purchase of land, buildings and equipment (75) (68)
Sale of land, buildings and equipment 9 3
Net cash flows used by investing activities of
discontinued operations - (36)
------ ------
Net cash (used) provided by investing activities (71) 682
------ ------
Cash Flows from Financing Activities
Net decrease in customers' deposits and credit balances (272) (43)
Sale of annuities and investment certificates 1,784 1,140
Redemption of annuities and investment certificates (1,107) (1,154)
Net (decrease) increase in debt with maturities
of 3 months or less (2,531) 2,912
Issuance of debt 10,777 2,029
Principal payments on debt (8,683) (4,167)
Issuance of American Express common shares 91 63
Repurchase of American Express common shares (114) -
Dividends paid (115) (134)
Net cash flows provided by financing activities of
discontinued operations - 3,737
------ ------
Net cash (used) provided by financing activities (170) 4,383
Net change in cash and cash equivalents of
discontinued operations - 45
Effect of exchange rate changes on cash 39 (58)
------ ------
Net increase in cash and cash equivalents 907 3,520
Cash and cash equivalents at beginning of period 3,433 3,312
------ ------
Cash and cash equivalents at end of period $ 4,340 $ 6,832
====== ======
See notes to Consolidated Financial Statements.
3
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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, 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 March 31, 1995 and December 31, 1994, the
consolidated results of its operations for the three months ended March
31, 1995 and 1994 and cash flows for the three months ended March 31,
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 $275 million and $206 million of interest expense for the three
months ended March 31, 1995 and March 31, 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 for 1994 have been adjusted to reflect the Lehman Brothers'
spin-off.
4. The following is a summary of investments:
March 31, December 31,
(In millions) 1995 1994
-------- -----------
Held to Maturity, at amortized cost
(fair value: 1995, $21,678; 1994,
$21,387) $21,686 $21,909
Available for Sale, at fair value
(cost: 1995, $16,747; 1994,
$15,912) 16,608 15,293
Trading 149 225
Investment mortgage loans 2,761 2,681
------- -------
$41,204 $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 three months ended March 31, 1995 and
1994 were approximately $34 million and $29 million, respectively.
Interest paid during the three months ended March 31, 1995 and 1994 was
approximately $559 million and $265 million, respectively.
4
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Consolidated Results Of Operations
Three Months Ended March 31, 1995 and 1994
The Company's consolidated net income increased 11 percent in the first
quarter of 1995, compared with income from continuing operations last year.
Net income was flat compared with last year, which included the results of
Lehman Brothers Holdings Inc., which is reported as a discontinued
operation. First quarter net income per share increased 13 percent,
compared with income from continuing operations a year ago. The growth in
net income was driven by an increase of 12.5 percent at Travel Related
Services and 18 percent at American Express Financial Advisors.
The Company's effective tax rate was 29 percent in the first quarter of
1995, compared with 28 percent a year ago. Both years' rates were reduced
by tax-advantaged investment income.
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 share repurchases will further 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 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 had repurchased approximately 18.8 million shares
through April 30, 1995.
5
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Travel Related Services
Results of Operations
Three Months Ended March 31, 1995 and 1994
Statement of Income
-------------------
(Unaudited)
(Amounts in millions, except percentages)
Three Months Ended
March 31,
-------------------- Percentage
1995 1994 Inc/(Dec)
Net Revenues: ---- ---- ----------
Discount Revenue $1,018 $906 12.4%
Net Card Fees 436 431 1.3
Travel Commissions and Fees 295 183 61.4
Interest and Dividends 243 174 39.9
Other Revenues 513 437 17.1
----- -----
2,505 2,131 17.6
----- -----
Lending:
Finance Charge Revenue 354 292 21.3
Interest Expense 118 64 86.7
----- -----
Net Finance Charge Revenue 236 228 3.2
----- -----
Total Net Revenues 2,741 2,359 16.2
----- -----
Expenses:
Marketing and Promotion 229 229 0.2
Provision for Losses and Claims:
Charge Card 164 148 11.2
Lending 106 114 (6.9)
Other 122 103 17.2
----- -----
Total 392 365 7.3
Interest Expense:
Charge Card 208 159 31.4
Other Interest Expense 58 25 #
----- -----
Total 266 184 44.8
Net Discount Expense * 100 67 47.6
Human Resources 693 586 18.3
Other Operating Expenses 684 602 13.7
----- -----
Total Expenses 2,364 2,033 16.3
----- -----
Pretax Income 377 326 15.4
Income Tax Provision 114 92 22.6
----- -----
Net Income $263 $234 12.5
===== =====
# Denotes variance of more than 100%.
* The impact of Net Discount Expense (related to TRS'
securitized receivables) was to:
Decrease the Provision for Losses
and Claims - Charge Card $37 $27 35.8
Decrease Interest Expense -
Charge Card 41 24 71.0
Increase Other Revenues 22 16 33.4
----- -----
Total Net Discount Expense $100 $67 47.6
===== =====
6
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Selected Statistical Information
--------------------------------
(Unaudited)
(Amounts in millions, except percentages and where indicated)
Three Months Ended
March 31,
-------------------- Percentage
1995 1994 Inc/(Dec)
---- ---- ----------
Total Cards in Force:
United States 25.1 24.7 1.8%
Outside the United States 11.2 10.7 4.2
----- -----
Total 36.3 35.4 2.5
===== =====
Basic Cards in Force:
United States 18.6 18.1 2.6
Outside the United States 8.6 7.9 8.2
----- -----
Total 27.2 26.0 4.3
===== =====
Card Billed Business (billions):
United States $26.0 $22.9 13.6
Outside the United States 10.8 8.9 21.4
----- -----
Total $36.8 $31.8 15.8
===== =====
Travelers Cheque Sales (billions) $5.4 $4.8 10.8
Average Travelers Cheques
Outstanding (billions) $5.4 $4.8 11.5
Travel Sales (billions) $3.4 $2.1 62.1
Travel Related Services' (TRS) net revenues increased reflecting an
increase in worldwide billed business and higher business travel sales
resulting from acquisitions and growth. The increase in worldwide billed
business resulted from higher spending per Cardmember, and an increase in
the average number of Cards outstanding. The rate of growth in discount
revenue is below the growth in worldwide billed business, reflecting a
change in the mix of Cardmember spending as well as repricing in selected
international markets. Lending net finance charge revenue increased
reflecting higher average receivables, partly offset by lower net interest
spreads.
The increase in the worldwide charge Card provision reflected the increase
in billed business, partly offset by a higher level of securitized
receivables. The worldwide lending provision declined reflecting continued
lower write-offs. Charge Card interest expense increased reflecting both
higher borrowing rates and increased funding requirements. The increase in
human resources expense primarily reflected the impact of acquisitions and
growth to support increased business volumes. Other operating expenses
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, but had essentially no effect
on net income.
7
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Liquidity and Capital Resources
Selected Balance Sheet Information
----------------------------------
(Unaudited)
(Amounts in billions, except percentages)
March 31, December 31, Percentage
1995 1994 Inc/(Dec)
--------- ------------ ---------
Accounts Receivable, net $15.8 $16.8 (6.4)%
Investments $10.9 $10.7 1.2
U.S. Consumer Lending
Loan Balances $8.3 $8.1 3.2
Total Assets $42.6 $42.5 0.4
Travelers Cheques Outstanding $5.8 $5.3 10.8
Accounts Payable $3.8 $3.8 0.8
Short-term Debt $14.7 $15.1 (2.6)
Long-term Debt $3.4 $3.4 1.5
Total Liabilities $38.2 $38.2 0.1
Total Shareholder's Equity $4.4 $4.3 3.1
Return on Average Equity 24.2% 24.0% -
The declines in accounts receivable and short-term debt reflected
repayments since year end when balances reflected seasonal growth. During
the first quarter 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.
8
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American Express Financial Advisors
Results of Operations
Three Months Ended March 31, 1995 and 1994
Statement of Income
-------------------
(Unaudited)
(Amounts in millions, except percentages and where indicated)
Three Months Ended
March 31,
-------------------- Percentage
1995 1994 Inc/(Dec)
---- ---- ----------
Revenues:
Investment Income $535 $503 6.4%
Management and Distribution Fees 206 205 0.4
Other Income 133 108 23.8
----- -----
Total Revenues 874 816 7.2
----- -----
Expenses:
Provision for Losses and Benefits:
Annuities 273 255 7.1
Insurance 94 88 7.0
Investment Certificates 49 22 #
----- -----
Total 416 365 14.1
Human Resources 207 209 (0.7)
Other Operating Expenses 87 106 (18.3)
----- -----
Total Expenses 710 680 4.5
----- -----
Pretax Income 164 136 20.8
Income Tax Provision 57 45 25.6
----- -----
Net Income $107 $91 18.4
===== =====
Selected Statistical Information
--------------------------------
Life Insurance in Force (billions) $54.4 $47.7 14.0
===== =====
Assets Owned and/or Managed (billions):
Assets managed for institutions $30.3 $24.3 24.6
Assets owned and managed for
individuals
Owned Assets 42.3 38.4 10.2
Managed Assets 40.4 36.8 9.8
----- -----
Total $113.0 $99.5 13.6
===== =====
Sales of Selected Products:
Mutual Funds $2,288 $2,526 (9.4)
Annuities $1,096 $1,010 8.5
Investment Certificates $412 $155 #
Life and Other Insurance Sales $83 $75 10.5
Fees From Financial Plans (thousands) $10,419 $10,174 2.4
Number of Financial Advisors 8,015 7,719 3.8
Product Sales Generated from Financial
Plans as a Percentage of Total Sales 63.4% 59.7% -
# Denotes variance of more than 100%.
9
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American Express Financial Advisors' revenue and earnings growth benefited
primarily from an increase in managed assets, as well as an increase in life
insurance in force. These increases were partially offset by the impact of
narrowing investment margins and lower distribution fees.
Investment income increased reflecting higher asset levels, offset, in
part, by lower investment yields. Management and distribution fees were
essentially even with last year as increased management fees earned on a
higher asset base were mostly offset by a decline in distribution fees due
to lower mutual fund sales. The growth in managed assets reflects market
appreciation and positive net sales. Other income increased primarily due
to higher life insurance contract charges and premiums.
Provisions for losses and benefits increased reflecting higher business in
force and higher accrual rates for annuities, life insurance and investment
certificates. Human resources expense declined slightly as an increase in
the number of employees was more than offset by the effect of lower
commissionable sales. Other operating expenses declined due to the
establishment of a reserve in the first quarter of 1994 to reflect
anticipated surrenders as a result of an annuity exchange plan.
Liquidity and Capital Resources
Selected Balance Sheet Information
----------------------------------
(Unaudited)
(Amounts in billions, except percentages)
March 31, December 31, Percentage
1995 1994 Inc/(Dec)
--------- ------------ ---------
Investments $26.5 $25.2 5.0%
Assets Held in Segregated Accounts $11.8 $10.9 8.6
Total Assets $42.3 $40.2 5.4
Reserves for Losses and Benefits $26.4 $25.6 3.0
Total Liabilities $39.9 $38.0 5.0
Total Shareholder's Equity $2.4 $2.1 12.8
Return on Average Equity 20.0% 19.3% -
Total assets owned increased from year end primarily reflecting increases
in investments and assets held in segregated asset accounts. These
increases reflected positive net sales and market appreciation.
10
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American Express Bank
Results of Operations
Three Months Ended March 31, 1995 and 1994
Statement of Income
-------------------
(Unaudited)
(Amounts in millions, except percentages)
Three Months Ended
March 31,
-------------------- Percentage
1995 1994 Inc/(Dec)
---- ---- ----------
Net Revenues:
Interest Income $239 $233 2.8%
Interest Expense 157 142 10.9
----- -----
Net Interest Income 82 91 (9.7)
Commissions, Fees and Other Revenues 59 58 1.9
Foreign Exchange Income 19 19 (0.1)
----- -----
Total Net Revenues 160 168 (4.6)
----- -----
Provision for Credit Losses 3 7 (52.9)
----- -----
Expenses:
Human Resources 64 61 4.4
Other Operating Expenses 71 64 10.8
----- -----
Total Expenses 135 125 7.6
----- -----
Pretax Income 22 36 (38.2)
Income Tax Provision 6 12 (43.0)
----- -----
Net Income $16 $24 (36.0)
===== =====
American Express Bank's (the Bank) results reflected lower net interest
income and higher operating expenses. The decline in results was partially
offset by a reduction in the provision for credit losses and a lower
effective tax rate.
The decline in net interest income primarily resulted from lower spreads on
the investment portfolio, as well as higher short-term funding costs.
Human resources expense increased reflecting staff cost increases in
selected markets. Operating expenses increased over the year ago level, in
part due to spending related to systems technology.
11
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<TABLE>
<CAPTION>
Liquidity and Capital Resources
Selected Balance Sheet Information
----------------------------------
(Unaudited)
(Amounts in billions, except percentages and where indicated)
<S>
March 31, December 31, Percentage March 31, Percentage
1995 1994 Inc/(Dec) 1994 Inc/(Dec)
----------------------------------------------------------
<C> <C> <C> <C> <C> <C>
Investments $2.6 $2.8 (4.3%) $3.1 (14.4%)
Total Loans $5.4 $5.0 7.6 $5.7 (5.1)
Reserve for Credit Losses (millions) $112 $109 2.3 $132 (15.2)
Total Assets $13.5 $13.3 1.2 $14.5 (7.0)
Deposits $9.2 $9.1 1.5 $10.4 (11.0)
Total Liabilities $12.7 $12.5 1.2 $13.7 (7.7)
Total Shareholder's Equity $0.8 $0.8 1.7 $0.8 (7.2)
Reserves as a Percentage of
Total Loans 2.1% 2.2% - 2.3% -
Total Nonperforming Loans (millions) $32 $20 61.0 $34 (6.6)
Other Nonperforming Assets (millions) $55 $56 (1.8) $89 (38.3)
Risk-Based Capital Ratios:
Tier 1 7.7% 7.5% - 6.5% -
Total 14.9% 14.7% - 12.7% -
Leverage Ratio 4.9% 4.8% - 4.3% -
Return on Average Assets 0.46% 0.54% * - 0.65% -
Return on Average Common Equity 8.37% 10.78% * - 13.13% -
* For the full year.
</TABLE>
The Bank's total assets increased slightly from year end as loan growth was
mostly offset by a decrease in investments. The increase in nonperforming
loans primarily reflects newly classified exposures during the quarter,
partly offset by repayments.
Corporate and Other
Three Months Ended March 31, 1995 and 1994
Corporate and Other reported first quarter 1995 net expenses of $33
million, compared with net expenses of $32 million a year ago.
Results for the first quarter 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, which was offset by expenses related to certain business building
initiatives.
First quarter 1994 results reflected 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 Holdings Inc. spin-off and certain business building
initiatives.
12
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<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 March 31, 1995 and the related consolidated
statements of income and cash flows for the three-month periods ended March 31,
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
May 12, 1995
13
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PART II. OTHER INFORMATION
AMERICAN EXPRESS COMPANY
Item 4. Submission of Matters to a Vote of Securities Holders
The registrant's annual meeting of shareholders was held on April 24,
1995. The matters that were voted upon at the meeting, and the number of votes
cast for, against or withheld, as well as the number of abstentions and broker
non-votes, as to each such matter, where applicable, are set forth below.
Votes Votes Votes Broker
For Against Withheld Abstentions Non-Votes
Selection of
Ernst & Young LLP
as independent 433,460,837 1,382,384 - 840,997 -
auditors
Shareholder proposal
relating to cumula-
tive voting 122,434,626 256,111,359 - 10,193,623 46,945,445
Shareholder proposal
relating to term
limits for directors 16,618,905 361,272,735 - 12,050,460 45,742,953
Shareholder proposal
relating to out-
sourcing 12,190,145 361,169,621 - 15,384,596 46,940,691
Election of Directors:
D.F. Akerson 433,511,583 - 2,173,470 - -
A.L. Armstrong 433,171,932 - 2,513,121 - -
E.L. Artzt 433,352,384 - 2,332,669 - -
W.G. Bowen 433,458,655 - 2,226,398 - -
D.M. Culver 433,174,412 - 2,510,641 - -
C.W. Duncan Jr. 433,428,301 - 2,256,752 - -
H. Golub 433,436,047 - 2,249,006 - -
B. Sills Greenough 433,002,392 - 2,682,661 - -
F.R. Johnson 431,912,168 - 3,772,885 - -
V.E. Jordan Jr. 432,652,628 - 3,032,425 - -
H.A. Kissinger 428,008,426 - 7,676,627 - -
D. Lewis 433,111,218 - 2,573,835 - -
A. Papone 429,129,008 - 6,556,045 - -
F.P. Popoff 433,441,296 - 2,243,757 - -
J.E. Stiefler 433,447,236 - 2,237,817 - -
14
<PAGE>
<PAGE>
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 January 23, 1995, Item 5, announcing the
registrant's 1994 annual earnings.
Form 8-K, dated March 27, 1995, Item 5, announcing approval of a
plan to repurchase up to 40 million common shares.
Form 8-K, dated April 4, 1995, Item 5, announcing the appointment
of George L. Farr as Vice Chairman.
Form 8-K, dated April 20, 1995, Item 5, reporting the registrant's
earnings for the quarter ended March 31, 1995.
15
<PAGE>
<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: May 15, 1995 By /s/ Michael P. Monaco
------------------ ---------------------------
Michael P. Monaco
Executive Vice President,
Chief Financial Officer and
Treasurer
Date: May 15, 1995 /s/ Daniel T. Henry
------------------ ---------------------------
Daniel T. Henry
Senior Vice President and
Comptroller
(Chief Accounting Officer)
<PAGE>
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this Quarterly Report:
Exhibit Description
10.1 Amended and Restated American Express Supplemental Retirement
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.
27 Financial Data Schedule.
E-1
<PAGE>
EXHIBIT 10.1
THE AMERICAN EXPRESS SUPPLEMENTAL RETIREMENT PLAN
Amended and Restated Effective March 1, 1995
The American Express Company Supplemental Retirement Plan,
formerly known as the American Express Supplementary Pension Plan
is amended and restated effective March 1, 1995, (the "Plan"),
and effective for benefits calculated with respect to
compensation earned for the period commencing July 1, 1994.
1. History of the Plan
On November 26, 1973, the American Express Company (the
"Company") Board of Directors directed the adoption of a
Supplementary Pension Plan intended to supplement the retirement
benefits of the American Express Retirement Plan, sometimes
referred to as the American Express Funded Pension Plan, and
other retirement and savings plans of the Company and its
subsidiaries and affiliates, through the payment of benefits to
those participants in such plans, and their surviving spouses and
beneficiaries, as to whom benefits otherwise payable under such
plans are restricted in accordance with Section 3(36) of the
Employee Retirement Income Security Act of 1974 (ERISA). Such
American Express Supplementary Pension Plan has remained in
effect since its adoption and has been construed and operated as
an "excess benefit plan" as defined under ERISA Section 3(36).
Effective July 1, 1994, the Board of Directors of the Company
authorized and directed the amendment and restatement of the
American Express Supplementary Pension Plan pursuant to the
provisions of Section 9 thereof. Such plan is being amended and
restated effective March 1, 1995.
The Plan shall be administered by the Senior Vice President,
World Wide Benefits (Administrator). The Administrator shall
have full power and authority to interpret, construe and
administer the Plan, consistent with the intent as well as the
terms of this Plan, and such interpretation and construction
thereof and actions taken thereunder shall be binding on all
persons for the purposes so stated by the Administrator;
provided, that any such interpretation shall be consistent with
Section 5(D) hereof. The Administrator may correct any defect,
supply any omission or reconcile any inconsistency in the Plan in
the manner and to the extent the Administrator deems desirable to
carry the Plan into effect. Any decision of the Administrator in
the administration of the Plan shall be final and conclusive and
binding upon all participants in the Plan.
3. Eligibility to Participate in the Plan.
(A) Subject to the discretion of the Administrator, an
employee who satisfies all of the following
requirements for the relevant Plan Year shall be a
participant in this Plan and entitled to the benefits
described herein:
<PAGE>
(1) For the relevant Plan Year, the employee is a
participant under a "qualified retirement plan"
maintained by the Company. For purposes of this
paragraph, the phrase "qualified retirement plan"
shall mean the American Express Company Retirement
Plan (the "Retirement Plan") and/or the American
Express Incentive Savings Plan (the "ISP"), as the
context may indicate as appropriate. The term
"Plan Year" shall mean the calendar year with
reference to which benefits are determined
hereunder. Participation by an employee in such
qualified retirement plan shall be determined
through reference to the eligibility criteria
applicable under the relevant qualified retirement
plan.
(2) (a) For the relevant Plan Year, the employee is
credited with "compensation" earned from the
Company or its subsidiaries or affiliates in an
amount in excess of the amount prescribed by the
Secretary of the Treasury as the applicable annual
compensation limit under Section 401(a)(17) of the
Internal Revenue Code of 1986, as amended (the
"Code"). For purposes of this paragraph, the term
"compensation" shall have the meaning ascribed to
it as defined under relevant provisions of the
qualified retirement plan with reference to which
benefits under this Plan are determined; or (b)
for the relevant Plan Year, the employee is
classified as at least "Grade Band 50" personnel
or greater as defined by the Administrator.
(B) Notwithstanding the provisions of Section 3(A) above,
participation in this Plan shall be limited to such
employees of the Company and its subsidiaries and
affiliates who are designated by the Administrator, on
a case-by-case basis, as eligible to participate in
this Plan; provided, that all Insiders (as defined in
Section 5) who meet the eligibility criteria set forth
in Section 3(A)(1) and (2) shall be automatically
eligible to participate in this Plan without any action by
the Administrator.
(C) The Administrator is authorized to approve, on behalf
of the Company, deferred compensation agreements and
amendments thereto, with employees eligible to
participate in this Plan.
(D) Employees who meet the eligibility requirements
pursuant to Section 3.(A) as a result of promotion or
new employment during the Plan Year may request
participation in this Plan; provided, however, such
request must be received by the Administrator no later
than thirty (30) days following receipt by the employee
of written confirmation of eligibility to participate
hereunder.
<PAGE>
4. Benefits Under the Plan
Effective March 17, 1995 and retroactive for benefits calculated
with respect to compensation earned during the period beginning July 1, 1994,
benefits hereunder shall be determined as follows:
(A) Benefits in Excess of Limits Under American Express
Company Retirement Plan:
If an employee who is a participant under the
Retirement Plan retires, becomes disabled, dies or
otherwise terminates employment such that he or she or
his or her beneficiary becomes entitled to benefits
under the Retirement Plan, and if any benefit was not
accrued for him or her under the terms of the
Retirement Plan because of the limitations of Section
415 and Section 401(a)(17) of the Code, as amended from
time to time (and the respective regulations issued
thereunder), then the Company hereby agrees and
promises to pay to such employee or his or her
beneficiary an amount, if any, equal to the difference
between the benefit payable to him or her or his or her
beneficiary under the Retirement Plan but for the
applicability of the limitations of Section 401(a)(17)
and Section 415 of the Code.
Notwithstanding anything to the contrary in this Plan
or the Retirement Plan, each person who is otherwise
entitled to receive benefits commencing on or after
July 1, 1994 hereunder, shall be entitled to an
additional benefit hereunder, if any, as would have
been payable to him or her under the Retirement Plan if
he or she had not elected to defer receipt of
compensation through voluntary non-qualified deferrals
pursuant to the American Express Salary Deferral Plan
or similar plan of deferred compensation sponsored by
the Company.
The benefits credited under this Section 4(A) shall be
restricted to a participant's vested portion with
respect to the vesting schedule from the Retirement
Plan. Any non-vested portion of such deferred
compensation to be paid shall be forfeited.
Notwithstanding the above, if during the first year
following a Change in Control, as defined in Section 7
below, a participant experiences a Defined Termination,
as such term is defined in the Company's Senior
Executive Severance Plan (provided that such
participant is eligible under such plan), then such
participant shall be deemed to have rendered two
additional years of Credited Service and to have
attained two additional years of age for all purposes
under the Plan from his date of termination, and shall
also be credited with an additional accrued benefit
under the Plan that is equivalent to the Pension
benefit that would have accrued under the Retirement
Plan if the participant had rendered such two
<PAGE>
such additional two years of age for all purposes under
the Retirement Plan. Upon such a termination of
employment (as described in the preceding sentence)
during the second year following a Change in Control,
then such participant shall be deemed to have rendered
one additional year of Credited Service and to have
attained one additional year of age for all purposes
under the Plan and the Retirement Plan, as described in
the preceding sentence.
(B) Benefits in Excess of Limits Under American Express
Incentive Savings Plan.
If an Employee is a participant in the ISP, the Company
shall establish book reserve accounts to which the
following shall be credited when earned or otherwise
payable:
(1) Company Stock Contribution Allocation. Commencing
with the first payroll period ending on or after
March 31, 1995, and with respect to each payroll
period thereafter, an amount equal to one-percent
(1%) of a participant's base salary less such
amount allocated as a Company Stock Contribution
(as defined in the ISP) to the account of the
participant under the ISP to the extent such
contribution is limited by the restrictions
specified in Sections 401(a)(17) and 415 of the
Code. For the purposes of this Section 4(b)(1),
the limitation of Code Section 401(a)(17) shall be
deemed to apply pro rationally to each regularly
scheduled pay period for a given calendar year.
(2) Company Profit-Sharing Contribution Allocation.
An amount equal to that portion of the Company
Profit-Sharing Contribution (as defined in the
ISP) which would have been made and allocated to
the account of the participant in the ISP for
1994 and later years, consisting of a percentage
of a participant's base salary, but for the
limitations specified in Sections 401(a)(17) and
415 of the Code. The benefits credited under this
Section 4(B)(2) at the time of distribution shall
be restricted to a participant's vested portion
with respect to the vesting schedule under the
ISP. Any non-vested portion of such deferred
compensation to be paid shall be forfeited.
(3) Company Matching Contribution Allocation. An
amount equal to that portion of the Company
Matching Contribution (as defined in the ISP)
which would have been made and allocated to the
account of the participant by the Company as a
Matching Contribution on behalf of a participant
under the ISP for 1995 and later years with
respect to that portion of a participant's
compensation which is deferred pursuant to the
American Express Salary Deferral Plan, or other
<PAGE>
similar plan of deferred compensation sponsored by
the Company and assuming (i) such salary portion
had not been deferred and (ii) the participant had
elected to make elective contributions under the
ISP equal to three percent (3%), or such lesser
amount if so elected by the participant under the
ISP, of such participant's compensation deferred
under such deferred compensation plan.
(4) On March 31, 1995, the Company will credit to the
applicable book reserve account of each
Participant, in a single sum, the aggregation of
all amounts that would have been allocated under
Section 4(B)(1)-(3) above with respect to a
Participant's compensation paid by the Company had
such allocations been made with respect to the
first payroll period ending on or after July 1,
1994 through the payroll period on or before March
17, 1995. The credit amount will equal such
aggregate value of allocations plus the equivalent
of the earnings, gain or loss had such aggregate
value been invested in units of the ISP Income
Fund on July 1, 1994 and held therein until March
17, 1995.
(C) Crediting of Accounts.
(1) Amounts described in Section 4(B)(1) shall be
credited to a book reserve account established for
a Plan participant on each payroll date. Such
book reserve account shall be denominated in units
("Units"). For purposes of this Plan, the price
and value of one Unit on any given day is equal to the
number of American Express Common Shares held by the
ISP American Express Stock Fund (the "Stock Fund") on a
given day multiplied by the previous day's closing price
of one American Express Common Share on the New York
Stock Exchange, plus the face value of all cash
equivalents held by the Stock Fund plus the fair market
value of all other assets held by the Stock Fund on
such day; divided by the number of Stock Fund units
outstanding on such day. This paragraph shall also
apply to credits under Section 4(B)(4) to the extent
such credits are made with respect to Company Stock
Contributions.
(2) Amounts described in Section 4(B)(2) and (3) shall
be credited to a book reserve account established
for a Plan participant at the time Company Profit
Sharing Contributions and Company Matching
Contributions, respectively, are allocated by the
Company to such Plan participant under the ISP.
Such book reserve account shall contain various
subaccounts, each representing the various
investment funds available to a participant under
the ISP.
<PAGE>
(D) Payment of Benefits.
(1) Any benefits payable under this Plan shall be
paid in cash from the general assets of the
Company in a single sum within ninety (90)
days following the Participants initial
payout or annuity starting date under the
Retirement Plan.
(2) The beneficiary or beneficiaries entitled to
receive benefits under (1) above shall be
those as the participant shall designate by
filing a written notice of such designation
with the Administrator in such form as the
Administrator may prescribe. The participant
may revoke or modify that designation at any
time by a further written designation.
The participant's beneficiary designation
shall be deemed automatically revoked in the
event of the death of the beneficiary or, if
the beneficiary is the participant's spouse,
in the event of dissolution of marriage.
If no designation is in effect at the time
when benefits payable under the Plan become
due, the terms of the Retirement Plan
governing the identity of the beneficiary or
beneficiaries shall apply to this Plan.
(3) Notwithstanding anything herein to the
contrary, upon the request of a participant
and based on a showing of an unanticipated
emergency caused by an event beyond the
control of the participant or beneficiary
that would result in severe financial
hardship to the individual if early
withdrawal were not permitted, the (need name
of position) may, in its sole discretion,
vary the manner and time of making the
distributions provided in this Section 6.
(E) Subaccounts; Investment Performance; Transfers
(1) Subject to Section 4(E)(3) below, for each
participant the performance of the book reserve
account established pursuant to Section 4(C)(1)
shall reflect the performance of the Stock Fund.
Such book reserve account shall reflect such
increases or decreases in value from time to time,
whether from dividends, gains, losses or
otherwise, as that experienced by the Stock Fund.
Credits to the book reserve account established
pursuant to Section 4(C)(1) may not be transferred
to any other account or subaccount under this Plan
or otherwise; provided, that, subject to Section 5
hereof, upon attainment of age 55, a participant
may elect to transfer credits from such account to
<PAGE>
one or more subaccounts established pursuant to
Section 4(C)(2).
(2) For each participant, credits to the book reserve
account established pursuant to Section 4(C)(2)
shall be made to such subaccounts thereunder
selected by such participant. If more than one
subaccount is selected, the participant must
designate, on a form or in a medium acceptable to
the Administrator, in one percent (1%) increments,
the amounts to be credited to each subaccount. A
participant shall be allowed to amend such
designation with the same frequency of investment
changes offered the participant under rules
governing the ISP during a given Plan year.
Subject to Section 4(E)(3) below, for each
participant the performance of such subaccounts
shall reflect the performance of the investment
fund under the ISP that such subaccount
represents. Each such subaccount shall reflect
such increases or decreases in value from time to
time, whether from dividends, gains, losses or
otherwise, as that experienced by the related
investment fund under the ISP. Subject to Section
5 hereof, credits to such subaccounts may be
transferred to any other subaccount under this
plan on such terms and at such times as permitted
with respect to the related investment funds under
the ISP. If a participant fails to affirmatively
designate one or more subaccounts pursuant to this
Section 4(E)(2), the Administrator shall presume
the participant has selected the subaccount(s)
that relate to the participant's investment
direction under the ISP; provided however, to the
extent an Insider (as defined in Section 5) has
directed ISP amounts to the Stock Fund, the
Administrator shall presume for this purpose that
such Insider has selected the subaccount relating
to the ISP Income Fund.
(3) The experience of the subaccounts as described
hereinabove and established for a participant
shall reflect, in as similar manner as
administratively feasible, the investments
experience realized by a participant with respect
to its investment elections under the ISP.
Subject to Section 4(C)(1), the subaccounts shall
be valued subject to such reasonable rules and
procedures as the Administrator shall adopt and
apply to all participants similarly situated with
an effort to value such subaccounts as if amounts
designated were invested in as similar time and
manner, subject to administrative convenience, as
amounts are invested, and subject to the same
market fluctuation factors as used in valuing such
investments in the ISP.
<PAGE>
5. Special Restrictions
(A) The provisions of this Section 5 shall apply to all
Plan participants who are required to file reports
under Section 16(a) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") with respect to equity
securities of American Express Company ("Insiders"). Such
provisions shall apply during all periods that Insiders
are subject to reporting under Section 16(a), including
any period following cessation of Insider status during
which such Insiders are required to report transactions
pursuant to Rule 16a-2(b) (or its successor) under the
Exchange Act.
At such time as any Insider ceases to be subject to
Section 16(a) reporting (and any period contemplated by
Rule 16a-2(b) has expired), this Section 5 shall cease
to be applicable to such participant.
(B) This Section 5 shall be automatically applicable to any
person who, on and after the date hereof, becomes an
Insider. For purposes of the foregoing, the effective
date of this Section shall be the date the person
becomes an Insider.
(C) Notwithstanding anything in this Plan to the contrary,
(i) credits to the account of an Insider pursuant to
Section 4(C)(2) may not be made to any subaccount that
reflects the performance of the Stock Fund, (ii)
credits made pursuant to Section 4(C)(2) to the account
of an Insider at any time may not be transferred to any
book reserve account or subaccount that reflects the
performance of the Stock Fund and (iii) credits made
to an Insider's book reserve account pursuant to
Section 4(C)(1) at any time and credits to the account
of an Insider pursuant to Section 4(C)(2) that were
made to a subaccount that reflects the performance of
the Stock Fund (which credits could only have been made
when such individual as not an Insider) may not be
transferred, withdrawn, paid out or otherwise changed,
other than (a) pursuant to Section 4(D)(1) or (2) (but
only at such time as such person is no longer an
Insider) or (b) pursuant to the forfeiture provisions
contained in the last sentence of Section 4(B)(2).
(D) It is intended that the interest of Insiders in any
subaccount that represents the performance of the Stock
Fund is intended to qualify for the exclusion from the
definition of "derivative security" pursuant to Rule
16a-1(c)(3)(i) under the Exchange Act. The
Administrator shall, with respect to Insiders,
administer and interpret all Plan provisions in a
manner consistent with such exclusion.
6. General Provisions
(A) Nothing in this Plan shall create, or be construed to
create, a trust of any kind or fiduciary relationship
<PAGE>
between the Company and the participant, his or her
designated beneficiary, or any other person. Any funds
deferred under the provisions of this Plan shall be
construed for all purposes as a part of the general
funds of the Company, and any right to receive payments
from the Company under this Plan shall be no greater
than the right of any unsecured general creditor. The
Company may, but need not, purchase any securities or
instruments as a means of hedging its obligations to
any participant under this Plan.
(B) The right of any participant, or other person, to the
payment of deferred compensation under this Plan shall
not be assigned, transferred, pledged or encumbered
except by the laws of descent and distribution.
(C) Participation in the Plan shall not be construed as
conferring upon the participant the right to continue
in the employ of the Company as an executive or any
other capacity. The Company expressly reserves the
right to dismiss any employee at any time without
liability for the effect such dismissal might have upon
him or her hereunder.
(D) Any deferred compensation payable under this Plan shall
not be deemed salary or other compensation to the
participant for the purpose of computing the benefits
under any qualified pension or profit sharing plan, or
life insurance benefit , or disability plan.
(E) The Company makes no representations or warranties and
assumes no responsibility as to the tax consequences to
any participant who enters into a deferred compensation
agreement with the Company pursuant to this Plan.
Further, payment by the Company to participant, or to
participant's beneficiary or beneficiaries in
accordance with the written designation of beneficiary
on file with the Administrator at the time of
participant's death, shall be binding on all interested
parties and persons, including participant's heirs,
executors, administrators and assigns, and shall
discharge the Company, its directors, officers and
employees from all claims, demands, actions or causes
of action of every kind arising out of or on account of
participant's participation in this Plan, known or
unknown, for himself or herself, his or her heirs,
executors, administrators and assigns. Any agreement
executed pursuant to this Plan shall include the above
provision of this Section 6(E).
(F) The Board of Directors or its delegate may, at any
time, amend or terminate the Plan, provided that the
Board may not reduce or modify the amount of any
benefit payable to a participant or any beneficiary
receiving benefit payments at the time the Plan is
amended or terminated. Notwithstanding the foregoing,
to the extent required by Rule 16a-1(c)(3)(i) (or its
successor) under the Exchange Act, the "formula"
<PAGE>
provisions of this Plan shall not be amended more than
once every six months, other than to comport with
changes in the Code, ERISA, or the rules thereunder.
(G) The Administrator may prescribe a form of agreement to
be used by a participant and the Company to defer
compensation under the Plan.
(H) This Plan and all actions taken hereunder shall be
governed by and construed in accordance with the laws
of the state of New York.
7. Change in Control
(A) A "Change in Control" means the happening of any of the
following:
(a) Any individual, entity or group (a "Person")
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act becomes the beneficial owner (within
the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 25% or more of either (i) the then outstanding common shares
of the Company (the "Outstanding Company Common Shares") or (ii)
the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that such beneficial
ownership shall not constitute a Change in Control if it
occurs as a result of any of the following acquisitions of
securities: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company or any corporation,
partnership, trust or other entity controlled by the Company
(a "Subsidiary"), (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by
the Company or any Subsidiary or (iv) any acquisition by any
corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii)
and (iii) of subsection (c) of this Change in Control
Section are satisfied. Notwithstanding the foregoing, a
Change in Control shall not be deemed to occur solely
because any Person (the "Subject Person") became the
beneficial owner of 25% or more of the Outstanding Company
Common Shares or Outstanding Company Voting Securities as a
result of the acquisition of Outstanding Company Common
Shares or Outstanding Company Voting Securities by the
Company which, by reducing the number of Outstanding Company
Common Shares or Outstanding Company Voting Securities,
increases the proportional number of shares beneficially
owned by the Subject Person; provided, that if a Change in
Control would be deemed to have occurred (but for the
operation of this sentence) as a result of the acquisition
of Outstanding Company Common Shares or Outstanding Company
Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the
beneficial owner of any additional Outstanding Company
Common Shares or Outstanding Company Voting Securities which
increases the percentage of the Outstanding Company Common
<PAGE>
Shares or Outstanding Company Voting Securities beneficially
owned by the Subject Person, then a Change in Control shall
then be deemed to have occurred; or
(b) Individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest or other actual or
threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board, including by reason
of plan intended to avoid or settle any such actual or
threatened contest or solicitation; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or
consolidation, (i) more than 60% of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation
and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Shares and
Outstanding Company Voting Securities immediately prior to
such reorganization, merger or consolidation, (ii) no Person
(excluding the Company, any employee benefit plan (or
related trust) of the Company, a Subsidiary or such
corporation resulting from such reorganization, merger or
consolidation or any subsidiary thereof, and any Person
beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or
indirectly, 25% or more of the Outstanding Company Common
Shares or Outstanding Company Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 25% or
more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization,
merger or consolidation or the combined voting power of the
then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and
(iii) at least a majority of the members of the board of
directors of the corporation resulting from such
reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial
plan providing for such reorganization, merger or
consolidation; or
(d) Approval by the shareholders of the Company of (i)
a complete liquidation or dissolution of the Company or (ii)
<PAGE>
the sale, lease, exchange or other disposition of all or
substantially all of the assets of the Company, other than
to a corporation, with respect to which following such sale,
lease, exchange or other disposition (A) more than 60% of,
respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Company Common Shares and Outstanding Company Voting
Securities immediately prior to such sale, lease, exchange
or other disposition, (B) no Person (excluding the Company
and any employee benefit plan (or related trust) of the
Company or a Subsidiary or such corporation or a subsidiary
thereof and any Person beneficially owning, immediately
prior to such sale, lease, exchange or other disposition,
directly or indirectly, 25% or more of the Outstanding
Company Common Shares or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly
or indirectly, 25% or more of, respectively, the then
outstanding shares of common stock of such corporation and
the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors and (C) at least a majority of the
members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution
of the initial plan or action of the Board providing for
such sale, lease, exchange or other disposition of assets of
the Company.
(B) Notwithstanding any other provision of this Plan to the
contrary, if all or any portion of the payments or benefits
to which the participant will be entitled under this Plan,
either alone or together with other payments or benefits
which the participant receives or is entitled to receive
directly or indirectly from the Company or any of its
subsidiaries or any other person or entity that would be
treated as a payor of parachute payments as hereinafter
defined, under any other plan, plan or arrangement, would
constitute a "parachute payment" within the meaning of
Section 280G of the Code or any successor provision thereto
and the regulations thereunder (except that "2.95" shall be
used instead of "3" under Section 280G(b)(2)(A)(ii) of the
Code or any successor provision thereto), such payment or
benefits provided to the participant under this Plan, and
any other payments or benefits which the participant
receives or is entitled to receive directly or indirectly
from the Company or any of its subsidiaries or any other
person or entity that would be treated as a payor of
parachute payments as hereinafter defined, under any other
plan, plan or arrangement which would constitute a parachute
payment, shall be reduced (but not below zero) as described
below to the extent necessary so that no portion thereof
would constitute such a parachute payment as previously
defined (except that "2.95" shall be used instead of "3"
under Section 280G(b)(2)(A)(ii) of the Code or any successor
provision thereto).<PAGE>
Whether payments or benefits to the participant are to be
reduced pursuant to the first sentence of this paragraph,
and the extent to which they are to be so reduced, will be
determined by the firm serving, immediately prior to the
Change in Control, as the Company's independent auditors, or
if that firm refuses to serve, by another qualified firm,
whether or not serving as independent auditors, designated
by the Administration Committee under the American Express
Senior Executive Severance Plan (the "Firm"). The Firm will
be paid reasonable compensation by the Company for such
services. If the Firm concludes that its determination is
inconsistent with a final determination of a court or the
Internal Revenue Service, the Firm shall, based on such
final determination, redetermine whether the amount payable
to the participant should have been reduced and, if
applicable, the amount of any such reduction. If the Firm
determines that a lesser payment should have been made to
the participant, then an amount equal to the amount of the
excess of the earlier payment over the redetermined amount
(the "Excess Amount") will be deemed for all purposes to be
a loan to the participant made on the date of the
participant's receipt of such Excess Amount, which the
participant will have an obligation to repay to the Company
on the fifth business day after demand, together with
interest on such amount at the lowest applicable Federal
rate (as defined in Section 1274(d) of the Code or any
successor provision thereto), compounded semi-annually (the
"Section 1274 Rate") from the date of the participant's
receipt of such Excess Amount until the date of such
repayment (or such lesser rate (including zero) as may be
designated by the Firm such that the Excess Amount and such
interest will not be treated as a parachute payment as
previously defined). If the Firm determines that a greater
payment should have been made to the participant, within
five business days of such determination, the Company will
pay to the participant the amount of the deficiency,
together with interest thereon from the date such amount
should have been paid to the date of such payment, at the
Section 1274 Rate (or such lesser rate (including zero) as
may be designated by the Firm such that the amount of such
deficiency and such interest will not be treated as a
parachute payment as previously defined). If a reduction is
to be made pursuant to this paragraph, the Firm will have
the right to determine which payments and benefits will be
reduced as described below based on the following hierarchy
from the first to be reduced to the last (or on such other
hierarchy chosen by the Firm in its sole discretion), either
those under this Plan alone or such other payments or
benefits which the participant receives or is entitled to
receive directly or indirectly from the Company or any of
its subsidiaries or any other person or entity that would be
treated as a payor of parachute payments as previously
defined, under any other plan, plan or arrangement:
(I) nonqualified stock option awards;
(II) restricted stock awards, awards in lieu of
restricted stock awards, and restricted stock
units;<PAGE>
(III) amounts payable under deferred compensation
(including, but not limited to, base salary, cash
bonus or annual incentive awards, and long-term
incentive awards) programs;
(IV) any other awards or amounts not described in (I),
(II) or (III) above that would be payable or
provided upon a Change in Control;
(V) amounts payable under severance benefit plans;
(VI) amounts payable under annual incentive (e.g., cash
bonus) plans;
(VII) portfolio grant awards and performance grant awards;
(VIII) amounts payable under employee welfare
benefit plans, such as life insurance plans
(including, but not limited to, the American
Express Key Executive Life Insurance Plan);
(IX) amounts payable under nonqualified employee
pension benefit plans; and
(X) any other awards or amounts not described in (V),
(VI), (VII), (VIII) or (IX) above that would be
payable or provided upon a termination of
employment that occurs within two years after a
Change in Control as described in the Change in
Control provision above.
The payments and benefits subject to reduction pursuant to this
paragraph include one or more attributes thereof, including, but
not limited to, acceleration of the time for the vesting or
payment thereof and the crediting of additional interest
equivalents thereunder. Such reduction may be effected by the
reduction or elimination, in whole or in part, of any such
payment or benefit (including any or all attributes thereof). If
a payment or benefit (including any or all attributes thereof) is
reduced in part, the remaining portion of the payment or benefit
(including any or all attributes thereof) will continue in full
force and effect under the provisions of such payment or benefit
(including any or all attributes thereof) as if the Change in
Control did not occur and without regard to such reduction or
elimination. Nothing in the preceding three sentences of this
paragraph is intended or should be interpreted to change the
calculated reduction amounts and procedure of this paragraph.
8. Effective Date
The provisions of this amended and restated Plan shall be
effective with respect to benefits determined hereunder
attributable to compensation earned on and after July 1,
1994, by a participant.
<PAGE>
<PAGE>
EXHIBIT 12.1
AMERICAN EXPRESS COMPANY
COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
Three Months
Ended March 31, Years Ended December 31,
1995 1994 1993 1992 1991
--------------- ---- ---- ---- ----
Earnings:
Pretax income from
continuing operations $ 498 $1,891 $ 2,326 $ 896 $ 622
Interest expense 578 1,925 1,783 2,171 2,761
Other adjustments 25 103 88 196 142
----- ----- ----- ----- -----
Total earnings (a) $ 1,101 $3,919 $ 4,197 $3,263 $3,525
----- ----- ----- ----- -----
Fixed charges:
Interest expense $ 578 $1,925 $ 1,783 $2,171 $2,761
Other adjustments 37 142 130 154 147
----- ----- ----- ----- -----
Total fixed charges (b) $ 615 $2,067 $ 1,913 $2,325 $2,908
Ratio of earnings to
fixed charges (a/b) 1.79 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>
<PAGE>
EXHIBIT 12.2
AMERICAN EXPRESS COMPANY
COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED SHARE DIVIDENDS
(Dollars in millions)
Three Months
Ended March 31, Years Ended December 31,
1995 1994 1993 1992 1991
-------------- ---- ---- ---- ----
Earnings:
Pretax income from
continuing operations $ 498 $1,891 $2,326 $ 896 $ 622
Interest expense 578 1,925 1,783 2,171 2,761
Other adjustments 25 103 88 196 142
----- ----- ----- ----- -----
Total earnings (a) $1,101 $3,919 $4,197 $3,263 $ 3,525
----- ----- ----- ----- -----
Fixed charges and
preferred share
dividends:
Interest expense $ 578 $1,925 $ 1,783 $2,171 $ 2,761
Dividends on preferred
shares 6 50 66 65 61
Other adjustments 37 142 130 154 147
----- ----- ----- ----- -----
Total fixed charges and
preferred share
dividends (b) $ 621 $2,117 $ 1,979 $2,390 $ 2,969
----- ----- ----- ----- -----
Ratio of earnings to
fixed charges and
preferred share
dividends (a/b) 1.77 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>
<PAGE>
<PAGE>
Exhibit 15
May 15, 1995
The Shareholders and Board of Directors
American Express Company
We are aware of the incorporation by reference in the Registration Statements
(Form 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. 33-43671, No. 33-48629,
No. 33-62124, No. 33-65008 and No. 33-53801; Form S-3 No. 2-89469,
No. 33-06038, No. 33-07435, No. 33-17706, No. 33-43268, No. 33-66654 and
No. 33-50997) of American Express Company of our report dated May 12, 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 period ended March 31, 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
<PAGE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Consolidated Balance Sheet at March 31, 1995 and Consolidated
Statement of Income for the three months ended March 31, 1995 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 4,340
<SECURITIES> 41,204
<RECEIVABLES> 16,948
<ALLOWANCES> 766
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,485
<DEPRECIATION> 1,643
<TOTAL-ASSETS> 99,737
<CURRENT-LIABILITIES> 0
<BONDS> 21,608
<COMMON> 297
0
200
<OTHER-SE> 6,486
<TOTAL-LIABILITY-AND-EQUITY> 99,737
<SALES> 0
<TOTAL-REVENUES> 3,771
<CGS> 0
<TOTAL-COSTS> 1,759
<OTHER-EXPENSES> 399
<LOSS-PROVISION> 812
<INTEREST-EXPENSE> 303
<INCOME-PRETAX> 498
<INCOME-TAX> 145
<INCOME-CONTINUING> 353
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 353
<EPS-PRIMARY> 0.70
<EPS-DILUTED> 0
</TABLE>
