<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 March 31, 1996
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.)
World Financial Center, 200 Vesey Street, 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, 1996
- ------------------------------------- -------------------------------
Common Shares (par value $.60 per share) 478,391,841 shares
<PAGE>
<PAGE>
AMERICAN EXPRESS COMPANY
FORM 10-Q
INDEX
Page No.
Part I. Financial Information:
Consolidated Statement of Income--Three 1
months ended March 31, 1996 and 1995
Consolidated Balance Sheet--March 31, 1996 2
and December 31, 1995
Consolidated Statement of Cash Flows--Three 3
months ended March 31, 1996 and 1995
Notes to Consolidated Financial Statements 4
Management's Discussion and Analysis of 5-15
Financial Condition and Results of Operations
Review Report of Independent Accountants 16
Part II. Other Information 17-18
<PAGE>
<PAGE>
PART I--FINANCIAL INFORMATION
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENT OF INCOME
(dollars in millions, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
--------------------
1996 1995
Net Revenues: ------ ------
Discount revenue $ 1,141 $1,018
Interest and dividends, net 838 863
Net card fees 421 436
Travel commissions and fees 298 295
Other commissions and fees 307 314
Management and distribution fees 279 206
Cardmember lending net finance charge
revenue 275 236
Life insurance premiums 97 207
Other 226 196
------- -------
Total 3,882 3,771
------- -------
Expenses:
Human resources 1,022 984
Provisions for losses and benefits:
Annuities and investment certificates 351 332
Life insurance 122 196
Charge card 210 164
Cardmember lending 188 106
Other 15 14
Interest:
Charge card 167 156
Other 124 147
Occupancy and equipment 288 268
Marketing and promotion 207 234
Professional services 202 174
Communications 102 99
Other 319 399
------- -------
Total 3,317 3,273
------- -------
Pretax income 565 498
Income tax provision 169 145
------- -------
Net income $ 396 $ 353
======= =======
Net income per common share $ 0.80 $ 0.70
======= =======
Average common and common equivalent
shares outstanding 490.6 502.6
======= =======
Cash dividends declared per
common share $ 0.225 $ 0.225
======= =======
See notes to Consolidated Financial Statements.
1<PAGE>
<PAGE>
AMERICAN EXPRESS COMPANY
CONSOLIDATED BALANCE SHEET
(millions)
(Unaudited)
March 31, December 31,
Assets 1996 1995
- ------ ------------- --------------
Cash and cash equivalents $ 5,629 $ 3,200
Accounts receivable and accrued interest:
Cardmember receivables, less reserves:
1996, $758; 1995, $753 15,477 17,154
Other receivables, less reserves:
1996, $59; 1995, $76 2,286 2,760
Investments 41,444 42,561
Loans:
Cardmember lending, less reserves:
1996, $510; 1995, $489 10,400 10,268
International banking, less reserves:
1996, $110, 1995, $111 5,215 5,317
Other, net 544 506
Separate account assets 15,760 14,974
Deferred acquisition costs 2,353 2,262
Land, buildings and equipment--at cost, less
accumulated depreciation: 1996, $1,732;
1995, $1,763 1,782 1,783
Other assets 7,020 6,620
-------- --------
Total assets $107,910 $107,405
======== ========
Liabilities and Shareholders' Equity
- ------------------------------------
Customers' deposits and credit balances $ 9,335 $ 9,889
Travelers Cheques outstanding 5,900 5,697
Accounts payable 4,371 4,686
Insurance and annuity reserves:
Fixed annuities 21,279 21,405
Life and disability policies 3,802 3,752
Investment certificate reserves 3,617 3,606
Short-term debt 18,306 17,654
Long-term debt 7,793 7,570
Separate account liabilities 15,760 14,974
Other liabilities 9,755 9,952
------ ------
Total liabilities 99,918 99,185
Shareholders' equity:
Preferred shares, $1.66 2/3 par value,
authorized 20 million shares
Convertible Exchangeable Preferred shares,
issued and outstanding 4 million shares,
stated at liquidation value 200 200
Common shares, $.60 par value, authorized
1.2 billion shares; issued and outstanding
479.1 million shares in 1996 and 483.1 million
shares in 1995 287 290
Capital surplus 3,786 3,781
Net unrealized securities gains 641 875
Foreign currency translation adjustment (86) (85)
Retained earnings 3,164 3,159
-------- --------
Total shareholders' equity 7,992 8,220
-------- --------
Total liabilities and shareholders' equity $107,910 $107,405
======== ========
See notes to Consolidated Financial Statements.
2<PAGE>
<PAGE>
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(millions)
(Unaudited)
Three Months Ended
March 31,
--------------------
1996 1995
---- ----
Cash Flows from Operating Activities
Net income $ 396 $ 353
Adjustments to reconcile net income to
net cash provided by operating activities:
Provisions for losses and benefits 617 455
Depreciation, amortization, deferred taxes and other 37 61
Changes in operating assets and liabilities, net of
effects of acquisitions and dispositions:
Accounts receivable and accrued interest 500 72
Other assets (468) (370)
Accounts payable and other liabilities (497) (158)
Increase in Travelers Cheques outstanding 203 570
Increase in insurance reserves 66 126
------ ------
Net cash provided by operating activities 854 1,109
------ ------
Cash Flows from Investing Activities
Sale of investments 1,225 769
Maturity and redemption of investments 1,959 1,457
Purchase of investments (2,367) (2,785)
Net decrease in Cardmember receivables 1,299 746
Proceeds from repayment of loans 6,004 5,621
Issuance of loans (6,341) (5,813)
Purchase of land, buildings and equipment (88) (75)
Sale of land, buildings and equipment 69 9
------ ------
Net cash provided (used) by investing activities 1,760 (71)
------ ------
Cash Flows from Financing Activities
Net decrease in customers' deposits and credit balances (516) (272)
Sale of annuities and investment certificates 1,413 1,784
Redemption of annuities and investment certificates (1,579) (1,107)
Net increase (decrease) in debt with maturities of
3 months or less 1,670 (2,690)
Issuance of debt 4,194 3,192
Principal payments on debt (5,035) (939)
Issuance of American Express common shares 110 91
Repurchase of American Express common shares (333) (114)
Dividends paid (113) (115)
------ ------
Net cash used by financing activities (189) (170)
Effect of exchange rate changes on cash 4 39
------ ------
Net increase in cash and cash equivalents 2,429 907
Cash and cash equivalents at beginning of period 3,200 3,433
------ ------
Cash and cash equivalents at end of period $ 5,629 $ 4,340
====== ======
See notes to Consolidated Financial Statements.
3<PAGE>
<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, 1995. 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, 1996 and December 31, 1995, the
consolidated results of its operations for the three months ended March
31, 1996 and 1995 and cash flows for the three months ended March 31,
1996 and 1995. Results of operations reported for interim periods are
not necessarily indicative of results for the entire year.
2. Cardmember Lending Net Finance Charge Revenue is presented net of
interest expense of $129 million and $118 million for the three months
ended March 31, 1996 and 1995, respectively. Interest and Dividends is
presented net of interest expense of $134 million and $157 million for
the three months ended March 31, 1996 and 1995, respectively, related
to the Company's international banking operations.
3. The following is a summary of investments:
March 31, December 31,
(In millions) 1996 1995
---------- -----------
Held to Maturity, at amortized cost
(fair value: 1996, $16,944; 1995,
$17,549) $16,591 $16,790
Available for Sale, at fair value
(cost: 1996, $19,604; 1995,
$20,452) 21,273 22,435
Investment mortgage loans (fair
value: 1996, $3,522; 1995,
$3,434) 3,404 3,180
Trading 176 156
-------- --------
$41,444 $42,561
======== ========
4. Net income taxes refunded during the three months ended March 31, 1996
were approximately $42 million. Net income taxes paid during the three
months ended March 31, 1995 were approximately $34 million. Interest
paid during the three months ended March 31, 1996 and 1995 was
approximately $612 million and $559 million, respectively.
4
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Consolidated Results Of Operations For The Three Months Ended March 31, 1996
and 1995
The Company's consolidated net income increased 12 percent in
the first quarter of 1996, compared with a year ago, while net income per
share increased 14 percent. The growth in earnings per share reflected
revenue growth, improved margins and a reduction in average shares
outstanding. Excluding the revenues of AMEX Life Assurance Company (AMEX
Life), a subsidiary that was sold in October 1995, consolidated revenues
increased 7 percent compared with last year. Proceeds from this sale are
being used to partially fund the Company's share repurchase program which is
discussed below.
Consolidated Liquidity and Capital Resources
Beginning in 1994, the Company put in place two share repurchase
programs authorized by the Board of Directors, which permit the repurchase
of up to 60 million common shares over the next several years as market
conditions allow. The share repurchases are intended to reduce the number
of outstanding common shares and common share equivalents to less
than 500 million. The average number of outstanding common shares and
common share equivalents was 491 million for the quarter ended March 31, 1996,
compared with 503 million for the year-ago quarter. Since inception of
the initial repurchase plan in 1994, the Company has repurchased and canceled
46.7 million shares under the repurchase programs at an average price
of $36.56 per share through April 30, 1996.
On May 6, 1996, after receiving a redemption notice from the
Company, Nippon Life Insurance Company converted all of its four million
$3.875 Convertible Exchangeable Preferred shares into 4,705,882 of the
Company's common shares. The increase in outstanding common shares will be
offset by the elimination of the preferred dividend. As a result, there
will be no impact on earnings per common share.
5<PAGE>
<PAGE>
Travel Related Services
Results of Operations For The Three Months Ended March 31, 1996 and 1995
Statement of Income
-------------------
(Unaudited)
(Amounts in millions, except percentages)
<TABLE>
<CAPTION>
Three Months Ended
March 31, Percentage
------------------
1996 1995 Inc/(Dec)
------------------------------
<S> <C> <C> <C>
Net Revenues:
Discount Revenue $1,141 $1,018 12.1%
Net Card Fees 421 436 (3.5)
Travel Commissions and Fees 298 295 0.8
Interest and Dividends 191 243 (21.7)
Other Revenues 424 513 (17.1)
--------------------
2,475 2,505 (1.2)
--------------------
Lending:
Finance Charge Revenue 404 354 14.3
Interest Expense 129 118 9.2
--------------------
Net Finance Charge Revenue 275 236 16.9
--------------------
Total Net Revenues 2,750 2,741 0.4
--------------------
Expenses:
Marketing and Promotion 200 229 (12.8)
Provision for Losses and Claims:
Charge Card 210 164 27.5
Lending 188 106 77.8
Other 24 122 (79.9)
--------------------
Total 422 392 7.8
--------------------
Interest Expense:
Charge Card 167 156 6.8
Other 95 110 (12.9)
--------------------
Total 262 266 (1.4)
Net Discount Expense * 126 100 26.0
Human Resources 704 693 1.6
Other Operating Expenses 620 684 (9.4)
--------------------
Total Expenses 2,334 2,364 (1.2)
--------------------
Pretax Income 416 377 10.3
Income Tax Provision 130 114 14.4
--------------------
Net Income $286 $263 8.6
====================
* The impact of Net Discount Expense (related to TRS'securitized
receivables) was to:
Decrease the Provision for Losses and
Claims - Charge Card $54 $37 44.6
Decrease Interest Expense -
Charge Card 41 41 (0.4)
Increase Other Revenues 31 22 43.7
---------------------
Total Net Discount Expense $126 $100 26.0
=====================
</TABLE>
6<PAGE>
<PAGE>
Travel Related Services
Selected Statistical Information
--------------------------------
(Unaudited)
(Amounts in billions, except percentages and where indicated)
<TABLE>
<CAPTION>
Three Months Ended
March 31, Percentage
------------------
1996 1995 Inc/(Dec)
--------------------------------
<S> <C> <C> <C>
Total Cards in Force (millions):
United States 27.1 25.1 8.0%
Outside the United States* 11.6 11.5 0.7
----------------------
Total 38.7 36.6 5.7
======================
Basic Cards in Force (millions):
United States 20.5 18.6 10.5
Outside the United States* 9.2 8.9 1.8
------------------------
Total 29.7 27.5 7.7
========================
Card Billed Business:
United States $29.8 $26.0 14.2
Outside the United States* 11.8 11.0 8.2
------------------------
Total $41.6 $37.0 12.5
========================
Travelers Cheque Sales $5.3 $5.4 (1.8)
Average Travelers Cheques
Outstanding $5.7 $5.4 6.3
Travel Sales $3.6 $3.4 5.7
</TABLE>
* Both years include Cards issued by strategic alliance partners and
independent operators as well as business billed on those Cards.
7<PAGE>
<PAGE>
Travel Related Services' (TRS) 1995 results included income from AMEX
Life. Excluding the year ago results for AMEX Life, TRS' net income grew
approximately 13 percent, revenues increased approximately 6 percent and
expenses were up approximately 4 percent, compared with the year ago
quarter.
Net revenues increased in the first quarter of 1996 reflecting an increase
in worldwide billed business on American Express Cards and growth in
Cardmember loans outstanding. The increase in billed business resulted
from higher spending per Cardmember, due in part to the benefits of
rewards programs and increased merchant coverage, as well as an increase
in the number of Cards outstanding. Lending net finance charge revenue
increased reflecting higher average loan balances, partly offset by lower
net interest spreads. Interest and dividends and other revenues declined
primarily reflecting the sale of AMEX Life.
The Charge Card provision for losses increased in the first quarter of
1996 reflecting volume growth as well as higher loss rates, while the
lending provision for losses increased due to higher loss rates. The
other provision for losses declined reflecting the sale of AMEX Life.
While certain risk factors exist relating to future credit trends (e.g.,
consumer credit trends, overall economic conditions), substantial reserving at
TRS during the latter part of 1995 and recent improving trends within the TRS
credit portfolios relating to charge and credit cards suggest that quarterly
year over year provision comparisons will improve over the course of 1996.*
The overall increase in the provision for losses was offset by lower marketing
and promotion expenses and other operating expenses. For the full year 1996,
marketing and promotion expenses are expected to equal or exceed last year's
total marketing and promotion expenses.* The increase in Charge Card interest
expense was due to increased volume, partly offset by lower rates.
* These are forward-looking statements. See Part II, Item 5 of this 10-Q
report for certain risks and uncertainties relating to such statements.
8
<PAGE>
<PAGE>
Travel Related Services
Liquidity and Capital Resources
Selected Balance Sheet Information
-------------------------------------
(Unaudited)
(Amounts in billions, except percentages)
<TABLE>
<CAPTION>
March 31, December 31, Percentage March 31, Percentage
1996 1995 Inc/(Dec) 1995 Inc/(Dec)
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Accounts Receivable, net $16.5 $18.9 (12.8%) $15.8 4.4%
Owned and Managed Cardmember
Receivables (excluding
Revolving Card Products):
Total Cardmember Receivables $18.8 $20.5 (8.2) $16.9 11.5
90 Days Past Due as a % of
Total Cardmember
Receivables 4.1% 3.5% - 3.7% -
Total Loss Reserves $1.0 $1.0 4.2 $0.8 18.1
% of Cardmember Receivables 5.3% 4.6% - 5.0% -
% of 90 Days Past Due 129% 131% - 135% -
Cardmember Receivables Loss Ratio,
Net of Recoveries 0.5% 0.5% - 0.5% -
U.S. Cardmember Lending (including
Revolving Card Products):
Total Cardmember Loans $10.2 $10.0 3.0 $8.3 23.0
30 Days Past Due as a % of
Total Cardmember Loans 3.5% 3.8% - 3.5% -
Total Loss Reserves $0.5 $0.4 9.0 $0.4 32.6
% of Cardmember Loans 4.7% 4.5% - 4.4% -
% of 30 Days Past Due 136% 116% - 124% -
Write-Off Rates 5.2% 4.4% - 4.1% -
Investments $9.0 $9.2 (2.2) $10.9 (17.4)
Total Assets $45.2 $45.2 - $42.6 5.9
Travelers Cheques Outstanding $5.9 $5.7 3.6 $5.8 1.0
Short-term Debt $18.5 $17.9 3.4 $14.7 25.9
Long-term Debt $4.6 $4.4 3.9 $3.4 32.1
Total Liabilities $40.3 $40.3 - $38.2 5.4
Total Shareholder's Equity $4.9 $4.9 (0.4) $4.4 10.3
Return on Average Equity 24.7% 24.6% - 24.1% -
</TABLE>
TRS' total assets were unchanged from year end as the decline in accounts
receivable, reflecting repayments since year end when balances reflected
seasonal growth, was offset by higher short-term investments. Total
shareholder's equity is unchanged from year end as the increase in
retained earnings was offset by a lower level of unrealized securities
gains primarily due to a decline in market value.
9<PAGE>
<PAGE>
American Express Financial Advisors
Results of Operations For The Three Months Ended March 31, 1996 and 1995
Statement of Income
--------------------
(Unaudited)
(Amounts in millions, except percentages and where indicated)
Three Months Ended
March 31, Percentage
-------------------
1996 1995 Inc/(Dec)
------------------------------
Revenues:
Investment Income $569 $535 6.3%
Management and Distribution Fees 279 206 35.9
Other Income 155 133 15.9
--------------------
Total Revenues 1,003 874 14.7
--------------------
Expenses:
Provision for Losses and Benefits:
Annuities 298 273 9.0
Insurance 109 94 14.9
Investment Certificates 53 49 8.5
--------------------
Total 460 416 10.3
Human Resources 246 207 18.9
Other Operating Expenses 101 87 16.4
--------------------
Total Expenses 807 710 13.5
--------------------
Pretax Income 196 164 19.9
Income Tax Provision 66 57 17.8
--------------------
Net Income $130 $107 21.0
====================
Selected Statistical Information
--------------------------------
Life Insurance in Force (billions) $61.2 $54.4 12.4
=====================
Assets Owned and/or Managed (billions):
Assets managed for institutions $32.7 $30.3 7.8
Assets owned and managed for
individuals:
Owned Assets 49.0 42.3 15.8
Managed Assets 51.4 40.4 27.2
---------------------
Total $133.1 $113.0 17.8
=====================
Sales of Selected Products:
Mutual Funds $3,569 $2,288 56.0
Annuities $1,155 $1,096 5.4
Investment Certificates $136 $ 412 (67.0)
Life and Other Insurance Sales $95 $83 14.8
Number of Financial Advisors 7,954 8,015 (0.8)
Fees From Financial Plans (thousands) $11,623 $10,419 11.6
Product Sales Generated from Financial
Plans as a Percentage of Total Sales 63.3% 63.5% -
10<PAGE>
<PAGE>
American Express Financial Advisors' revenue and earnings growth for the
first quarter of 1996 benefited primarily from higher fee revenues, partially
offset by the impact of somewhat lower investment margins.
The increase in investment income in the first quarter of 1996 reflected
higher asset levels, partly offset by lower investment yields compared
with the year-ago period. Management and distribution fees increased
reflecting increased management fees earned on a higher asset base and
increased distribution fees attributable to higher mutual fund sales. The
growth in managed assets reflects positive net sales and market appreciation.
Other income increased primarily due to higher life insurance contract charges
and premiums.
Provisions for annuity and insurance benefits increased in the first quarter
of 1996 reflecting higher business in force, partly offset by lower accrual
rates. The provision for investment certificates increased reflecting higher
investment certificates in force and higher accrual rates. The increase in
human resources expense reflected higher financial advisors' compensation and,
to a lesser extent, an increase in the number of employees compared with last
year. Other operating expenses increased primarily reflecting a higher
provision for insurance industry guarantee association assessments and higher
amortization of deferred acquisition costs.
11
<PAGE>
<PAGE>
American Express Financial Advisors
Liquidity and Capital Resources
Selected Balance Sheet Information
----------------------------------
(Unaudited)
(Amounts in billions, except percentages)
March 31, December 31, Percentage March 31, Percentage
1996 1995 Inc/(Dec) 1995 Inc/(Dec)
-------------------------------------------------------
Investments $28.2 $28.8 (1.9%) $26.5 6.4%
Separate Account Assets $15.8 $15.0 5.2 $11.8 33.3
Total Assets $49.0 $48.3 1.5 $42.3 15.8
Reserves for Losses
and Benefits $28.6 $28.6 (0.2) $26.4 8.5
Total Liabilities $46.1 $45.2 1.9 $39.9 15.4
Total Shareholder's Equity $2.9 $3.1 (3.9) $2.4 22.3
Return on Average Equity 19.6% 19.4% - 18.7% -
American Express Financial Advisors' total assets increased from year end
primarily reflecting an increase in separate account assets due to market
appreciation and positive net sales. The declines in investments and total
shareholder's equity from year end primarily reflect a lower level of
unrealized securities gains due to a decline in market value.
12<PAGE>
<PAGE>
American Express Bank
Results of Operations For The Three Months Ended March 31, 1996 and 1995
Statement of Income
-------------------
(Unaudited)
(Amounts in millions, except percentages)
Three Months Ended
March 31, Percentage
-----------------
1996 1995 Inc/(Dec)
-----------------------------
Net Revenues:
Interest Income $211 $239 (11.8%)
Interest Expense 134 157 (15.0)
-------------------
Net Interest Income 77 82 (5.7)
Commissions, Fees and Other Revenues 49 59 (17.7)
Foreign Exchange Income 20 19 3.3
--------------------
Total Net Revenues 146 160 (9.1)
--------------------
Provision for Credit Losses 4 3 18.8
--------------------
Expenses:
Human Resources 56 64 (12.5)
Other Operating Expenses 57 71 (20.2)
--------------------
Total Expenses 113 135 (16.6)
--------------------
Pretax Income 29 22 32.6
Income Tax Provision 10 6 57.6
---------------------
Net Income $19 $16 21.9
=====================
The improvement in American Express Bank's (the Bank) first quarter 1996
earnings was principally due to expense savings, partially offset by lower
revenues. These results reflect the impact of the Bank's continued
efforts to focus on strategic markets and eliminate low return activities,
as well as the impact of cost reduction initiatives.
Net interest income declined in the first quarter of 1996 reflecting
balance sheet reduction and higher short-term funding costs. The decline
in commissions, fees and other revenues and other operating expenses
primarily reflected the impact of exiting nonstrategic businesses,
including the transfer to the Bank's parent, American Express Company, of
certain aircraft assets. In addition, the increase in the effective tax
rate reflects a lower level of tax-advantaged securities.
13<PAGE>
<PAGE>
American Express Bank
Liquidity and Capital Resources
Selected Balance Sheet Information
----------------------------------
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in billions, except percentages and where indicated)
March 31, December 31, Percentage March 31, Percentage
1996 1995 Inc/(Dec) 1995 Inc/(Dec)
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments $2.4 $2.5 (6.6%) $2.8 (15.1%)
Total Loans $5.3 $5.4 (1.9) $5.4 (0.8)
Reserve for Credit
Losses (millions) $110 $111 (0.5) $112 (1.4)
Reserves as a Percentage of
Total Loans 2.1% 2.0% - 2.1% -
Total Nonperforming Loans
(millions) $35 $34 4.0 $32 11.1
Other Real Estate Owned
(millions) $43 $44 (1.0) $55 (21.0)
Total Assets $11.8 $12.3 (4.5) $13.5 (12.5)
Deposits $8.1 $8.5 (4.8) $9.2 (12.6)
Total Liabilities $11.0 $11.5 (4.1) $12.7 (13.1)
Total Shareholder's Equity
(millions) $746 $837 (10.9) $771 (3.3)
Risk-Based Capital Ratios:
Tier 1 9.0% 8.9% - 7.7% -
Total 12.9% 13.0% - 14.9% -
Leverage Ratio 5.5% 5.8% - 4.9% -
Return on Average Assets 0.64% 0.59%* - 0.46% -
Return on Average
Common Equity 10.57% 9.99%* - 8.14% -
* For the full year
</TABLE>
The Bank's total assets declined from year end primarily due to declines
in loans and investments. The decline in the Bank's Leverage Ratio is due
to a decrease in retained earnings resulting primarily from a $75 million
special dividend to American Express Company, partly offset by decreases
in average quarterly assets and deferred tax assets.
14
<PAGE>
<PAGE>
Corporate and Other
Corporate and Other reported first quarter 1996 net expenses of $39
million, compared with net expenses of $33 million a year ago. Both years
include the Company's share of the Travelers Inc. 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.
15
<PAGE>
<PAGE>
INDEPENDENT ACCOUNTANTS REVIEW REPORT
The Shareholders and Board of Directors of
American Express Company
We have reviewed the accompanying consolidated balance sheet of American
Express Company (the "Company") as of March 31, 1996 and the related
consolidated statements of income and cash flows for the three-month periods
ended March 31, 1996 and 1995. These financial statements are the
responsibility of the Company's management.
We conducted our review 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 review, 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,
1995, 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 8, 1996, 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, 1995 is
fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
/s/Ernst & Young LLP
New York, New York
May 13, 1996
16
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<PAGE>
PART II. OTHER INFORMATION
AMERICAN EXPRESS COMPANY
Item 4. Submission of Matters to a Vote of Security Holders
The registrant's annual meeting of shareholders was held on April 22,
1996. 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
auditors 409,892,321 918,942 - 768,719 -
Shareholder proposal
relating to cumula-
tive voting 81,456,870 242,626,987 - 34,919,282 52,576,843
Proposal relating
to amendment of the
1989 Long-Term
Incentive Plan 320,959,797 88,221,663 - 2,398,522 -
Election of Directors:
D.F. Akerson 410,328,971 - 1,251,011 - -
A.L. Armstrong 410,140,615 - 1,439,367 - -
E.L. Artzt 410,250,204 - 1,329,778 - -
W.G. Bowen 410,272,002 - 1,307,980 - -
D.M. Culver 410,201,545 - 1,378,437 - -
C.W. Duncan Jr. 410,274,473 - 1,305,509 - -
H. Golub 410,240,303 - 1,339,679 - -
B. Sills Greenough 409,964,699 - 1,615,283 - -
F.R. Johnson 409,375,475 - 2,204,507 - -
V.E. Jordan Jr. 409,675,746 - 1,904,236 - -
D. Lewis 410,068,093 - 1,511,889 - -
A. Papone 410,208,895 - 1,371,087 - -
F.P. Popoff 410,287,864 - 1,292,118 - -
17<PAGE>
<PAGE>
Item 5. Other Information
Forward-looking Statements
Certain statements in Part I of this 10-Q Report are identified under
"TRS Results of Operations For The Three Months Ended March 31, 1996 and 1995"
as "forward-looking statements." Such forward-looking statements involve
risks and uncertainties. Important factors which may cause actual results to
differ materially from the statements made include, but are not limited to,
the following: consumer and/or business spending per Cardmember, which may
result from general economic conditions affecting consumers or businesses,
including the overall levels of consumer debt; the level of competition for
TRS products, including a possible willingness on the part of certain large
competitors to cut interest rates, card fees and/or discount rates for their
card products in order to preserve or gain market share; an increase in
spending by competitors on advertising; the risks inherent in new product
introductions, including uncertainty of customer acceptance of the product's
value proposition relative to competitors' products, and competitors' response
to the introduction; the continued effectiveness of TRS' reengineering
initiatives on marketing and promotion costs; general economic and business
conditions, including higher interest rates and consumer credit trends, which
could affect the ability of consumers and businesses to repay credit and
charge card debt to TRS; the rate of bankruptcies of consumers and businesses;
and the volume of new card products issued by TRS, which typically involve
higher provisioning.
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 9, 1996, Item 5, reporting the
appointment of John A. Ward as Chairman and Chief Executive
Officer of American Express Bank.
Form 8-K, dated January 22, 1996, Item 5, reporting the
registrant's earnings for the quarter and year ended December 31,
1995.
Form 8-K, dated April 20, 1996, Item 5, reporting the
registrant's earnings for the quarter ended March 31, 1996.
Form 8-K, dated April 24, 1996, Item 5, reporting the resignation
of the registrant's Chief Financial Officer.
18
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMERICAN EXPRESS COMPANY
------------------------
(Registrant)
Date: May 15, 1996 By /s/ Daniel T. Henry
------------------ -----------------------
Daniel T. Henry
Senior Vice President and
Comptroller
(Duly Authorized Officer and
Chief Accounting Officer)
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EXHIBIT INDEX
The following exhibits are filed as part of this Quarterly Report:
Exhibit Description
10.1 Amended and Restated 1989 Long-Term Incentive Plan, dated April
22, 1996.
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
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<PAGE>
Exhibit 10.1
AMERICAN EXPRESS COMPANY
1989 LONG-TERM INCENTIVE PLAN
1. PURPOSE. The purpose of the 1989 Long-Term Incentive Plan (the
"Plan") is to advance the interests of American Express Company (the
"Company") and its shareholders by providing incentives to certain key
employees of the Company and its affiliates and to certain other key
individuals who perform services for these entities, including those who
contribute significantly to the strategic and long-term performance objectives
and growth of the Company and its affiliates.
2. ADMINISTRATION. The Plan shall be administered solely by the
Compensation and Benefits Committee (the "Committee") of the Board of
Directors (the "Board") of the Company, as such Committee is from time to time
constituted, or any successor committee the Board may designate to administer
the Plan. If at any time Rule 16b-3 or any successor rule ("Rule 16b-3") under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), so
permits without adversely affecting the ability of the Plan to comply with the
conditions for exemption from Section 16 of the Exchange Act (or any successor
provision) provided by Rule 16b-3, the Committee may delegate the
administration of the Plan in whole or in part, on such terms and conditions,
and to such person or persons as it may determine in its discretion, as it
relates to persons not subject to Section 16 of the Exchange Act (or any
successor provision). The membership of the Committee or such successor
committee shall be constituted, and the Committee's delegation of
administration shall be limited, so as to comply at all times with the
applicable requirements of Rule 16b-3 and to permit the award of
"performance-based compensation" under Section 162(m) of the Internal Revenue
Code of 1986, as amended, and the regulations thereunder ("Section 162(m)").
No member of the Committee shall be eligible or have been eligible within one
year prior to his appointment to receive awards under the Plan ("Awards") or
to receive awards under any other plan, program or arrangement of the Company
or any of its affiliates if such eligibility would cause such member to cease
to be a "disinterested person" under Rule 16b-3; provided that if at any time
Rule 16b-3 so permits without adversely affecting the ability of the Plan to
comply with the conditions for exemption from Section 16 of the Exchange Act
(or any successor provision) provided by Rule 16b-3, one or more members of
the Committee may cease to be "disinterested persons."
1<PAGE>
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The Committee has all the powers vested in it by the terms of the Plan
set forth herein, such powers to include exclusive authority (except as may be
delegated as permitted herein) to select the key employees and other key
individuals to be granted Awards under the Plan, to determine the type, size
and terms of the Award to be made to each individual selected, to modify the
terms of any Award that has been granted, to determine the time when Awards
will be granted, to establish performance objectives, to make any adjustments
necessary or desirable as a result of the granting of Awards to eligible
individuals located outside the United States and to prescribe the form of the
instruments embodying Awards made under the Plan. The Committee is authorized
to interpret the Plan and the Awards granted under the Plan, to establish,
amend and rescind any rules and regulations relating to the Plan, and to make
any other determinations which it deems necessary or desirable for the
administration of the Plan. The Committee (or its delegate as permitted
herein) may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Award in the manner and to the extent the
Committee deems necessary or desirable to carry it into effect. Any decision
of the Committee (or its delegate as permitted herein) in the interpretation
and administration of the Plan, as described herein, shall lie within its sole
and absolute discretion and shall be final, conclusive and binding on all
parties concerned. The Committee may act only by a majority of its members in
office, except that the members thereof may authorize any one or more of their
members or any officer of the Company to execute and deliver documents or to
take any other ministerial action on behalf of the Committee with respect to
Awards made or to be made to Plan participants. No member of the Committee and
no officer of the Company shall be liable for anything done or omitted to be
done by him, by any other member of the Committee or by any officer of the
Company in connection with the performance of duties under the Plan, except
for his own willful misconduct or as expressly provided by statute.
Determinations to be made by the Committee under the Plan may be made by its
delegates.
3. PARTICIPATION. (a) AFFILIATES. If an Affiliate (as hereinafter
defined) of the Company wishes to participate in the Plan and its
participation shall have been approved by the Board upon the recommendation of
the Committee, the board of directors or other governing body of the Affiliate
shall adopt a resolution in form and substance satisfactory to the Committee
authorizing participation by the Affiliate in the Plan with respect to its key
employees or other key individuals performing services for it. As used herein,
the term "Affiliate" means any entity in which the Company has a substantial
direct or indirect equity interest, as determined by the Committee in its
discretion.
An Affiliate participating in the Plan may cease to be a
participating company at any time by action of the Board or by action of the
board of directors or other governing body of such Affiliate, which latter
action shall be effective not earlier than the date of delivery to the
Secretary of the Company of a certified copy of a resolution of the
Affiliate's board of directors or other governing body taking such action.
If the participation in the Plan of an Affiliate shall terminate, such
termination shall not relieve it of any obligations theretofore incurred by it
under the Plan, except as may be approved by the Committee.
2<PAGE>
<PAGE>
(b) PARTICIPANTS. Consistent with the purposes of the Plan, the
Committee shall have exclusive power (except as may be delegated as permitted
herein) to select the key employees and other key individuals performing
services for the Company and its Affiliates who may participate in the Plan
and be granted Awards under the Plan. Eligible individuals may be selected
individually or by groups or categories, as determined by the Committee in its
discretion. No non-employee director of the Company or any of its Affiliates
shall be eligible to receive an Award under the Plan.
4. AWARDS UNDER THE PLAN. (a) TYPES OF AWARDS. Awards under the Plan may
include, but need not be limited to, one or more of the following types,
either alone or in any combination thereof: (i) "Stock Options," (ii) "Stock
Appreciation Rights," (iii) "Restricted Stock," (iv) "Performance Grants" and
(v) any other type of Award deemed by the Committee in its discretion to be
consistent with the purposes of the Plan (including, but not limited to,
Awards of or options or similar rights granted with respect to unbundled stock
units or components thereof, and Awards to be made to participants who are
foreign nationals or are employed or performing services outside the United
States). Stock Options, which include "Nonqualified Stock Options" and
"Incentive Stock Options" or combinations thereof, are rights to purchase
common shares of the Company having a par value of $.60 per share and stock of
any other class into which such shares may thereafter be changed (the "Common
Shares"). Nonqualified Stock Options and Incentive Stock Options are subject
to the terms, conditions and restrictions specified in Paragraph 5. Stock
Appreciation Rights are rights to receive (without payment to the Company)
cash, Common Shares, other Company securities (which may include, but need not
be limited to, unbundled stock units or components thereof, debentures,
preferred stock, warrants, securities convertible into Common Shares or other
property, and other types of securities including, but not limited to, those
of the Company or an Affiliate, or any combination thereof ("Other Company
Securities")) or property, or other forms of payment, or any combination
thereof, as determined by the Committee, based on the increase in the value of
the number of Common Shares specified in the Stock Appreciation Right. Stock
Appreciation Rights are subject to the terms, conditions and restrictions
specified in Paragraph 6. Shares of Restricted Stock are Common Shares which
are issued subject to certain restrictions pursuant to Paragraph 7.
Performance Grants are contingent awards subject to the terms, conditions and
restrictions described in Paragraph 8, pursuant to which the participant may
become entitled to receive cash, Common Shares, Other Company Securities or
property, or other forms of payment, or any combination thereof, as determined
by the Committee.
(b) MAXIMUM NUMBER OF SHARES THAT MAY BE ISSUED. There may be issued
under the Plan (as Restricted Stock, in payment of Performance Grants,
pursuant to the exercise of Stock Options or Stock Appreciation Rights, or in
3<PAGE>
<PAGE>
payment of or pursuant to the exercise of such other Awards as the Committee,
in its discretion, may determine) an aggregate of not more than 81,300,358
Common Shares and Other Company Securities, subject to adjustment as provided
in Paragraph 15. For purposes of this Paragraph 4(b), Other Company Securities
shall be counted against the maximum number of Common Shares as required by
Rule 16b-3. Common Shares and, to the extent they constitute equity
securities, Other Company Securities issued pursuant to the Plan may be either
authorized but unissued shares, treasury shares, reacquired shares or any
combination thereof. Unless prohibited by Rule 16b-3, any Common Shares or
Other Company Securities subject to repurchase or forfeiture rights that are
reacquired by the Company pursuant to such rights or any Common Shares or
Other Company Securities previously counted against the maximum number of
shares set forth above in respect of any Award that is cancelled, terminated
or expires unexercised in whole or in part will be available for issuance
under new Awards. In addition, to the extent not prohibited by Rule 16b-3, any
Common Shares or Other Company Securities withheld by or tendered to the
Company in connection with the payment of the exercise price of an Award or
the satisfaction of the tax withholding obligations upon the exercise or
vesting of an Award will be available for issuance under new Awards.
(c) RIGHTS WITH RESPECT TO COMMON SHARES AND OTHER SECURITIES.
(i) Unless otherwise determined by the Committee in its
discretion, a participant to whom an Award of Restricted Stock has
been made (and any person succeeding to such a participant's rights
pursuant to the Plan) shall have, after issuance of a certificate or
the entry on behalf of a participant of an uncertificated book
position on the records of the Company's transfer agent and registrar
for the number of Common Shares awarded and prior to the expiration
of the Restricted Period or the earlier repurchase of such Common
Shares as herein provided, ownership of such Common Shares, including
the right to vote the same and to receive dividends or other
distributions made or paid with respect to such Common Shares
(provided that such Common Shares, and any new, additional or
different shares, or Other Company Securities or property, or other
forms of consideration which the participant may be entitled to
receive with respect to such Common Shares as a result of a stock
split, stock dividend or any other change in the corporate or capital
structure of the Company, shall be subject to the restrictions
hereinafter described as determined by the Committee in its
discretion), subject, however, to the options, restrictions and
limitations imposed thereon pursuant to the Plan. Notwithstanding the
foregoing, a participant with whom an Award agreement is made to
issue Common Shares in the future shall have no rights as a
shareholder with respect to Common Shares related to such agreement
until issuance of a certificate to him.
4<PAGE>
<PAGE>
(ii) Unless otherwise determined by the Committee in its
discretion, a participant to whom a grant of Stock Options, Stock
Appreciation Rights, Performance Grants or any other Award is made
(and any person succeeding to such a participant's rights pursuant to
the Plan) shall have no rights as a shareholder with respect to any
Common Shares or as a holder with respect to other securities, if
any, issuable pursuant to any such Award until the date of the
issuance of a stock certificate to him or the entry on his behalf of
an uncertificated book position on the records of the Company's
transfer agent and registrar for such Common Shares or other
instrument of ownership, if any. Except as provided in Paragraph 15,
no adjustment shall be made for dividends, distributions or other
rights (whether ordinary or extraordinary, and whether in cash,
securities, other property or other forms of consideration, or any
combination thereof) for which the record date is prior to the date
such stock certificate or other instrument of ownership, if any, is
issued.
5. STOCK OPTIONS. The Committee may grant Stock Options either alone, or
in conjunction with Stock Appreciation Rights, Performance Grants or other
Awards, either at the time of grant or by amendment thereafter; provided that
an Incentive Stock Option may be granted only to an eligible employee of the
Company or its parent or subsidiary corporation. Each Stock Option (referred
to herein as an "Option") granted under the Plan shall be evidenced by an
instrument in such form as the Committee shall prescribe from time to time in
accordance with the Plan and shall comply with the following terms and
conditions, and with such other terms and conditions, including, but not
limited to, restrictions upon the Option or the Common Shares issuable upon
exercise thereof, as the Committee, in its discretion, shall establish:
(a) The option price may be equal to or greater than the fair market
value of the Common Shares subject to such Option at the time the Option is
granted, as determined by the Committee; provided, however, that in the case
of an Incentive Stock Option granted to such an employee who owns stock
representing more than ten percent of the voting power of all classes of stock
of the Company or of its parent or subsidiary (a "Ten Percent Employee"), such
option price shall not be less than 110% of such fair market value at the time
the Option is granted; but in no event will such option price be less than the
par value of such Common Shares.
(b) The Committee shall determine the number of Common Shares to be
subject to each Option. The number of Common Shares subject to an outstanding
Option may be reduced on a share-for-share or other appropriate basis, as
determined by the Committee, to the extent that Common Shares under such
Option are used to calculate the cash, Common Shares, Other Company Securities
or property, or other forms of payment, or any combination thereof, received
pursuant to exercise of a Stock Appreciation Right attached to such Option, or
to the extent that any other Award granted in conjunction with such Option is
paid.
5<PAGE>
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(c) The Option may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, except by will or the laws of descent
and distribution, and shall be exercisable during the grantee's lifetime only
by him. Unless the Committee determines otherwise, the Option shall not be
exercisable for at least six months after the date of grant, unless the
grantee ceases employment or performance of services before the expiration of
such six-month period by reason of his disability as defined in Paragraph 12
or his death.
(d) The Option shall not be exercisable:
(i) in the case of any Incentive Stock Option granted to a Ten
Percent Employee, after the expiration of five years from the date it
is granted, and, in the case of any other Option, after the
expiration of ten years from the date it is granted. Any Option may
be exercised during such period only at such time or times and in
such installments as the Committee may establish;
(ii) unless payment in full is made for the shares being
acquired thereunder at the time of exercise; such payment shall be
made in such form (including, but not limited to, cash, Common
Shares, or any combination thereof) as the Committee may determine in
its discretion; and
(iii) unless the person exercising the Option has been, at all
times during the period beginning with the date of the grant of the
Option and ending on the date of such exercise, employed by or
otherwise performing services for the Company or an Affiliate, or a
corporation, or a parent or subsidiary of a corporation, substituting
or assuming the Option in a transaction to which Section 425(a) of
the Internal Revenue Code of 1986, as amended or any successor
statutory provision thereto (the "Code"), is applicable, except that
(A) in the case of any Nonqualified Stock Option, if such person shall
cease to be employed by or otherwise performing services for the Company or an
Affiliate solely by reason of a period of Related Employment as defined in
Paragraph 14, he may, during such period of Related Employment, exercise the
Nonqualified Stock Option as if he continued such employment or performance of
service; or
(B) if such person shall cease such employment or performance of
services by reason of his disability as defined in Paragraph 12 or early,
normal or deferred retirement under an approved retirement program of the
Company or an Affiliate (or such other plan or arrangement as may be approved
by the Committee, in its discretion, for this purpose) while holding an Option
which has not expired and has not been fully exercised, such person, at any
time within three years (or such other period determined by the Committee)
after the date he ceased such employment or performance of services (but in no
event after the Option has expired), may exercise the Option with respect to
any shares as to which he could have exercised the Option on the date he
ceased such employment or performance of services, or with respect
6<PAGE>
<PAGE>
to such greater number of shares as determined by the Committee; or
(C) if any person to whom an Option has been granted shall die holding
an Option which has not expired and has not been fully exercised, his
executors, administrators, heirs or distributees, as the case may be, may, at
any time within one year (or such other period determined by the Committee)
after the date of death (but in no event after the Option has expired),
exercise the Option with respect to any shares as to which the decedent could
have exercised the Option at the time of his death, or with respect to such
greater number of shares as determined by the Committee.
(e) In the case of an Incentive Stock Option, the amount of aggregate
fair market value of Common Shares (determined at the time of grant of the
Option pursuant to subparagraph 5(a) of the Plan) with respect to which
incentive stock options are exercisable for the first time by an employee
during any calendar year (under all such plans of his employer corporation and
its parent and subsidiary corporations) shall not exceed $100,000.
(f) It is the intent of the Company that Nonqualified Stock Options
granted under the Plan not be classified as Incentive Stock Options, that the
Incentive Stock Options granted under the Plan be consistent with and contain
or be deemed to contain all provisions required under Section 422A and the
other appropriate provisions of the Code and any implementing regulations (and
any successor provisions thereof), and that any ambiguities in construction
shall be interpreted in order to effectuate such intent.
6. STOCK APPRECIATION RIGHTS. The Committee may grant Stock Appreciation
Rights either alone, or in conjunction with Stock Options, Performance Grants
or other Awards, either at the time of grant or by amendment thereafter. Each
Award of Stock Appreciation Rights granted under the Plan shall be evidenced
by an instrument in such form as the Committee shall prescribe from time to
time in accordance with the Plan and shall comply with the following terms and
conditions, and with such other terms and conditions, including, but not
limited to, restrictions upon the Award of Stock Appreciation Rights or the
Common Shares issuable upon exercise thereof, as the Committee, in its
discretion, shall establish:
(a) The Committee shall determine the number of Common Shares to be
subject to each Award of Stock Appreciation Rights. The number of Common
Shares subject to an outstanding Award of Stock Appreciation Rights may be
reduced on a share-for-share or other appropriate basis, as determined by the
Committee, to the extent that Common Shares under such Award of Stock
Appreciation Rights are used to calculate the cash, Common Shares, Other
Company Securities or property or other forms of payment, or any combination
thereof, received pursuant to exercise of an Option attached to such Award of
Stock Appreciation Rights, or to the extent that any other Award granted in
conjunction with such Award of Stock Appreciation Rights is paid.
7<PAGE>
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(b) The Award of Stock Appreciation Rights may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, except by will or
the laws of descent and distribution, and shall be exercisable during the
grantee's lifetime only by him. Unless the Committee determines otherwise, the
Award of Stock Appreciation Rights shall not be exercisable for at least six
months after the date of grant, unless the grantee ceases employment or
performance of services before the expiration of such six-month period by
reason of his disability as defined in Paragraph 12 or his death.
(c) The Award of Stock Appreciation Rights shall not be exercisable:
(i) in the case of any Award of Stock Appreciation Rights that
are attached to an Incentive Stock Option granted to a Ten Percent
Employee, after the expiration of five years from the date it is
granted, and, in the case of any other Award of Stock Appreciation
Rights, after the expiration of ten years from the date it is
granted. Any Award of Stock Appreciation Rights may be exercised
during such period only at such time or times and in such
installments as the Committee may establish;
(ii) unless the Option or other Award to which the Award of
Stock Appreciation Rights is attached is at the time exercisable; and
(iii) unless the person exercising the Award of Stock
Appreciation Rights has been at all times during the period beginning
with the date of the grant thereof and ending on the date of such
exercise, employed by or otherwise performing services for the
Company or an Affiliate, except that
(A) in the case of any Award of Stock Appreciation Rights (other than
those attached to an Incentive Stock Option), if such person shall cease to be
employed by or otherwise performing services for the Company or an Affiliate
solely by reason of a period of Related Employment as defined in Paragraph 14,
he may, during such period of Related Employment, exercise the Award of Stock
Appreciation Rights as if he continued such employment or performance of
services; or
(B) if such person shall cease such employment or performance of
services by reason of his disability as defined in Paragraph 12 or early,
normal or deferred retirement under an approved retirement program of the
Company or an Affiliate (or such other plan or arrangement as may be approved
by the Committee, in its discretion, for this purpose), while holding an Award
of Stock Appreciation Rights which has not expired and has not been fully
exercised, such person may, at any time within three years (or such other
period determined by the Committee) after the date he ceased such employment
or performance of services (but in no event after the Award of Stock
Appreciation Rights has expired), exercise the Award of Stock Appreciation
Rights with respect to any shares as to which he could have exercised the
Award of Stock Appreciation Rights on the date he ceased such employment or
performance of services, or with respect to such greater number of shares as
determined by the Committee; or
8<PAGE>
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(C) if any person to whom an Award of Stock Appreciation Rights has been
granted shall die holding an Award of Stock Appreciation Rights which has not
expired and has not been fully exercised, his executors, administrators, heirs
or distributees, as the case may be, may, at any time within one year (or such
other period determined by the Committee) after the date of death (but in no
event after the Award of Stock Appreciation Rights has expired), exercise the
Award of Stock Appreciation Rights with respect to any shares as to which the
decedent could have exercised the Award of Stock Appreciation Rights at the
time of his death, or with respect to such greater number of shares as
determined by the Committee.
(d) An Award of Stock Appreciation Rights shall entitle the holder (or
any person entitled to act under the provisions of subparagraph 6(c)(iii)(C)
hereof) to exercise such Award or to surrender unexercised the Option (or
other Award) to which the Stock Appreciation Right is attached (or any portion
of such Option or other Award) to the Company and to receive from the Company
in exchange therefor, without payment to the Company, that number of Common
Shares having an aggregate value equal to (or, in the discretion of the
Committee, less than) the excess of the fair market value of one share, at the
time of such exercise, over the exercise price (or Option Price, as the case
may be) per share, times the number of shares subject to the Award or the
Option (or other Award), or portion thereof, which is so exercised or
surrendered, as the case may be. The Committee shall be entitled in its
discretion to elect to settle the obligation arising out of the exercise of a
Stock Appreciation Right by the payment of cash or Other Company Securities or
property, or other forms of payment, or any combination thereof, as determined
by the Committee, equal to the aggregate value of the Common Shares it would
otherwise be obligated to deliver. Any such election by the Committee shall be
made as soon as practicable after the receipt by the Committee of written
notice of the exercise of the Stock Appreciation Right. The value of a Common
Share, Other Company Securities or property, or other forms of payment
determined by the Committee for this purpose shall be the fair market value
thereof on the last business day next preceding the date of the election to
exercise the Stock Appreciation Right, unless the Committee, in its
discretion, determines otherwise.
(e) A Stock Appreciation Right may provide that it shall be deemed to
have been exercised at the close of business on the business day preceding the
expiration date of the Stock Appreciation Right or of the related Option (or
other Award), or such other date as specified by the Committee, if at such
time such Stock Appreciation Right has a positive value. Such deemed exercise
shall be settled or paid in the same manner as a regular exercise thereof as
provided in subparagraph 6(d) hereof.
(f) No fractional shares may be delivered under this Paragraph 6, but in
lieu thereof a cash or other adjustment shall be made as determined by the
Committee in its discretion.
9<PAGE>
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7. RESTRICTED STOCK. Each Award of Restricted Stock under the Plan shall
be evidenced by an instrument in such form as the Committee shall prescribe
from time to time in accordance with the Plan and shall comply with the
following terms and conditions, and with such other terms and conditions as
the Committee, in its discretion, shall establish:
(a) The Committee shall determine the number of Common Shares to be
issued to a participant pursuant to the Award, and the extent, if any, to
which they shall be issued in exchange for cash, other consideration, or both.
(b) Common Shares issued to a participant in accordance with the Award
may not be sold, assigned, transferred, pledged, hypothecated or otherwise
disposed of, except by will or the laws of descent and distribution, or as
otherwise determined by the Committee, for such period as the Committee shall
determine, from the date on which the Award is granted (the "Restricted
Period"). The Company will have the option to repurchase the shares subject to
the Award at such price as the Committee shall have fixed, in its discretion,
when the Award was made or amended thereafter, which option will be
exercisable (i) if the participant's continuous employment or performance of
services for the Company and its Affiliates shall terminate for any reason,
except solely by reason of a period of Related Employment as defined in
Paragraph 14, or except as otherwise provided in subparagraph 7(c), prior to
the expiration of the Restricted Period, (ii) if, on or prior to the
expiration of the Restricted Period or the earlier lapse of such repurchase
option, the participant has not paid to the Company an amount equal to any
federal, state, local or foreign income or other taxes which the Company
determines is required to be withheld in respect of such shares, or (iii)
under such other circumstances as determined by the Committee in its
discretion. Such repurchase option shall be exercisable on such terms, in such
manner and during such period as shall be determined by the Committee when the
Award is made or as amended thereafter. Each certificate for Common Shares
issued pursuant to a Restricted Stock Award shall bear an appropriate legend
referring to the foregoing repurchase option and other restrictions and to the
fact that the shares are partly paid, shall be deposited by the awardholder
with the Company, together with a stock power endorsed in blank, or shall be
evidenced in such other manner permitted by applicable law as determined by
the Committee in its discretion. Any attempt to dispose of any such Common
Shares in contravention of the foregoing repurchase option and other
restrictions shall be null and void and without effect. If Common Shares
issued pursuant to a Restricted Stock Award shall be repurchased pursuant to
the repurchase option described above, the participant, or in the event of his
death, his personal representative, shall forthwith deliver to the Secretary
of the Company the certificates for the Common Shares awarded to the
participant, accompanied by such instrument of transfer, if any, as may
reasonably be required by the Secretary of the Company. If the repurchase
option described above is not exercised by the Company, such option and the
restrictions imposed pursuant to the first sentence of this subparagraph 7(b)
shall terminate and be of no further force and effect.
10<PAGE>
<PAGE>
(c) If a participant who has been in continuous employment or
performance of services for the Company or an Affiliate since the date on
which a Restricted Stock Award was granted to him shall, while in such
employment or performance of services, die, or terminate such employment or
performance of services by reason of disability as defined in Paragraph 12 or
by reason of early, normal or deferred retirement under an approved retirement
program of the Company or an Affiliate (or such other plan or arrangement as
may be approved by the Committee in its discretion, for this purpose) and any
of such events shall occur after the date on which the Award was granted to
him and prior to the end of the Restricted Period of such Award, the Committee
may determine to cancel the repurchase option (and any and all other
restrictions) on any or all of the Common Shares subject to such Award; and
the repurchase option shall become exercisable at such time as to the
remaining shares, if any.
8. PERFORMANCE GRANTS. The Award of a Performance Grant ("Performance
Grant") to a participant will entitle him to receive a specified amount
determined by the Committee (the "Actual Value"), if the terms and conditions
specified herein and in the Awards are satisfied. Each Award of a Performance
Grant shall be subject to the following terms and conditions, and to such
other terms and conditions, including but not limited to, restrictions upon
any cash, Common Shares, Other Company Securities or property, or other forms
of payment, or any combination thereof, issued in respect of the Performance
Grant, as the Committee, in its discretion, shall establish, and shall be
embodied in an instrument in such form and substance as is determined by the
Committee:
(a) The Committee shall determine the value or range of values of a
Performance Grant to be awarded to each participant selected for an Award and
whether or not such a Performance Grant is granted in conjunction with an
Award of Options, Stock Appreciation Rights, Restricted Stock or other Award,
or any combination thereof, under the Plan (which may include, but need not be
limited to, deferred Awards) concurrently or subsequently granted to the
participant (the "Associated Award"). As determined by the Committee, the
maximum value of each Performance Grant (the "Maximum Value") shall be: (i) an
amount fixed by the Committee at the time the Award is made or amended
thereafter, (ii) an amount which varies from time to time based in whole or in
part on the then current value of a Common Share, Other Company Securities or
property, or other securities or property, or any combination thereof or (iii)
an amount that is determinable from criteria specified by the Committee.
Performance Grants may be issued in different classes or series having
different names, terms and conditions. In the case of a Performance Grant
awarded in conjunction with an Associated Award, the Performance Grant may be
reduced on an appropriate basis to the extent that the Associated Award has
been exercised, paid to or otherwise received by the participant, as
determined by the Committee.
(b) The award period ("Award Period") in respect of any Performance
Grant shall be a period determined by the Committee. At the time each Award is
11<PAGE>
<PAGE>
made, the Committee shall establish performance objectives to be attained
within the Award Period as the means of determining the Actual Value of such a
Performance Grant. The performance objectives shall be based on such measure
or measures of performance, which may include, but need not be limited to, the
performance of the participant, the Company, one or more of its subsidiaries
or one or more of their divisions or units, or any combination of the
foregoing, as the Committee shall determine, and may be applied on an absolute
basis or be relative to industry or other indices, or any combination thereof.
The Actual Value of a Performance Grant shall be equal to its Maximum Value
only if the performance objectives are attained in full, but the Committee
shall specify the manner in which the Actual Value of Performance Grants shall
be determined if the performance objectives are met in part. Such performance
measures, the Actual Value or the Maximum Value, or any combination thereof,
may be adjusted in any manner by the Committee in its discretion at any time
and from time to time during or as soon as practicable after the Award Period,
if it determines that such performance measures the Actual Value or the
Maximum Value, or any combination thereof, are not appropriate under the
circumstances.
(c) The rights of a participant in Performance Grants awarded to him
shall be provisional and may be cancelled or paid in whole or in part, all as
determined by the Committee, if the participant's continuous employment or
performance of services for the Company and its Affiliates shall terminate for
any reason prior to the end of the Award Period, except solely by reason of a
period of Related Employment as defined in Paragraph 14.
(d) The Committee shall determine whether the conditions of
subparagraph 8(b) or 8(c) hereof have been met and, if so, shall ascertain the
Actual Value of the Performance Grants. If the Performance Grants have no
Actual Value, the Award and such Performance Grants shall be deemed to have
been cancelled and the Associated Award, if any, may be cancelled or permitted
to continue in effect in accordance with its terms. If the Performance Grants
have an Actual Value and:
(i) were not awarded in conjunction with an Associated Award,
the Committee shall cause an amount equal to the Actual Value of the
Performance Grants earned by the participant to be paid to him or his
beneficiary as provided below; or
(ii) were awarded in conjunction with an Associated Award, the
Committee shall determine, in accordance with criteria specified by
the Committee (A) to cancel the Performance Grants, in which event no
amount in respect thereof shall be paid to the participant or his
beneficiary, and the Associated Award may be permitted to continue in
effect in accordance with its terms, (B) to pay the Actual Value of
the Performance Grants to the participant or his beneficiary as
provided below, in which event the Associated Award may be cancelled
or (C) to pay to the participant or his beneficiary as provided
below, the Actual Value of only a portion of the Performance Grants,
12<PAGE>
<PAGE>
in which event all or a portion of the Associated Award may be permitted
to continue in effect in accordance with its terms or be cancelled, as
determined by the Committee.
Such determination by the Committee shall be made as promptly as
practicable following the end of the Award Period or upon the earlier
termination of employment or performance of services, or at such other time or
times as the Committee shall determine, and shall be made pursuant to criteria
specified by the Committee.
Payment of any amount in respect of the Performance Grants which the
Committee determines to pay as provided above shall be made by the Company, as
promptly as practicable after the end of the Award Period or at such other
time or times as the Committee shall determine, and may be made in cash,
Common Shares, Other Company Securities or property, or other forms of
payment, or any combination thereof or in such other manner, as determined by
the Committee in its discretion. Notwithstanding anything in this Paragraph 8
to the contrary, the Committee may, in its discretion, determine and pay out
the Actual Value of the Performance Grants at any time during the Award
Period.
9. DEFERRAL OF COMPENSATION. The Committee shall determine whether or
not an Award shall be made in conjunction with deferral of the participant's
salary, bonus or other compensation, or any combination thereof, and whether
or not such deferred amounts may be
(i) forfeited to the Company or to other participants, or any
combination thereof, under certain circumstances (which may include,
but need not be limited to, certain types of termination of
employment or performance of services for the Company and its
Affiliates),
(ii) subject to increase or decrease in value based upon the
attainment of or failure to attain, respectively, certain performance
measures and/or
(iii) credited with income equivalents (which may include, but
need not be limited to, interest, dividends or other rates of return)
until the date or dates of payment of the Award, if any.
9A. QUALIFYING AWARDS. The Committee may, in its sole discretion, grant
an Award to any participant with the intent that such Award qualifies as
"performance-based compensation" under Section 162(m) (a "Qualifying Award").
The provisions of this Paragraph 9A as well as all other applicable provisions
of the Plan not inconsistent with this Paragraph 9A shall apply to all
Qualifying Awards issued under the Plan. Qualifying Awards shall be of the
type set forth in subparagraph (a) or (b) below.
13<PAGE>
<PAGE>
(a) Qualifying Awards may be issued as Stock Options and Stock
Appreciation Rights. Commencing with calendar year 1996, the number of Common
Shares underlying all Options and Stock Appreciation Rights that may be
granted to any participant within any calendar year shall be limited to
500,000, subject to adjustment as provided in Paragraph 15. The foregoing
limitation shall be subject to the limitation set forth in Paragraph 4(b).
(b)(i) Qualifying Awards (other than Stock Options and Stock
Appreciation Rights) may be issued as Performance Grants and any other Award
whose payment is conditioned upon the achievement of the performance
objectives described in this subparagraph. Amounts earned under such Awards
shall be based upon the attainment of performance objectives established by
the Committee in accordance with Section 162(m). Such performance objectives
may vary by participant and by Award and shall be based upon the attainment of
specific amounts of, or changes in one or more of the following: revenues,
earnings, shareholders' equity, return on equity, assets, return on assets,
capital, return on capital, book value, economic value added, operating
margins, cash flow, shareholder return, expenses or market share. The
foregoing objectives may be applicable to the Company as a whole, one or more
of its subsidiaries, divisions, business units or business lines, or any
combination of the foregoing, and may be applied on an absolute basis or be
relative to other companies, industries or indices or be based upon any
combination of the foregoing. In addition to the performance objectives the
Committee may also condition payment of any such Award upon the attainment of
conditions, such as completion of a period of service, notwithstanding that
the performance objective or objectives specified in the Award are satisfied.
The Committee shall have the discretion, by participant and by Award, to
reduce (but not to increase) some or all of the amount that would otherwise be
payable under the Award by reason of the satisfaction of the performance
objectives set forth in the Award. In making any such determination, the
Committee is authorized to take into account any such factor or factors it
determines are appropriate, including but not limited to Company, business
unit and individual performance.
(ii) Under all Awards granted pursuant to this subparagraph (b), in any
one calendar year: (A) no participant may be paid cash, Common Shares, Other
Company Securities or other property (other than shares of Restricted Stock)
or any combination of the foregoing with a value (as determined by the
Committee) in excess of $6.5 million and (B) no participant may receive more
than 100,000 shares of Restricted Stock, subject to adjustment to the extent
provided in Paragraph 15. For purposes of the foregoing, the amount paid or
received in any calendar year under a Qualifying Award described in this
subparagraph (b) shall be deemed to be the value earned under such Award based
upon the attainment of performance objectives and any downward adjustments, as
14<PAGE>
<PAGE>
determined by the Committee, as of the date of the determination. The
limitations contained in this subparagraph (b)(ii) shall apply only to
Qualifying Awards granted on and after April 22, 1996. Amounts paid pursuant
to Awards granted under the Plan prior to April 22, 1996 shall not be counted
toward or subject to such limits.
10. DEFERRED PAYMENT OF AWARDS. The Committee may specify that the
payment of all or any portion of cash, Common Shares, Other Company Securities
or property, or any other form of payment, or any combination thereof, under
an Award shall be deferred until a later date. Deferrals shall be for such
periods or until the occurrence of such events, and upon such terms, as the
Committee shall determine in its discretion. Deferred payments of Awards may
be made by undertaking to make payment in the future based upon the
performance of certain investment equivalents (which may include, but need not
be limited to, government securities, Common Shares, other securities,
property, or consideration, or any combination thereof), together with such
additional amounts of income equivalents (which may be compounded and may
include, but need not be limited to, interest, dividends or other rates of
return, or any combination thereof) as may accrue thereon until the date or
dates of payment, such investment equivalents and such additional amounts of
income equivalents to be determined by the Committee in its discretion.
11. AMENDMENT OF AWARDS UNDER THE PLAN. The terms of any outstanding
Award under the Plan may be amended from time to time by the Committee in its
discretion in any manner that it deems appropriate (including, but not limited
to, acceleration of the date of exercise of any Award and/or payments
thereunder); provided that no such amendment shall adversely affect in a
material manner any right of a participant under the Award without his written
consent, unless the Committee determines in its discretion that there have
occurred or are about to occur significant changes in the participant's
position, duties or responsibilities, or significant changes in economic,
legislative, regulatory, tax, accounting or cost/benefit conditions which are
determined by the Committee in its discretion to have or to be expected to
have a substantial effect on the performance of the Company, or any
subsidiary, affiliate, division or department thereof, on the Plan or on any
Award under the Plan.
12. DISABILITY. For the purposes of this Plan, a participant shall be
deemed to have terminated his employment or performance of services for the
Company and its Affiliates by reason of disability, if the Committee shall
determine that the physical or mental condition of the participant by reason
of which such employment or performance of services terminated was such at
that time as would entitle him to payment of monthly disability benefits under
the Company's Long Term Disability Benefit Plan, or, if the participant is not
eligible for benefits under such plan, under any similar disability plan of
the Company or an Affiliate in which he is a participant. If the participant
is not eligible for benefits under any disability plan of the Company or an
15<PAGE>
<PAGE>
Affiliate, he shall be deemed to have terminated such employment or
performance of services by reason of disability if the Committee shall
determine that his physical or mental condition would entitle him to benefits
under the Company's Long Term Disability Benefit Plan if he were eligible
therefor.
13. TERMINATION OF A PARTICIPANT. For all purposes under the Plan, the
Committee shall determine whether a participant has terminated employment by
or the performance of services for the Company and its Affiliates; provided,
however, that transfers between the Company and an Affiliate or between
Affiliates, and approved leaves of absence shall not be deemed such a
termination.
14. RELATED EMPLOYMENT. For the purposes of this Plan, Related
Employment shall mean the employment or performance of services by an
individual for an employer that is neither the Company nor an Affiliate,
provided that (i) such employment or performance of services is undertaken by
the individual at the request of the Company or an Affiliate, (ii) immediately
prior to undertaking such employment or performance of services, the
individual was employed by or performing services for the Company or an
Affiliate or was engaged in Related Employment as herein defined and (iii)
such employment or performance of services is in the best interests of the
Company and is recognized by the Committee, in its discretion, as Related
Employment for purposes of this Paragraph 14. The death or disability of an
individual during a period of Related Employment as herein defined shall be
treated, for purposes of this Plan, as if the death or onset of disability had
occurred while the individual was employed by or performing services for the
Company or an Affiliate.
15. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the
outstanding Common Shares of the Company by reason of any stock split, stock
dividend, split-up, split-off, spin-off, recapitalization, merger,
consolidation, rights offering, reorganization, combination or exchange of
shares, a sale by the Company of all or part of its assets, any distribution
to shareholders other than a normal cash dividend, or other extraordinary or
unusual event, if the Committee shall determine, in its discretion, that such
change equitably requires an adjustment in the terms of any Award or the
number of Common Shares available for Awards, such adjustment may be made by
the Committee and shall be final, conclusive and binding for all purposes of
the Plan.
16. DESIGNATION OF BENEFICIARY BY PARTICIPANT. A participant may name a
beneficiary to receive any payment in which he may be entitled in respect of
any Award under the Plan in the event of his death, on a written form to be
provided by and filed with the Committee, and in a matter determined by the
Committee in its discretion. The Committee reserves the right to review and
approve beneficiary designations. A participant may change his beneficiary
from time to time in the same manner, unless such participant has made an
irrevocable designation. Any designation of beneficiary under the Plan (to the
extent it is valid and enforceable under the applicable law) shall be
16<PAGE>
<PAGE>
controlling over any other disposition, testamentary, or otherwise, as
determined by the Committee in its discretion. If no designated beneficiary
survives the participant and is living on the date on which any amount becomes
payable to such participant's beneficiary, such payment will be made to the
legal representatives of the participant's estate, and the term "beneficiary"
as used in the Plan shall be deemed to include such person or persons. If there
is any question as to the legal right of any beneficiary to receive a
distribution under the Plan, the Committee in its discretion may determine that
the amount in question be paid to the legal representatives of the estate of
the participant, in which event the Company, the Board and the Committee and
the members thereof will have no further liability to anyone with respect to
such amount.
17. FINANCIAL ASSISTANCE. If the Committee determines that such action
is advisable, the Company may assist any person to whom an Award has been
granted in obtaining financing from the Company under the American Express
1983 Stock Purchase Assistance Plan (or other program of the Company, or one
of its Affiliates approved pursuant to applicable law), or from a bank or
other third party, on such terms as are determined by the Committee, and in
such amount as is required to accomplish the purposes of the Plan, including,
but not limited to, to permit the exercise of an Award, the participation
therein, and/or the payment of any taxes in respect thereof. Such assistance
may take any form that the Committee deems appropriate, including, but not
limited to, a direct loan from the Company or an Affiliate, a guarantee of the
obligation by the Company or an Affiliate, or the maintenance by the Company
or an Affiliate of deposits with such bank or third party.
18. MISCELLANEOUS PROVISIONS.
(a) No employee or other person shall have any claim or right to be
granted an Award under the Plan. Determinations made by the Committee under
the Plan need not be uniform and may be made selectively among eligible
individuals under the Plan, whether or not such eligible individuals are
similarly situated. Neither the Plan nor any action taken hereunder shall be
construed as giving any employee or other person any right to continue to be
employed by or perform services for the Company or any Affiliate, and the
right to terminate the employment of or performance of services by any
participant at any time and for any reason is specifically reserved.
(b) No participant or other person shall have any right with respect to
the Plan, the Common Shares reserved for issuance under the Plan or in any
Award, contingent or otherwise, until written evidence of the Award shall have
been delivered to the recipient and all the terms, conditions and provisions
of the Plan and the Award applicable to such recipient (and each person
claiming under or through him) have been met.
(c) Except as may be approved by the Committee where such approval shall
not adversely affect compliance of the Plan with Rule 16b-3 under the Exchange
17<PAGE>
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Act, a participant's rights and interest under the Plan may not be assigned or
transferred, hypothecated or encumbered in whole or in part either directly or
by operation of law or otherwise (except in the event of a participant's
death) including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner; provided, however, that
any Option or similar right (including, but not limited to, a Stock
Appreciation Right) offered pursuant to the Plan shall not be transferable
other than by will or the laws of descent and distribution and shall be
exercisable during the participant's lifetime only by him.
(d) No Common Shares, Other Company Securities or property, other
securities or property, or other forms of payment shall be issued hereunder
with respect to any Award unless counsel for the Company, shall be satisfied
that such issuance will be in compliance with applicable federal, state, local
and foreign legal, securities exchange and other applicable requirements.
(e) It is the intent of the Company that the Plan comply in all respects
with Rule 16b-3 under the Exchange Act, that any ambiguities or
inconsistencies in construction of the Plan be interpreted to give effect to
such intention and that if any provision of the Plan is found not to be in
compliance with Rule 16b-3, such provision shall be deemed null and void to
the extent required to permit the Plan to comply with Rule 16b-3.
(f) The Company and its Affiliates shall have the right to deduct from
any payment made under the Plan any federal, state, local or foreign income or
other taxes required by law to be withheld with respect to such payment. It
shall be a condition to the obligation of the Company to issue Common Shares,
Other Company Securities or property, other securities or property, or other
forms of payment, or any combination thereof, upon exercise, settlement or
payment of any Award under the Plan, that the participant (or any beneficiary
or person entitled to act) pay to the Company, upon its demand, such amount as
may be requested by the Company for the purpose of satisfying any liability to
withhold federal, state, local or foreign income or other taxes. If the amount
requested is not paid, the Company may refuse to issue Common Shares, Other
Company Securities or property, other securities or property, or other forms
of payment, or any combination thereof. Notwithstanding anything in the Plan
to the contrary, the Committee may, in its discretion, permit an eligible
participant (or any beneficiary or person entitled to act) to elect to pay a
portion or all of the amount requested by the Company for such taxes with
respect to such Award, at such time and in such manner as the Committee shall
deem to be appropriate (including, but not limited to, by authorizing the
Company to withhold, or agreeing to surrender to the Company on or about the
date such tax liability is determinable, Common Shares, Other Company
Securities or property, other securities or property, or other forms of
payment, that would otherwise be distributed, or have been distributed, as the
case may be, pursuant to such Award to such person, having a fair market value
equal to the amount of such taxes).
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(g) The expenses of the Plan shall be borne by the Company. However, if
an Award is made to an individual employed by or performing services for an
Affiliate,
(i) if such Award results in payment of cash to the
participant, such Affiliate shall pay to the Company an amount equal
to such cash payment; and
(ii) if the Award results in the issuance by the Company to the
participant of Common Shares, Other Company Securities or property,
other securities or property, or other forms of payment, or any
combination thereof, such Affiliate shall pay to the Company an
amount equal to the fair market value thereof, as determined by the
Committee, on the date such shares, Other Company Securities or
property, other securities or property, or other forms of payment, or
any combination thereof, are issued (or, in the case of the issuance
of Restricted Stock or of Common Shares, Other Company Securities or
property, or other securities or property, or other forms of payment
subject to transfer and forfeiture conditions, equal to the fair
market value thereof on the date on which they are no longer subject
to applicable restrictions), minus the amount, if any, received by
the Company in respect of the purchase of such Common Shares, Other
Company Securities or property, other securities or property or other
forms of payment, or any combination thereof.
(h) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Award under the Plan, and the rights to
the payment of Awards shall be no greater than the rights of the Company's
general creditors.
(i) By accepting any Award or other benefit under the Plan, each
participant and each person claiming under or through him shall be
conclusively deemed to have indicated his acceptance and ratification of, and
consent to, any action taken under the Plan by the Company, the Board or the
Committee or its delegates.
(j) Fair market value in relation to Common Shares, Other Company
Securities or property, other securities or property or other forms of payment
of Awards under the Plan, or any combination thereof, as of any specific time
shall mean such value as determined by the Committee in accordance with
applicable law.
(k) The masculine pronoun includes the feminine and the singular
includes the plural wherever appropriate.
(l) The appropriate officers of the Company shall cause to be filed any
reports, returns or other information regarding Awards hereunder or any Common
Shares issued pursuant hereto as may be required by Section 13 or 15(d) of the
Exchange Act (or any successor provision) or any other applicable statute,
rule or regulation.
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(m) The validity, construction, interpretation, administration and
effect of the Plan, and of its rules and regulations, and rights relating to
the Plan and to Awards granted under the Plan, shall be governed by the
substantive laws, but not the choice of law rules, of the State of New York.
19. PLAN AMENDMENT OR SUSPENSION. The Plan may be amended or suspended
in whole or in part at any time and from time to time by the Board, but no
amendment shall be effective unless and until the same is approved by
shareholders of the Company, where the failure to obtain such approval would
adversely affect the compliance of the Plan with Rule 16b-3 under the Exchange
Act and with other applicable law. No amendment of the Plan shall adversely
affect in a material manner any right of any participant with respect to any
Award theretofore granted without such participant's written consent, except
as permitted under Paragraph 11.
20. PLAN TERMINATION. This Plan shall terminate upon the earlier of the
following dates or events to occur:
(a) upon the adoption of a resolution of the Board terminating the Plan;
or
(b) ten years from the date the Plan is initially approved and adopted
by the shareholders of the Company in accordance with Paragraph 21 hereof,
provided, however, that the Board may, prior to the expiration of such
ten-year period, extend the term of the Plan for an additional period of up to
five years for the grant of Awards other than Incentive Stock Options. No
termination of the Plan shall materially alter or impair any of the rights or
obligations of any person, without his consent, under any Award theretofore
granted under the Plan, except that subsequent to termination of the Plan, the
Committee may make amendments permitted under Paragraph 11.
21. SHAREHOLDER ADOPTION. The Plan shall be submitted to the
shareholders of the Company for their approval and adoption at a meeting to be
held on or before June 30, 1989, or at any adjournment thereof. The Plan shall
not be effective and no Award shall be made hereunder unless and until the
Plan has been so approved and adopted. The shareholders shall be deemed to
have approved and adopted the Plan only if it is approved and adopted at a
meeting of the shareholders duly held by vote taken in the manner required by
the laws of the State of New York.
20<PAGE>
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EXHIBIT 12.1
AMERICAN EXPRESS COMPANY
COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
<TABLE>
<CAPTION>
Three Months Years Ended December 31,
Ended March 31,
1996 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Pretax income from
continuing operations $ 565 $ 2,183 $ 1,891 $ 2,326 $ 896 $ 622
Interest expense 554 2,343 1,925 1,776 2,171 2,761
Other adjustments 31 95 103 88 196 142
----- ------ ------ ------ ------ ------
Total earnings (a) $ 1,150 $ 4,621 $ 3,919 $ 4,190 $ 3,263 $3,525
------ ------ ------ ------ ------ ------
Fixed charges:
Interest expense $ 554 $ 2,343 $ 1,925 $ 1,776 $ 2,171 $2,761
Other adjustments 32 135 142 130 154 147
------ ------ ------ ------ ------ ------
Total fixed charges (b) $ 586 $ 2,478 $ 2,067 $ 1,906 $ 2,325 $2,908
------ ------ ------ ------ ------ ------
Ratio of earnings to
fixed charges (a/b) 1.96 1.86 1.90 2.20 1.40 1.21
</TABLE>
Included in interest expense in the above computation is interest expense
related to the international banking operations of American Express
Company (the "Company") and Travel Related Services' Cardmember lending
activities, which is netted against interest and dividends and Cardmember
lending net finance charge revenue, respectively, 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 was reported as an equity investment in the above
computation. In the fourth quarter of 1995, the Company's ownership was
further reduced to approximately 10 percent as a result of shares issued
by FDC in connection with a merger transaction. Accordingly, as of
December 31, 1995, the Company's investment in FDC is accounted for as
Investments - Available for Sale.
<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)
<TABLE>
<CAPTION>
Three Months Years Ended December 31,
Ended March 31,
1996 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Pretax income from
continuing operations $ 565 $ 2,183 $ 1,891 $ 2,326 $ 896 $ 622
Interest expense 554 2,343 1,925 1,776 2,171 2,761
Other adjustments 31 95 103 88 196 142
------ ------ ------ ------ ------ ------
Total earnings (a) $ 1,150 $ 4,621 $ 3,919 $ 4,190 $ 3,263 $ 3,525
------ ------ ------ ------ ------ ------
Fixed charges and
preferred share
dividends:
Interest expense $ 554 $ 2,343 $ 1,925 $ 1,776 $ 2,171 $ 2,761
Dividends on preferred
shares 6 24 50 66 65 61
Other adjustments 32 135 142 130 154 147
------ ------ ------ ------ ------ ------
Total fixed charges and
preferred share
dividends (b) $ 592 $ 2,502 $ 2,117 $ 1,972 $ 2,390 $ 2,969
------ ------ ------ ------ ------ ------
Ratio of earnings to
fixed charges and
preferred share
dividends (a/b) 1.94 1.85 1.85 2.12 1.37 1.19
</TABLE>
Included in interest expense in the above computation is interest expense
related to the international banking operations of American Express Company
(the "Company") and Travel Related Services' Cardmember lending activities,
which is netted against interest and dividends and Cardmember lending net
finance charge revenue, respectively, 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 was reported as an equity
investment in the above computation. In the fourth quarter of 1995, the
Company's ownership was further reduced to approximately 10 percent as a result
of shares issued by FDC in connection with a merger transaction. Accordingly,
as of December 31, 1995, the Company's investment in FDC is accounted for as
Investments - Available for Sale.
<PAGE>
<PAGE>
Exhibit 15
May 15, 1996
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. 33-28721, No. 33-33552, No. 33-36422, No.
33-38777, No. 33-48629, No. 33-62124, No. 33-65008 and No. 33-53801; Form S-3
No. 2-89469, No. 33-17706, No. 33-43268, No. 33-66654 and No. 33-50997) of
American Express Company of our report dated May 13, 1996 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, 1996.
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>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Consolidated Balance Sheet at March 31, 1996 and Consolidated
Statement of Income for the three months ended March 31, 1996 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-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 5,629
<SECURITIES> 41,444
<RECEIVABLES> 18,580
<ALLOWANCES> 817
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,514
<DEPRECIATION> 1,732
<TOTAL-ASSETS> 107,910
<CURRENT-LIABILITIES> 0
<BONDS> 26,099
0
200
<COMMON> 287
<OTHER-SE> 7,505
<TOTAL-LIABILITY-AND-EQUITY> 107,910
<SALES> 0
<TOTAL-REVENUES> 3,882
<CGS> 0
<TOTAL-COSTS> 1,821
<OTHER-EXPENSES> 319
<LOSS-PROVISION> 886
<INTEREST-EXPENSE> 291
<INCOME-PRETAX> 565
<INCOME-TAX> 169
<INCOME-CONTINUING> 396
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 396
<EPS-PRIMARY> 0.80
<EPS-DILUTED> 0
</TABLE>