<PAGE>
<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 June 30, 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 July 31, 1996
- - -------------------------------------- ----------------------------
Common Shares (par value $.60 per share) 474,349,411 shares
<PAGE>
<PAGE>
AMERICAN EXPRESS COMPANY
FORM 10-Q
INDEX
Part I. Financial Information:
Consolidated Statement of Income--Three and 1-2
six months ended June 30, 1996 and 1995
Consolidated Balance Sheet--June 30, 1996 and 3
December 31, 1995
Consolidated Statement of Cash Flows--Six 4
months ended June 30, 1996 and 1995
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of 6-16
Financial Condition and Results of Operations
Review Report of Independent Accountants 17
Part II. Other Information 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
June 30,
-------------------------
1996 1995
Net Revenues: ---------- ---------
Discount revenue $ 1,247 $ 1,112
Interest and dividends, net 844 883
Net card fees 414 436
Travel commissions and fees 329 320
Other commissions and fees 308 321
Management and distribution fees 296 227
Cardmember lending net finance charge
revenue 249 252
Life insurance premiums 99 209
Other 258 207
---------- ---------
Total 4,044 3,967
---------- ---------
Expenses:
Human resources 1,052 1,006
Provisions for losses and benefits:
Annuities and investment certificates 346 347
Life insurance 115 202
Charge card 248 199
Cardmember lending 126 126
Other 16 15
Interest:
Charge card 171 170
Other 138 149
Occupancy and equipment 299 268
Marketing and promotion 262 260
Professional services 195 202
Communications 108 101
Other 332 350
---------- ----------
Total 3,408 3,395
---------- ----------
Pretax income 636 572
Income tax provision 184 162
---------- ----------
Net income $ 452 $ 410
========== ==========
Net income per common share $ 0.93 $ 0.81
========== ==========
Average common and common equivalent
shares outstanding 487.0 499.3
========== ==========
Cash dividends declared per
common share $ 0.225 $ 0.225
========== ==========
See notes to Consolidated Financial Statements.
1<PAGE>
<PAGE>
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENT OF INCOME
(dollars in millions, except per share amounts)
(Unaudited)
Six Months Ended
June 30,
---------------------
1996 1995
Net Revenues: -------- ---------
Discount revenue $ 2,388 $ 2,130
Interest and dividends, net 1,682 1,746
Net card fees 835 872
Travel commissions and fees 627 615
Other commissions and fees 615 636
Management and distribution fees 576 432
Cardmember lending net finance charge
revenue 524 488
Life insurance premiums 196 416
Other 483 403
--------- ---------
Total 7,926 7,738
--------- ---------
Expenses:
Human resources 2,074 1,990
Provisions for losses and benefits:
Annuities and investment certificates 696 679
Life insurance 237 398
Charge card 458 364
Cardmember lending 314 232
Other 32 28
Interest:
Charge card 338 326
Other 262 296
Occupancy and equipment 587 536
Marketing and promotion 469 494
Professional services 397 376
Communications 210 200
Other 652 749
--------- ---------
Total 6,726 6,668
--------- ---------
Pretax income 1,200 1,070
Income tax provision 351 307
--------- ---------
Net income $ 849 $ 763
========= =========
Net income per common share $ 1.73 $ 1.51
========= =========
Average common and common equivalent
shares outstanding 489.0 500.6
========= =========
Cash dividends declared per
common share $ 0.450 $ 0.450
========= =========
See notes to Consolidated Financial Statements.
2<PAGE>
<PAGE>
AMERICAN EXPRESS COMPANY
CONSOLIDATED BALANCE SHEET
(millions)
(Unaudited)
June 30, December 31,
Assets 1996 1995
- - ------- ----------- -----------
Cash and cash equivalents $ 4,970 $ 3,200
Accounts receivable and accrued interest:
Cardmember receivables, less reserves:
1996, $787; 1995, $753 17,214 17,154
Other receivables, less reserves:
1996, $45; 1995, $76 2,163 2,760
Investments 41,123 42,561
Loans:
Cardmember lending, less reserves:
1996, $455; 1995, $489 9,830 10,268
International banking, less reserves:
1996, $113; 1995, $111 5,361 5,317
Other, net 495 506
Separate account assets 16,713 14,974
Deferred acquisition costs 2,440 2,262
Land, buildings and equipment--at cost, less
accumulated depreciation: 1996, $1,794;
1995, $1,763 1,766 1,783
Other assets 5,572 6,620
---------- ----------
Total assets $107,647 $107,405
========== ==========
Liabilities and Shareholders' Equity
- - ------------------------------------
Customers' deposits and credit balances $ 8,570 $ 9,889
Travelers Cheques outstanding 6,603 5,697
Accounts payable 4,607 4,686
Insurance and annuity reserves:
Fixed annuities 21,400 21,405
Life and disability policies 3,840 3,752
Investment certificate reserves 3,140 3,606
Short-term debt 16,593 17,654
Long-term debt 8,391 7,570
Separate account liabilities 16,713 14,974
Other liabilities 9,835 9,952
---------- ---------
Total liabilities 99,692 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 at December 31, 1995, stated at
liquidation value - 200
Common shares, $.60 par value, authorized
1.2 billion shares; issued and outstanding
476.6 million shares in 1996 and 483.1
million shares in 1995 286 290
Capital surplus 3,880 3,781
Net unrealized securities gains 533 875
Foreign currency translation adjustment (92) (85)
Retained earnings 3,348 3,159
----------- ---------
Total shareholders' equity 7,955 8,220
----------- ---------
Total liabilities and shareholders' equity $107,647 $107,405
=========== ============
See notes to Consolidated Financial Statements.
3<PAGE>
<PAGE
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(millions)
(Unaudited)
Six Months Ended
June 30,
---------------------
1996 1995
---- ----
Cash Flows from Operating Activities
Net income $ 849 $ 763
Adjustments to reconcile net income to
net cash provided by operating activities:
Provisions for losses and benefits 1,129 978
Depreciation, amortization, deferred taxes and other 21 170
Changes in operating assets and liabilities,
net of effects of acquisitions and dispositions:
Accounts receivable and accrued interest 645 (127)
Other assets 1,073 (202)
Accounts payable and other liabilities (86) (40)
Increase in Travelers Cheques outstanding 906 1,385
Increase in insurance reserves 113 212
------ ------
Net cash provided by operating activities 4,650 3,139
------ ------
Cash Flows from Investing Activities
Sale of investments 2,593 1,398
Maturity and redemption of investments 3,364 2,315
Purchase of investments (4,975) (5,497)
Net increase in Cardmember receivables (787) (677)
Proceeds from repayment of loans 11,375 10,810
Cardmember loans sold to Trust 1,000 -
Issuance of loans (12,405) (11,263)
Purchase of land, buildings and equipment (166) (150)
Sale of land, buildings and equipment 112 15
Acquisitions, net of cash acquired/sold - (7)
------ ------
Net cash provided (used) by investing activities 111 (3,056)
------ ------
Cash Flows from Financing Activities
Net decrease in customers' deposits and credit balances (1,222) (367)
Sale of annuities and investment certificates 2,766 3,615
Redemption of annuities and investment certificates (3,334) (2,204)
Net increase (decrease) in debt with maturities
of 3 months or less 3,319 (5,707)
Issuance of debt 7,068 10,102
Principal payments on debt (10,810) (3,643)
Issuance of American Express common shares 139 169
Repurchase of American Express common shares (705) (517)
Dividends paid (222) (231)
------ ------
Net cash (used) provided by financing activities (3,001) 1,217
Effect of exchange rate changes on cash 10 21
------ ------
Net increase in cash and cash equivalents 1,770 1,321
Cash and cash equivalents at beginning of period 3,200 3,433
------ ------
Cash and cash equivalents at end of period $4,970 $4,754
====== ======
See notes to Consolidated Financial Statements.
4<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 June 30, 1996 and December 31, 1995, the
consolidated results of its operations for the three and six months
ended June 30, 1996 and 1995 and cash flows for the six months ended
June 30, 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 $122 million and $124 million for the three months
ended June 30, 1996 and 1995, respectively, and $251 million and $242
million for the six months ended June 30, 1996 and 1995, respectively.
Interest and Dividends is presented net of interest expense of
$135 million and $152 million for the three months ended June 30, 1996
and 1995, respectively, and $269 million and $309 million for the six
months ended June 30, 1996 and 1995, respectively, related to the
Company's international banking operations.
3. The following is a summary of investments:
June 30, December 31,
(In millions) 1996 1995
---------- -----------
Held to Maturity, at amortized cost
(fair value: 1996, $16,362; 1995,
$17,549) $16,198 $16,790
Available for Sale, at fair value (cost:
1996, $19,497; 1995, $20,452) 21,158 22,435
Investment mortgage loans (fair value:
1996, $3,563; 1995, $3,434) 3,539 3,180
Trading 228 156
----------- -----------
$41,123 $42,561
=========== ===========
4. Net income taxes paid during the six months ended June 30, 1996 and
1995 were approximately $234 million and $284 million, respectively.
Interest paid during the six months ended June 30, 1996 and 1995 was
approximately $1.2 billion and $1.3 billion, respectively.
5<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Consolidated Results Of Operations For The Three and Six Months Ended
June 30, 1996 and 1995
The Company's consolidated net income increased 10 percent and 11 percent
in the second quarter and first half of 1996, respectively, compared with
a year ago. Net income per share in both the second quarter and first
half of 1996 increased 15 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 6 percent in both the second quarter and first half of
1996, 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 maintain the number of
outstanding common shares and common share equivalents below 500 million
and to offset issuances of common shares in connection with the Company's
employee compensation plans. The average number of outstanding common shares
and common share equivalents was 487 million and 499 million for the quarter
ended June 30, 1996 and 1995, respectively, and 489 million and 501 million
for the six months ended June 30, 1996 and 1995, respectively. Since
inception of the initial repurchase plan in 1994, the Company has repurchased
56.2 million shares under the repurchase programs at an average price of
$38.01 per share through July 31, 1996.
During the first six months of 1996, 2.3 million put options issued in
connection with the share repurchase programs expired unexercised. At
June 30, 1996, the Company had a total of 1.0 million put options
outstanding with a weighted average strike price of $41.74 per share.
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 was offset by
the elimination of the preferred dividend. As a result, there was no
impact on earnings per common share.
6
<PAGE>
<PAGE>
Travel Related Services
Results of Operations For The Three and Six Months Ended June 30, 1996
and 1995
<TABLE>
<CAPTION>
Statement of Income
-------------------
(Unaudited)
(Dollars in millions)
Three Months Ended Six Months Ended
June 30, Percentage June 30, Percentage
------------ -----------
1996 1995 Inc/(Dec) 1996 1995 Inc/(Dec)
------------------------ ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Revenues:
Discount Revenue $1,247 $1,112 12.2% $2,388 $2,130 12.1%
Net Card Fees 414 436 (5.1) 835 872 (4.3)
Travel Commissions and Fees 329 320 3.0 627 615 1.9
Interest and Dividends 211 256 (17.6) 401 499 (19.6)
Other Revenues 451 526 (14.4) 876 1,039 (15.8)
---------------- ---------------
2,652 2,650 0.1 5,127 5,155 (0.6)
---------------- ---------------
Lending:
Finance Charge Revenue 371 376 (1.3) 775 730 6.3
Interest Expense 122 124 (1.2) 251 242 3.9
---------------- ---------------
Net Finance Charge Revenue 249 252 (1.4) 524 488 7.5
---------------- ---------------
Total Net Revenues 2,901 2,902 (0.1) 5,651 5,643 0.1
---------------- ---------------
Expenses:
Marketing and Promotion 252 250 0.6 452 480 (5.8)
Provision for Losses and
Claims:
Charge Card 248 199 24.5 458 364 25.9
Lending 126 126 0.2 314 232 35.7
Other 26 124 (79.0) 50 246 (79.5)
---------------- ---------------
Total 400 449 (10.9) 822 842 (2.2)
---------------- ---------------
Interest Expense:
Charge Card 171 170 0.6 338 326 3.6
Other 114 114 0.3 210 224 (6.2)
---------------- ---------------
Total 285 284 0.5 548 550 (0.4)
Net Discount Expense 125 107 16.7 251 207 21.2
Human Resources 721 705 2.3 1,426 1,398 2.0
Other Operating Expenses 659 684 (3.8) 1,277 1,366 (6.6)
---------------- ---------------
Total Expenses 2,442 2,479 (1.5) 4,776 4,843 (1.4)
---------------- ---------------
Pretax Income 459 423 8.4 875 800 9.3
Income Tax Provision 137 125 9.3 266 238 11.7
---------------- ---------------
Net Income $322 $298 8.1 $609 $562 8.3
================ ===============
</TABLE>
The impact on the Statement of Income related to TRS' securitized receivables
and loans was as follows:
Increase Other Revenues $42 $20 $73 $42
Decrease Lending Finance
Charge Revenue (32) - (32) -
Decrease Lending Interest
Expense 8 - 8 -
Decrease Provision for
Losses and Claims:
Charge Card 54 46 108 83
Lending 12 - 12 -
Decrease Interest Expense -
Charge Card 41 41 82 82
Increase Net Discount
Expense (125) (107) (251) (207)
---------------- ----------------
Pretax Income $0 $0 $0 $0
================ ================
7<PAGE>
<PAGE>
Travel Related Services
<TABLE>
<CAPTION>
Selected Statistical Information
--------------------------------
(Unaudited)
(Amounts in billions, except percentages and where indicated)
Three Months Ended Six Months Ended
June 30, Percentage June 30, Percentage
--------- ---------
1996 1995 Inc/(Dec) 1996 1995 Inc/(Dec)
----------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Cards in Force (millions):
United States 27.5 25.7 7.1% 27.5 25.7 7.1%
Outside the United States* 11.8 11.5 2.2 11.8 11.5 2.2
------------- --------------
Total 39.3 37.2 5.6 39.3 37.2 5.6
============= ==============
Basic Cards in Force (millions):
United States 20.9 19.1 9.5 20.9 19.1 9.5
Outside the United States* 9.3 9.1 2.5 9.3 9.1 2.5
------------- --------------
Total 30.2 28.2 7.3 30.2 28.2 7.3
============= ==============
Card Billed Business:
United States $32.6 $28.7 13.7 $62.2 $54.7 13.7
Outside the United States* 13.2 11.9 10.7 25.1 22.8 10.1
------------- --------------
Total $45.8 $40.6 12.8 $87.3 $77.5 12.6
============= ==============
Travelers Cheque Sales $6.7 $6.9 (2.3) $12.0 $12.2 (2.1)
Average Travelers Cheques
Outstanding $6.1 $6.1 (1.0) $5.9 $5.8 2.6
Travel Sales $4.0 $4.0 2.3 $7.6 $7.4 3.9
</TABLE>
* Both years include Cards issued by strategic alliance partners and independent
operators as well as business billed on those Cards.
8<PAGE>
<PAGE>
Travel Related Services' (TRS) 1995 results included income from AMEX
Life. Excluding AMEX Life results from the three and six month periods of
1995, TRS' net income grew approximately 12 percent and 13 percent,
respectively, revenues increased approximately 5 percent and 6 percent,
respectively, and expenses were up approximately 4 percent in both
periods.
For the three and six months ended June 30, 1996, net revenues reflected
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 growth in
the number of Cards outstanding. These increases were partially offset by
a decrease in net Card fees reflecting TRS' strategy of growing its
lending portfolio through the issuance of low- and no-fee credit cards.
The decline in lending net finance charge revenue in the second quarter
reflects the impact of the $1 billion asset securitization completed in
the second quarter of 1996 (see TRS' Liquidity and Capital Resources
discussion). Excluding the impact of the asset securitization, lending
net finance charge revenue increased in the second quarter. The increase
in both periods reflects higher average loan balances, partly offset by
lower net interest spreads due to introductory interest rates on new
products. Interest and dividends and other revenues declined primarily
reflecting the sale of AMEX Life.
The Charge Card provision for losses increased primarily reflecting volume
growth. Excluding the impact of the asset securitization in 1996, the
lending provision for losses increased in the second quarter. The
increase in both periods reflects higher loss rates. The other provision
for losses declined reflecting the sale of AMEX Life.
9<PAGE>
<PAGE>
Travel Related Services
Liquidity and Capital Resources
Selected Balance Sheet Information
----------------------------------
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in billions)
June 30, December 31, Percentage June 30, Percentage
1996 1995 Inc/(Dec) 1995 Inc/(Dec)
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Accounts Receivable, net $18.3 $18.9 (3.0%) $17.1 7.1%
Cardmember Loans, net $9.8 $10.3 (4.3) $9.0 9.5
Owned and Managed Cardmember
Receivables (excluding Revolving
Card Products):
Total Cardmember Receivables $20.6 $20.5 0.5 $17.9 14.9
90 Days Past Due as a % of Total
Cardmember Receivables 3.7% 3.5% - 3.6% -
Total Loss Reserves $1.1 $1.0 10.7 $0.9 17.6
% of Cardmember Receivables 5.1% 4.6% - 5.0% -
% of 90 Days Past Due 138% 131% - 140% -
Cardmember Receivables Loss Ratio,
Net of Recoveries 0.5% 0.5% - 0.5% -
Owned and Managed U.S. Cardmember
Lending (including Revolving
Card Products):
Total Cardmember Loans $10.5 $10.0 5.5 $8.6 21.4
30 Days Past Due as a % of Total
Cardmember Loans 3.2% 3.8% - 3.6% -
Total Loss Reserves $0.5 $0.4 5.6 $0.4 22.2
% of Cardmember Loans 4.5% 4.5% - 4.4% -
% of 30 Days Past Due 135% 116% - 123% -
Write-Off Rates 5.2% 4.4% - 4.3% -
Investments $9.0 $9.2 (1.6) $11.5 (21.6)
Total Assets $44.3 $45.2 (1.9) $45.3 (2.2)
Travelers Cheques Outstanding $6.6 $5.7 15.9 $6.7 (0.8)
Short-term Debt $16.7 $17.9 (7.1) $15.8 5.6
Long-term Debt $5.2 $4.4 18.7 $3.5 48.2
Total Liabilities $39.4 $40.3 (2.2) $40.7 (3.2)
Total Shareholder's Equity $4.9 $4.9 0.4 $4.6 6.4
Return on Average Equity 24.8% 24.6% - 24.5% -
</TABLE>
TRS' total assets declined from year end due to a decline in accounts
receivable and a decline in Cardmember loans reflecting the $1 billion
asset securitization discussed below which was completed in the second
quarter.
American Express Centurion Bank (Centurion Bank) and American Express
Receivables Financing Corporation II, a newly formed wholly-owned
subsidiary of TRS, created a new trust, the American Express Credit
Account Master Trust (the Trust), for the securitization of revolving
credit loans. On May 16, 1996, the Trust securitized $1 billion of loans
through the issuance of two classes of investor certificates and a collateral
interest. The securitized assets consist of loans arising in a portfolio
of designated Optima Card, Optima Line of Credit and Sign & Travel revolving
credit accounts owned by Centurion Bank.
10<PAGE>
<PAGE>
American Express Financial Advisors
Results of Operations For The Three and Six Months Ended June 30, 1996
and 1995
<TABLE>
<CAPTION>
Statement of Income
-------------------
(Unaudited)
(Dollars in millions, except where indicated)
Three Months Ended Six Months Ended
June 30, Percentage June 30, Percentage
--------- ---------
1996 1995 Inc/(Dec) 1996 1995 Inc/(Dec)
--------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Investment Income $562 $549 2.4% $1,131 $1,084 4.3%
Management and Distribution Fees 296 227 30.8 576 432 33.2
Other Income 159 135 17.4 313 269 16.7
------------- ------------
Total Revenues 1,017 911 11.7 2,020 1,785 13.2
------------- ------------
Expenses:
Provision for Losses and
Benefits:
Annuities 298 290 2.7 595 562 5.8
Insurance 102 103 (1.1) 210 197 6.6
Investment Certificates 48 46 3.6 101 96 6.1
------------ ------------
Total 448 439 1.9 906 855 6.0
Human Resources 252 216 16.2 498 424 17.5
Other Operating Expenses 86 64 36.6 188 150 24.9
------------ ------------
Total Expenses 786 719 9.3 1,592 1,429 11.4
------------ -------------
Pretax Income 231 192 20.6 428 356 20.3
Income Tax Provision 78 63 24.8 145 120 21.5
------------ ------------
Net Income $153 $129 18.6 $283 $236 19.7
============ ============
Selected Statistical Information
-------------------------------
Life Insurance in Force (billions) $63.0 $55.9 12.7 $63.0 $55.9 12.7
============= ==============
Assets Owned and/or Managed
(billions):
Assets managed for institutions $34.8 $33.1 5.4 $34.8 $33.1 5.4
Assets owned and managed for
individuals:
Owned Assets 49.7 45.0 10.5 49.7 45.0 10.5
Managed Assets 54.0 43.3 24.3 54.0 43.3 24.3
------------- -------------
Total $138.5 $121.4 14.0 $138.5 $121.4 14.0
============= ==============
Sales of Selected Products:
Mutual Funds $3,762 $2,364 59.1 $7,332 $4,652 57.6
Annuities $1,125 $961 17.0 $2,279 $2,057 10.8
Investment Certificates $186 $604 (69.3) $322 $1,016 (68.4)
Life and Other
Insurance Sales $113 $96 17.8 $209 $179 16.4
Number of Financial Advisors 7,997 7,918 1.0 7,997 7,918 1.0
Fees From Financial
Plans (thousands) $11,584 $9,625 20.4 $23,207 $20,044 15.8
Product Sales Generated from
Financial Plans as a Percentage
of Total Sales 62.9% 64.1% - 63.0% 63.8% -
</TABLE>
11<PAGE>
<PAGE>
During the three and six months ended June 30, 1996, the increase in
American Express Financial Advisors' investment income reflected higher
average asset levels, partly offset by lower investment yields compared
with the year-ago periods. 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 market appreciation and, to a lesser
extent, positive net sales. Other income increased primarily due to
higher life insurance contract charges and premiums.
The provision for annuity benefits increased reflecting higher annuities
in force, partly offset by lower accrual rates. The provision for
insurance benefits reflects higher life insurance in force, partially
offset by lower accrual rates. The provision for investment certificates
increased reflecting higher average investment certificates in force and,
in the six month period, higher accrual rates. The increase in human
resources expense reflected higher financial advisors' compensation
reflecting higher commissionable sales and, to a lesser extent, an
increase in the number of employees compared with last year. Other
operating expenses increased primarily reflecting higher amortization of
deferred acquisition costs and higher data processing costs. The increase
in other operating expenses in the six month period also reflected a
higher provision for insurance industry guarantee association assessments.
12<PAGE>
<PAGE>
American Express Financial Advisors
Liquidity and Capital Resources
Selected Balance Sheet Information
------------------------------------
(Unaudited)
(Dollars in billions)
June 30, December 31, Percentage June 30, Percentage
1996 1995 Inc/(Dec) 1995 Inc/(Dec)
--------------------------------------------------------
Investments $27.9 $28.8 (3.0%) $27.9 -
Separate Account Assets $16.7 $15.0 11.6 $13.0 28.9%
Total Assets $49.7 $48.3 3.0 $45.0 10.5
Reserves for Losses
and Benefits $28.3 $28.6 (1.3) $27.3 3.7
Total Liabilities $46.8 $45.2 3.6 $42.2 10.8
Total Shareholder's Equity $2.9 $3.1 (4.6) $2.8 6.2
Return on Average Equity 19.9% 19.4% - 19.0% -
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 reflect a lower level
of unrealized securities gains due to a decline in market value reflecting
an increase in market interest rates.
13 <PAGE>
<PAGE>
American Express Bank
Results of Operations For The Three and Six Months Ended June 30, 1996
and 1995
<TABLE>
<CAPTION>
Statement of Income
-------------------
(Unaudited)
(Dollars in millions)
Three Months Ended Six Months Ended
June 30, Percentage June 30, Percentage
--------- ---------
1996 1995 Inc/(Dec) 1996 1995 Inc/(Dec)
--------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Net Revenues:
Interest Income $207 $233 (11.1%) $418 $472 (11.5%)
Interest Expense 135 152 (11.2) 269 309 (13.1)
----------- -------------
Net Interest Income 72 81 (11.0) 149 163 (8.3)
Commissions, Fees and
Other Revenues 48 61 (22.8) 96 120 (20.3)
Foreign Exchange Income 20 21 (3.2) 40 40 (0.1)
----------- -------------
Total Net Revenues 140 163 (14.4) 285 323 (11.8)
----------- -------------
Provision for Credit Losses 4 1 # 8 4 88.5
----------- -------------
Expenses:
Human Resources 54 65 (17.2) 110 129 (14.9)
Other Operating Expenses 60 69 (14.2) 116 140 (17.2)
------------ -------------
Total Expenses 114 134 (15.6) 226 269 (16.1)
------------ -------------
Pretax Income 22 28 (21.1) 51 50 2.7
Income Tax Provision 8 9 (12.4) 18 15 17.8
------------ -------------
Net Income $14 $19 (25.1) $33 $35 (4.0)
============ =============
</TABLE>
# Denotes variance of more than 100%.
The decline in American Express Bank's (the Bank) earnings for the three
and six months ended June 30, 1996 reflects lower revenues, partly offset
by expense savings. 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 reflecting balance sheet reduction and higher
short-term funding costs. The declines in commissions, fees and other
revenues and other operating expenses primarily reflected the impact of
exiting nonstrategic businesses, including the transfer of certain
aircraft assets to the Bank's parent, American Express Company, in January
1996.
14
<PAGE>
<PAGE>
American Express Bank
Liquidity and Capital Resources
Selected Balance Sheet Information
----------------------------------
(Unaudited)
(Dollars in billions, except where indicated)
June 30, December 31, Percentage June 30, Percentage
1996 1995 Inc/(Dec) 1995 Inc/(Dec)
-------------------------------------------------------
Investments $2.1 $2.5 (17.0%) $2.9 (26.8%)
Total Loans $5.5 $5.4 0.9 $5.4 0.8
Reserve for Credit
Losses (millions) $113 $111 2.5 $115 (1.4)
Reserves as a
Percentage of Total
Loans 2.1% 2.0% - 2.1% -
Total Nonperforming
Loans (millions) $38 $34 13.6 $32 19.3
Other Real Estate
Owned (millions) $48 $44 8.7 $53 (9.9)
Total Assets $11.5 $12.3 (6.7) $13.0 (11.8)
Deposits $7.8 $8.5 (7.5) $8.9 (11.8)
Total Liabilities $10.7 $11.5 (6.5) $12.2 (12.2)
Total Shareholder's
Equity (millions) $755 $837 (9.8) $798 (5.4)
Risk-Based Capital Ratios:
Tier 1 9.1% 8.9% - 8.3% -
Total 12.9% 13.0% - 15.8% -
Leverage Ratio 5.8% 5.8% - 5.2% -
Return on Average Assets* 0.57% 0.59% - 0.52% -
Return on Average Common
Equity* 9.20% 9.99% - 9.02% -
* For the year-to-date period
The Bank's total assets declined from year end reflecting a decline in
investments due to a lower level of client deposits.
15<PAGE>
<PAGE>
Corporate and Other
Corporate and Other reported second quarter 1996 net expenses of $37
million, compared with net expenses of $36 million a year ago. The 1995
second quarter included a gain from the sale of common stock and warrants
of Mellon Bank Corporation, which was offset by expenses related to
certain business building initiatives.
Corporate and Other reported net expenses of $76 million in the first six
months of 1996, compared with $70 million last year. Results for the
first half of 1996 and 1995 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.
16
<PAGE>
<PAGE>
INDEPENDENT ACCOUNTANTS REVIEW REPORT
The Shareholders and Board of Directors
American Express Company
We have reviewed the accompanying consolidated balance sheet of
American Express Company (the "Company") as of June 30, 1996 the
related consolidated statements of income for the three month and
six month periods ended June 30, 1996 and 1995, and the
consolidated statement of cash flows for the six month periods
ended June 30, 1996 and 1995. These financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data, and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, which will be performed for the full year with the
objective of expressing an opinion regarding the consolidated
financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based our reviews, we are not aware of any material
modifications that should be made to the accompanying
consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of the Company
as of December 31, 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
August 12, 1996
17<PAGE>
<PAGE>
PART II. OTHER INFORMATION
AMERICAN EXPRESS COMPANY
Item 1. Legal Proceedings
SAFRA-RELATED ACTIONS
The parties have agreed to settle the consolidated action,
entitled Seinfeld, et ano., v. Robinson, et. al., subject to
court approval after a hearing scheduled for November 14, 1996.
The proposed settlement does not provide for monetary damages.
As part of the settlement the Company will implement certain
procedures with respect to retention of outside consultants. This
consolidated action was previously reported in the registrant's
Annual Report on Form 10-K for the year ended December 31, 1995.
FCH-RELATED ACTIONS
In June 1996 the United States District Court for the
Central District of California approved settlement of a class
action and a shareholder derivative action brought against the
Company and certain of its officers and directors arising out of
the investment by Shearson Lehman, then a subsidiary of the
Company, in First Capital Holdings Corp. The settlement amount,
including fees and expenses, is the responsibility of Lehman Brothers.
These actions were previously reported in the registrant's Annual
Report on Form 10-K for the year ended December 31, 1995.
Item 4. Submission of Matters to a Vote of Securities Holders
For information relating to the matters voted upon at the
registrant's annual meeting for shareholders held on April 22,
1996, see Item 4 on page 17 of the registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996, which is
incorporated herein by reference.
Item 5. Other Information
On August 12, 1996, the Company announced the appointment of
Richard Goeltz as vice chairman and chief financial officer.
Mr. Goeltz will also be a member of the Company's Office of the Chief
Executive. Mr. Goeltz will join the Company on September 3, 1996, from
NatWest Group in London, where he is group chief financial officer and
member of the Board of Directors. Prior to joining NatWest, Mr. Goeltz
was executive vice president and chief financial officer of Joseph E. Seagram
& Sons, Inc.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index on page E-1 hereof.
(b) Reports on Form 8-K:
Form 8-K, dated April 18, 1996, Item 5, relating to the
registrant's earnings for the quarter ended March 31, 1996.
Form 8-K, dated April 24, 1996, Item 5, relating to the
resignation of the registrant's Chief Financial Officer.
Form 8-K, dated July 22, 1996, Item 5, relating to the
registrant's earnings for the quarter ended June 30, 1996.
18<PAGE>
<PAGE>
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: August 14, 1996 By /s/ Daniel T. Henry
--------------------- -----------------------
Daniel T. Henry
Senior Vice President and
Comptroller
(Duly Authorized Officer and
Chief Accounting Officer)
<PAGE>
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this Quarterly
Report:
Exhibit Description
12 Computation in Support of Ratio of Earnings to Fixed Charges.
15 Letter re Unaudited Interim Financial Information.
27 Financial Data Schedule.
E-1
<PAGE>
<PAGE>
EXHIBIT 12
AMERICAN EXPRESS COMPANY
COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
Six Months Years Ended December 31,
Ended June 30, -----------------------------------
1996
(Unaudited) 1995 1994 1993 1992 1991
--------- ---- ---- ---- ---- ----
Earnings:
Pretax income from
continuing operations $1,200 $2,183 $1,891 $2,326 $ 896 $ 622
Interest expense 1,120 2,343 1,925 1,776 2,171 2,761
Other adjustments 64 95 103 88 196 142
------ ------ ------ ------ ------ ------
Total earnings (a) $2,384 $4,621 $3,919 $4,190 $3,263 $3,525
------ ------ ------ ------ ------ ------
Fixed charges:
Interest expense $1,120 $2,343 $1,925 $1,776 $2,171 $2,761
Other adjustments 65 135 142 130 154 147
------ ------ ------ ------ ------ ------
Total fixed charges (b) $1,185 $2,478 $2,067 $1,906 $2,325 $ 2,908
------ ------ ------ ------ ------ ------
Ratio of earnings to
fixed charges (a/b) 2.01 1.86 1.90 2.20 1.40 1.21
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 under the equity method 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 under the equity method.
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 15
August 14, 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 August 12, 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 and six-month periods ended
June 30, 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 June 30, 1996 and Consolidated
Statement of Income for the six months ended June 30, 1996 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,970
<SECURITIES> 41,123
<RECEIVABLES> 20,209
<ALLOWANCES> 832
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,560
<DEPRECIATION> 1,794
<TOTAL-ASSETS> 107,647
<CURRENT-LIABILITIES> 0
<BONDS> 24,984
0
0
<COMMON> 286
<OTHER-SE> 7,669
<TOTAL-LIABILITY-AND-EQUITY> 107,647
<SALES> 0
<TOTAL-REVENUES> 7,926
<CGS> 0
<TOTAL-COSTS> 3,737
<OTHER-EXPENSES> 652
<LOSS-PROVISION> 1,737
<INTEREST-EXPENSE> 600
<INCOME-PRETAX> 1,200
<INCOME-TAX> 351
<INCOME-CONTINUING> 849
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 849
<EPS-PRIMARY> 1.73
<EPS-DILUTED> 0
</TABLE>
