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Previous: AMERICAN ELECTRIC POWER COMPANY INC, POS AMC, 1997-04-29 |
Next: AMERICAN CAPITAL EMERGING GROWTH FUND INC, NSAR-A, 1997-04-29 |
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 24, 1997
AMERICAN EXPRESS COMPANY
- ------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 1-7657 13-4922250
- ------------------------------- -------------- ------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification)
200 Vesey Street, World Financial Center
New York, New York 10285
- ---------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 640-2000
--------------
- -------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
EXPLANATORY NOTE
In an 8-K filed by American Express Company on April 25, 1997 the preface to
Item 5 stated certain information was issued and distributed on February 27,
1997. The purpose of this amended Form 8-K/A is solely to change such date
from February 27, 1997 to April 24, 1997. The corrected version is as follows:
Item 5. Other Events
On April 24, 1997, American Express Company issued the following
Press Release on first quarter earnings and distributed the following
Earnings Conference Call Summary:
(a) Press Release
NEW YORK, April 24, 1997 -- American Express Company today reported record first
quarter net income of $454 million, 15 percent higher than the same period a
year ago. On a per share basis, first quarter net income was $0.94, an
increase of 18 percent from $0.80.
These results exceeded American Express' long-term targets of 12-15 percent
earnings per share growth and return on equity of 18-20 percent, on average and
over time. The company also has targeted at least two-thirds of that earnings
growth, or 8-10 percent, to come from higher revenues. Revenue growth for the
quarter was somewhat below that target.
Travel Related Services (TRS) reported first quarter net income of $315 million,
up 10 percent from $286 million a year ago.
TRS' net revenues increased 7 percent from last year's first quarter, primarily
related to higher worldwide billed business and growth in Cardmember loans
outstanding. Excluding the impact of securitizing a portion of the card
portfolio and a reduction in investments related to the consolidation of certain
legal entities within the consumer lending business, revenues rose 9 percent
from last year's first quarter. The improvement in billed business reflects a
greater number of cards outstanding and higher spending per Cardmember. Spending
grew in part due to the benefits of rewards programs and expanded merchant
coverage. The growth in cards is largely attributable to the introduction of new
consumer and small business credit card products, consistent with the
Company's strategy of building its lending portfolio through the issuance of
low- and no-fee credit cards.
The charge card provision for losses declined, particularly in Latin America and
the small business card portfolio. The lending provision for losses rose
primarily because of growth in outstanding loans.
The increase in operating expenses resulted from the cost of Cardmember loyalty
programs, business growth and investment spending.
American Express Financial Advisors (AEFA) reported record quarterly net income
of $157 million, a 21 percent increase over the $130 million in the same period
last year.
Revenue and earnings growth benefited from higher fee revenues due to an
increase in managed assets and growth in distribution fees primarily from sales
of mutual funds.
<PAGE>
AEFA reported record sales of mutual funds in the first quarter. Sales of life
and other insurance products and investment certificates increased over last
year; sales of annuities declined.
American Express Bank (AEB) reported first quarter net income of $20 million, an
8 percent increase from $19 million in 1996.
The growth in earnings primarily reflects higher revenues due to increased net
interest income on loans and investments. This was largely offset by higher
operating expenses due primarily to systems technology investment. During the
quarter, the Bank had an $18 million loan recovery from Peru, which was used to
increase the reserve for credit losses. The Bank also received an unfavorable
court ruling relating to the collapse of the Bank of Credit and Commerce
International (BCCI) in 1991. When BCCI assets were forfeited to the Federal
Government, AEB turned over funds that it held in accounts of BCCI, including
approximately $24 million in funds it claimed as setoffs against obligations of
BCCI then outstanding to AEB. The recent court ruling, in effect, denied AEB's
claims to the funds that were taken as setoffs. This matter is not expected to
have a material impact on AEB's results.*
Corporate and Other reported net expenses of $38 million, compared with net
expenses of $39 million a year ago.
- - -
American Express Company, (www.americanexpress.com), founded in 1850, is a
global travel, financial and network services provider.
* This is a forward-looking statement which is subject to risks and
uncertainties. Important factors that could cause results to differ materially
from the forward-looking statement include, among other things, unanticipated
events at AEB during the remainder of the year such as other litigation and
credit losses.
<PAGE>
American Express Company
------------------------
Financial Summary
-----------------
(Unaudited)
(Dollars in millions, except per share amounts)
Quarter Ended
March 31,
-------------- Percentage
1997 1996 Inc/(Dec)
---- ---- ----------
Revenues by Industry Segment (A)
- --------------------------------
Travel Related Services $2,970 $2,777 6.9%
American Express Financial
Advisors 1,084 1,003 8.1
American Express Bank 153 146 5.3
------- -------
4,207 3,926 7.2
Corporate and Other,
including adjustments
and eliminations (43) (17) #
------- -------
$4,164 $3,909 6.5
======= =======
Pretax Income by Industry Segment
- ---------------------------------
Travel Related Services $449 $416 8.1%
American Express Financial
Advisors 236 196 20.5
American Express Bank 32 29 10.5
------- -------
717 641 12.0
Corporate and Other (77) (76) (1.9)
------- -------
PRETAX INCOME $640 $565 13.4
======= =======
Net Income by Industry Segment
- ------------------------------
Travel Related Services $315 $286 10.1%
American Express Financial
Advisors 157 130 21.0
American Express Bank 20 19 8.2
------- -------
492 435 13.3
Corporate and Other (38) (39) 0.4
------- -------
NET INCOME $454 $396 14.6
======= =======
NET INCOME PER COMMON SHARE $0.94 $0.80 17.5
======= =======
Cash dividends declared per
common share $0.225 $0.225
======= =======
Average common shares
outstanding (000's) 482,077 490,610
======= =======
(A) Revenues are reported net of interest expense, where
applicable.
<PAGE>
American Express Company
------------------------
Selected Statistical Information
--------------------------------
(Unaudited)
Quarter Ended
March 31,
------------- Percentage
1997 1996 Inc/(Dec)
---- ---- ----------
Return on Average Equity* 23.0% 22.3% -
Common Shares Outstanding (millions) 470.9 479.1 (1.7%)
Book Value per Common Share:
Actual $17.80 $16.26 9.5%
Pro Forma* $17.44 $14.93 16.8%
Shareholders' Equity (billions) $8.4 $8.0 4.9%
* Excludes the effect of SFAS #115 and for ROE, also excludes
fourth quarter 1996 $300 million gain on the exchange of the
Company's DECs and $138 million restructuring charge.
<PAGE>
American Express Company
------------------------
Financial Summary
-----------------
(Unaudited)
(Dollars in millions, except per share amounts)
Quarter Ended
March 31, 1997
--------------
Revenues by Industry Segment (A)
- --------------------------------
Travel Related Services $2,970
American Express Financial Advisors 1,084
American Express Bank 153
-------
4,207
Corporate and Other,
including adjustments and eliminations (43)
-------
CONSOLIDATED REVENUES (A) $4,164
=======
Pretax Operating Income by Industry Segment
- -------------------------------------------
Travel Related Services (B) $449
American Express Financial Advisors 236
American Express Bank 32
-------
717
Corporate and Other (C) (77)
-------
PRETAX OPERATING INCOME $640
=======
Operating Income by Industry Segment
- ------------------------------------
Travel Related Services (B) $315
American Express Financial Advisors 157
American Express Bank 20
-------
492
Corporate and Other (C) (38)
-------
OPERATING INCOME $454
FDC Gain/(Restructuring) 0
-------
NET INCOME $454
=======
OPERATING INCOME PER COMMON SHARE $0.94
FDC Gain/(Restructuring) $0.00
-------
NET INCOME PER COMMON SHARE $0.94
=======
Cash dividends declared per common share $0.225
=======
Average common shares outstanding (000's) 482,077
=======
<PAGE>
Quarter Ended
December 31, 1996
-----------------
Revenues by Industry Segment (A)
- --------------------------------
Travel Related Services $3,103
American Express Financial Advisors 1,069
American Express Bank 156
-------
4,328
Corporate and Other,
including adjustments and eliminations (27)
-------
CONSOLIDATED REVENUES (A) $4,301
=======
Pretax Operating Income by Industry Segment
- -------------------------------------------
Travel Related Services (B) $403
American Express Financial Advisors 228
American Express Bank 26
-------
657
Corporate and Other (C) (78)
-------
PRETAX OPERATING INCOME $579
=======
Operating Income by Industry Segment
- ------------------------------------
Travel Related Services (B) $299
American Express Financial Advisors 155
American Express Bank 17
-------
471
Corporate and Other (C) (38)
-------
OPERATING INCOME $433
FDC Gain/(Restructuring) 162
-------
NET INCOME $595
=======
OPERATING INCOME PER COMMON SHARE $0.90
FDC Gain/(Restructuring) $0.33
-------
NET INCOME PER COMMON SHARE $1.23
=======
Cash dividends declared per common share $0.225
=======
Average common shares outstanding (000's) 482,065
=======
<PAGE>
Quarter Ended
September 30, 1996
------------------
Revenues by Industry Segment (A)
- --------------------------------
Travel Related Services $2,958
American Express Financial Advisors 1,021
American Express Bank 151
-------
4,130
Corporate and Other,
including adjustments and eliminations (36)
-------
CONSOLIDATED REVENUES (A) $4,094
=======
Pretax Operating Income by Industry Segment
- -------------------------------------------
Travel Related Services (B) $441
American Express Financial Advisors 230
American Express Bank 28
-------
699
Corporate and Other (C) (78)
-------
PRETAX OPERATING INCOME $621
=======
Operating Income by Industry Segment
- ------------------------------------
Travel Related Services (B) $323
American Express Financial Advisors 156
American Express Bank 18
-------
497
Corporate and Other (C) (39)
-------
OPERATING INCOME $458
FDC Gain/(Restructuring) 0
-------
NET INCOME $458
=======
OPERATING INCOME PER COMMON SHARE $0.95
FDC Gain/(Restructuring) $0.00
-------
NET INCOME PER COMMON SHARE $0.95
=======
Cash dividends declared per common share $0.225
=======
Average common shares outstanding (000's) 481,865
=======
<PAGE>
Quarter Ended
June 30, 1996
-------------
Revenues by Industry Segment (A)
- --------------------------------
Travel Related Services $2,934
American Express Financial Advisors 1,017
American Express Bank 140
-------
4,091
Corporate and Other,
including adjustments and eliminations (14)
-------
CONSOLIDATED REVENUES (A) $4,077
=======
Pretax Operating Income by Industry Segment
- -------------------------------------------
Travel Related Services (B) $459
American Express Financial Advisors 231
American Express Bank 22
-------
712
Corporate and Other (C) (76)
-------
PRETAX OPERATING INCOME $636
=======
Operating Income by Industry Segment
- ------------------------------------
Travel Related Services (B) $322
American Express Financial Advisors 153
American Express Bank 14
-------
489
Corporate and Other (C) (37)
-------
OPERATING INCOME $452
FDC Gain/(Restructuring) 0
-------
NET INCOME $452
=======
OPERATING INCOME PER COMMON SHARE $0.93
FDC Gain/(Restructuring) $0.00
-------
NET INCOME PER COMMON SHARE $0.93
=======
Cash dividends declared per common share $0.225
=======
Average common shares outstanding (000's) 487,048
=======
<PAGE>
Quarter Ended
March 31, 1996
--------------
Revenues by Industry Segment (A)
- --------------------------------
Travel Related Services $2,777
American Express Financial Advisors 1,003
American Express Bank 146
-------
3,926
Corporate and Other,
including adjustments and eliminations (17)
-------
CONSOLIDATED REVENUES (A) $3,909
=======
Pretax Operating Income by Industry Segment
- -------------------------------------------
Travel Related Services (B) $416
American Express Financial Advisors 196
American Express Bank 29
-------
641
Corporate and Other (C) (76)
-------
PRETAX OPERATING INCOME $565
=======
Operating Income by Industry Segment
- ------------------------------------
Travel Related Services (B) $286
American Express Financial Advisors 130
American Express Bank 19
-------
435
Corporate and Other (C) (39)
-------
OPERATING INCOME $396
FDC Gain/(Restructuring) 0
-------
NET INCOME $396
=======
OPERATING INCOME PER COMMON SHARE $0.80
FDC Gain/(Restructuring) $0.00
-------
NET INCOME PER COMMON SHARE $0.80
=======
Cash dividends declared per common share $0.225
=======
Average common shares outstanding (000's) 490,610
=======
(A) Revenues are reported net of interest expense, where
applicable.
(B) TRS' results for the quarter ended December 31, 1996
exclude a pretax restructuring charge of $196 million
($125 million after-tax).
(C) Corporate and Other results for the quarter ended
December 31, 1996 exclude a pretax gain of $480 million
($300 million after-tax) on the exchange of the Company's
DECs (Debt Exchangeable for Common Stock) for shares of
common stock of First Data Corporation and a $20 million
pretax charge ($13 million after-tax) related to the early
retirement of debt and certain restructuring costs.
<PAGE>
American Express Company
------------------------
Selected Statistical Information
--------------------------------
(Unaudited)
Quarter Ended
March 31, 1997
--------------
Return on Average Equity* 23.0%
Common Shares Outstanding (millions) 470.9
Book Value per Common Share:
Actual $17.80
Pro Forma* $17.44
Shareholders' Equity (billions) $8.4
Quarter Ended
December 31, 1996
-----------------
Return on Average Equity* 22.8%
Common Shares Outstanding (millions) 472.9
Book Value per Common Share:
Actual $18.04
Pro Forma* $17.22
Shareholders' Equity (billions) $8.5
Quarter Ended
September 30, 1996
------------------
Return on Average Equity* 22.8%
Common Shares Outstanding (millions) 473.5
Book Value per Common Share:
Actual $17.41
Pro Forma* $16.19
Shareholders' Equity (billions) $8.2
Quarter Ended
June 30, 1996
-------------
Return on Average Equity* 22.6%
Common Shares Outstanding (millions) 476.6
Book Value per Common Share:
Actual $16.69
Pro Forma* $15.57
Shareholders' Equity (billions) $8.0
<PAGE>
Quarter Ended
March 31, 1996
--------------
Return on Average Equity* 22.3%
Common Shares Outstanding (millions) 479.1
Book Value per Common Share:
Actual $16.26
Pro Forma* $14.93
Shareholders' Equity (billions) $8.0
* Excludes the effect of SFAS #115 and for ROE, also excludes
fourth quarter 1996 $300 million gain on the exchange of the
Company's DECs and $138 million restructuring charge.
<PAGE>
(PRELIMINARY) TRAVEL RELATED SERVICES
-----------------------
Statement of Income
-------------------
(Unaudited)
(Dollars in millions)
Quarter Ended Percentage
MARCH 31, Inc/(Dec)
----------------- ----------
1997 1996
---- ----
Net Revenues:
Discount Revenue $1,306 $1,141 14.5%
Net Card Fees 405 421 (3.9)
Travel Commissions and Fees 336 325 3.9
Interest and Dividends 132 191 (30.7)
Other Revenues 503 424 18.2
------- -------
2,682 2,502 7.2
------- -------
Lending:
Finance Charge Revenue 431 404 6.5
Interest Expense 143 129 10.5
------- -------
Net Finance Charge Revenue 288 275 4.7
------- -------
Total Net Revenues 2,970 2,777 6.9
------- -------
Expenses:
Marketing and Promotion 202 200 1.1
Provision for Losses and Claims:
Charge Card 190 210 (9.4)
Lending 211 188 12.3
Other 24 24 (3.6)
------- -------
Total 425 422 0.6
------- -------
Interest Expense:
Charge Card 169 167 1.4
Other 35 95 (63.4)
------- -------
Total 204 262 (22.3)
Net Discount Expense 151 126 20.5
Human Resources 749 704 6.4
Other Operating Expenses 790 647 22.0
------- -------
Total Expenses 2,521 2,361 6.7
------- -------
Pretax Income 449 416 8.1
Income Tax Provision 134 130 3.8
------- -------
Net Income $315 $286 10.1
======= =======
<PAGE>
(Preliminary) Travel Related Services
-----------------------
Statement of Income
-------------------
(Unaudited, Managed Asset Basis)
(Dollars in millions)
Quarter Ended
March 31,
-------------- Percentage
1997 1996 Inc/(Dec)
---- ---- ----------
Net Revenues:
Discount Revenue $1,306 $1,141 14.5%
Net Card Fees 405 421 (3.9)
Travel Commissions and Fees 336 325 3.9
Interest and Dividends 132 191 (30.7)
Other Revenues 453 393 14.8
------- -------
2,632 2,471 6.5
------- -------
Lending:
Finance Charge Revenue 478 404 18.3
Interest Expense 160 129 23.9
------- -------
Net Finance Charge Revenue 318 275 15.6
------- -------
Total Net Revenues 2,950 2,746 7.4
------- -------
Expenses:
Marketing and Promotion 202 200 1.1
Provision for Losses and Claims:
Charge Card 252 264 (4.4)
Lending 222 188 18.1
Other 24 24 (3.6)
------- -------
Total 498 476 4.6
------- -------
Interest Expense:
Charge Card 227 208 9.6
Other 35 95 (63.4)
------- -------
Total 262 303 (13.5)
Human Resources 749 704 6.4
Other Operating Expenses 790 647 22.0
------- -------
Total Expenses 2,501 2,330 7.3
------- -------
Pretax Income 449 416 8.1
Income Tax Provision 134 130 3.8
------- -------
Net Income $315 $286 10.1
======= =======
<PAGE>
(Preliminary) Travel Related Services
-----------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Amounts in billions, except percentages and where indicated)
Quarter Ended
March 31,
-------------- Percentage
1997 1996 Inc/(Dec)
---- ---- ----------
Total Cards in Force (millions):
United States 29.6 27.1 9.1%
Outside the United States 12.3 11.6 6.4
------ ------
Total 41.9 38.7 8.3
====== ======
Basic Cards in Force (millions):
United States 22.9 20.5 12.0
Outside the United States 9.6 9.2 4.7
------ ------
Total 32.5 29.7 9.7
====== ======
Card Billed Business:
United States $34.6 $29.8 16.5
Outside the United States 13.3 11.8 12.4
------ ------
Total $47.9 $41.6 15.3
====== ======
Average Discount Rate* 2.75% 2.76% -
Average Basic Cardmember
Spending (dollars)* $1,498 $1,427 5.0
Average Fee per Card (dollars)* $39 $44 (11.4)
Travel Sales $3.9 $3.6 9.0
Travel Commissions and Fees/Sales** 8.6% 9.0% -
Travelers Cheque Sales $5.1 $5.3 (3.4)
Average Travelers Cheques Outstanding $5.8 $5.7 0.3
Investments $6.1 $9.0 (32.2)
Travelers Cheques Outstanding $5.8 $5.9 (2.3)
Total Debt $22.1 $23.1 (4.5)
Shareholder's Equity $4.8 $4.9 (2.4)
Return on Average Equity*** 26.3% 24.7% -
Return on Average Assets*** 2.9% 2.5% -
* Computed excluding Cards issued by strategic alliance partners
and independent operators as well as business billed on those
Cards.
** Computed from information provided herein.
***Excluding the effect of SFAS #115 and the fourth quarter 1996
restructuring charge of $125 million after-tax.
<PAGE>
(Preliminary) Travel Related Services
-----------------------
Selected Statistical Information (continued)
--------------------------------------------
(Unaudited)
(Amounts in billions, except percentages and where indicated)
Quarter Ended
March 31,
-------------- Percentage
1997 1996 Inc/(Dec)
------ ------ ---------
Owned and Managed Charge Card
Receivables:
Total Receivables $21.2 $18.8 12.9%
90 Days Past Due as a % of Total 3.5% 4.1% -
Loss Reserves (millions) $921 $991 (7.1)
% of Receivables 4.3% 5.3% -
% of 90 Days Past Due 124% 129% -
Net Loss Ratio 0.50% 0.51% -
Owned and Managed U.S. Cardmember
Lending:
Total Loans $12.9 $10.2 25.9
Past Due Loans as a % of Total:
30-89 Days 2.6% 2.5% -
90+ Days 1.0% 1.0% -
Loss Reserves (millions):
Beginning Balance $488 $443 10.0
Provision 201 170 18.3
Net Charge-Offs/Other (156) (130) 20.0
------ ------
Ending Balance $533 $483 10.2
====== ======
% of Loans 4.1% 4.7% -
% of Past Due 115% 136% -
Average Loans $12.8 $10.2 25.6
Net Write-Off Rate 5.1% 5.2% -
Net Interest Yield 8.7% 9.4% -
<PAGE>
(Preliminary) Travel Related Services
-----------------------
Statement of Income
-------------------
(Unaudited)
(Dollars in millions)
Quarter Ended
March 31, 1997
--------------
Net Revenues:
Discount Revenue $1,306
Net Card Fees 405
Travel Commissions and Fees 336
Interest and Dividends 132
Other Revenues 503
-------
2,682
-------
Lending:
Finance Charge Revenue 431
Interest Expense 143
-------
Net Finance Charge Revenue 288
-------
Total Net Revenues 2,970
-------
Expenses:
Marketing and Promotion 202
Provision for Losses and Claims:
Charge Card 190
Lending 211
Other 24
-------
Total 425
-------
Interest Expense:
Charge Card 169
Other 35
-------
Total 204
Net Discount Expense 151
Human Resources 749
Other Operating Expenses 790
-------
Total Expenses 2,521
-------
Pretax Income 449
Income Tax Provision 134
-------
Operating Income $315
=======
<PAGE>
Quarter Ended
December 31, 1996
-----------------
Net Revenues:
Discount Revenue $1,380
Net Card Fees 415
Travel Commissions and Fees 380
Interest and Dividends 156
Other Revenues 483
-------
2,814
-------
Lending:
Finance Charge Revenue 423
Interest Expense 134
-------
Net Finance Charge Revenue 289
-------
Total Net Revenues 3,103
-------
Expenses:
Marketing and Promotion 268
Provision for Losses and Claims:
Charge Card 113
Lending 214
Other 22
-------
Total 349
-------
Interest Expense:
Charge Card 176
Other 65
-------
Total 241
Net Discount Expense 174
Human Resources 794
Other Operating Expenses 874
-------
Total Expenses 2,700
-------
Pretax Income 403
Income Tax Provision 104
-------
Operating Income $299*
=======
* Excludes restructuring charge of $125 million after-tax
($196 million pretax).
<PAGE>
Quarter Ended
September 30, 1996
------------------
Net Revenues:
Discount Revenue $1,256
Net Card Fees 418
Travel Commissions and Fees 354
Interest and Dividends 167
Other Revenues 508
-------
2,703
-------
Lending:
Finance Charge Revenue 377
Interest Expense 122
-------
Net Finance Charge Revenue 255
-------
Total Net Revenues 2,958
-------
Expenses:
Marketing and Promotion 278
Provision for Losses and Claims:
Charge Card 172
Lending 107
Other 28
-------
Total 307
-------
Interest Expense:
Charge Card 175
Other 72
-------
Total 247
Net Discount Expense 128
Human Resources 764
Other Operating Expenses 793
-------
Total Expenses 2,517
-------
Pretax Income 441
Income Tax Provision 118
-------
Operating Income $323
=======
<PAGE>
Quarter Ended
June 30, 1996
-------------
Net Revenues:
Discount Revenue $1,247
Net Card Fees 414
Travel Commissions and Fees 362
Interest and Dividends 211
Other Revenues 451
-------
2,685
-------
Lending:
Finance Charge Revenue 371
Interest Expense 122
-------
Net Finance Charge Revenue 249
-------
Total Net Revenues 2,934
-------
Expenses:
Marketing and Promotion 252
Provision for Losses and Claims:
Charge Card 248
Lending 126
Other 26
-------
Total 400
-------
Interest Expense:
Charge Card 171
Other 114
-------
Total 285
Net Discount Expense 125
Human Resources 721
Other Operating Expenses 692
-------
Total Expenses 2,475
-------
Pretax Income 459
Income Tax Provision 137
-------
Operating Income $322
=======
<PAGE>
Quarter Ended
March 31, 1996
--------------
Net Revenues:
Discount Revenue $1,141
Net Card Fees 421
Travel Commissions and Fees 325
Interest and Dividends 191
Other Revenues 424
-------
2,502
-------
Lending:
Finance Charge Revenue 404
Interest Expense 129
-------
Net Finance Charge Revenue 275
-------
Total Net Revenues 2,777
-------
Expenses:
Marketing and Promotion 200
Provision for Losses and Claims:
Charge Card 210
Lending 188
Other 24
-------
Total 422
-------
Interest Expense:
Charge Card 167
Other 95
-------
Total 262
Net Discount Expense 126
Human Resources 704
Other Operating Expenses 647
-------
Total Expenses 2,361
-------
Pretax Income 416
Income Tax Provision 130
-------
Operating Income $286
=======
<PAGE>
(Preliminary) Travel Related Services
-----------------------
Statement of Income
-------------------
(Unaudited, Managed Asset Basis)
(Dollars in millions)
Quarter Ended
March 31, 1997
--------------
Net Revenues:
Discount Revenue $1,306
Net Card Fees 405
Travel Commissions and Fees 336
Interest and Dividends 132
Other Revenues 453
-------
2,632
-------
Lending:
Finance Charge Revenue 478
Interest Expense 160
-------
Net Finance Charge Revenue 318
-------
Total Net Revenues 2,950
-------
Expenses:
Marketing and Promotion 202
Provision for Losses and Claims:
Charge Card 252
Lending 222
Other 24
-------
Total 498
-------
Interest Expense:
Charge Card 227
Other 35
-------
Total 262
Human Resources 749
Other Operating Expenses 790
-------
Total Expenses 2,501
-------
Pretax Income 449
Income Tax Provision 134
-------
Operating Income $315
=======
<PAGE>
Quarter Ended
December 31, 1996
-----------------
Net Revenues:
Discount Revenue $1,380
Net Card Fees 415
Travel Commissions and Fees 380
Interest and Dividends 156
Other Revenues 450
-------
2,781
-------
Lending:
Finance Charge Revenue 463
Interest Expense 150
-------
Net Finance Charge Revenue 313
-------
Total Net Revenues 3,094
-------
Expenses:
Marketing and Promotion 268
Provision for Losses and Claims:
Charge Card 199
Lending 235
Other 22
-------
Total 456
-------
Interest Expense:
Charge Card 234
Other 65
-------
Total 299
Human Resources 794
Other Operating Expenses 874
-------
Total Expenses 2,691
-------
Pretax Income 403
Income Tax Provision 104
-------
Operating Income $299*
=======
* Excludes restructuring charge of $125 million after-tax
($196 million pretax).
<PAGE>
Quarter Ended
September 30, 1996
------------------
Net Revenues:
Discount Revenue $1,256
Net Card Fees 414
Travel Commissions and Fees 354
Interest and Dividends 167
Other Revenues 463
-------
2,654
-------
Lending:
Finance Charge Revenue 420
Interest Expense 139
-------
Net Finance Charge Revenue 281
-------
Total Net Revenues 2,935
-------
Expenses:
Marketing and Promotion 278
Provision for Losses and Claims:
Charge Card 223
Lending 118
Other 28
-------
Total 369
-------
Interest Expense:
Charge Card 218
Other 72
-------
Total 290
Human Resources 764
Other Operating Expenses 793
-------
Total Expenses 2,494
-------
Pretax Income 441
Income Tax Provision 118
-------
Operating Income $323
=======
<PAGE>
Quarter Ended
June 30, 1996
-------------
Net Revenues:
Discount Revenue $1,247
Net Card Fees 414
Travel Commissions and Fees 362
Interest and Dividends 211
Other Revenues 409
-------
2,643
-------
Lending:
Finance Charge Revenue 403
Interest Expense 130
-------
Net Finance Charge Revenue 273
-------
Total Net Revenues 2,916
-------
Expenses:
Marketing and Promotion 252
Provision for Losses and Claims:
Charge Card 302
Lending 138
Other 26
-------
Total 466
-------
Interest Expense:
Charge Card 212
Other 114
-------
Total 326
Human Resources 721
Other Operating Expenses 692
-------
Total Expenses 2,457
-------
Pretax Income 459
Income Tax Provision 137
-------
Operating Income $322
=======
<PAGE>
Quarter Ended
March 31, 1996
--------------
Net Revenues:
Discount Revenue $1,141
Net Card Fees 421
Travel Commissions and Fees 325
Interest and Dividends 191
Other Revenues 393
-------
2,471
-------
Lending:
Finance Charge Revenue 404
Interest Expense 129
-------
Net Finance Charge Revenue 275
-------
Total Net Revenues 2,746
-------
Expenses:
Marketing and Promotion 200
Provision for Losses and Claims:
Charge Card 264
Lending 188
Other 24
-------
Total 476
-------
Interest Expense:
Charge Card 208
Other 95
-------
Total 303
Human Resources 704
Other Operating Expenses 647
-------
Total Expenses 2,330
-------
Pretax Income 416
Income Tax Provision 130
-------
Operating Income $286
=======
<PAGE>
(Preliminary) Travel Related Services
-----------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Amounts in billions, except percentages and where indicated)
Quarter Ended
March 31, 1997
--------------
Total Cards in Force (millions):
United States 29.6
Outside the United States 12.3
------
Total 41.9
======
Basic Cards in Force (millions):
United States 22.9
Outside the United States 9.6
------
Total 32.5
======
Card Billed Business:
United States $34.6
Outside the United States 13.3
------
Total $47.9
======
Average Discount Rate* 2.75%
Average Basic Cardmember
Spending (dollars)* $1,498
Average Fee per Card (dollars)* $39
Travel Sales $3.9
Travel Commissions and Fees/Sales** 8.6%
Travelers Cheque Sales $5.1
Average Travelers Cheques Outstanding $5.8
Investments $6.1
Travelers Cheques Outstanding $5.8
Total Debt $22.1
Shareholder's Equity $4.8
Return on Average Equity*** 26.3%
Return on Average Assets*** 2.9%
<PAGE>
Quarter Ended
December 31, 1996
-----------------
Total Cards in Force (millions):
United States 29.2
Outside the United States 12.3
------
Total 41.5
======
Basic Cards in Force (millions):
United States 22.5
Outside the United States 9.6
------
Total 32.1
======
Card Billed Business:
United States $36.2
Outside the United States 14.9
------
Total $51.1
======
Average Discount Rate* 2.72%
Average Basic Cardmember
Spending (dollars)* $1,633
Average Fee per Card (dollars)* $41
Travel Sales $4.3
Travel Commissions and Fees/Sales** 8.8%
Travelers Cheque Sales $5.5
Average Travelers Cheques Outstanding $6.0
Investments $6.5
Travelers Cheques Outstanding $5.8
Total Debt $23.4
Shareholder's Equity $4.7
Return on Average Equity*** 25.6%
Return on Average Assets*** 2.8%
Quarter Ended
September 30, 1996
------------------
Total Cards in Force (millions):
United States 28.4
Outside the United States 11.9
------
Total 40.3
======
Basic Cards in Force (millions):
United States 21.7
Outside the United States 9.4
------
Total 31.1
======
Card Billed Business:
United States $32.7
Outside the United States 13.2
------
Total $45.9
======
<PAGE>
Average Discount Rate* 2.75%
Average Basic Cardmember
Spending (dollars)* $1,512
Average Fee per Card (dollars)* $43
Travel Sales $3.8
Travel Commissions and Fees/Sales** 9.3%
Travelers Cheque Sales $8.6
Average Travelers Cheques Outstanding $6.6
Investments $6.5
Travelers Cheques Outstanding $6.3
Total Debt $21.8
Shareholder's Equity $5.0
Return on Average Equity*** 25.1%
Return on Average Assets*** 2.7%
Quarter Ended
June 30, 1996
-------------
Total Cards in Force (millions):
United States 27.5
Outside the United States 11.8
------
Total 39.3
======
Basic Cards in Force (millions):
United States 20.9
Outside the United States 9.3
------
Total 30.2
======
Card Billed Business:
United States $32.6
Outside the United States 13.2
------
Total $45.8
======
Average Discount Rate* 2.74%
Average Basic Cardmember
Spending (dollars)* $1,545
Average Fee per Card (dollars)* $43
Travel Sales $4.0
Travel Commissions and Fees/Sales** 9.1%
Travelers Cheque Sales $6.7
Average Travelers Cheques Outstanding $6.1
Investments $9.0
Travelers Cheques Outstanding $6.6
Total Debt $21.9
Shareholder's Equity $4.9
Return on Average Equity*** 24.8%
Return on Average Assets*** 2.6%
<PAGE>
Quarter Ended
March 31, 1996
--------------
Total Cards in Force (millions):
United States 27.1
Outside the United States 11.6
------
Total 38.7
======
Basic Cards in Force (millions):
United States 20.5
Outside the United States 9.2
------
Total 29.7
======
Card Billed Business:
United States $29.8
Outside the United States 11.8
------
Total $41.6
======
Average Discount Rate* 2.76%
Average Basic Cardmember
Spending (dollars)* $1,427
Average Fee per Card (dollars)* $44
Travel Sales $3.6
Travel Commissions and Fees/Sales** 9.0%
Travelers Cheque Sales $5.3
Average Travelers Cheques Outstanding $5.7
Investments $9.0
Travelers Cheques Outstanding $5.9
Total Debt $23.1
Shareholder's Equity $4.9
Return on Average Equity*** 24.7%
Return on Average Assets*** 2.5%
* Computed excluding Cards issued by strategic alliance
partners and independent operators as well as business
billed on those Cards.
** Computed from information provided herein.
***Excluding the effect of SFAS #115 and the fourth quarter 1996
restructuring charge of $125 million after-tax.
<PAGE>
(Preliminary) Travel Related Services
-----------------------
Selected Statistical Information (continued)
--------------------------------------------
(Unaudited)
(Amounts in billions, except percentages and where indicated)
Quarter Ended
March 31, 1997
--------------
Owned and Managed Charge Card
Receivables:
Total Receivables $21.2
90 Days Past Due as a % of Total 3.5%
Loss Reserves (millions) $921
% of Receivables 4.3%
% of 90 Days Past Due 124%
Net Loss Ratio 0.50%
Owned and Managed U.S. Cardmember
Lending:
Total Loans $12.9
Past Due Loans as a % of Total:
30-89 Days 2.6%
90+ Days 1.0%
Loss Reserves (millions):
Beginning Balance $488
Provision 201
Net Charge-Offs/Other (156)
------
Ending Balance $533
======
% of Loans 4.1%
% of Past Due 115%
Average Loans $12.8
Net Write-Off Rate 5.1%
Net Interest Yield 8.7%
<PAGE>
Quarter Ended
December 31, 1996
-----------------
Owned and Managed Charge Card
Receivables:
Total Receivables $22.5
90 Days Past Due as a % of Total 3.2%
Loss Reserves (millions) $923
% of Receivables 4.1%
% of 90 Days Past Due 128%
Net Loss Ratio 0.51%
Owned and Managed U.S. Cardmember
Lending:
Total Loans $12.7
Past Due Loans as a % of Total:
30-89 Days 2.4%
90+ Days 0.9%
Loss Reserves (millions):
Beginning Balance $427
Provision 220
Net Charge-Offs/Other (159)
------
Ending Balance $488
======
% of Loans 3.8%
% of Past Due 117%
Average Loans $12.1
Net Write-Off Rate 5.2%
Net Interest Yield 8.6%
Quarter Ended
September 30, 1996
------------------
Owned and Managed Charge Card
Receivables:
Total Receivables $20.7
90 Days Past Due as a % of Total 3.6%
Loss Reserves (millions) $996
% of Receivables 4.8%
% of 90 Days Past Due 134%
Net Loss Ratio 0.54%
Owned and Managed U.S. Cardmember
Lending:
Total Loans $11.2
Past Due Loans as a % of Total:
30-89 Days 2.3%
90+ Days 0.9%
Loss Reserves (millions):
Beginning Balance $468
Provision 98
<PAGE>
Net Charge-Offs/Other (139)
------
Ending Balance $427
======
% of Loans 3.8%
% of Past Due 119%
Average Loans $11.0
Net Write-Off Rate 5.1%
Net Interest Yield 8.4%
Quarter Ended
June 30, 1996
-------------
Owned and Managed Charge Card
Receivables:
Total Receivables $20.6
90 Days Past Due as a % of Total 3.7%
Loss Reserves (millions) $1,054
% of Receivables 5.1%
% of 90 Days Past Due 138%
Net Loss Ratio 0.51%
Owned and Managed U.S. Cardmember
Lending:
Total Loans $10.5
Past Due Loans as a % of Total:
30-89 Days 2.3%
90+ Days 0.9%
Loss Reserves (millions):
Beginning Balance $483
Provision 119
Net Charge-Offs/Other (134)
------
Ending Balance $468
======
% of Loans 4.5%
% of Past Due 135%
Average Loans $10.5
Net Write-Off Rate 5.2%
Net Interest Yield 8.9%
Quarter Ended
March 31, 1996
--------------
Owned and Managed Charge Card
Receivables:
Total Receivables $18.8
90 Days Past Due as a % of Total 4.1%
Loss Reserves (millions) $991
% of Receivables 5.3%
% of 90 Days Past Due 129%
Net Loss Ratio 0.51%
<PAGE>
Owned and Managed U.S. Cardmember
Lending:
Total Loans $10.2
Past Due Loans as a % of Total:
30-89 Days 2.5%
90+ Days 1.0%
Loss Reserves (millions):
Beginning Balance $443
Provision 170
Net Charge-Offs/Other (130)
------
Ending Balance $483
======
% of Loans 4.7%
% of Past Due 136%
Average Loans $10.2
Net Write-Off Rate 5.2%
Net Interest Yield 9.4%
<PAGE>
(Preliminary) American Express Financial Advisors
-----------------------------------
Statement of Income
-------------------
(Unaudited)
(Dollars in millions)
Quarter Ended
March 31,
------------------ Percentage
1997 1996 Inc/(Dec)
---- ---- ----------
Revenues:
Investment Income $570 $569 0.1%
Management and Distribution Fees 331 279 18.6
Other Revenues 183 155 18.4
------ ------
Total Revenues 1,084 1,003 8.1
------ ------
Expenses:
Provision for Losses and Benefits:
Annuities 305 298 2.6
Insurance 104 109 (4.0)
Investment Certificates 42 53 (21.8)
------ ------
Total 451 460 (1.8)
Human Resources 300 246 21.6
Other Operating Expenses 97 101 (4.0)
------ ------
Total Expenses 848 807 5.1
------ ------
Pretax Income 236 196 20.5
Income Tax Provision 79 66 19.4
------ ------
Net Income $157 $130 21.0
====== ======
<PAGE>
(Preliminary) American Express Financial Advisors
-----------------------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Dollars in millions, except where indicated)
Quarter Ended
March 31,
---------------- Percentage
1997 1996 Inc/(Dec)
------- ------ ---------
Revenues, Net of Provisions $633 $544 16.4%
Investments (billions) $28.9 $28.2 2.3
Client Contract Reserves (billions) $29.1 $28.6 1.8
Shareholder's Equity (billions) $3.1 $2.9 6.4
Return on Average Equity* 20.8% 19.6% -
Life Insurance in Force (billions) $69.2 $61.2 13.1
Assets Owned and/or Managed (billions):
Assets managed for institutions $36.4 $32.7 11.4
Assets owned and managed for individuals:
Owned Assets:
Separate Account Assets 18.4 15.8 16.8
Other Owned Assets 34.9 33.2 4.9
----- ------
Total Owned Assets 53.3 49.0 8.7
Managed Assets 60.0 51.4 16.6
----- ------
Total $149.7 $133.1 12.4
===== ======
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $(544) $458 -
Other Owned Assets $(244) $(283) (13.8)
Total Managed Assets $(1,624) $1,165 -
Sales of Selected Products:
Mutual Funds $4,029 $3,569 12.9
Annuities $870 $1,155 (24.6)
Investment Certificates $190 $136 40.1
Life and Other Insurance Sales $103 $95 8.1
Number of Financial Advisors 8,426 7,954 5.9
Fees From Financial Plans(thousands) $13,336 $11,623 14.7
Product Sales Generated from
Financial Plan as a Percentage
of Total Sales 64.6% 63.3% -
* Excluding the effect of SFAS #115.
<PAGE>
(Preliminary) American Express Financial Advisors
-----------------------------------
Statement of Income
-------------------
(Unaudited)
(Dollars in millions)
Quarter Ended
March 31, 1997
--------------
Revenues:
Investment Income $570
Management and Distribution Fees 331
Other Revenues 183
-------
Total Revenues 1,084
-------
Expenses:
Provision for Losses and Benefits:
Annuities 305
Insurance 104
Investment Certificates 42
-------
Total 451
Human Resources 300
Other Operating Expenses 97
-------
Total Expenses 848
-------
Pretax Income 236
Income Tax Provision 79
-------
Net Income $157
=======
Quarter Ended
December 31, 1996
-----------------
Revenues:
Investment Income $576
Management and Distribution Fees 327
Other Revenues 166
-------
Total Revenues 1,069
-------
Expenses:
Provision for Losses and Benefits:
Annuities 309
Insurance 108
Investment Certificates 51
-------
Total 468
<PAGE>
Human Resources 277
Other Operating Expenses 96
-------
Total Expenses 841
-------
Pretax Income 228
Income Tax Provision 73
-------
Net Income $155
======
Quarter Ended
September 30, 1996
------------------
Revenues:
Investment Income $560
Management and Distribution Fees 302
Other Revenues 159
-------
Total Revenues 1,021
-------
Expenses:
Provision for Losses and Benefits:
Annuities 303
Insurance 102
Investment Certificates 45
-------
Total 450
Human Resources 259
Other Operating Expenses 82
-------
Total Expenses 791
-------
Pretax Income 230
Income Tax Provision 74
-------
Net Income $156
=======
Quarter Ended
June 30, 1996
-------------
Revenues:
Investment Income $562
Management and Distribution Fees 296
Other Revenues 159
-------
Total Revenues 1,017
-------
Expenses:
Provision for Losses and Benefits:
Annuities 298
Insurance 102
Investment Certificates 48
-------
Total 448
<PAGE>
Human Resources 252
Other Operating Expenses 86
-------
Total Expenses 786
-------
Pretax Income 231
Income Tax Provision 78
-------
Net Income $153
=======
Quarter Ended
March 31, 1996
--------------
Revenues:
Investment Income $569
Management and Distribution Fees 279
Other Revenues 155
-------
Total Revenues 1,003
-------
Expenses:
Provision for Losses and Benefits:
Annuities 298
Insurance 109
Investment Certificates 53
-------
Total 460
Human Resources 246
Other Operating Expenses 101
-------
Total Expenses 807
-------
Pretax Income 196
Income Tax Provision 66
-------
Net Income $130
=======
<PAGE>
(Preliminary) American Express Financial Advisors
-----------------------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Dollars in millions, except where indicated)
Quarter Ended
March 31, 1997
--------------
Revenues, Net of Provisions $633
Investments (billions) $28.9
Client Contract Reserves (billions) $29.1
Shareholder's Equity (billions) $3.1
Return on Average Equity* 20.8%
Life Insurance in Force (billions) $69.2
Assets Owned and/or Managed (billions):
Assets managed for institutions $36.4
Assets owned and managed for individuals:
Owned Assets:
Separate Account Assets 18.4
Other Owned Assets 34.9
-------
Total Owned Assets 53.3
Managed Assets 60.0
-------
Total $149.7
=======
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $(544)
Other Owned Assets $(244)
Total Managed Assets $(1,624)
Sales of Selected Products:
Mutual Funds $4,029
Annuities $870
Investment Certificates $190
Life and Other Insurance Sales $103
Number of Financial Advisors 8,426
Fees From Financial Plans (thousands) $13,336
Product Sales Generated from Financial
Plans as a Percentage of Total Sales 64.6%
<PAGE>
Quarter Ended
December 31, 1996
-----------------
Revenues, Net of Provisions $601
Investments (billions) $28.6
Client Contract Reserves (billions) $28.9
Shareholder's Equity (billions) $3.2
Return on Average Equity* 20.4%
Life Insurance in Force (billions) $67.3
Assets Owned and/or Managed (billions):
Assets managed for institutions $37.3
Assets owned and managed for individuals:
Owned Assets:
Separate Account Assets 18.5
Other Owned Assets 34.2
-------
Total Owned Assets 52.7
Managed Assets 59.4
-------
Total $149.4
=======
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $735
Other Owned Assets $126
Total Managed Assets $3,264
Sales of Selected Products:
Mutual Funds $3,686
Annuities $1,085
Investment Certificates $233
Life and Other Insurance Sales $131
Number of Financial Advisors 8,340
Fees From Financial Plans (thousands) $13,205
Product Sales Generated from Financial
Plans as a Percentage of Total Sales 64.9%
<PAGE>
Quarter Ended
September 30, 1996
------------------
Revenues, Net of Provisions $570
Investments (billions) $28.2
Client Contract Reserves (billions) $28.6
Shareholder's Equity (billions) $3.0
Return on Average Equity* 20.2%
Life Insurance in Force (billions) $65.2
Assets Owned and/or Managed (billions):
Assets managed for institutions $35.8
Assets owned and managed for individuals:
Owned Assets:
Separate Account Assets 17.5
Other Owned Assets 33.3
-------
Total Owned Assets 50.8
Managed Assets 56.3
-------
Total $142.9
=======
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $354
Other Owned Assets $56
Total Managed Assets $2,380
Sales of Selected Products:
Mutual Funds $3,313
Annuities $946
Investment Certificates $182
Life and Other Insurance Sales $109
Number of Financial Advisors 8,092
Fees From Financial Plans (thousands) $11,660
Product Sales Generated from Financial
Plans as a Percentage of Total Sales 64.7%
<PAGE>
Quarter Ended
June 30, 1996
-------------
Revenues, Net of Provisions $570
Investments (billions) $27.9
Client Contract Reserves (billions) $28.3
Shareholder's Equity (billions) $2.9
Return on Average Equity* 19.9%
Life Insurance in Force (billions) $63.0
Assets Owned and/or Managed (billions):
Assets managed for institutions $34.8
Assets owned and managed for individuals:
Owned Assets:
Separate Account Assets 16.7
Other Owned Assets 33.0
-------
Total Owned Assets 49.7
Managed Assets 54.0
-------
Total $138.5
=======
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $390
Other Owned Assets $(131)
Total Managed Assets $2,254
Sales of Selected Products:
Mutual Funds $3,762
Annuities $1,125
Investment Certificates $186
Life and Other Insurance Sales $113
Number of Financial Advisors 7,997
Fees From Financial Plans (thousands) $11,584
Product Sales Generated from Financial
Plans as a Percentage of Total Sales 62.9%
<PAGE>
Quarter Ended
March 31, 1996
--------------
Revenues, Net of Provisions $544
Investments (billions) $28.2
Client Contract Reserves (billions) $28.6
Shareholder's Equity (billions) $2.9
Return on Average Equity* 19.6%
Life Insurance in Force (billions) $61.2
Assets Owned and/or Managed (billions):
Assets managed for institutions $32.7
Assets owned and managed for individuals:
Owned Assets:
Separate Account Assets 15.8
Other Owned Assets 33.2
-------
Total Owned Assets 49.0
Managed Assets 51.4
-------
Total $133.1
=======
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $458
Other Owned Assets $(283)
Total Managed Assets $1,165
Sales of Selected Products:
Mutual Funds $3,569
Annuities $1,155
Investment Certificates $136
Life and Other Insurance Sales $95
Number of Financial Advisors 7,954
Fees From Financial Plans (thousands) $11,623
Product Sales Generated from Financial
Plans as a Percentage of Total Sales 63.3%
* Excluding the effect of SFAS #115.
<PAGE>
(Preliminary) American Express Bank
---------------------
Statement of Income
-------------------
(Unaudited)
(Dollars in millions)
Quarter Ended
March 31,
------------- Percentage
1997 1996 Inc/(Dec)
---- ---- ----------
Net Revenues:
Interest Income $218 $211 3.2%
Interest Expense 136 134 1.6%
------ ------
Net Interest Income 82 77 6.1%
Commissions, Fees and
Other Revenues 52 49 7.2%
Foreign Exchange Income 19 20 (2.3%)
------ ------
Total Net Revenues 153 146 5.3%
------ ------
Provision for Credit Losses 2 4 (45.4%)
------ ------
Expenses:
Human Resources 58 56 3.2%
Other Operating Expenses 61 57 8.3%
------ ------
Total Expenses 119 113 5.7%
------ ------
Pretax Income 32 29 10.5%
Income Tax Provision 12 10 14.7%
------ ------
Net Income $20 $19 8.2%
====== ======
<PAGE>
(Preliminary) American Express Bank
---------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Dollars in millions, except where indicated)
Quarter Ended
March 31,
---------------- Percentage
1997 1996 Inc/(Dec)
------ ----- ----------
Investments (billions) $2.8 $2.4 17.5%
Total Loans (billions) $6.1 $5.3 14.2%
Reserve for Credit Losses $131 $110 19.3%
Total Nonperforming Loans $46 $35 31.0%
Other Real Estate Owned $35 $43 (19.8%)
Deposits (billions) $9.1 $8.1 12.3%
Shareholder's Equity $787 $746 5.5%
Return on Average Assets* 0.69% 0.64% -
Return on Average Common Equity* 11.14% 10.57% -
Risk-Based Capital Ratios:
Tier 1 8.7% 9.0% -
Total 11.8% 12.9% -
Leverage Ratio 5.6% 5.5% -
* Excluding the effect of SFAS #115.
<PAGE>
(Preliminary) American Express Bank
---------------------
Statement of Income
-------------------
(Unaudited)
(Dollars in millions)
Quarter Ended
March 31, 1997
--------------
Net Revenues:
Interest Income $218
Interest Expense 136
------
Net Interest Income 82
Commissions, Fees and Other Revenues 52
Foreign Exchange Income 19
------
Total Net Revenues 153
------
Provision for Credit Losses 2
------
Expenses:
Human Resources 58
Other Operating Expenses 61
------
Total Expenses 119
------
Pretax Income 32
Income Tax Provision 12
------
Net Income $20
======
Quarter Ended
December 31, 1996
-----------------
Net Revenues:
Interest Income $223
Interest Expense 140
------
Net Interest Income 83
Commissions, Fees and Other Revenues 57
Foreign Exchange Income 16
------
Total Net Revenues 156
------
Provision for Credit Losses 10
------
Expenses:
Human Resources 56
Other Operating Expenses 64
------
Total Expenses 120
------
Pretax Income 26
Income Tax Provision 9
------
Net Income $17
======
<PAGE>
Quarter Ended
September 30, 1996
------------------
Net Revenues:
Interest Income $206
Interest Expense 128
------
Net Interest Income 78
Commissions, Fees and Other Revenues 57
Foreign Exchange Income 16
------
Total Net Revenues 151
------
Provision for Credit Losses 5
------
Expenses:
Human Resources 59
Other Operating Expenses 59
------
Total Expenses 118
------
Pretax Income 28
Income Tax Provision 10
------
Net Income $18
======
Quarter Ended
June 30, 1996
-------------
Net Revenues:
Interest Income $207
Interest Expense 135
------
Net Interest Income 72
Commissions, Fees and Other Revenues 48
Foreign Exchange Income 20
------
Total Net Revenues 140
------
Provision for Credit Losses 4
------
Expenses:
Human Resources 54
Other Operating Expenses 60
------
Total Expenses 114
------
Pretax Income 22
Income Tax Provision 8
------
Net Income $14
======
<PAGE>
Quarter Ended
March 31, 1996
--------------
Net Revenues:
Interest Income $211
Interest Expense 134
------
Net Interest Income 77
Commissions, Fees and Other Revenues 49
Foreign Exchange Income 20
------
Total Net Revenues 146
------
Provision for Credit Losses 4
------
Expenses:
Human Resources 56
Other Operating Expenses 57
------
Total Expenses 113
------
Pretax Income 29
Income Tax Provision 10
------
Net Income $19
======
<PAGE>
(Preliminary) American Express Bank
---------------------
Selected Statistical Information
--------------------------------
(Unaudited)
(Dollars in millions, except where indicated)
Quarter Ended
March 31,1997
-------------
Investments (billions) $2.8
Total Loans (billions) $6.1
Reserve for Credit Losses $131
Total Nonperforming Loans $46
Other Real Estate Owned $35
Deposits (billions) $9.1
Shareholder's Equity $787
Return on Average Assets* 0.69%
Return on Average Common Equity* 11.14%
Risk-Based Capital Ratios:
Tier 1 8.7%
Total 11.8%
Leverage Ratio 5.6%
Quarter Ended
December 31, 1996
-----------------
Investments (billions) $2.8
Total Loans (billions) $5.9
Reserve for Credit Losses $117
Total Nonperforming Loans $35
Other Real Estate Owned $36
Deposits (billions) $8.7
Shareholder's Equity $799
Return on Average Assets* 0.55%
Return on Average Common Equity* 8.89%
Risk-Based Capital Ratios:
Tier 1 8.8%
Total 12.5%
Leverage Ratio 5.6%
<PAGE>
Quarter Ended
September 30, 1996
------------------
Investments (billions) $2.5
Total Loans (billions) $5.6
Reserve for Credit Losses $116
Total Nonperforming Loans $31
Other Real Estate Owned $34
Deposits (billions) $8.4
Shareholder's Equity $777
Return on Average Assets* 0.62%
Return on Average Common Equity* 9.61%
Risk-Based Capital Ratios:
Tier 1 9.0%
Total 12.8%
Leverage Ratio 6.0%
Quarter Ended
June 30, 1996
-------------
Investments (billions) $2.1
Total Loans (billions) $5.5
Reserve for Credit Losses $113
Total Nonperforming Loans $38
Other Real Estate Owned $48
Deposits (billions) $7.8
Shareholder's Equity $755
Return on Average Assets* 0.49%
Return on Average Common Equity* 7.83%
Risk-Based Capital Ratios:
Tier 1 9.1%
Total 12.9%
Leverage Ratio 5.8%
Quarter Ended
March 31, 1996
--------------
Investments (billions) $2.4
Total Loans (billions) $5.3
Reserve for Credit Losses $110
Total Nonperforming Loans $35
Other Real Estate Owned $43
Deposits (billions) $8.1
Shareholder's Equity $746
Return on Average Assets* 0.64%
Return on Average Common Equity* 10.57%
Risk-Based Capital Ratios:
Tier 1 9.0%
Total 12.9%
Leverage Ratio 5.5%
* Excluding the effect of SFAS #115.
<PAGE>
(b) Earnings Conference Call Summary
First Quarter 1997
Earnings Conference Call
Summary
The enclosed summary should be read in conjunction with the text and statistical
tables included in American Express Company's (the "Company" or "AXP") First
Quarter 1997 Earnings Release.
This summary includes certain forward-looking statements, indicated by an
asterisk, which are subject to risks and uncertainties and speak only as of the
date on which they are made. Important factors that could cause actual results
to differ materially from these forward-looking statements, as well as affect
the Company's ability to achieve its financial and other goals, are set forth
on pages 29 and 30 of the Company's 1996 10-K Annual Report filed with the
Securities and Exchange Commission.
<PAGE>
FIRST QUARTER 1997
HIGHLIGHTS
. 1Q '97 was the seventeenth consecutive quarter AXP met, or exceeded,
targets for EPS growth (17.5% increase) and ROE (23%).
. The corporate strategy progressed with new product and service offerings.
- CARD/NETWORK - Network agreements were signed with Credomatic in
Central America and Sony Card Entertainment in Brazil. In the U.S.,
we launched Corporate Optima Platinum Card for small businesses and
Platinum Optima Card for consumers. A joint venture was formed with
AT&T Capital to provide equipment financing to small business
owners.
- INTERNATIONAL - A co-branded corporate card with Credit Lyonnais in
France was announced. A co-branded AIR MILES credit card in
Canada and an AXP credit card in Taiwan were launched.
- FINANCIAL SERVICES - Tax & Business Services doubled in size through
the acquisition of several U.S. accounting firms, including
divisions of Checkers, Simon & Rosner LLP, a top 30 accounting firm
in Chicago. AXP is now one of the top 15 U.S. accounting firms.
. Strong growth was recorded in a number of key areas:
- Total cards in force increased 8% and basic cards in force by 10%;
- Worldwide billed business rose 15%;
- Worldwide lending balances of $13.9B were up 25%;
- AEFA assets owned and managed grew 12% despite $2.4B of market
depreciation during quarter.
. 1Q '97 credit loss indicator trends continue to compare favorably with the
industry.
. Recently issued data from Nilson Report indicate that in 1996, for first
time in a decade, AXP increased share slightly in the U.S., as card
spending (excluding cash transactions and debit cards) grew faster than
Visa and Mastercard.
<PAGE>
AMERICAN EXPRESS COMPANY
FIRST QUARTER 1997 OVERVIEW
CONSOLIDATED
(millions, except per share amounts) Quarter Ended Percentage
March 31, Inc/(Dec)
------------- -----------
1997 1996
Consolidated revenues $4,164 $3,909 6.5%
====== ======
Net income $454 $396 14.6%
====== ======
EPS $0.94 $0.80 17.5%
====== ======
. CONSOLIDATED REVENUES:
- Revenue grew 6.5%, still below our target range of 8-10%. The
benefits of strong card spending and greater loan balances and
managed assets continued to be somewhat obscured by the revenue
sacrifices resulting from our lending business building strategy,
as well as declines in card fees and investment income.
-- We continue to believe the pipeline building of new and deeper
customer relationships should form a solid basis for future
revenue generation.*
- The 3Q '96 elimination of asset gross-ups at Centurion Bank
negatively affected year-over-year comparisons by $36MM. Revenues
rose approximately 8% excluding this item and the impact of
securitizing a portion of the cardmember receivable and lending
portfolios.
- The implementation of SFAS 125 had an insignificant effect on the
Company's results of operations and financial condition.
. CONSOLIDATED EXPENSES: Increased 5.4% due to higher human resource and
operating expenses.
. AVERAGE SHARES: 482.1MM versus 490.6MM in 1Q '96 and 482.1MM in 4Q '96.
- Actual share activity:
1Q '97 4Q '96 1Q '96
------ ------ ------
Shares outstanding - beginning of period 472.9 473.5 483.1
Repurchase of common shares (5.2) (2.8) (7.2)
Employee benefit plans, compensation
and other 3.2 2.2 3.2
----- ----- -----
Shares outstanding - end of period 470.9 472.9 479.1
===== ===== =====
- 65.7MM shares have been acquired since the inception of repurchase
programs in September, 1994. Over the past twelve months, 20.2MM
shares were repurchased.
- Average shares were flat versus 4Q '96 as a higher average share
price resulted in greater common stock equivalents.
<PAGE>
AMERICAN EXPRESS COMPANY
FIRST QUARTER 1997 OVERVIEW
TRAVEL RELATED SERVICES
(preliminary) STATEMENT OF INCOME
(unaudited, managed asset basis)
(millions) Quarter Ended Percentage
March 31, Inc/(Dec)
------------------- -----------
1997 1996
Net revenues:
Discount revenue $1,306 $1,141 15%
Net card fees 405 421 (4)
Travel commissions and fees 336 325 4
Interest and dividends 132 191 (31)
Other revenues 453 393 15
------ ------
2,632 2,471 7
------ ------
Lending:
Finance charge revenue 478 404 18
Interest expense 160 129 24
------ ------
Net finance charge revenue 318 275 16
------ ------
Total net revenues 2,950 2,746 7
------ ------
Expenses:
Marketing and promotion 202 200 1
Provision for losses and claims:
Charge card 252 264 (4)
Lending 222 188 18
Other 24 24 (4)
------ ------
Total 498 476 5
------ ------
Interest expense:
Charge card 227 208 10
Other 35 95 (63)
------ ------
Total 262 303 (14)
------ ------
Human resources 749 704 6
Other operating expenses 790 647 22
------ ------
Total expenses 2,501 2,330 7
------ ------
Pretax income 449 416 8
Income tax provision 134 130 4
------ ------
Net income $315 $286 10
====== ======
. Revenues benefited from strong growth in worldwide billed business and
cardmember loans outstanding, partially offset by lower card fees, yields
on loans and interest revenues.
. 1996 results reflect a $27MM restatement of "Travel Commissions and Fees"
revenue and "Other Operating Expenses". AXP's practice was to report cost
reimbursements related to travel management fee-based contracts as a
credit in "Other Operating Expenses" instead of as travel revenue.
Beginning 1Q '97, these reimbursements are reported as revenue in "Travel
Commissions and Fees" for better consistency with our reporting for travel
management commission-based contracts where all the client and supplier
payments that offset the cost of providing travel services are included.
This change did not affect income.
. Excluding the effect of the asset gross-ups at Centurion Bank, revenues
rose 9%.
. The pre-tax margin increased slightly as revenue growth and a decrease in
interest expense were partially offset by higher provisions for credit
losses and human resource and operating expenses.
. The effective tax rate decreased to 30% in 1Q '97 from 31% in 1Q '96.
. Note that the average discount rate, spending per basic card in force and
card fee data included in the following discussion and the earning release
statistical attachments have been restated to eliminate the distorting
effects of non-proprietary activities. Reported cards in force and billed
business will continue to include alliance related cards and volumes. The
discount rate, spending per card and card fee statistics will be computed
using proprietary data only to present more clearly the results of our
operations.
<PAGE> AMERICAN EXPRESS COMPANY
FIRST QUARTER 1997 OVERVIEW
TRAVEL RELATED SERVICES (Cont'd)
. DISCOUNT REVENUE: Higher billed business and stable discount rates
resulted in a 15% increase in discount revenue.
- The average discount rate of 2.75% in 1Q '97 was down 1BP from 2.76%
in 1Q '96 but up 3BP from 2.72% in 4Q '96 due to mix of business
variances between the periods.
-- Merchant pressure on discount rates is always present, but we
believe the AXP value proposition is strong. However, changes
in the mix of business (e.g., growing acceptance at
supermarkets, discounters and colleges), the continued shift
to electronic data capture, volume related pricing discounts,
and selective repricing initiatives will probably result in
some rate erosion over time.*
Quarter Ended Percentage
March 31, Inc/(Dec)
------------------ ----------
1997 1996
---- ----
Card billed business (billions):
United States $34.6 $29.8 17%
Outside the United States 13.3 11.8 12
----- -----
Total $47.9 $41.6 15
===== =====
Basic cards in force (millions):
United States 22.9 20.5 12%
Outside the United States 9.6 9.2 5
----- -----
Total 32.5 29.7 10
===== =====
Spending per basic card in force (dollars) (a):
United States $1,524 $1,472 4%
Outside the United States $1,433 $1,322 8
Total $1,498 $1,427 5
(a) Proprietary card activity only.
- Billed Business: Higher spending per cardmember worldwide (due in
part to increased merchant coverage and the benefits of rewards
programs), as well as a rise in cards in force, resulted in billed
business growth of 15%.
-- U.S. spending growth per basic card in force was suppressed by
two items:
- First, we have added a substantial number of new, credit
card-related basic relationships which have not yet reached
the spending levels of our more mature products,
- Second, we now have customers with multiple basic consumer
card relationships (e.g., Green Card, plus Optima, Delta,
Hilton, Sheraton or Golf Card). While this is consistent with
AXP's strategy of capturing a larger portion of the various
household spending flows, the average spending per basic card
is diluted.
-- Excluding foreign exchange translation, billed business
outside the U.S. grew approximately 14% versus the reported
12%.
-- The retail category continues to be a particularly strong
component of worldwide business.
-- The average airline charge was up versus last year, and volume
was strong.
. NET CARD FEES: Lower card fees reflect continuing declines in consumer
charge cards and the effect of the related AXP strategy of building its
lending portfolio through the issuance of low- and no-fee credit cards.
These new product relationships take time to mature and generate their
ultimate revolving revenue benefit.
- Success in building new card relationships through our expanded
product portfolio was evident in the increase of 8.3% in cards in
force and 9.7% in basic cards in force.
- The average fee per card in force was $39 in 1Q '97 versus $44 in 1Q
'96.
<PAGE>
AMERICAN EXPRESS COMPANY
FIRST QUARTER 1997 OVERVIEW
TRAVEL RELATED SERVICES (Cont'd)
. TRAVEL COMMISSIONS AND FEES: Travel revenues were up 4% on 9% growth in
Travel sales. The declining revenue earned per dollar of sales (8.6% in
1Q '97 versus 9.0% in 1Q '96) reflects continued efforts by airlines to
reduce distribution costs and by large corporate clients to contain travel
and entertainment expenses.
. INTEREST AND DIVIDENDS: Lower interest revenue resulted in part from the
elimination of asset gross-ups at Centurion Bank caused by the
consolidation of assets from our Delaware Bank into our Utah Bank
effective 7/1/96.
- The gross-up elimination had no effect on profit as "Other Interest
Expense" declined by a like amount, but it depressed the revenue
comparison by $36MM in 1Q '97.
- Excluding the gross-up elimination effect, "Interest and Dividends"
were down 15% versus the 31% reported decline. This decrease
reflects a reduced investment pool at American Express Credit
Corporation and lower yields on our Travelers Cheque investment
portfolio.
. OTHER REVENUES: The 15% growth reflects higher fees, e.g., assessments,
on card products.
. NET FINANCE CHARGE REVENUE: Rose 16% as the benefit of 25% growth in
worldwide lending balances to $13.9B was partially offset by lower net
interest yields on the U.S. portfolio (8.7% in 1Q '97 versus 9.4% in 1Q
'96).
- The yield decline was due to a higher proportion of the portfolio on
introductory-rates versus 1Q '96. This reflects the AEFA transfer
discussed below, as well as balance growth related to our launch of
small business lending products in September, 1996.
- During the quarter, management responsibility for approximately
$300MM of consumer loans sold through AEFA was transferred back to
that subsidiary; therefore, the balances are no longer reported
within TRS. U.S. cardmember loan growth excluding these loans from
the 3/31/96 balance was 30% versus the reported 26% increase.
. MARKETING AND PROMOTION EXPENSES: Increased 1% as efforts to rationalize
spending continue.
. CHARGE CARD INTEREST EXPENSE: Higher billed business volumes versus last
year were partially offset by a lower worldwide cost of funds (down 51BP).
. OTHER INTEREST EXPENSE: The decline mirrors the decrease in "Interest
Revenue" relating to the elimination of the asset gross-up at Centurion
Bank and a lower investment pool at American Express Credit Corporation.
. HUMAN RESOURCE EXPENSES: The increase versus last year includes the
effect of 4/1/96 merit increases and substantially higher contract
programmer costs for technology related projects such as interactive
services and customized cardmember rewards.
- The employee count of 60.2K was up approximately 200 versus last
year due to business growth and global technology initiatives.
. OTHER OPERATING EXPENSES: Higher cardmember service related volume and
Membership Rewards costs contributed to the 22% increase compared with 1Q
'96.
- The $84MM decrease versus 4Q '96 is consistent with historical
seasonal trends in various expense categories.
<PAGE>
AMERICAN EXPRESS COMPANY
FIRST QUARTER 1997 OVERVIEW
TRAVEL RELATED SERVICES (Cont'd)
. CREDIT QUALITY:
- Overall, credit quality worsened somewhat in the quarter as past due
rates deteriorated from 4Q '96 levels. In light of the continuation
of a difficult industry-wide credit environment we continue to
manage credit cautiously and conservatively.
- The provision for losses for charge card products decreased 4%
versus last year reflecting declines in Latin America and the small
business area.
- The lending provision for losses increased 18% versus 1Q '96 largely
due to growth in outstanding loans.
- Reserve coverage ratios at more than 100% of past due balances
remain strong both absolutely and compared with key industry
competitors.
- WORLDWIDE CHARGE CARD:
-- Past due rates improved versus 1Q '96 but increased versus 4Q
'96 mostly reflecting the normal decline in receivable
balances from the seasonally high 4Q level created by holiday
spending. Write-off rates remained stable compared with both
1Q '96 and 4Q '96.
3/97 12/96 3/96
------- ------ ------
Write-offs, net of recoveries 0.50% 0.51% 0.51%
Past due as a % of receivables 3.5% 3.2% 4.1%
-- Reserves remained strong:
3/97 12/96 3/96
------- ------ ------
Reserves (MM) $921 $923 $991
% of receivables 4.3% 4.1% 5.3%
% of past due accounts 124% 128% 129%
- WORLDWIDE LENDING:
-- The write-off rate in 1Q '97 was marginally below the levels
in both 1Q '96 and 4Q '96, but the past due rate deteriorated
somewhat.
3/97 12/96 3/96
------- ------ ------
U. S. write-offs, net of
recoveries 5.1% 5.2% 5.2%
Past due as a % of loans 3.6% 3.3% 3.5%
-- U.S. cardmember lending reserves increased:
3/97 12/96 3/96
------- ------ ------
Reserves (MM) $533 $488 $483
% of total loans 4.1% 3.8% 4.7%
% of past due accounts 115% 117% 136%
- AXP coverage ratios continue to compare favorably with key
industry competitors and were essentially even with 4Q '96
levels.
<PAGE>
AMERICAN EXPRESS COMPANY
FIRST QUARTER 1997 OVERVIEW
AMERICAN EXPRESS FINANCIAL ADVISORS
(preliminary) STATEMENT OF INCOME
(unaudited)
(millions) Quarter Ended Percentage
March 31, Inc/(Dec)
---------------- ----------
1997 1996
---- ----
Revenues:
Investment income $570 $569 0%
Management and distribution fees 331 279 19
Other revenues 183 155 18
------ ------
Total revenues 1,084 1,003 8
------ ------
Expenses:
Provision for losses and benefits:
Annuities 305 298 3
Insurance 104 109 (4)
Investment certificates 42 53 (22)
------ ------
Total 451 460 (2)
Human resources 300 246 22
Other operating expenses 97 101 (4)
------ ------
Total expenses 848 807 5
------ ------
Pretax income 236 196 21
Income tax provision 79 66 19
------ ------
Net income $157 $130 21
====== ======
. Revenue and earnings growth reflect increased management fees from higher
managed asset levels (including separate account assets) and greater
distribution fees driven by strong mutual fund and variable annuity sales.
- The total revenue increase was suppressed by flat investment income
due to lower investment yields and a nearly flat owned investment
asset pool.
-- These results are consistent with the shift in the mix of
sales from fixed to variable return products and a lower yield
on more recent investments.
-- Revenue growth, net of provisions, was strong at +16% versus
last year.
. These improvements were partially offset by higher compensation-related
expenses.
. The effective tax rate of 33% was down slightly from 1Q '96.
. INVESTMENT INCOME:
- Average yields of 7.7% were almost unchanged from 7.8% in 1Q '96.
- Average invested assets of $29.3B were up 2% versus $28.8B in 1Q
'96.
- Insurance spreads were flat with last year, while those for
annuities were down somewhat. Certificate spreads were up
substantially versus 1Q '96 following a one-year promotional client
offering made in mid-1995. Spreads on annuities and insurance were
even with 4Q '96; those for certificates were up.
- ASSET QUALITY is strong.
-- The level of non-performing assets remained low at only 0.2%
of invested assets which was flat with last year. Reserves
cover 83% of these non-performing assets.
-- The SFAS 115 related mark-to-market adjustment on the
portfolio (reported in assets pre-tax) was ($14)MM at 3/97,
reflecting depreciation during 1Q '97 of ($244)MM. As of
3/96, the mark-to-market adjustment was $179MM.
-- Unrealized appreciation on securities held to maturity was
$116MM compared with $292MM at 3/96 and $427MM at 12/96.
<PAGE>
AMERICAN EXPRESS COMPANY
FIRST QUARTER 1997 OVERVIEW
AMERICAN EXPRESS FINANCIAL ADVISORS (Cont'd)
. MANAGEMENT AND DISTRIBUTION FEES: The increase of 19% was due to higher
(i) average assets under management (including separate account assets)
(ii) distribution fees from greater mutual fund sales and asset levels and
(iii) variable annuity sales.
- ASSETS MANAGED:
Percentage
(billions) March 31, Inc/(Dec)
------------------ -------------
1997 1996
---- ----
Assets managed for individuals $60.0 $51.4 17%
Assets managed for institutions 36.4 32.7 11
Separate account assets 18.4 15.8 17
------- ------
Total $114.8 $ 99.9 15
======= ======
- The growth in managed assets since 1Q '96 resulted from $7.2B of
market appreciation and $7.7B of net new money.
-- During 1Q '97, $1.7B of net new managed assets were added, and
market depreciation of $2.2B was recorded.
- PRODUCT SALES:
-- Mutual fund sales were at record levels, increasing 13%, as
strong equity and money market in-flows more than compensated
for flat bond fund sales. All three load categories, i.e.,
front, rear and no, had double-digit improvement versus last
year.
- At approximately 45% of the industry average, redemption rates
continued to compare favorably with the competition.
-- Overall, annuity sales were down 25% as the decrease in fixed
annuity sales more than offset a 17% increase in variable
annuities.
-- Sales of insurance products rose 8%.
-- Certificate sales were up 40%, reflecting weakness in last
year's sales.
-- Product sales generated through plans stayed strong at 65% of
total sales in 1Q '97 versus 63% in 1Q '96 and 65% in 4Q '96.
. OTHER REVENUES: Growth of 18% resulted from higher life insurance
premiums and financial planning and tax preparation fees.
- Financial Planning fees of $13.3MM were up 15% versus 1Q '96.
- Tax preparation fees rose substantially reflecting acquisitions.
. PROVISIONS FOR LOSSES AND BENEFITS: Increased annuity product provisions
were due to higher inforce levels and a flat accrual rate. Insurance
provisions were down slightly reflecting favorable claims experience in
several business lines. For certificate products, a decreased inforce
level and accrual rate resulted in a smaller overall provision.
. HUMAN RESOURCES: Expenses were up because of larger field force
compensation-related expenses caused by growth in sales and asset levels,
as well as rising home office expenses from higher average full-time
equivalent employees (+15%) within the technology and client services
organizations and from recent acquisitions.
- ADVISOR FORCE: 8,426 at 3/97; +472 planners, or 6%, versus 3/96;
+86 planners versus 12/96.
-- We remain optimistic about advisors in the pipeline as we continue
to see a steady flow of applications for Series 7 licenses.*
-- The veteran advisor retention rates remain at record levels.
-- Planner productivity was strong for the quarter; the number of
clients and accounts per client were up 6% and 4%, respectively,
versus 1Q '96.
. OTHER OPERATING EXPENSES: The 4% decrease reflects lower state insurance
guarantee assessment accruals, partially offset by higher costs related to
the outsourcing of data processing support services, increased usage of
contract programmers for technology-oriented initiatives, and greater
advertising and promotion expenditures.
<PAGE>
AMERICAN EXPRESS COMPANY
FIRST QUARTER 1997 OVERVIEW
AMERICAN EXPRESS BANK
(preliminary) STATEMENT OF INCOME
(unaudited)
(millions) Quarter Ended Percentage
March 31, Inc/(Dec)
-------------------- ----------
1997 1996
---- ----
Net revenues:
Interest income $218 $211 3%
Interest expense 136 134 2
------ ------
Net interest income 82 77 6
Commissions, fees and
other revenues 52 49 7
Foreign exchange income 19 20 (2)
------ ------
Total net revenues 153 146 5
------ ------
Provision for credit losses 2 4 (45)
------ ------
Expenses:
Human resources 58 56 3
Other operating expenses 61 57 8
------ ------
Total expenses 119 113 6
------ ------
Pretax income 32 29 11
Income tax provision 12 10 15
------ ------
Net income $20 $19 8
====== ======
. AEB continues to improve revenue generating potential within its core
businesses and to integrate further with AXP's other businesses.
. In 1Q'97, higher revenues, primarily due to increased net interest income
on greater loans and investments (rose $800MM and $400MM, respectively,
versus 3/96), were largely offset by growing operating expenses from
systems technology investments.
. Total assets of $12.7B at 3/97 were up 8% versus 3/96 reflecting growth in
both investments and loans.
- Non-performing loans of $46MM remained at a low level, and reserve
coverage of 2.9 times was strong. Other real estate owned of $35MM
was down from last year but consistent with recent quarters.
- During the quarter, a loan recovery of Peruvian LDC debt was used to
increase the reserve for credit losses.
- 8.7% Tier 1 and 11.8% total capital ratios continued in the "well
capitalized" range.
. AEB received an unfavorable court ruling relating to the collapse of BCCI
in 1991. When BCCI assets were forfeited to the Federal Government, AEB
turned over funds it held in accounts of BCCI, including approximately
$24MM in funds it claimed as setoffs against obligations of BCCI then
outstanding to AEB. The recent court ruling, in effect, denied AEB's
claims to the funds that were taken as setoffs. This matter is not
expected to have a material impact on AEB's results.**
<PAGE>
FIRST QUARTER 1997 OVERVIEW
CORPORATE AND OTHER
. The net expense of $38MM was level with the past year.
. 1Q '97 includes a $7MM pretax benefit from an earnings payout by Lehman
(related to AXP 1994 spin-off) which was fully offset by costs associated
with AXP business initiatives such as Financial Direct and Workplace
Services.
. 1Q '96 included a $46MM pretax benefit from a revenue payout by Travelers
(related to Shearson sale) which was also fully offset by costs associated
with AXP business initiatives. 1996 was the last year AXP was eligible to
receive the revenue payout.
** This is a forward-looking statement which is subject to risks and
uncertainties. Important factors that could cause results to differ
materially from the forward-looking statement include, among other things,
unanticipated events at AEB during the remainder of the year such as other
litigation and credit losses.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
AMERICAN EXPRESS COMPANY
By: /s/ Stephen P. Norman
----------------------------
Name: Stephen P. Norman
Title: Secretary
Dated: April 28, 1997
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