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Previous: AMCAP FUND INC, 24F-2NT, 1999-04-26 |
Next: VAN KAMPEN EMERGING GROWTH FUND, 497, 1999-04-26 |
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 8-K
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 22, 1999
--------------------------
AMERICAN EXPRESS COMPANY
(Exact name of registrant as specified in its charter)
--------------------------
New York 1-7657 13-4922250
- ----------------------------- ------------------------ ------------------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or Identification No.)
organization)
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>
Item 5. Other Events
On April 22, 1999, the Registrant issued a press release announcing its
first quarter earnings and distributed a 1999 First Quarter Earnings Supplement.
Such press release is filed herein as Exhibit 99.1, and such Earnings Supplement
is filed herein as Exhibit 99.2.
Item 7. Financial Statements, Pro Forma Financial Information And Exhibits
(c) Exhibits
99.1 Press release of American Express Company announcing its 1999
first quarter earnings, dated April 22, 1999.
99.2 1999 First Quarter Earnings Supplement of American
Express Company.
<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 hereunto duly authorized.
AMERICAN EXPRESS COMPANY
(REGISTRANT)
By /s/ Stephen P. Norman
---------------------
Name: Stephen P. Norman
Title: Secretary
DATE: April 23, 1999
<PAGE>
EXHIBIT INDEX
Item No. Description
- -------- -----------
99.1 Press release of American Express Company announcing its 1999
first quarter earnings, dated April 22, 1999.
99.2 1999 First Quarter Earnings Supplement of American
Express Company.
EXHIBIT 99.1
New York, April 22, 1999 -- American Express Company today reported record
first quarter net income of $575 million, up from $460 million in the same
period a year ago. Diluted earnings per share were $1.26 compared with $0.98.
Net revenues totaled $4.5 billion, up 12 percent from $4.0 billion. The
company's return on equity was 25.1 percent. The year-ago results included
several items: a credit loss provision at American Express Bank relating to its
Asia/Pacific portfolio, a gain on the sale of First Data Corporation shares and
a preferred dividend based on Lehman Brothers earnings. Excluding these items,
income increased 11 percent from $520 million and diluted earnings per share
grew 14 percent from $1.11.
The 1999 first-quarter results reflect strong earnings and revenue growth
at Travel Related Services and American Express Financial Advisors.
Due to a change in accounting rules, the company is required to capitalize
software costs rather than expensing these costs as they occur. For the first
quarter of 1999, this amounted to a benefit of $59 million (net of
amortization). This benefit was offset by increased investment spending and
therefore had no impact on net income.
Travel Related Services (TRS) reported record quarterly net income of $363
million, up 15 percent from $315 million in the first quarter a year ago.
TRS' net revenues increased 11 percent from the prior year, reflecting
higher billed business in the United States and internationally, growth in
cardmember loans and higher travel commissions and fees.
The improvement in billed business resulted from higher spending per
cardmember, reflecting several factors including the benefits of rewards
programs and expanded merchant coverage. Billed business growth came despite a
general tightening of corporate travel and entertainment expenses, and the
cancellation of 1.6 million U.S. Government cards in the fourth quarter of 1998,
representing approximately $3.5 billion in annualized spending, due to the
company's decision to withdraw from this business. Total cards in force
decreased as a result of this decision. The decrease was partially offset by
substantial growth in cards outside the United States. The increase in travel
commissions and fees was primarily due to acquisitions during the latter part of
1998, which increased revenues and expenses, but did not have a material effect
on earnings. The increase in other revenues resulted principally from
acquisitions of accounting firms and ATM networks.
The provision for losses on charge cards declined as a result of improved
loss rates. The provision for the lending portfolio rose, primarily reflecting a
higher level of loans outstanding, partly offset by lower loss rates. Human
resources expenses rose, mainly due to acquisitions and increased business
volumes. The increase in other operating expenses resulted in part from the cost
of cardmember loyalty programs, business growth and investment spending.
American Express Financial Advisors (AEFA) reported record quarterly net
income of $214 million, up 15 percent from $186 million reported a year ago.
Net revenues and earnings growth benefited from higher fee revenues due to
an increase in managed assets and wider investment margins. The growth in
managed assets reflects positive net sales and market appreciation. AEFA
reported record sales of mutual funds and investment certificates. Sales of life
and other insurance products increased while sales of annuities declined. Human
resources expenses rose, largely reflecting compensation costs associated with
higher sales and asset levels. Other operating expenses rose, primarily due to
costs related to higher business volumes and investments to build the business.
American Express Bank/Travelers Cheque (AEB/TC) reported quarterly net
income of $41 million compared with a net loss of $83 million a year ago.
Travelers Cheque results were consistent with the prior year.
The year-ago results included a $138 million ($213 million pretax) credit
loss provision related to AEB's business in the Asia/Pacific region,
particularly Indonesia. Excluding the provision, net income declined reflecting
lower foreign exchange trading revenues, primarily in Asia, and higher operating
expenses due to costs associated with new consumer product introductions.
Corporate and Other reported net expenses of $43 million, compared with net
income of $42 million a year ago. The current year results include a $39 million
($46 million pretax) preferred stock dividend based on earnings from Lehman
Brothers, which was offset by expenses related to the Year 2000 issue (discussed
in the company's 1998 annual report) and business building initiatives. The
prior year results included income of $78 million ($106 million pretax)
representing a $39 million ($60 million pretax) gain from sales of common stock
of First Data Corporation and an equivalent Lehman Brothers dividend.
American Express Company (http://www.americanexpress.com), founded in 1850,
is a global travel, financial and network services provider.
<PAGE>
American Express Company
------------------------
Financial Summary
-----------------
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in millions)
Quarter Ended
March 31,
------------------ Percentage
1999 1998 Inc/(Dec)
------- ------- ----------
Net Revenues by Segment (A)
- ---------------------------
<S> <C> <C> <C>
Travel Related Services $ 3,421 $ 3,083 11.0%
American Express Financial Advisors 885 734 20.6
American Express Bank/Travelers Cheque 247 257 (4.1)
------- -------
4,553 4,074 11.7
Corporate and Other,
including adjustments and eliminations (42) (40) (5.0)
------- -------
CONSOLIDATED NET REVENUES (A) $ 4,511 $ 4,034 11.8
======= =======
Pretax Income by Segment
- ------------------------
Travel Related Services $ 554 $ 482 15.1
American Express Financial Advisors 312 271 14.9
American Express Bank/Travelers Cheque 12 (174) #
------- -------
878 579 51.6
Corporate and Other (87) 35 #
------- -------
PRETAX INCOME $ 791 $ 614 29.0
======= =======
Net Income by Segment
- ---------------------
Travel Related Services $ 363 $ 315 15.1
American Express Financial Advisors 214 186 14.9
American Express Bank/Travelers Cheque 41 (83) #
------- -------
618 418 47.5
Corporate and Other (43) 42 #
------- -------
NET INCOME $ 575 $ 460 25.0
======= =======
</TABLE>
# Denotes variance of more than 100%.
(A) Net revenues are reported net of interest expense, where applicable, and
American Express Financial Advisors' provision for losses and benefits.
American Express Company
------------------------
Financial Summary (continued)
-----------------------------
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
March 31,
------------------ Percentage
1999 1998 Inc/(Dec)
------- ------- ----------
EARNINGS PER SHARE
<S> <C> <C> <C>
Basic
- -----
Earnings Per Common Share $ 1.28 $ 1.00 28.0%
======= =======
Average common shares
outstanding (millions) 447.7 460.7 (2.8)
======= =======
Diluted
- -------
Earnings Per Common Share $ 1.26 $ 0.98 28.6
======= =======
Average common shares
outstanding (millions) 456.2 469.5 (2.8)
======= =======
Cash dividends declared
per common share $ 0.225 $ 0.225 --
======= =======
</TABLE>
Selected Statistical Information
--------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
March 31,
------------------ Percentage
1999 1998 Inc/(Dec)
------- ------- ----------
<S> <C> <C> <C>
Return on Average Equity* 25.1% 23.1% --
Common Shares Outstanding (millions) 450.0 461.9 (2.6)%
Book Value per Common Share:
Actual $ 21.74 $ 20.41 6.5%
Pro Forma* $ 20.92 $ 19.19 9.0%
Shareholders' Equity (billions) $ 9.8 $ 9.4 3.8%
</TABLE>
* Excludes the effect of SFAS No. 115.
American Express Company
------------------------
Financial Summary
-----------------
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in millions)
Quarter Ended
March 31,
1999
------------
<S> <C>
Net Revenues by Segment (A)
- ---------------------------
Travel Related Services $ 3,421
American Express Financial Advisors 885
American Express Bank/Travelers Cheque 247
-------
4,553
Corporate and Other,
including adjustments and eliminations (42)
-------
CONSOLIDATED NET REVENUES (A) $ 4,511
=======
Pretax Income by Segment
- ------------------------
Travel Related Services $ 554
American Express Financial Advisors 312
American Express Bank/Travelers Cheque 12
-------
878
Corporate and Other (87)
-------
PRETAX INCOME $ 791
=======
Net Income by Segment
- ---------------------
Travel Related Services $ 363
American Express Financial Advisors 214
American Express Bank/Travelers Cheque 41
-------
618
Corporate and Other (43)
-------
NET INCOME $ 575
=======
<CAPTION>
Quarter Ended
December 31,
1998
-------------
Net Revenues by Segment (A)
- ---------------------------
<S> <C>
Travel Related Services $ 3,545
American Express Financial Advisors 837
American Express Bank/Travelers Cheque 239
-------
4,621
Corporate and Other,
including adjustments and eliminations (67)
-------
CONSOLIDATED NET REVENUES (A) $ 4,554
=======
Pretax Income by Segment
- ------------------------
Travel Related Services $ 483
American Express Financial Advisors 304
American Express Bank/Travelers Cheque 2
-------
789
Corporate and Other (76)
-------
PRETAX INCOME $ 713
=======
Net Income by Segment
- --------------==-----
Travel Related Services $ 326
American Express Financial Advisors 209
American Express Bank/Travelers Cheque 36
-------
571
Corporate and Other (41)
-------
NET INCOME $ 530
=======
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
September 30,
1998
-------------
<S> <C>
Net Revenues by Segment (A)
- ---------------------------
Travel Related Services $ 3,339
American Express Financial Advisors 802
American Express Bank/Travelers Cheque 255
-------
4,396
Corporate and Other,
including adjustments and eliminations (54)
-------
CONSOLIDATED NET REVENUES (A) $ 4,342
=======
Pretax Income by Segment
- ------------------------
Travel Related Services $ 554
American Express Financial Advisors 308
American Express Bank/Travelers Cheque 20
-------
882
Corporate and Other (83)
-------
PRETAX INCOME $ 799
=======
Net Income by Segment
- ---------------------
Travel Related Services $ 362
American Express Financial Advisors 211
American Express Bank/Travelers Cheque 43
-------
616
Corporate and Other (42)
-------
NET INCOME $ 574
=======
<CAPTION>
Quarter Ended
June 30,
1998
-------------
<S> <C>
Net Revenues by Segment (A)
- ---------------------------
Travel Related Services $ 3,270
American Express Financial Advisors 807
American Express Bank/Travelers Cheque 251
-------
4,328
Corporate and Other,
including adjustments and eliminations (42)
-------
CONSOLIDATED NET REVENUES (A) $ 4,286
=======
Pretax Income by Segment
- ------------------------
Travel Related Services $ 546
American Express Financial Advisors 309
American Express Bank/Travelers Cheque 23
-------
878
Corporate and Other (78)
-------
PRETAX INCOME $ 800
=======
Net Income by Segment
- ---------------------
Travel Related Services $ 360
American Express Financial Advisors 212
American Express Bank/Travelers Cheque 47
-------
619
Corporate and Other (41)
-------
NET INCOME $ 578
=======
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1998
-------------
<S> <C>
Net Revenues by Segment (A)
- --------------------------
Travel Related Services $ 3,083
American Express Financial Advisors 734
American Express Bank/Travelers Cheque 257
-------
4,074
Corporate and Other,
including adjustments and eliminations (40)
-------
CONSOLIDATED NET REVENUES (A) $ 4,034
=======
Pretax Income by Segment
- ------------------------
Travel Related Services $ 482
American Express Financial Advisors 271
American Express Bank/Travelers Cheque (174)
-------
579
Corporate and Other 35
-------
PRETAX INCOME $ 614
=======
Net Income by Segment
- ---------------------
Travel Related Services $ 315
American Express Financial Advisors 186
American Express Bank/Travelers Cheque (83)
-------
418
Corporate and Other 42
-------
NET INCOME $ 460
=======
</TABLE>
(A) Net revenues are reported net of interest expense, where applicable, and
American Express Financial Advisors' provision for losses and benefits.
American Express Company
------------------------
Financial Summary (continued)
-----------------------------
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1999
-------------
<S> <C>
EARNINGS PER SHARE
Basic
- -----
Earnings Per Common Share $ 1.28
========
Average common shares outstanding (millions) 447.7
========
Diluted
- -------
Earnings Per Common Share $ 1.26
========
Average common shares outstanding (millions) 456.2
========
Cash dividends declared per common share $ 0.225
========
<CAPTION>
Quarter Ended
December 31,
1998
-------------
<S> <C>
EARNINGS PER SHARE
Basic
- -----
Earnings Per Common Share $ 1.18
========
Average common shares outstanding (millions) 448.7
========
Diluted
- -------
Earnings Per Common Share $ 1.16
========
Average common shares outstanding (millions) 456.0
========
Cash dividends declared per common share $ 0.225
========
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
September 30,
1998
-------------
<S> <C>
EARNINGS PER SHARE
Basic
- -----
Earnings Per Common Share $ 1.27
========
Average common shares outstanding (millions) 451.6
========
Diluted
- -------
Earnings Per Common Share $ 1.25
========
Average common shares outstanding (millions) 459.6
========
Cash dividends declared per common share $ 0.225
========
<CAPTION>
Quarter Ended
June 30,
1998
-------------
<S> <C>
EARNINGS PER SHARE
Basic
- -----
Earnings Per Common Share $ 1.27
========
Average common shares outstanding (millions) 456.3
========
Diluted
- -------
Earnings Per Common Share $ 1.24
========
Average common shares outstanding (millions) 465.3
========
Cash dividends declared per common share $ 0.225
========
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1998
-------------
<S> <C>
EARNINGS PER SHARE
Basic
- -----
Earnings Per Common Share $ 1.00
========
Average common shares outstanding (millions) 460.7
========
Diluted
- -------
Earnings Per Common Share $ 0.98
========
Average common shares outstanding (millions) 469.5
========
Cash dividends declared per common share $ 0.225
========
</TABLE>
Selected Statistical Information
--------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1999
-------------
<S> <C>
Return on Average Equity* 25.1%
Common Shares Outstanding (millions) 450.0
Book Value per Common Share:
Actual $ 21.74
Pro Forma* $ 20.92
Shareholders' Equity (billions) $ 9.8
<CAPTION>
Quarter Ended
December 31,
1998
-------------
<S> <C>
Return on Average Equity* 24.0%
Common Shares Outstanding (millions) 450.5
Book Value per Common Share:
Actual $ 21.53
Pro Forma* $ 20.24
Shareholders' Equity (billions) $ 9.7
<CAPTION>
Quarter Ended
September 30,
1998
-------------
<S> <C>
Return on Average Equity* 23.9%
Common Shares Outstanding (millions) 452.3
Book Value per Common Share:
Actual $ 20.79
Pro Forma* $ 19.28
Shareholders' Equity (billions) $ 9.4
<CAPTION>
Quarter Ended
June 30,
1998
-------------
<S> <C>
Return on Average Equity* 23.5%
Common Shares Outstanding (millions) 456.8
Book Value per Common Share:
Actual $ 20.35
Pro Forma* $ 19.11
Shareholders' Equity (billions) $ 9.3
<CAPTION>
Quarter Ended
March 31,
1998
-------------
<S> <C>
Return on Average Equity* 23.1%
Common Shares Outstanding (millions) 461.9
Book Value per Common Share:
Actual $ 20.41
Pro Forma* $ 19.19
Shareholders' Equity (billions) $ 9.4
</TABLE>
* Excludes the effect of SFAS No. 115.
(Preliminary) Travel Related Services
-----------------------
Statement of Income
-------------------
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in millions)
Quarter Ended
March 31,
------------------ Percentage
1999 1998 Inc/(Dec)
------- ------- ----------
<S> <C> <C> <C>
Net Revenues:
Discount Revenue $1,514 $1,429 5.9%
Net Card Fees 403 398 1.4
Travel Commissions and Fees 426 351 21.6
Other Revenues 731 588 24.3
Lending:
Finance Charge Revenue 503 478 5.1
Interest Expense 156 161 (3.2)
------ ------
Net Finance Charge Revenue 347 317 9.4
------ ------
Total Net Revenues 3,421 3,083 11.0
------ ------
Expenses:
Marketing and Promotion 270 244 10.6
Provision for Losses and Claims:
Charge Card 182 218 (16.2)
Lending 235 218 7.7
Other 14 13 7.0
------ ------
Total 431 449 (3.9)
------ ------
Charge Card Interest Expense 183 197 (6.9)
Net Discount Expense 143 140 1.9
Human Resources 912 787 15.9
Other Operating Expenses 928 784 18.3
------ ------
Total Expenses 2,867 2,601 10.2
------ ------
Pretax Income 554 482 15.1
Income Tax Provision 191 167 14.9
------ ------
Net Income $ 363 $ 315 15.1
====== ======
</TABLE>
(Preliminary) Travel Related Services
-----------------------
Statement of Income
-------------------
(Unaudited, Managed Asset Basis)
<TABLE>
<CAPTION>
(Dollars in millions)
Quarter Ended
March 31,
------------------ Percentage
1999 1998 Inc/(Dec)
------- ------- ----------
<S> <C> <C> <C>
Net Revenues:
Discount Revenue $1,514 $1,429 5.9%
Net Card Fees 403 398 1.4
Travel Commissions and Fees 426 351 21.6
Other Revenues 639 511 25.0
Lending:
Finance Charge Revenue 652 584 11.7
Interest Expense 200 194 3.2
------ ------
Net Finance Charge Revenue 452 390 15.9
------ ------
Total Net Revenues 3,434 3,079 11.5
------ ------
Expenses:
Marketing and Promotion 270 244 10.6
Provision for Losses and Claims:
Charge Card 233 273 (14.7)
Lending 282 248 13.7
Other 14 13 7.0
------ ------
Total 529 534 (1.0)
------ ------
Charge Card Interest Expense 241 248 (2.5)
Human Resources 912 787 15.9
Other Operating Expenses 928 784 18.3
------ ------
Total Expenses 2,880 2,597 10.9
------ ------
Pretax Income 554 482 15.1
Income Tax Provision 191 167 14.9
------ ------
Net Income $ 363 $ 315 15.1
====== ======
</TABLE>
This Statement of Income is provided on a Managed Asset Basis for analytical
purposes only. It presents the income statement of TRS as if there had been no
securitization transactions.
(Preliminary) Travel Related Services
-----------------------
Selected Statistical Information
--------------------------------
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in billions, except percentages and where indicated)
Quarter Ended
March 31,
------------------ Percentage
1999 1998 Inc/(Dec)
------- ------- ----------
<S> <C> <C> <C>
Total Cards in Force (millions):
United States 27.9 29.5 (5.5)%
Outside the United States 15.0 13.8 8.6
------ ------
Total 42.9 43.3 (1.0)
====== ======
Basic Cards in Force (millions):
United States 21.8 23.3 (6.2)
Outside the United States 11.5 10.6 8.0
------ ------
Total 33.3 33.9 (1.7)
====== ======
Card Billed Business:
United States $ 41.6 $ 38.5 8.2
Outside the United States 15.2 14.1 7.2
------ ------
Total $ 56.8 $ 52.6 8.0
====== ======
Average Discount Rate* 2.73% 2.74% --
Average Basic Cardmember
Spending (dollars)* $1,781 $1,600 11.3
Average Fee per Card (dollars)* $ 40 $ 38 5.3
Travel Sales $ 5.3 $ 4.3 25.3
Travel Commissions and Fees/Sales** 8.0% 8.2% --
Total Debt $ 28.2 $ 24.9 13.0
Shareholder's Equity $ 5.1 $ 4.8 6.6
Return on Average Equity*** 28.4% 25.7% --
Return on Average Assets*** 3.3% 3.1% --
</TABLE>
* 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 No. 115.
(Preliminary) Travel Related Services
-----------------------
Selected Statistical Information (continued)
--------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in billions, except percentages and where indicated)
Quarter Ended
March 31,
------------------ Percentage
1999 1998 Inc/(Dec)
------- ------- ----------
<S> <C> <C> <C>
Owned and Managed Charge Card
Receivables:
Total Receivables $ 23.5 $ 22.0 6.7%
90 Days Past Due as a % of Total 3.0% 3.4% --
Loss Reserves (millions) $ 876 $ 967 (9.4)
% of Receivables 3.7% 4.4% --
% of 90 Days Past Due 126% 131% --
Net Loss Ratio 0.43% 0.47% --
Owned and Managed U.S. Cardmember
Lending:
Total Loans $ 16.7 $ 14.2 17.9
Past Due Loans as a % of Total:
30-89 Days 2.1% 2.5% --
90+ Days 1.0% 1.1% --
Loss Reserves (millions):
Beginning Balance $ 619 $ 589 5.1
Provision 244 221 10.4
Net Charge-Offs/Other (240) (219) 9.2
------ ------
Ending Balance $ 623 $ 591 5.5
====== ======
% of Loans 3.7% 4.2% --
% of Past Due 121% 117% --
Average Loans $ 16.7 $ 14.2 17.3
Net Write-Off Rate 5.9% 6.3% --
Net Interest Yield 9.4% 9.6% --
</TABLE>
(Preliminary) Travel Related Services
-----------------------
Statement of Income
-------------------
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in millions)
Quarter Ended
March 31,
1999
-------------
<S> <C>
Net Revenues:
Discount Revenue $1,514
Net Card Fees 403
Travel Commissions and Fees 426
Other Revenues 731
Lending:
Finance Charge Revenue 503
Interest Expense 156
------
Net Finance Charge Revenue 347
------
Total Net Revenues 3,421
------
Expenses:
Marketing and Promotion 270
Provision for Losses and Claims:
Charge Card 182
Lending 235
Other 14
------
Total 431
------
Charge Card Interest Expense 183
Net Discount Expense 143
Human Resources 912
Other Operating Expenses 928
------
Total Expenses 2,867
------
Pretax Income 554
Income Tax Provision 191
------
Net Income $ 363
======
<CAPTION>
Quarter Ended
December 31,
1998
-------------
<S> <C>
Net Revenues:
Discount Revenue $1,639
Net Card Fees 398
Travel Commissions and Fees 452
Other Revenues 687
Lending:
Finance Charge Revenue 535
Interest Expense 166
------
Net Finance Charge Revenue 369
------
Total Net Revenues 3,545
------
Expenses:
Marketing and Promotion 301
Provision for Losses and Claims:
Charge Card 100
Lending 293
Other 14
------
Total 407
------
Charge Card Interest Expense 211
Net Discount Expense 185
Human Resources 990
Other Operating Expenses 968
------
Total Expenses 3,062
------
Pretax Income 483
Income Tax Provision 157
------
Net Income $ 326
======
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
September 30,
1998
-------------
<S> <C>
Net Revenues:
Discount Revenue $1,522
Net Card Fees 393
Travel Commissions and Fees 441
Other Revenues 645
Lending:
Finance Charge Revenue 502
Interest Expense 164
------
Net Finance Charge Revenue 338
------
Total Net Revenues 3,339
------
Expenses:
Marketing and Promotion 310
Provision for Losses and Claims:
Charge Card 148
Lending 224
Other 17
------
Total 389
------
Charge Card Interest Expense 199
Net Discount Expense 170
Human Resources 924
Other Operating Expenses 793
------
Total Expenses 2,785
------
Pretax Income 554
Income Tax Provision 192
------
Net Income $ 362
======
<CAPTION>
Quarter Ended
June 30,
1998
-------------
<S> <C>
Net Revenues:
Discount Revenue $1,525
Net Card Fees 398
Travel Commissions and Fees 403
Other Revenues 614
Lending:
Finance Charge Revenue 493
Interest Expense 163
------
Net Finance Charge Revenue 330
------
Total Net Revenues 3,270
------
Expenses:
Marketing and Promotion 275
Provision for Losses and Claims:
Charge Card 236
Lending 187
Other 11
------
Total 434
------
Charge Card Interest Expense 203
Net Discount Expense 170
Human Resources 843
Other Operating Expenses 799
------
Total Expenses 2,724
------
Pretax Income 546
Income Tax Provision 186
------
Net Income $ 360
======
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1998
-------------
<S> <C>
Net Revenues:
Discount Revenue $1,429
Net Card Fees 398
Travel Commissions and Fees 351
Other Revenues 588
Lending:
Finance Charge Revenue 478
Interest Expense 161
------
Net Finance Charge Revenue 317
------
Total Net Revenues 3,083
------
Expenses:
Marketing and Promotion 244
Provision for Losses and Claims:
Charge Card 218
Lending 218
Other 13
------
Total 449
------
Charge Card Interest Expense 197
Net Discount Expense 140
Human Resources 787
Other Operating Expenses 784
------
Total Expenses 2,601
------
Pretax Income 482
Income Tax Provision 167
------
Net Income $ 315
======
</TABLE>
(Preliminary) Travel Related Services
-----------------------
Statement of Income
-------------------
(Unaudited, Managed Asset Basis)
<TABLE>
<CAPTION>
(Dollars in millions)
Quarter Ended
March 31,
1999
-------------
<S> <C>
Net Revenues:
Discount Revenue $1,514
Net Card Fees 403
Travel Commissions and Fees 426
Other Revenues 639
Lending:
Finance Charge Revenue 652
Interest Expense 200
------
Net Finance Charge Revenue 452
------
Total Net Revenues 3,434
------
Expenses:
Marketing and Promotion 270
Provision for Losses and Claims:
Charge Card 233
Lending 282
Other 14
------
Total 529
------
Charge Card Interest Expense 241
Human Resources 912
Other Operating Expenses 928
------
Total Expenses 2,880
------
Pretax Income 554
Income Tax Provision 191
------
Net Income $ 363
======
<CAPTION>
Quarter Ended
December 31,
1998
-------------
<S> <C>
Net Revenues:
Discount Revenue $1,639
Net Card Fees 398
Travel Commissions and Fees 452
Other Revenues 617
Lending:
Finance Charge Revenue 655
Interest Expense 211
------
Net Finance Charge Revenue 444
------
Total Net Revenues 3,550
------
Expenses:
Marketing and Promotion 301
Provision for Losses and Claims:
Charge Card 192
Lending 331
Other 14
------
Total 537
------
Charge Card Interest Expense 271
Human Resources 990
Other Operating Expenses 968
------
Total Expenses 3,067
------
Pretax Income 483
Income Tax Provision 157
------
Net Income $ 326
======
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
September 30,
1998
-------------
<S> <C>
Net Revenues:
Discount Revenue $1,522
Net Card Fees 395
Travel Commissions and Fees 441
Other Revenues 562
Lending:
Finance Charge Revenue 636
Interest Expense 209
------
Net Finance Charge Revenue 427
------
Total Net Revenues 3,347
------
Expenses:
Marketing and Promotion 310
Provision for Losses and Claims:
Charge Card 224
Lending 263
Other 17
------
Total 504
------
Charge Card Interest Expense 262
Human Resources 924
Other Operating Expenses 793
------
Total Expenses 2,793
------
Pretax Income 554
Income Tax Provision 192
------
Net Income $ 362
======
<CAPTION>
Quarter Ended
June 30,
1998
-------------
<S> <C>
Net Revenues:
Discount Revenue $1,525
Net Card Fees 393
Travel Commissions and Fees 403
Other Revenues 536
Lending:
Finance Charge Revenue 595
Interest Expense 197
------
Net Finance Charge Revenue 398
------
Total Net Revenues 3,255
------
Expenses:
Marketing and Promotion 239
Provision for Losses and Claims:
Charge Card 307
Lending 251
Other 11
------
Total 569
------
Charge Card Interest Expense 259
Human Resources 843
Other Operating Expenses 799
------
Total Expenses 2,709
------
Pretax Income 546
Income Tax Provision 186
------
Net Income $ 360
======
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1998
-------------
<S> <C>
Net Revenues:
Discount Revenue $1,429
Net Card Fees 398
Travel Commissions and Fees 351
Other Revenues 511
Lending:
Finance Charge Revenue 584
Interest Expense 194
------
Net Finance Charge Revenue 390
------
Total Net Revenues 3,079
------
Expenses:
Marketing and Promotion 244
Provision for Losses and Claims:
Charge Card 273
Lending 248
Other 13
------
Total 534
------
Charge Card Interest Expense 248
Human Resources 787
Other Operating Expenses 784
------
Total Expenses 2,597
------
Pretax Income 482
Income Tax Provision 167
------
Net Income $ 315
======
</TABLE>
This Statement of Income is provided on a Managed Asset Basis for analytical
purposes only. It presents the income statement of TRS as if there had been no
securitization transactions. Under Statement of Financial Accounting Standards
No. 125 (SFAS No. 125), which prescribes the accounting for securitized
receivables, TRS recognized a pretax gain of $36 million ($23 million after-tax)
in the second quarter of 1998 related to the securitization of U.S. receivables.
This gain was invested in additional Marketing and Promotion expenses and had no
material impact on net income or total expenses in the second quarter of 1998.
For purposes of this presentation such gain and a corresponding $36 million
increase in Marketing and Promotion expenses have been eliminated in the second
quarter of 1998.
(Preliminary) Travel Related Services
-----------------------
Selected Statistical Information
--------------------------------
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in billions, except percentages and where indicated)
Quarter Ended
March 31,
1999
-------------
<S> <C>
Total Cards in Force (millions):
United States 27.9
Outside the United States 15.0
---------
Total 42.9
=========
Basic Cards in Force (millions):
United States 21.8
Outside the United States 11.5
---------
Total 33.3
=========
Card Billed Business:
United States $ 41.6
Outside the United States 15.2
---------
Total $ 56.8
=========
Average Discount Rate* 2.73%
Average Basic Cardmember
Spending (dollars)* $ 1,781
Average Fee per Card (dollars)* $ 40
Travel Sales $ 5.3
Travel Commissions and Fees/Sales** 8.0%
Total Debt $ 28.2
Shareholder's Equity $ 5.1
Return on Average Equity*** 28.4%
Return on Average Assets*** 3.3%
<CAPTION>
Quarter Ended
December 31,
1998
-------------
<S> <C>
Total Cards in Force (millions):
United States 27.8
Outside the United States 14.9
---------
Total 42.7
=========
Basic Cards in Force (millions):
United States 21.7
Outside the United States 11.5
---------
Total 33.2
=========
Card Billed Business:
United States $ 44.2
Outside the United States 17.2
---------
Total $ 61.4
=========
Average Discount Rate* 2.72%
Average Basic Cardmember
Spending (dollars)* $ 1,861
Average Fee per Card (dollars)* $ 38
Travel Sales $ 5.6
Travel Commissions and Fees/Sales** 8.1%
Total Debt $ 28.0
Shareholder's Equity $ 4.9
Return on Average Equity*** 27.8%
Return on Average Assets*** 3.3%
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
September 30,
1998
-------------
<S> <C>
Total Cards in Force (millions):
United States 29.5
Outside the United States 14.6
---------
Total 44.1
=========
Basic Cards in Force (millions):
United States 23.3
Outside the United States 11.3
---------
Total 34.6
=========
Card Billed Business:
United States $ 41.5
Outside the United States 15.2
---------
Total $ 56.7
=========
Average Discount Rate* 2.72%
Average Basic Cardmember
Spending (dollars)* $ 1,704
Average Fee per Card (dollars)* $ 37
Travel Sales $ 5.1
Travel Commissions and Fees/Sales** 8.6%
Total Debt $ 26.9
Shareholder's Equity $ 5.2
Return on Average Equity*** 27.1%
Return on Average Assets*** 3.3%
<CAPTION>
Quarter Ended
June 30,
1998
-------------
Total Cards in Force (millions):
United States 29.6
Outside the United States 14.2
---------
Total 43.8
=========
Basic Cards in Force (millions):
United States 23.3
Outside the United States 11.0
---------
Total 34.3
=========
Card Billed Business:
United States $ 41.4
Outside the United States 15.4
---------
Total $ 56.8
=========
Average Discount Rate* 2.72%
Average Basic Cardmember
Spending (dollars)* $ 1,717
Average Fee per Card (dollars)* $ 38
Travel Sales $ 4.9
Travel Commissions and Fees/Sales** 8.2%
Total Debt $ 24.0
Shareholder's Equity $ 5.0
Return on Average Equity*** 26.5%
Return on Average Assets*** 3.2%
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1998
-------------
<S> <C>
Total Cards in Force (millions):
United States 29.5
Outside the United States 13.8
---------
Total 43.3
=========
Basic Cards in Force (millions):
United States 23.3
Outside the United States 10.6
---------
Total 33.9
=========
Card Billed Business:
United States $ 38.5
Outside the United States 14.1
---------
Total $ 52.6
=========
Average Discount Rate* 2.74%
Average Basic Cardmember
Spending (dollars)* $ 1,600
Average Fee per Card (dollars)* $ 38
Travel Sales $ 4.3
Travel Commissions and Fees/Sales** 8.2%
Total Debt $ 24.9
Shareholder's Equity $ 4.8
Return on Average Equity*** 25.7%
Return on Average Assets*** 3.1%
</TABLE>
* 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 No. 115.
(Preliminary) Travel Related Services
-----------------------
Selected Statistical Information (continued)
--------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in billions, except percentages and where indicated)
Quarter Ended
March 31,
1999
-------------
<S> <C>
Owned and Managed Charge Card
Receivables:
Total Receivables $ 23.5
90 Days Past Due as a % of Total 3.0%
Loss Reserves (millions) $ 876
% of Receivables 3.7%
% of 90 Days Past Due 126%
Net Loss Ratio 0.43%
Owned and Managed U.S. Cardmember
Lending:
Total Loans $ 16.7
Past Due Loans as a % of Total:
30-89 Days 2.1%
90+ Days 1.0%
Loss Reserves (millions):
Beginning Balance $ 619
Provision 244
Net Charge-Offs/Other (240)
--------
Ending Balance $ 623
========
% of Loans 3.7%
% of Past Due 121%
Average Loans $ 16.7
Net Write-Off Rate 5.9%
Net Interest Yield 9.4%
<CAPTION>
Quarter Ended
December 31,
1998
-------------
<S> <C>
Owned and Managed Charge Card
Receivables:
Total Receivables $ 24.0
90 Days Past Due as a % of Total 2.7%
Loss Reserves (millions) $ 897
% of Receivables 3.7%
% of 90 Days Past Due 138%
Net Loss Ratio 0.42%
Owned and Managed U.S. Cardmember
Lending:
Total Loans $ 16.7
Past Due Loans as a % of Total:
30-89 Days 2.2%
90+ Days 0.9%
Loss Reserves (millions):
Beginning Balance $ 579
Provision 285
Net Charge-Offs/Other (245)
--------
Ending Balance $ 619
========
% of Loans 3.7%
% of Past Due 120%
Average Loans $ 15.9
Net Write-Off Rate 6.2%
Net Interest Yield 9.5%
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
September 30,
1998
-------------
<S> <C>
Owned and Managed Charge Card
Receivables:
Total Receivables $ 23.3
90 Days Past Due as a % of Total 2.7%
Loss Reserves (millions) $ 961
% of Receivables 4.1%
% of 90 Days Past Due 151%
Net Loss Ratio 0.48%
Owned and Managed U.S. Cardmember
Lending:
Total Loans $ 15.4
Past Due Loans as a % of Total:
30-89 Days 2.2%
90+ Days 1.0%
Loss Reserves (millions):
Beginning Balance $ 577
Provision 236
Net Charge-Offs/Other (234)
---------
Ending Balance $ 579
=========
% of Loans 3.8%
% of Past Due 118%
Average Loans $ 15.2
Net Write-Off Rate 6.4%
Net Interest Yield 9.6%
<CAPTION>
Quarter Ended
June 30,
1998
-------------
<S> <C>
Owned and Managed Charge Card
Receivables:
Total Receivables $ 23.4
90 Days Past Due as a % of Total 3.1%
Loss Reserves (millions) $ 1,015
% of Receivables 4.3%
% of 90 Days Past Due 142%
Net Loss Ratio 0.46%
Owned and Managed U.S. Cardmember
Lending:
Total Loans $ 14.8
Past Due Loans as a % of Total:
30-89 Days 2.3%
90+ Days 1.1%
Loss Reserves (millions):
Beginning Balance $ 591
Provision 219
Net Charge-Offs/Other (233)
---------
Ending Balance $ 577
=========
% of Loans 3.9%
% of Past Due 115%
Average Loans $ 14.5
Net Write-Off Rate 6.6%
Net Interest Yield 9.5%
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1998
-------------
<S> <C>
Owned and Managed Charge Card
Receivables:
Total Receivables $ 22.0
90 Days Past Due as a % of Total 3.4%
Loss Reserves (millions) $ 967
% of Receivables 4.4%
% of 90 Days Past Due 131%
Net Loss Ratio 0.47%
Owned and Managed U.S. Cardmember
Lending:
Total Loans $ 14.2
Past Due Loans as a % of Total:
30-89 Days 2.5%
90+ Days 1.1%
Loss Reserves (millions):
Beginning Balance $ 589
Provision 221
Net Charge-Offs/Other (219)
-------
Ending Balance $ 591
=======
% of Loans 4.2%
% of Past Due 117%
Average Loans $ 14.2
Net Write-Off Rate 6.3%
Net Interest Yield 9.6%
</TABLE>
(Preliminary) American Express Financial Advisors
-----------------------------------
Statement of Income
-------------------
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in millions)
Quarter Ended
March 31,
------------------ Percentage
1999 1998 Inc/(Dec)
------- ------- ----------
<S> <C> <C> <C>
Net Revenues:
Investment Income $ 595 $ 613 (2.9)%
Management and Distribution Fees 522 418 25.0
Other Revenues 228 190 19.5
------ ------
Total Revenues 1,345 1,221 10.1
Provision for Losses and Benefits:
Annuities 270 297 (9.0)
Insurance 126 117 7.1
Investment Certificates 64 73 (12.5)
------ ------
Total 460 487 (5.6)
------ ------
Net Revenues 885 734 20.6
------ ------
Expenses:
Human Resources 416 351 18.5
Other Operating Expenses 157 112 40.7
------ ------
Total Expenses 573 463 23.9
------ ------
Pretax Income 312 271 14.9
Income Tax Provision 98 85 14.8
------ ------
Net Income $ 214 $ 186 14.9
====== ======
</TABLE>
(Preliminary) American Express Financial Advisors
-----------------------------------
Selected Statistical Information
--------------------------------
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in millions, except where indicated)
Quarter Ended
March 31,
------------------ Percentage
1999 1998 Inc/(Dec)
------- ------- ----------
<S> <C> <C> <C>
Investments (billions) $ 30.6 $ 31.1 (1.6)%
Client Contract Reserves (billions) $ 30.5 $ 30.3 0.6
Shareholder's Equity (billions) $ 4.1 $ 3.8 5.5
Return on Average Equity* 22.6% 22.1% --
Life Insurance in Force (billions) $ 82.9 $ 76.1 9.0
Assets Owned, Managed or
Administered (billions):
Assets managed for institutions $ 46.9 $ 42.3 10.7
Assets owned, managed or administered
for individuals:
Owned Assets:
Separate Account Assets 28.2 26.0 8.6
Other Owned Assets 37.4 37.0 1.0
------- -------
Total Owned Assets 65.6 63.0 4.1
Managed Assets 91.2 80.2 13.8
Administered Assets 15.7 9.9 57.8
------- -------
Total $ 219.4 $ 195.4 12.2
======= =======
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $ 912 $ 2,610 (65.1)
Other Owned Assets $ (204) $ 18 --
Total Managed Assets $ 2,889 $ 8,844 (67.3)
Sales of Selected Products:
Mutual Funds $ 6,033 $ 5,095 18.4
Annuities $ 579 $ 651 (11.1)
Investment Certificates $ 660 $ 458 44.2
Life and Other Insurance Products $ 92 $ 83 10.5
Number of Financial Advisors 10,372 9,838 5.4
Fees From Financial Plans (thousands) $21,252 $17,521 21.3
Product Sales Generated from Financial
Plans as a Percentage of Total Sales 66.5% 65.1% --
</TABLE>
* Excluding the effect of SFAS No. 115.
(Preliminary) American Express Financial Advisors
-----------------------------------
Statement of Income
-------------------
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in millions)
Quarter Ended
March 31,
1999
-------------
<S> <C>
Net Revenues:
Investment Income $ 595
Management and Distribution Fees 522
Other Revenues 228
------
Total Revenues 1,345
Provision for Losses and Benefits:
Annuities 270
Insurance 126
Investment Certificates 64
------
Total 460
------
Net Revenues 885
------
Expenses:
Human Resources 416
Other Operating Expenses 157
------
Total Expenses 573
------
Pretax Income 312
Income Tax Provision 98
------
Net Income $ 214
======
<CAPTION>
Quarter Ended
December 31,
1998
-------------
<S> <C>
Net Revenues:
Investment Income $ 647
Management and Distribution Fees 476
Other Revenues 222
------
Total Revenues 1,345
Provision for Losses and Benefits:
Annuities 282
Insurance 125
Investment Certificates 101
------
Total 508
------
Net Revenues 837
------
Expenses:
Human Resources 407
Other Operating Expenses 126
------
Total Expenses 533
------
Pretax Income 304
Income Tax Provision 95
------
Net Income $ 209
======
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
September 30,
1998
-------------
<S> <C>
Net Revenues:
Investment Income $ 573
Management and Distribution Fees 476
Other Revenues 198
------
Total Revenues 1,247
Provision for Losses and Benefits:
Annuities 280
Insurance 122
Investment Certificates 43
------
Total 445
------
Net Revenues 802
------
Expenses:
Human Resources 384
Other Operating Expenses 110
------
Total Expenses 494
------
Pretax Income 308
Income Tax Provision 97
------
Net Income $ 211
======
<CAPTION>
Quarter Ended
June 30,
1998
-------------
<S> <C>
Net Revenues:
Investment Income $ 603
Management and Distribution Fees 482
Other Revenues 197
------
Total Revenues 1,282
Provision for Losses and Benefits:
Annuities 292
Insurance 125
Investment Certificates 58
------
Total 475
------
Net Revenues 807
------
Expenses:
Human Resources 388
Other Operating Expenses 110
------
Total Expenses 498
------
Pretax Income 309
Income Tax Provision 97
------
Net Income $ 212
======
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1998
-------------
<S> <C>
Net Revenues:
Investment Income $ 613
Management and Distribution Fees 418
Other Revenues 190
------
Total Revenues 1,221
Provision for Losses and Benefits:
Annuities 297
Insurance 117
Investment Certificates 73
------
Total 487
------
Net Revenues 734
------
Expenses:
Human Resources 351
Other Operating Expenses 112
------
Total Expenses 463
------
Pretax Income 271
Income Tax Provision 85
------
Net Income $ 186
======
</TABLE>
(Preliminary) American Express Financial Advisors
-----------------------------------
Selected Statistical Information
--------------------------------
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in millions, except where indicated)
Quarter Ended
March 31,
1999
-------------
<S> <C>
Investments (billions) $ 30.6
Client Contract Reserves (billions) $ 30.5
Shareholder's Equity (billions) $ 4.1
Return on Average Equity* 22.6%
Life Insurance in Force (billions) $ 82.9
Assets Owned, Managed or
Administered (billions):
Assets managed for institutions $ 46.9
Assets owned, managed or administered
for individuals:
Owned Assets:
Separate Account Assets 28.2
Other Owned Assets 37.4
---------
Total Owned Assets 65.6
Managed Assets 91.2
Administered Assets 15.7
---------
Total $ 219.4
=========
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $ 912
Other Owned Assets $ (204)
Total Managed Assets $ 2,889
Sales of Selected Products:
Mutual Funds $ 6,033
Annuities $ 579
Investment Certificates $ 660
Life and Other Insurance Products $ 92
Number of Financial Advisors 10,372
Fees From Financial Plans (thousands) $ 21,252
Product Sales Generated from Financial
Plans as a Percentage of Total Sales 66.5%
<CAPTION>
Quarter Ended
December 31,
1998
------------
<S> <C>
Investments (billions) $ 30.9
Client Contract Reserves (billions) $ 30.3
Shareholder's Equity (billions) $ 4.1
Return on Average Equity* 22.5%
Life Insurance in Force (billions) $ 81.1
Assets Owned, Managed or
Administered (billions):
Assets managed for institutions $ 45.9
Assets owned, managed or administered
for individuals:
Owned Assets:
Separate Account Assets 27.3
Other Owned Assets 37.3
---------
Total Owned Assets 64.6
Managed Assets 87.9
Administered Assets 14.0
---------
Total $ 212.4
=========
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $ 4,288
Other Owned Assets $ (243)
Total Managed Assets $ 14,493
Sales of Selected Products:
Mutual Funds $ 4,936
Annuities $ 557
Investment Certificates $ 575
Life and Other Insurance Products $ 100
Number of Financial Advisors 10,350
Fees From Financial Plans (thousands) $ 18,359
Product Sales Generated from Financial
Plans as a Percentage of Total Sales 66.8%
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
September 30,
1998
-------------
<S> <C>
Investments (billions) $ 30.8
Client Contract Reserves (billions) $ 30.2
Shareholder's Equity (billions) $ 4.1
Return on Average Equity* 22.4%
Life Insurance in Force (billions) $ 79.2
Assets Owned, Managed or
Administered (billions):
Assets managed for institutions $ 40.5
Assets owned, managed or administered
for individuals:
Owned Assets:
Separate Account Assets 23.0
Other Owned Assets 37.0
---------
Total Owned Assets 60.0
Managed Assets 76.8
Administered Assets 11.2
---------
Total $ 188.5
=========
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $ (3,712)
Other Owned Assets $ 91
Total Managed Assets $ (10,595)
Sales of Selected Products:
Mutual Funds $ 5,262
Annuities $ 648
Investment Certificates $ 560
Life and Other Insurance Products $ 102
Number of Financial Advisors 10,060
Fees From Financial Plans (thousands) $ 15,595
Product Sales Generated from Financial
Plans as a Percentage of Total Sales 65.4%
<CAPTION>
Quarter Ended
June 30,
1998
-------------
<S> <C>
Investments (billions) $ 31.0
Client Contract Reserves (billions) $ 30.2
Shareholder's Equity (billions) $ 4.0
Return on Average Equity* 22.3%
Life Insurance in Force (billions) $ 77.8
Assets Owned, Managed or
Administered (billions):
Assets managed for institutions $ 44.0
Assets owned, managed or administered
for individuals:
Owned Assets:
Separate Account Assets 26.6
Other Owned Assets 37.2
---------
Total Owned Assets 63.8
Managed Assets 83.0
Administered Assets 11.2
---------
Total $ 202.0
=========
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $ 361
Other Owned Assets $ 24
Total Managed Assets $ 1,045
Sales of Selected Products:
Mutual Funds $ 5,474
Annuities $ 702
Investment Certificates $ 383
Life and Other Insurance Products $ 104
Number of Financial Advisors 9,869
Fees From Financial Plans (thousands) $ 20,891
Product Sales Generated from Financial
Plans as a Percentage of Total Sales 64.7%
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1998
-------------
<S> <C>
Investments (billions) $ 31.1
Client Contract Reserves (billions) $ 30.3
Shareholder's Equity (billions) $ 3.8
Return on Average Equity* 22.1%
Life Insurance in Force (billions) $ 76.1
Assets Owned, Managed or
Administered (billions):
Assets managed for institutions $ 42.3
Assets owned, managed or administered
for individuals:
Owned Assets:
Separate Account Assets 26.0
Other Owned Assets 37.0
---------
Total Owned Assets 63.0
Managed Assets 80.2
Administered Assets 9.9
---------
Total $ 195.4
=========
Market Appreciation (Depreciation) During
the Period:
Owned Assets:
Separate Account Assets $ 2,610
Other Owned Assets $ 18
Total Managed Assets $ 8,844
Sales of Selected Products:
Mutual Funds $ 5,095
Annuities $ 651
Investment Certificates $ 458
Life and Other Insurance Products $ 83
Number of Financial Advisors 9,838
Fees From Financial Plans (thousands) $ 17,521
Product Sales Generated from Financial
Plans as a Percentage of Total Sales 65.1%
</TABLE>
* Excluding the effect of SFAS No. 115.
(Preliminary) American Express Bank/Travelers Cheque
--------------------------------------
Statement of Income
-------------------
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in millions)
Quarter Ended
March 31,
------------------ Percentage
1999 1998 Inc/(Dec)
------- ------- ----------
<S> <C> <C> <C>
Net Revenues:
Interest Income $ 193 $ 210 (8.0)%
Interest Expense 119 139 (13.9)
----- -----
Net Interest Income 74 71 3.6
TC Investment Income 79 80 (1.0)
Foreign Exchange Income 18 48 (61.9)
Commissions, Fees and Other Revenue 76 58 30.7
----- -----
Total Net Revenues 247 257 (4.1)
----- -----
Expenses:
Human Resources 82 74 10.5
Other Operating Expenses 136 124 9.5
Provision for Losses 17 233 (92.8)
----- -----
Total Expenses 235 431 (45.6)
----- -----
Pretax Income/(Loss) 12 (174) #
Income Tax Benefit (29) (91) (68.6)
----- -----
Net Income/(Loss) $ 41 $ (83) #
===== =====
</TABLE>
# Denotes variance of more than 100%.
(Preliminary) American Express Bank/Travelers Cheque
--------------------------------------
Selected Statistical Information
--------------------------------
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in billions, except where indicated)
Quarter Ended
March 31,
------------------ Percentage
1999 1998 Inc/(Dec)
------- ------- ----------
<S> <C> <C> <C>
Selected Statistical Information
- --------------------------------
Total Shareholder's Equity (millions) $1,148 $1,119 2.6%
Return on Average Common Equity * 19.7% 12.5% --
Return on Average Assets * 0.90% 0.61% --
American Express Bank:
Total Loans $ 5.3 $ 6.0 (12.2)
Total Nonperforming Loans (millions) $ 209 $ 149 39.9
Other Nonperforming Assets (millions) $ 64 $ 102 (37.6)
Reserve for Credit Losses (millions)** $ 261 $ 359 (27.1)
Loan Loss Reserves as a % of Total Loans 4.1% 4.9% --
Deposits $ 7.9 $ 8.3 (5.7)
Assets Managed / Administered *** $ 6.3 $ 5.1 22.3
Assets of Non-Consolidated Joint
Ventures $ 2.6 $ 2.6 1.9
Risk-Based Capital Ratios:
Tier 1 9.8% 9.0% --
Total 12.1% 12.2% --
Leverage Ratio 5.4% 5.1% --
Travelers Cheque:
Sales $ 4.6 $ 4.8 (4.2)
Average Outstanding $ 5.8 $ 5.7 3.3
Average Investments $ 5.6 $ 5.4 2.1
Tax equivalent yield 8.9% 9.2% --
</TABLE>
* Excludes the effect of SFAS No. 115 for all periods presented.
** Allocation:
Loans $218 $294
Other Assets, primarily derivatives 41 59
Other Liabilities 2 6
---- ----
Total Credit Loss Reserves $261 $359
==== ====
*** Includes assets managed by American Express Financial Advisors.
(Preliminary) American Express Bank/Travelers Cheque
--------------------------------------
Statement of Income
-------------------
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in millions)
Quarter Ended
March 31,
1999
-------------
<S> <C>
Net Revenues:
Interest Income $ 193
Interest Expense 119
-----
Net Interest Income 74
TC Investment Income 79
Foreign Exchange Income 18
Commissions, Fees and Other Revenue 76
-----
Total Net Revenues 247
-----
Expenses:
Human Resources 82
Other Operating Expenses 136
Provision for Losses 17
-----
Total Expenses 235
-----
Pretax Income/(Loss) 12
Income Tax Benefit (29)
-----
Net Income/(Loss) $ 41
=====
<CAPTION>
Quarter Ended
December 31,
1998
-------------
<S> <C>
Net Revenues:
Interest Income $ 210
Interest Expense 136
-----
Net Interest Income 74
TC Investment Income 82
Foreign Exchange Income 32
Commissions, Fees and Other Revenue 51
-----
Total Net Revenues 239
-----
Expenses:
Human Resources 86
Other Operating Expenses 136
Provision for Losses 15
-----
Total Expenses 237
-----
Pretax Income/(Loss) 2
Income Tax Benefit (34)
-----
Net Income/(Loss) $ 36
=====
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
September 30,
1998
-------------
<S> <C>
Net Revenues:
Interest Income $ 217
Interest Expense 143
-----
Net Interest Income 74
TC Investment Income 88
Foreign Exchange Income 30
Commissions, Fees and Other Revenue 63
-----
Total Net Revenues 255
-----
Expenses:
Human Resources 83
Other Operating Expenses 140
Provision for Losses 12
-----
Total Expenses 235
-----
Pretax Income/(Loss) 20
Income Tax Benefit (23)
-----
Net Income/(Loss) $ 43
=====
<CAPTION>
Quarter Ended
June 30,
1998
-------------
<S> <C>
Net Revenues:
Interest Income $ 218
Interest Expense 147
-----
Net Interest Income 71
TC Investment Income 80
Foreign Exchange Income 35
Commissions, Fees and Other Revenue 65
-----
Total Net Revenues 251
-----
Expenses:
Human Resources 79
Other Operating Expenses 136
Provision for Losses 13
-----
Total Expenses 228
-----
Pretax Income/(Loss) 23
Income Tax Benefit (24)
-----
Net Income/(Loss) $ 47
=====
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1998
-------------
<S> <C>
Net Revenues:
Interest Income $ 210
Interest Expense 139
-----
Net Interest Income 71
TC Investment Income 80
Foreign Exchange Income 48
Commissions, Fees and Other Revenue 58
-----
Total Net Revenues 257
-----
Expenses:
Human Resources 74
Other Operating Expenses 124
Provision for Losses 233
-----
Total Expenses 431
-----
Pretax Income/(Loss) (174)
Income Tax Benefit (91)
-----
Net Income/(Loss) $ (83)
=====
</TABLE>
(Preliminary) American Express Bank/Travelers Cheque
--------------------------------------
Selected Statistical Information
--------------------------------
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in billions, except where indicated)
Quarter Ended
March 31,
1999
-------------
<S> <C>
Selected Statistical Information
- --------------------------------
Total Shareholder's Equity (millions) $ 1,148
Return on Average Common Equity * 19.7%
Return on Average Assets * 0.90%
American Express Bank:
Total Loans $ 5.3
Total Nonperforming Loans (millions) $ 209
Other Nonperforming Assets (millions) $ 64
Reserve for Credit Losses (millions)** $ 261
Loan Loss Reserves as a % of Total Loans 4.1%
Deposits $ 7.9
Assets Managed / Administered *** $ 6.3
Assets of Non-Consolidated Joint
Ventures $ 2.6
Risk-Based Capital Ratios:****
Tier 1 9.8%
Total 12.1%
Leverage Ratio 5.4%
Travelers Cheque:
Sales $ 4.6
Average Outstanding $ 5.8
Average Investments $ 5.6
Tax equivalent yield 8.9%
<CAPTION>
Quarter Ended
December 31,
1998
------------
<S> <C>
Selected Statistical Information
- --------------------------------
Total Shareholder's Equity (millions) $ 1,197
Return on Average Common Equity * 4.9%
Return on Average Assets * 0.23%
American Express Bank:
Total Loans $ 5.6
Total Nonperforming Loans (millions) $ 180
Other Nonperforming Assets (millions) $ 63
Reserve for Credit Losses (millions)** $ 259
Loan Loss Reserves as a % of Total Loans 3.8%
Deposits $ 8.3
Assets Managed / Administered *** $ 6.2
Assets of Non-Consolidated Joint
Ventures $ 2.6
Risk-Based Capital Ratios:****
Tier 1 9.8%
Total 12.6%
Leverage Ratio 5.5%
Travelers Cheque:
Sales $ 5.0
Average Outstanding $ 5.9
Average Investments $ 5.8
Tax equivalent yield 8.8%
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
September 30,
1998
-------------
<S> <C>
Selected Statistical Information
- --------------------------------
Total Shareholder's Equity (millions) $ 1,210
Return on Average Common Equity * 8.1%
Return on Average Assets * 0.39%
American Express Bank:
Total Loans $ 6.1
Total Nonperforming Loans (millions) $ 239
Other Nonperforming Assets (millions) $ 92
Reserve for Credit Losses (millions)** $ 348
Loan Loss Reserves as a % of Total Loans 4.6%
Deposits $ 8.7
Assets Managed / Administered *** $ 5.7
Assets of Non-Consolidated Joint
Ventures $ 2.4
Risk-Based Capital Ratios:****
Tier 1 9.4%
Total 12.2%
Leverage Ratio 5.6%
Travelers Cheque:
Sales $ 7.8
Average Outstanding $ 6.4
Average Investments $ 6.1
Tax equivalent yield 8.8%
<CAPTION>
Quarter Ended
June 30,
1998
-------------
<S> <C>
Selected Statistical Information
- --------------------------------
Total Shareholder's Equity (millions) $ 1,135
Return on Average Common Equity * 10.4%
Return on Average Assets * 0.50%
American Express Bank:
Total Loans $ 6.1
Total Nonperforming Loans (millions) $ 205
Other Nonperforming Assets (millions) $ 73
Reserve for Credit Losses (millions)** $ 350
Loan Loss Reserves as a % of Total Loans 4.3%
Deposits $ 8.1
Assets Managed / Administered *** $ 5.6
Assets of Non-Consolidated Joint
Ventures $ 2.7
Risk-Based Capital Ratios:****
Tier 1 9.2%
Total 12.2%
Leverage Ratio 5.6%
Travelers Cheque:
Sales $ 6.4
Average Outstanding $ 6.0
Average Investments $ 5.7
Tax equivalent yield 9.0%
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1998
-------------
<S> <C>
Selected Statistical Information
- --------------------------------
Total Shareholder's Equity (millions) $ 1,119
Return on Average Common Equity * 12.5%
Return on Average Assets * 0.61%
American Express Bank:
Total Loans $ 6.0
Total Nonperforming Loans (millions) $ 149
Other Nonperforming Assets (millions) $ 102
Reserve for Credit Losses (millions)** $ 359
Loan Loss Reserves as a % of Total Loans 4.9%
Deposits $ 8.3
Assets Managed / Administered *** $ 5.1
Assets of Non-Consolidated Joint
Ventures $ 2.6
Risk-Based Capital Ratios:****
Tier 1 9.0%
Total 12.2%
Leverage Ratio 5.1%
Travelers Cheque:
Sales $ 4.8
Average Outstanding $ 5.7
Average Investments $ 5.4
Tax equivalent yield 9.2%
</TABLE>
* Excludes the effect of SFAS No. 115 for all periods presented.
** Allocation:
<TABLE>
<CAPTION>
Quarter Ended
-------------
3/31 12/31 9/30 6/30 3/31
1999 1998 1998 1998 1998
---- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Loans $ 218 $ 214 $ 279 $ 265 $ 294
Other Assets, primarily
derivatives 41 43 66 84 59
Other Liabilities 2 2 3 1 6
----- ----- ----- ----- -----
Total Credit Loss Reserves $ 261 $ 259 $ 348 $ 350 $ 359
===== ===== ===== ===== =====
</TABLE>
*** Includes assets managed by American Express Financial Advisors.
**** March 31, 1998 amounts are proforma reflecting regulatory capital actions
taken in April 1998.
American Express Bank
---------------------
Exposures By Country and Region
-------------------------------
(Unaudited)
<TABLE>
<CAPTION>
($ in billions)
Net
Guarantees
FX and and 3/31/99 12/31/98
Deriva- Contin- Total Total
Country Loans tives gents Other* Exposure** Exposure**
------- ----- ------- ---------- ----- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Hong Kong $ 0.8 $ -- $ -- $ 0.1 $ 1.0 $ 1.1
Indonesia 0.2 -- -- 0.1 0.4 0.4
Singapore 0.3 -- 0.1 0.1 0.5 0.6
Korea 0.1 -- 0.1 0.2 0.4 0.3
Taiwan 0.3 -- 0.1 0.1 0.6 0.5
China -- -- -- -- -- --
Japan -- -- -- 0.1 0.1 0.1
Thailand -- -- -- -- -- --
Other 0.1 -- -- 0.1 0.1 0.1
----- ----- ----- ----- ----- -----
Total Asia/
Pacific
Region** 1.9 0.1 0.3 0.8 3.1 3.2
----- ----- ----- ----- ----- -----
Chile 0.2 -- -- 0.1 0.4 0.4
Brazil 0.3 -- -- 0.1 0.4 0.4
Mexico 0.1 -- -- -- 0.1 0.1
Peru 0.1 -- -- -- 0.1 0.1
Argentina 0.1 -- -- -- 0.1 0.1
Other 0.1 -- 0.1 0.2 0.4 0.4
----- ----- ----- ----- ----- -----
Total Latin
America** 0.9 -- 0.2 0.4 1.4 1.4
----- ----- ----- ----- ----- -----
India 0.3 -- -- 0.4 0.8 0.8
Pakistan 0.1 -- -- 0.1 0.2 0.2
Other 0.1 -- -- 0.1 0.2 0.2
----- ----- ----- ----- ----- -----
Total
Subcontinent** 0.5 -- 0.1 0.6 1.2 1.2
----- ----- ----- ----- ----- -----
Egypt 0.5 -- -- 0.2 0.6 0.7
Other 0.2 -- 0.1 -- 0.3 0.3
----- ----- ----- ----- ----- -----
Total Middle
East &
Africa** 0.7 -- 0.1 0.2 0.9 1.0
----- ----- ----- ----- ----- -----
Total Europe*** 1.0 0.1 1.1 2.0 4.3 4.4
Total North
America** 0.2 0.1 0.1 1.5 1.8 1.9
----- ----- ----- ----- ----- -----
Total Worldwide** $ 5.3 $ 0.3 $ 1.8 $ 5.5 $12.8 $13.2
===== ===== ===== ===== ===== =====
</TABLE>
* Includes cash, placements and securities.
** Individual items may not add to totals due to rounding.
*** Total exposures at 3/31/99 and 12/31/98 includes $20 million of exposures
to Russia.
Note: Includes cross-border and local exposure and does not net local funding or
liabilities against any local exposure.
[LOGO OF AMERICAN EXPRESS COMPANY]
1999
FIRST QUARTER
EARNINGS SUPPLEMENT
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 1999 Earnings Release.
- --------------------------------------------------------------------------------
This summary contains certain forward-looking statements, each 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, including
the Company's financial and other goals, are set forth on pages 32-34 of the
Company's 1998 10-K Annual Report on file with the Securities and Exchange
Commission.
- --------------------------------------------------------------------------------
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 1999
------------------
HIGHLIGHTS
----------
o 1Q `99 diluted EPS growth of 14%, excluding last year's significant items,
the net revenue increase of 12% (10% on a gross revenue basis), and ROE of
25% met or exceeded our financial targets.
- Last year's results exclude the $213MM ($138MM after-tax) provision
for credit losses related to exposures in the Asia/Pacific region,
principally in Indonesia, the gain of $46MM ($39MM after-tax) from a
Lehman Brothers preferred stock dividend based on its earnings and the
$60MM ($39MM after-tax) gain from sales of First Data Corporation
(FDC) common shares.
-- Including these three items diluted EPS rose by 29%.
o Solid performance was recorded in a number of key areas. Compared with the
first quarter of 1998:
- Worldwide billed business rose 8% despite the loss of $3.5B of annual
charge volume associated with the U.S. government account, which was
cancelled effective 11/30/98, continued weakness in certain
international economies and general tightening by corporations of T&E
expenditures;
- Worldwide lending balances of $18.3B were up 19%;
- Cards in force outside the U.S. grew 9%; and
- AEFA assets owned, managed and administered of $219B were 12% higher.
o A number of new products and services were offered and agreements reached.
- Several card products were announced or introduced:
-- The Corporate Purchasing Card in Puerto Rico;
-- The American Express-BankBoston Personal, Gold and Credit Cards
in Argentina;
-- A co-branded credit card with Suncorp Metway in Australia;
-- The Yucho Saison American Express Card, which Credit Saison is
co-branding with the Ministry of Posts and Telecommunications, in
Japan; and
-- An affinity card with the World Wide Fund for Nature, the first
of 25 signed affinity card agreements in Australia.
- We acquired the non-attest assets of two prominent Boston CPA firms.
- AEFA launched a new business in Japan.
- Small Business Services completed its acquisition of Rockford
Industries, which finances and leases equipment.
- A marketing alliance was formed with IBM to provide small business
customers automatic discounts of up to 10% on a broad range of IBM
products.
- We acquired Golden Bear Travel Agency, a leading cruise oriented
agency.
- AEFA announced a strategic relationship with Goldman Sachs that will
include offering its mutual funds through our advisors.
- We signed agreements with three business-to-business e-commerce sites,
MarketSite.net, Ariba, and Concur, to accept AXP Purchasing Cards.
- AEFA began to roll out to participants a 401(K) web site that provides
online access to view account information and perform transactions.
o Further progress was made in the first quarter in broadening relationships
with existing AXP customers:
- Spending and lending balances per cardmember increased;
- Approximately 30% of new AEFA clients were from the cardmember base;
and
- AEFA manufactured certificates sold by AEB to its international
clients continued to grow well.
1
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 1999 OVERVIEW
---------------------------
CONSOLIDATED
------------
<TABLE>
<CAPTION>
(millions, except per share amounts) Quarter Ended Percentage
March 31, Inc/(Dec)
---------------------- ----------
1999 1998
---- ----
<S> <C> <C> <C>
Consolidated revenues:
- ----------------------
Gross $ 4,971 $ 4,521 10%
======= =======
Net $ 4,511 $ 4,034 12%
======= =======
Net income:
- -----------
Before Significant Items $ 575 $ 520 11%
AEB provision for Asian credit losses -- (138) --
FDC gain -- 39 --
Lehman earnings dividend -- 39 --
------- -------
Consolidated $ 575 $ 460 25%
======= =======
EPS:
- ----
Basic - Before Significant Items $ 1.28 $ 1.13 13%
======= =======
- Consolidated $ 1.28 $ 1.00 28%
======= =======
Diluted - Before Significant Items $ 1.26 $ 1.11 14%
======= =======
- Consolidated $ 1.26 $ 0.98 29%
======= =======
</TABLE>
o CONSOLIDATED REVENUES: Growth reflects the benefits of strong card
spending, larger loan balances, higher managed assets, greater insurance
premiums and acquisitions.
o CONSOLIDATED EXPENSES: Increased due to higher human resource and operating
expenses, reflecting acquisitions which increased revenues and expenses but
did not have a material impact on earnings.
- In 1Q `99, due to a change in accounting rules, the Company was
required to capitalize software costs (net of amortization) of $59MM,
principally in TRS and AEFA, which would have been expensed under our
previous policy. This reduction in cost was offset by higher
investment spending and therefore had no effect on net income.
o SHARE REPURCHASES: 99.6MM shares have been acquired since the inception of
repurchase programs in September, 1994.
<TABLE>
<CAPTION>
Millions of Shares
-----------------------------------
- Average shares: 1Q `99 4Q `98 1Q `98
--------------- ----- ----- ------
<S> <C> <C> <C>
Basic 447.7 448.7 460.7
===== ===== =====
Diluted 456.2 456.0 469.5
===== ===== =====
- Actual shares:
--------------
Shares outstanding - beginning of period 450.5 452.3 466.4
Repurchase of common shares (2.6) (2.5) (5.5)
Rockford acquisition 0.5 -- --
Employee benefit plans, compensation
and other 1.6 0.7 1.0
----- ----- -----
Shares outstanding - end of period 450.0 450.5 461.9
===== ===== =====
</TABLE>
CORPORATE AND OTHER
-------------------
o The 1Q `99 net expense was $43MM compared with $42MM of net income in 1Q
`98.
- 1Q `99 includes a $46MM ($39MM after-tax) Lehman Brothers preferred
dividend based on its earnings which was offset by costs associated
with Y2K related expenditures and various business building
initiatives.
- 1Q `98 also includes a $46MM ($39MM after-tax) Lehman Brothers
preferred dividend and a $60MM ($39MM after-tax) gain on the sales of
FDC common shares. Excluding these items, Corporate and Other had a net
operating expense of $36MM in 1Q `98.
2
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 1999 OVERVIEW
---------------------------
TRAVEL RELATED SERVICES
-----------------------
(preliminary)
STATEMENT OF INCOME
-------------------
(UNAUDITED, MANAGED ASSET BASIS)
<TABLE>
<CAPTION>
Quarter Ended Percentage
(millions) March 31, Inc/(Dec)
-------------------------- -----------
1999 1998
---- ----
<S> <C> <C> <C>
Net revenues:
Discount revenue $1,514 $1,429 6%
Net card fees 403 398 1
Travel commissions and fees 426 351 22
Other revenues 639 511 25
Lending:
Finance charge revenue 652 584 12
Interest expense 200 194 3
------ ------
Net finance charge revenue 452 390 16
------ ------
Total net revenues 3,434 3,079 12
------ ------
Expenses:
Marketing and promotion 270 244 11
Provision for losses and claims:
Charge card 233 273 (15)
Lending 282 248 14
Other 14 13 7
------ ------
Total 529 534 (1)
------ ------
Charge card interest expense 241 248 (2)
Human resources 912 787 16
Other operating expenses 928 784 18
------ ------
Total expenses 2,880 2,597 11
------ ------
Pretax income 554 482 15
Income tax provision 191 167 15
------ ------
Net income $ 363 $ 315 15
====== ======
</TABLE>
o Revenues benefited from higher worldwide billed business, growth in
cardmember loans outstanding and travel, Tax and Business Services (TBS)
and ATM acquisitions.
o The higher expenses reflect increased human resource and operating costs,
primarily due to acquisitions, and larger marketing and promotion
expenditures. Overall expense growth was mitigated by slightly lower
provisions for credit losses and interest costs.
o The pre-tax margin was 16.1% versus 15.7% last year.
o The effective tax rate was 35% in 1Q `99 and 1Q `98 compared with 33% in 4Q
`98.
3
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 1999 OVERVIEW
---------------------------
TRAVEL RELATED SERVICES (Cont'd)
--------------------------------
o DISCOUNT REVENUE: Higher billed business and a slightly lower discount rate
resulted in a 6% increase in discount revenue.
- The average discount rate of 2.73% in 1Q `99 was down 1BP versus 1Q
`98 but up 1BP from 4Q `98.
-- 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.*
<TABLE>
<CAPTION>
Quarter Ended Percentage
March 31, Inc/(Dec)
---------------------------- ----------
1999 1998
---- ----
<S> <C> <C> <C>
Card billed business (billions):
United States $ 41.6 $ 38.5 8%
Outside the United States 15.2 14.1 7
-------- --------
Total $ 56.8 $ 52.6 8
======== ========
Cards in force (millions):
United States 27.9 29.5 (5)%
Outside the United States 15.0 13.8 9
-------- --------
Total 42.9 43.3 (1)
======== ========
Basic cards in force (millions):
United States 21.8 23.3 (6)%
Outside the United States 11.5 10.6 8
-------- --------
Total 33.3 33.9 (2)
======== ========
Spending per basic card in force (dollars) (a):
United States $ 1,915 $ 1,653 16%
Outside the United States $ 1,472 $ 1,468 --
Total $ 1,781 $ 1,600 11
</TABLE>
(a) Proprietary card activity only.
- BILLED BUSINESS: Higher spending per basic cardmember worldwide (due
in part to increased merchant coverage and the benefits of rewards
programs) more than offset the effect of the loss of $3.5B of annual
charge volume associated with the U.S. government account, cancelled
effective 11/30/98, and resulted in an 8% increase in billed business.
-- U.S. spending per basic card in force increased 16% reflecting
strong growth in the consumer and small business areas and
significantly higher corporate spending, principally due to the
U.S. government account cancellation. Overall, corporate spending
continued to be somewhat tempered by tighter policies regarding
T&E expenditures.
-- U.S. billed business grew 11% excluding the U.S. government
account.
-- Excluding foreign exchange translation:
- Total billed business outside the U.S. rose approximately 7%
on strong double digit growth in Canada, high single digit
improvement in the Asia/Pacific region, and a decline in
Latin America. As in the U.S., European growth was
negatively impacted by tighter corporate policies regarding
T&E expenditures.
- Spending per proprietary basic card in force outside the
U.S. was flat reflecting recent card launches and economic
weakness in a number of markets.
-- Network partnership volumes sustained their strong growth trend.
-- The retail category continues to contribute strongly to worldwide
business growth.
-- The average airline charge was flat; transaction volume decreased
modestly.
- CARDS IN FORCE expansion outside the U.S. was strong at 9%, as
proprietary card increases continued and a substantial number of new
network cards were added over the past year. The decline in the U.S.
reflects:
-- The cancellation of 1.6MM U.S. government cards, effective
11/30/98. Excluding this, U.S. cards in force and basic cards in
force were flat;
-- The cancellation during 1997 and 1998 of certain poorly
performing credit card accounts in conjunction with profitability
reviews; and
-- Reduced U.S. consumer card acquisition activities in 1998 due to
our shift in strategy to expand existing relationships.
4
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 1999 OVERVIEW
---------------------------
TRAVEL RELATED SERVICES (Cont'd)
--------------------------------
o NET CARD FEES: Were flat versus last year as growth in small business
offset a decline in U.S. consumer charge cards in force. The average fee
per card in force was $40 in 1Q `99 versus $38 in 1Q and 4Q '98, mostly due
to the cancellation of the U.S. government cards.
o TRAVEL COMMISSIONS AND FEES: Were up 22% on 25% growth in travel sales
driven by recent acquisitions. The declining revenue earned per dollar of
sales (8.0% in 1Q `99 versus 8.2% in 1Q `98) reflects continued efforts by
airlines to reduce distribution costs and by corporate clients to contain
travel and entertainment expenses.
o OTHER REVENUES: Increased 25% principally reflecting higher lending
assessments and fees and the TBS and ATM acquisitions.
o NET FINANCE CHARGE REVENUE: Rose 16% on 19% growth in worldwide lending
balances and lower net interest yields.
- The yield on the U.S. portfolio declined to 9.4% in 1Q `99 versus 9.6%
in 1Q `98 and 9.5% in 4Q `98 as a higher proportion of the portfolio
was on introductory-rates.
- The variance in the gross revenue and interest expense growth rates of
12% and 3%, respectively, reflects the relative effect of three 25BP
interest rate cuts subsequent to 1Q `98.
o MARKETING AND PROMOTION EXPENSES: Increased 11% on greater acquisition
activity levels both domestically and outside the U.S.
o CHARGE CARD INTEREST EXPENSE: Declined 2% as higher billed business volumes
versus last year were more than offset by a lower worldwide cost of funds.
o HUMAN RESOURCE EXPENSES: Increased 16% versus last year as a result of a
higher average number of employees, merit increases and greater contract
programmer costs for technology related projects.
- The employee count at 3/99 of 70,700 was up approximately 9,600 versus
last year and 1,000 versus 4Q `98 primarily due to the effect of
travel and TBS acquisitions, and increased business volumes.
o OTHER OPERATING EXPENSES: Higher costs related to business growth,
cardmember loyalty programs, acquisitions, professional fees for the
outsourcing of certain collection activities and consultant fees were
partially offset by the benefits of ongoing cost containment efforts.
5
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 1999 OVERVIEW
---------------------------
TRAVEL RELATED SERVICES (Cont'd)
--------------------------------
o CREDIT QUALITY:
--------------
- Charge card credit quality was stable; lending credit indicators
improved in the quarter.
- The provision for losses for charge card products was 15% below last
year as a lower provision rate, reflecting the continuation of
historically good credit indicators, more than offset higher volumes.
- The lending provision for losses rose 14% versus 1Q `98 on 19% growth
in outstanding loans and improved credit quality.
- Reserve coverage ratios at more than 100% of past due balances, were
strong both absolutely and compared with key industry competitors.
- WORLDWIDE CHARGE CARD:
-- Write-off rates improved versus 1Q `98 and were stable versus 4Q
`98. Past due rates were down from last year but up versus 4Q `98
reflecting the normal decline in receivable balances from the
seasonally high 4Q level created by holiday spending.
<TABLE>
<CAPTION>
3/99 12/98 3/98
----- ----- ----
<S> <C> <C> <C>
Loss ratio, net of recoveries 0.43% 0.42% 0.47%
90 days past due as a % of receivables 3.0% 2.7% 3.4%
-- Reserve coverage of past due accounts remained strong despite a
decline in the reserve balance.
<CAPTION>
3/99 12/98 3/98
----- ----- ----
<S> <C> <C> <C>
Reserves (MM) $876 $897 $967
% of receivables 3.7% 3.7% 4.4%
% of past due accounts 126% 138% 131%
- U.S. LENDING:
-- The write-off and past due rates improved.
<CAPTION>
3/99 12/98 3/98
----- ----- ----
<S> <C> <C> <C>
Write-off rate, net of recoveries 5.9% 6.2% 6.3%
30 days past due as a % of loans 3.1% 3.1% 3.6%
-- Cardmember lending reserves were up versus both 1Q `98 and 4Q
`98; coverage of past due accounts increased somewhat.
<CAPTION>
3/99 12/98 3/98
----- ----- ----
<S> <C> <C> <C>
Reserves (MM) $623 $619 $591
% of total loans 3.7% 3.7% 4.2%
% of past due accounts 121% 120% 117%
</TABLE>
6
<PAGE>
7
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 1999 OVERVIEW
---------------------------
AMERICAN EXPRESS FINANCIAL ADVISORS
-----------------------------------
(preliminary) STATEMENT OF INCOME
-------------------
(UNAUDITED)
(millions)
<TABLE>
<CAPTION>
Quarter Ended Percentage
March 31, Inc/(Dec)
--------------------------- ----------
1999 1998
---- ----
<S> <C> <C> <C>
Revenues:
Investment income $ 595 $ 613 (3)%
Management and distribution fees 522 418 25
Other revenues 228 190 20
------ ------
Total revenues 1,345 1,221 10
Provision for losses and benefits:
Annuities 270 297 (9)
Insurance 126 117 7
Investment certificates 64 73 (13)
------ ------
Total 460 487 (6)
------ ------
Total net revenues 885 734 21
------ ------
Expenses:
Human resources 416 351 19
Other operating expenses 157 112 41
------ ------
Total expenses 573 463 24
------ ------
Pretax income 312 271 15
Income tax provision 98 85 15
------ ------
Net income $ 214 $ 186 15
====== ======
</TABLE>
o Net revenue growth of 21% resulted from:
- Increased management fees from larger managed asset levels;
- Greater distribution fees from mutual fund sales, asset levels and the
acquisition of Securities America;
- Higher Other Revenues related to insurance premiums and financial
planning fees; and
- Improved spreads on annuity, insurance and certificate products.
o Margins declined due to the effect of investment spending on items such as
the development of the future advisor platform infrastructure, the
evolution of our online transaction and third party distribution
capabilities, and expansion in Japan.
o The effective tax rate was 31%, even with last quarter and last year.
o ASSETS OWNED, MANAGED AND ADMINISTERED:
<TABLE>
<CAPTION>
Percentage
(billions) March 31, Inc/(Dec)
-------------------- ----------
1999 1998
---- ----
<S> <C> <C> <C>
Assets owned (excluding separate accounts) $37.4 $37.0 1%
Separate account assets 28.2 26.0 9
Assets managed 138.1 122.5 13
Assets administered 15.7 9.9 58
------ ------
Total $219.4 $195.4 12
====== ======
</TABLE>
o INVESTMENT INCOME:
- Gross investment income declined 3% on a lower average yield on
invested assets and a reduced impact from the value of options hedging
outstanding stock market certificates.
- Average invested assets of $31.0B were up 1% versus $30.7B in 1Q `98.
- The average yield was 7.6% versus 7.8% in 1Q `98.
- Insurance, annuity and certificate spreads were up versus last year
and flat versus last quarter.
7
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 1999 OVERVIEW
---------------------------
AMERICAN EXPRESS FINANCIAL ADVISORS (CONT'D)
--------------------------------------------
o ASSET QUALITY remains strong.
- Non-performing assets relative to invested assets were only 0.1% and
were 221% covered by reserves.
- The SFAS 115 related mark-to-market appreciation on the portfolio
(reported in assets pre-tax) was $178MM at 3/99 versus $510MM at 3/98
and $382MM at 12/98.
- Unrealized appreciation on securities held to maturity was $448MM
compared with $641MM at 3/98 and $750MM at 12/98.
o MANAGEMENT AND DISTRIBUTION FEES: The increase of 25% was due to higher
average assets under management, distribution fees from greater mutual fund
sales and asset levels, service fees received from Securities America
planners and higher brokerage fees from substantially increased retail
trading activities.
- ASSETS MANAGED:
<TABLE>
<CAPTION>
Percentage
(billions) March 31, Inc/(Dec)
------------------- ----------
1999 1998
------ ------
<S> <C> <C> <C>
Assets managed for individuals $ 91.2 $ 80.2 14%
Assets managed for institutions 46.9 42.3 11
Separate account assets 28.2 26.0 9
------ ------ --
Total $166.3 $148.5 12
====== ====== ==
</TABLE>
-- The growth in managed assets since 1Q `98 resulted from $9.7B of
market appreciation and $8.1B of net new money.
- During 1Q `99, market appreciation was $3.8B and $1.4B of
net new managed assets were added.
o PRODUCT SALES:
- Total advisor cash sales from all products were strong, up 18% over 1Q
`98.
- Mutual fund sales increased 18%, with high double digit growth in bond
and money market fund sales, and high single digit growth in equity
funds. All load categories (front-, rear- and no-load) showed double
digit improvement.
-- Redemption rates continued to be approximately 50% of the
industry level.
- Annuity sales were down 11%, as variable annuity sales fell
modestly and fixed annuity sales continued to be depressed
by low interest rates; sales of insurance products increased
11%.
- Certificate sales increased 44% from last year reflecting
the rapid growth of certificates sold to clients outside the
U.S. through a joint venture between AEFA and AEB.
- Product sales generated through plans were 67% of total
sales in 1Q `99, versus 65% last year.
o OTHER REVENUES: Were up 20% as a result of higher life insurance premiums
and financial planning fees.
- Financial Planning fees of $21.3MM rose 21% versus 1Q `98.
o PROVISIONS FOR LOSSES AND BENEFITS: Lower annuity product provisions
resulted from both a smaller fixed annuity inforce level and a reduced
accrual rate. Insurance provisions increased reflecting a larger inforce
level and higher claims in the life insurance business lines. Certificate
provisions decreased from a lower accrual rate and a reduced impact versus
last year from appreciation in the S&P 500, which more than offset a higher
inforce level.
8
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 1999 OVERVIEW
---------------------------
AMERICAN EXPRESS FINANCIAL ADVISORS (Cont'd)
--------------------------------------------
o HUMAN RESOURCES: Expenses were up 19% because of larger field force
compensation-related expenses due to growth in sales and asset levels, as
well as higher home office expenses reflecting the Securities America
acquisition, growth in the client services organization and increased
contract programmer costs for technology-related initiatives.
- Beginning in the first quarter of 1999, we have reported contract
programmer costs, which AEFA traditionally included in "Other
Operating Expenses", in "Human Resources Expense" for consistency with
our other business unit reporting. Prior year amounts have been
reclassified to reflect this change.
- BRANDED ADVISOR FORCE: 9,220 at 3/99; +487 advisors, or 6%, versus
3/98, but down 25 advisors versus 12/98, consistent with typical first
quarter seasonal trends.
-- We continue to be optimistic about advisors in the pipeline as
applicant activity remained strong.*
-- The veteran advisor retention rates remain at record levels.
-- Advisor productivity increased.
-- The number of clients and accounts per client were up 6% and 2%,
respectively, versus 1Q `98. Client retention continued in excess
of 95%.
- TOTAL ADVISOR FORCE: 10,372 at 3/99; +534 advisors, or 5%, versus
3/98, and up 22 advisors versus 12/98.
-- Securities America advisors increased by 47 in the quarter as
concerted recruitment efforts showed benefits.
o OTHER OPERATING EXPENSES: The 41% increase reflects costs related to higher
business volumes, the Securities America acquisition, the new advisor
platforms, expansion into Japan, the evolution of our online transaction
and third party distribution capabilities, and greater rent and equipment
support costs for new advisors.
9
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 1999 OVERVIEW
---------------------------
AMERICAN EXPRESS BANK/TRAVELERS CHEQUE
--------------------------------------
(preliminary) STATEMENT OF INCOME
(unaudited)
<TABLE>
<CAPTION>
(millions) Quarter Ended Percentage
March 31, Inc/(Dec)
---------------- ----------
1999 1998
----- ------
<S> <C> <C> <C>
Net revenues:
Interest income $ 193 $ 210 (8)%
Interest expense 119 139 (14)
----- -----
Net interest income 74 71 4
TC investment income 79 80 (1)
Foreign exchange income 18 48 (62)
Commissions, fees and other revenues 76 58 31
----- -----
Total net revenues 247 257 (4)
----- -----
Expenses:
Human resources 82 74 11
Other operating expenses 136 124 10
Provision for losses 17 233 (93)
----- -----
Total expenses 235 431 (46)
----- -----
Pretax income 12 (174) N/A
Income tax benefit (29) (91) (69)
----- -----
Net income $ 41 $ (83) N/A
===== =====
</TABLE>
N/A - not applicable.
o Revenues declined 4% as lower foreign exchange income more than offset
higher commissions, fees and other revenues. AEB's two individual oriented
businesses, Private Banking and Personal Financial Services ("PFS"), both
continued to improve in the quarter as assets managed, deposits and loans
all grew.
- Net interest income at AEB was up 4% versus last year as the effects
of a lower loan portfolio and higher non-performing loans in Asia were
more than offset by a reduction in funding costs.
- TC investment income decreased slightly due to lower yields on higher
average investments.
- Foreign exchange income declined substantially as more stable currency
markets significantly reduced spreads, particularly in the Far East,
and client trading volumes declined.
- Commissions, fees and other revenues increased reflecting higher
Private Banking fees and losses last year within Indonesian security
positions.
o Human resources expense rose 11% due to growth in PFS business activities
and the addition of Private Banking relationship managers. Other operating
expenses increased 10% as a result of higher advertising and promotion
costs related to PFS activities and the launch of WorldExpress funds.
o The provision for losses decreased due to the $213MM 1Q `98 provision
related to exposures in the Asia/Pacific region, principally in Indonesia.
o AEB remained "well capitalized".
<TABLE>
<CAPTION>
3/99 12/98 3/98 Well-Capitalized
----- ----- ---- ----------------
<S> <C> <C> <C> <C>
Tier 1 9.8% 9.8% 9.0% 6.0%
Total 12.1% 12.6% 12.2% 10.0%
Leverage Ratio 5.4% 5.5% 5.1% 5.0%
</TABLE>
10
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 1999 OVERVIEW
---------------------------
AMERICAN EXPRESS BANK/TRAVELERS CHEQUE (CONT'D)
-----------------------------------------------
o EXPOSURES
- AEB's loans outstanding declined to $5.3B at 3/99 versus $5.6B at
12/98 and $6.0B at 3/98. The reduction since 3/98 resulted from a
$1.0B decrease in corporate and correspondent bank loans and a $320MM
increase in consumer and private banking loans, largely in the
Asia/Pacific region. Since 12/98, corporate and correspondent bank
loans were $360MM lower and consumer and private banking loans were up
$40MM despite the sale of approximately $30MM of Hong Kong consumer
loans during the quarter.
- In addition to the loan portfolio, there are other banking activities,
such as forward contracts, various contingencies and market
placements, which added approximately $7.6B to the credit exposures at
3/99 and 12/98 compared with $7.4B at 3/98.
<TABLE>
<CAPTION>
3/31/99
--------------------------------------------------------------
Net
Guarantees 12/31/98
FX and and Total Total
Country Loans Derivatives Contingents Other(1) Exposure(2) Exposure(2)
------- ----- ----------- ----------- ----- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Hong Kong $0.8 -- -- $0.1 $ 1.0 $ 1.1
Indonesia 0.2 -- -- 0.1 0.4 0.4
Singapore 0.3 -- $0.1 0.1 0.5 0.6
Korea 0.1 -- 0.1 0.2 0.4 0.3
Taiwan 0.3 -- 0.1 0.1 0.6 0.5
China -- -- -- -- -- --
Japan -- -- -- 0.1 0.1 0.1
Thailand -- -- -- -- -- --
Other 0.1 -- -- 0.1 0.1 0.1
---- ---- ---- ---- ----- -----
Total Asia/Pacific Region (2) 1.9 $0.1 0.3 0.8 3.1 3.2
---- ---- ---- ---- ----- -----
Chile 0.2 -- -- 0.1 0.4 0.4
Brazil 0.3 -- -- 0.1 0.4 0.4
Mexico 0.1 -- -- -- 0.1 0.1
Peru 0.1 -- -- -- 0.1 0.1
Argentina 0.1 -- -- -- 0.1 0.1
Other 0.1 -- 0.1 0.2 0.4 0.4
---- ---- ---- ---- ----- -----
Total Latin America (2) 0.9 -- 0.2 0.4 1.4 1.4
---- ---- ---- ---- ----- -----
India 0.3 -- -- 0.4 0.8 0.8
Pakistan 0.1 -- -- 0.1 0.2 0.2
Other 0.1 -- -- 0.1 0.2 0.2
---- ---- ---- ---- ----- -----
Total Sub Continent (2) 0.5 -- 0.1 0.6 1.2 1.2
---- ---- ---- ---- ----- -----
Egypt 0.5 -- -- 0.2 0.6 0.7
Other 0.2 -- -- 0.1 0.3 0.3
---- ---- ---- ---- ----- -----
Total Middle East and Africa (2) 0.7 -- 0.1 0.2 0.9 1.0
Total Europe (3) 1.0 0.1 1.1 2.0 4.3 4.4
Total North America (2) 0.2 0.1 0.1 1.5 1.8 1.9
---- ---- ---- ---- ----- -----
Total Worldwide (2) $5.3 $0.3 $1.8 $5.5 $12.8 $13.2
==== ==== ==== ==== ===== =====
</TABLE>
(1) Includes cash, placements and securities.
(2) Individual items may not add to totals due to rounding.
(3) Includes $20MM of exposure to Russia at 3/99 and 12/98.
Note: Includes cross-border and local exposure and does not net local
funding or liabilities against any local exposure.
11
<PAGE>
AMERICAN EXPRESS COMPANY
------------------------
FIRST QUARTER 1999 OVERVIEW
---------------------------
AMERICAN EXPRESS BANK/TRAVELERS CHEQUE (CONT'D)
-----------------------------------------------
o Total non-performing loans for AEB rose to $209MM from $149MM at 3/98 and
$180MM at 12/98. The increase versus last year and last quarter primarily
reflects the expected deterioration in Indonesia. No material write-offs
were recorded in 1Q `99.
o Other non-performing assets at AEB of $64MM at 3/99, primarily foreign
exchange and derivatives contracts, decreased from $102MM at 3/98 and were
flat with last quarter. The decline versus last year reflects write-offs
related to Indonesia in 4Q `98, as anticipated within the 1Q `98 provision.
o AEB's total reserves at 3/99 were $261MM compared with $359MM at 3/98 and
$259MM at 12/98 and are allocated as follows:
<TABLE>
<CAPTION>
(millions) 3/99 12/98 3/98
---- ----- -----
<S> <C> <C> <C>
Loans $218 $214 $294
Other Assets, primarily derivatives 41 43 59
Other Liabilities 2 2 6
---- ---- ----
Total $261 $259 $359
==== ==== ====
</TABLE>
o Management formally reviews the loan portfolio and evaluates credit risk
throughout the year. This evaluation takes into consideration the financial
condition of the borrowers, fair market value of collateral, status of
delinquencies, historical loss experience, industry trends, and the impact
of current economic conditions. As of March 31, 1999 management believes
the loss reserve is appropriate.
12
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