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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1994
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-6908
AMERICAN EXPRESS CREDIT CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 11-1988350
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Rodney Square, Wilmington, Delaware 19801
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (302) 594-3350
None
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Former name, former address and former fiscal year, if changed since last
report.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a)
AND (b) OF FORM 10-Q AND HAS THEREFORE OMITTED CERTAIN ITEMS FROM THIS REPORT
IN ACCORDANCE WITH THE REDUCED DISCLOSURE FORMAT PERMITTED UNDER GENERAL
INSTRUCTION H(2).
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at May 12, 1994
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Common Stock, $.10 par value 1,504,938 shares
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AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
Form 10-Q
INDEX
Page No.
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
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Condensed consolidated balance
sheet - March 31, 1994 and
December 31, 1993 3
Condensed consolidated statement
of income - three months ended
March 31, 1994 and 1993 4
Condensed consolidated statement of
retained earnings - three months ended
March 31, 1994 and 1993 4
Condensed consolidated statement
of cash flows - three months ended
March 31, 1994 and 1993 5
Notes to condensed consolidated
financial statements 6
Item 2. Management's Discussion and Analysis
------------------------------------
of Financial Condition and Results
----------------------------------
of Operations 6
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Part II. OTHER INFORMATION
Item 6. Exhibit and Reports on Form 8-K 9
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AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
PART I
------
CONDENSED CONSOLIDATED BALANCE SHEET
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(millions)
(Unaudited)
March 31, December 31,
1994 1993
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Assets
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Cash and cash equivalents $ 1,879 $ 257
Accounts receivable 12,546 12,968
Less reserve for doubtful accounts 552 542
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11,994 12,426
Loan to affiliate 2,000 2,000
Deferred charges and other assets 263 260
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Total assets $16,136 $14,943
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Liabilities and Shareholder's Equity
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Short-term debt $11,512 $ 9,738
Current portion of long-term debt 548 692
Long-term debt 1,643 1,776
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Total debt 13,703 12,206
Due to affiliates 562 932
Accrued interest and other liabilities 124 97
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Total liabilities 14,389 13,235
Deferred discount revenue 56 46
Shareholder's equity:
Common stock 1 1
Capital surplus 129 129
Retained earnings 1,561 1,532
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Total shareholder's equity 1,691 1,662
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Total liabilities and shareholder's equity $16,136 $14,943
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See notes to condensed consolidated financial statements.
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AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
CONDENSED CONSOLIDATED STATEMENT OF INCOME
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(millions)
(Unaudited)
Three Months Ended
March 31,
-------------------
1994 1993
---- ----
Revenues:
Revenue earned from purchased
accounts receivable $281 $298
Interest income from affiliates 18 17
Interest income from investments 13 13
Other income 2 2
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Total 314 330
Expenses:
Interest 150 148
Provision for doubtful accounts,
net of recoveries 119 122
Other expenses 1 2
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Total 270 272
Income before taxes and extraordinary
charge 44 58
Income tax provision 15 19
--- ---
Income before extraordinary charge 29 39
Extraordinary charge for early
retirement of debt (net of income tax
benefit) - 10
--- ---
Net income $ 29 $ 29
=== ===
CONDENSED CONSOLIDATED STATEMENT OF RETAINED EARNINGS
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(millions)
(Unaudited)
Three Months Ended
March 31,
------------------
1994 1993
---- ----
Retained earnings at beginning of period $1,532 $1,542
Net income 29 29
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Retained earnings at end of period $1,561 $1,571
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See notes to condensed consolidated financial statements.
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AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
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(millions)
(Unaudited)
Three Months Ended
March 31,
-------------------
1994 1993
---- ----
Cash Flows from Operating Activities:
Net income $ 29 $ 29
Adjustments to reconcile net income to net cash and
cash equivalents provided by operating activities:
Extraordinary charge for early retirement of debt - 15
Provision for doubtful accounts, net of recoveries 119 122
Amortization of deferred underwriting fees and bond
discount/premium - 1
Increase (decrease) in deferred discount revenue 10 (26)
(Increase) decrease in deferred tax assets (2) 11
Increase in interest receivable and
operating assets (8) (56)
Increase (decrease) in accrued interest and other
liabilities 27 (16)
(Decrease) increase in due to affiliates (3) 6
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Net cash provided by operating activities 172 86
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Cash Flows from Investing Activities:
Decrease in accounts receivable 362 779
Purchase of net secured receivables from an affiliate (85) -
Recoveries of accounts receivable previously written off 44 45
Repayment from affiliates of loans and deposits - 140
Decrease in due to affiliates from purchased receivables (368) (781)
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Net cash (used in) provided by investing activities (47) 183
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Cash Flows from Financing Activities:
Net increase in short-term debt with maturity less
than ninety days 3,230 1,164
Proceeds from issuance of debt 1,309 1,314
Repayment of debt (3,042) (1,796)
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Net cash provided by financing activities 1,497 682
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Net increase in cash and cash equivalents 1,622 951
Cash and cash equivalents at beginning of period 257 126
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Cash and cash equivalents at end of period $1,879 $1,077
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See notes to condensed consolidated financial statements.
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AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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1. The condensed consolidated financial statements should be read in
conjunction with the Annual Report of American Express Credit
Corporation (Credco) on Form 10-K for the year ended December 31, 1993.
Significant accounting policies disclosed therein have not changed.
The condensed consolidated financial statements are unaudited; however,
in the opinion of management, they include all adjustments (consisting
of normal recurring adjustments) necessary for a fair presentation
of the consolidated financial position of Credco at March 31, 1994
and December 31, 1993 and the consolidated results of its operations,
changes in its retained earnings and cash flows for the three-month
periods ended March 31, 1994 and 1993. Results of operations reported
for interim periods are not necessarily indicative of results for the
entire year.
2. In March 1994, Credco began purchasing secured interest-bearing
receivables, which are included in accounts receivable, from an affiliate,
American Express Deposit Corp. totalling $85 million at March 31, 1994.
These receivables were purchased at fair value. These receivables are
secured by mutual funds and certificates of deposit.
3. For the three-month periods ended March 31, 1994 and 1993, Credco paid
$156 million and $178 million of interest, respectively. Income taxes
paid for each of the three-month periods ended March 31, 1994 and 1993
were $17 million and $1 million, respectively.
Item 2. Management's Discussion and Analysis of
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Financial Condition and Results of Operations
---------------------------------------------
Credco is primarily engaged in the business of purchasing a major portion of
the Cardmember receivables arising from the use of the American Express R
Card, American Express R Gold Card, Platinum Card R and Corporate Card,
issued in the United States, including certain related extended payment plan
receivables, and in designated currencies outside the United States. Credco
also purchases certain receivables arising from the use of the Optima sm
Card. These Cardmember receivables are purchased without recourse from
TRS and certain of its subsidiaries. As of March 31, 1994, there were
35.4 million Cards in force worldwide. In addition, Credco purchases certain
secured interest-bearing receivables from an affiliate. Credco generally
purchases non-interest-bearing Cardmember receivables at face amount less a
specified discount agreed upon from time to time and interest-bearing
Cardmember receivables at face amount. Non-interest-bearing Cardmember
receivables are purchased under agreements that generally provide that the
discount rates shall not be lower than a rate that yields earnings to Credco
equal to at least 1.25 times fixed charges on an annual basis. The agreements
also provide that consideration will be given from time to time to revising the
discount rate to reflect changes in money market interest rates or significant
changes in the collectibility of receivables.
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AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
The average discount rate for the three-month periods ended March 31, 1994
and 1993 was .99 percent and 1.07 percent, respectively. The ratio of
earnings to fixed charges for the three-month periods ended March 31, 1994,
and 1993 was 1.29 and 1.39, respectively. For the first three months of 1993,
the ratio of earnings to fixed charges calculated in accordance with the
Receivables Agreements after the impact of the extraordinary charge was 1.29.
Pretax income depends primarily on the volume and collectibility of American
Express Cardmember receivables purchased, the discount rates applicable
thereto, and the relationship of total discount to Credco's interest expense.
Credco purchased $25.8 billion and $22.4 billion of Cardmember receivables
during the three-month periods ended March 31, 1994 and 1993, respectively.
At March 31, 1994 and 1993, Credco owned $11.3 billion and $9.7 billion,
respectively, of non-interest-bearing receivables. These amounts include
$1.4 billion and $1.1 billion, respectively, of gross participation interests
in non-interest bearing receivables arising out of TRS's asset securitization
program. In addition, at March 31, 1994 and 1993, Credco owned extended payment
plan receivables totalling $1.3 billion and $1.1 billion, respectively. These
amounts consist of certain interest-bearing extended payment plan receivables
and deferred merchandise receivables. For the three-month periods ended March
31, 1994 and 1993, the average life of Cardmember receivables owned by Credco
was 42.1 and 42.9 days, respectively. Credco generally writes off against its
reserve for doubtful accounts the total balance of non-interest-bearing
receivables for which any portion remains unpaid twelve months from the date of
original billing. Interest-bearing receivables are written off when six
contractual payments by the Cardmember are past due. Accounts are written off
earlier if deemed uncollectible.
Credco's write-offs, net of recoveries, as a percentage of the volume of
Cardmember receivables purchased for the three-month periods ended March 31,
1994 and 1993 were .43 percent and .59 percent, respectively. This decrease is
due to a reduction in write-offs and an increase in the volume of Cardmember
receivables purchased.
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AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
The following is an analysis of the increase (decrease) in key revenue and
expense accounts for the three-month period ended March 31, 1994, compared
with the three-month period ended March 31, 1993 (in millions):
Revenue earned from purchased accounts receivable -
changes attributable to:
Volume of receivables purchased $ 44
Discount and interest rates (61)
---
Total $(17)
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Interest income from affiliates - changes attributable to:
Volume of average investments outstanding $ 0
Interest rates 1
---
Total $ 1
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Interest expense - changes attributable to:
Volume of average debt outstanding $ 14
Interest rates (12)
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Total $ 2
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Provision for doubtful accounts - changes attributable to:
Volume of receivables purchased $ 25
Provision rates and volume of recoveries (28)
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Total $ (3)
===
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AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
PART II. OTHER INFORMATION
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Item 6. Exhibit and Reports on Form 8-K
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(a) Exhibit:
12. Computation in support of ratio of earnings to fixed
charges.
(b) Reports on Form 8-K:
None.
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AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
AMERICAN EXPRESS CREDIT CORPORATION
(REGISTRANT)
/s/ Vincent P. Lisanke
Vincent P. Lisanke
President and CEO
May 12, 1994
/s/ C. J. Martin
C. J. Martin
Vice President - Finance
(Chief Accounting Officer)
May 12, 1994
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AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
EXHIBIT INDEX
Pursuant to Item 601 of Regulation S-K
Description How Filed
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Exhibit 12. Computation in support of ratio of Electronically filed
earnings to fixed charges. herewith.
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EXHIBIT 12
AMERICAN EXPRESS CREDIT CORPORATION
COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES
(millions)
Three Months Ended
March 31, Year Ended December 31,
(Unaudited)
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1994 1993 1993 1992 1991 1990 1989
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Earnings:
Income before
extraordinary
charge $ 29 $ 39 $137 $138 $ 174 $ 191 $ 190
Income tax provision 15 19 64 70 87 99 71
Interest expense 150 148 599 728 946 1,022 898
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Total earnings $194 $206 $800 $936 $1,207 $1,312 $1,159
=== === === === ===== ===== =====
Fixed charges -
interest expense $150 $148 $599 $728 $ 946 $1,022 $898
=== === === === ===== ===== ===
Ratio of earnings
to fixed charges 1.29 1.39* 1.34** 1.29 1.28 1.28 1.29
Note: Gross rentals on long-term leases were minimal in amount in each of
the periods shown.
* The ratio of earnings to fixed charges calculated in accordance
with the Receivables Agreements after the impact of the
extraordinary charge of $15 million (pretax) was 1.29.
** The ratio of earnings to fixed charges calculated in accordance
with the Receivables Agreements after the impact of the
extraordinary charges of $34 million (pretax) was 1.28.
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