<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM 10-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
[ ] 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
(Exact name of Registrant as specified in its charter)
Delaware 11-1988350
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Rodney Square, Wilmington, Delaware 19801
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number including area code: (302) 594-3350
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
--------------------------------------
6 1/8% Senior Debentures due June 15, 2000 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION
J(1)(a) AND (b) OF FORM 10-K AND HAS THEREFORE OMITTED CERTAIN ITEMS FROM
THIS REPORT IN ACCORDANCE WITH THE REDUCED DISCLOSURE FORMAT PERMITTED
UNDER INSTRUCTION J.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
---
American Express Company, through a wholly-owned subsidiary, owns all of
the outstanding common stock of the Registrant. Accordingly, there is no
market for the Registrant's common stock. At March 30, 1995, 1,504,938
shares were outstanding.
Documents Incorporated by Reference: None<PAGE>
<PAGE>
PART I
Item 1. BUSINESS.
Introduction
American Express Credit Corporation (including its subsidiaries, where
appropriate, "Credco") was incorporated in Delaware in 1962 and was
acquired by American Express Company ("American Express") in December 1965.
On January 1, 1983, Credco became a wholly-owned subsidiary of American
Express Travel Related Services Company, Inc. (including its subsidiaries,
where appropriate, "TRS"), a wholly-owned subsidiary of American Express.
Credco is primarily engaged in the business of purchasing most
Cardmember receivables arising from the use of the American Express R Card,
including the American Express R Gold Card, Platinum Card R and Corporate
Card issued in the United States, and 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. The American Express Card and the Optima Card are referred
to herein as the "Card".
American Express Card Business
The Card is issued by TRS. Cards are currently issued in 35
currencies. The Card, which is issued to individuals for their personal
account or through a corporate account established by their employer for
its business purposes, permits Cardmembers to charge purchases of goods and
services in the United States and in most countries around the world at
establishments that have agreed to accept the Card. TRS accepts from each
participating establishment the charges arising from Cardmember purchases
at a discount that varies with the type of participating establishment, the
charge volume, the timing and method of payment to the establishment, the
method of submission of charges and, in certain instances, the average
charge amount and the amount of information provided.
Except in the case of the Optima Card, the Card is primarily designed
for use as a method of payment and not as a means of financing purchases of
goods and services and carries no pre-set spending limit. Charges are
approved based on a Cardmember's past spending and payment patterns, credit
history and personal resources. Except in the case of the Optima Card and
certain extended payment plans, payment of the full amount billed each
month is due from the Cardmember upon receipt of the bill, and no finance
charges are assessed. Card accounts that are past due by a given number of
days are subject, in most cases, to a delinquency assessment.
The Optima Card is a revolving credit card which is marketed to
individuals in the United States and several other countries.
The American Express Card and consumer lending businesses are subject
to extensive regulation in the United States under a number of federal laws
and regulations. Federal legislation regulates abusive debt collection
practices. In addition, a number of states and foreign countries have
similar consumer credit protection and disclosure laws. These laws and
regulations have not had, and are not expected to have, a material adverse
effect on the Card and consumer lending businesses, either in the United
States or on a worldwide basis.
-1-<PAGE>
<PAGE>
General Nature of Credco's Business
Credco purchases certain Cardmember receivables arising from the use
of the Card throughout the world pursuant to agreements (the "Receivables
Agreements") with TRS. Net income primarily depends on the volume of
receivables arising from the use of the Card purchased by Credco, the
discount rates applicable thereto, the relationship of total discount to
Credco's interest expense and the collectibility of the receivables
purchased. The average life and collectibility of accounts receivable
generated by the use of the Card are affected by factors such as general
economic conditions, overall levels of consumer debt and the number of new
Cards issued.
Credco purchases Cardmember receivables without recourse. Amounts
resulting from unauthorized charges (for example, those made with a lost or
stolen Card) are excluded from the definition of "receivables" under the
Receivables Agreements and are not eligible for purchase by Credco. If the
unauthorized nature of the charge is discovered after purchase by Credco,
TRS repurchases the charge from Credco.
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. The Receivables
Agreements generally require that non-interest-bearing receivables be
purchased at discount rates which yield to Credco earnings of not less than
1.25 times its fixed charges on an annual basis. The Receivables
Agreements also provide that consideration will be given from time to time
to revising the discount rate applicable to purchases of new receivables to
reflect changes in money market rates or significant changes in the
collectibility of receivables. New groups of Cardmember receivables are
generally purchased net of reserve balances applicable thereto.
Extended payment plan receivables are primarily funded by subsidiaries
of TRS other than Credco; however, Credco purchases certain extended
payment plan receivables. At December 31, 1994 and 1993, extended payment
plan receivables owned by Credco totaled $1.5 billion and $1.1 billion
respectively, representing 10.4 percent and 8.8 percent, respectively, of
all receivables owned by Credco. These extended payment plan receivables
consist of certain interest-bearing extended payment plan receivables
comprised principally of Optima and Sign & Travel accounts and non-
interest-bearing deferred merchandise receivables.
As part of TRS's asset securitization program, Credco purchases
participation interests in securitized receivables. See note 3 in "Notes
to Consolidated Financial Statements" appearing herein.
The Card issuers, at their expense and as agents for Credco, perform
accounting, clerical and other services necessary to bill and collect all
Cardmember receivables owned by Credco. The Receivables Agreements provide
that, without prior written consent of Credco, the credit standards used to
determine whether a Card is to be issued to an applicant may not be
materially reduced and that the policy as to the cancellation of Cards for
credit reasons may not be materially liberalized.
-2-<PAGE>
<PAGE>
The Receivables Agreements may be terminated at any time by the
parties thereto. Alternatively, such parties may agree to reduce the
required 1.25 fixed charge coverage ratio, which could result in lower
discount rates and, consequently, lower revenues and net income of Credco.
Volume of Business
The following table shows the volume of Cardmember receivables
purchased by Credco, net of Cardmember receivables sold to affiliates,
during each of the years indicated, together with the receivables owned by
Credco at the end of such years (millions):
Volume of Cardmember Cardmember Receivables Owned
Receivables Purchased at December 31,
Year Domestic Foreign Total Domestic Foreign Total
---- -------- ------- -------- -------- ------- -------
1994 $83,851 $25,639 $109,490 $11,273 $2,747 $14,020
1993 80,202 14,635 94,837 10,758 2,210 12,968
1992 81,311 13,041 94,352 10,412 1,287 11,699
1991 80,844 18,934 99,778 10,581 1,639 12,220
1990 87,323 16,117 103,440 11,278 1,790 13,068
TRS's asset securitization program disclosed above reduced the volume
of domestic Cardmember receivables purchased and the amount owned by Credco
at December 31, 1994, 1993 and 1992.
In July 1993, Credco began purchasing certain foreign currency
Cardmember receivables which had been sold to an affiliate during the
period from December 1991 through June 1993. In December 1993, Credco
repurchased participation interests in a portion of its foreign receivables
which had previously been sold to an affiliate during the period from
December 1991 through November 1993. These transactions increased the
volume of foreign Cardmember receivables purchased and the amount owned by
Credco from December 31, 1993.
The average life of Cardmember receivables owned by Credco for each of
the five years ending December 31, 1994 (based upon the ratio of the
average amount of both billed and unbilled receivables owned by Credco at
the end of each month during the years indicated to the volume of
Cardmember receivables purchased by Credco, net of Cardmember receivables
sold to affiliates) was 43 days.
The following table shows the aging of billed, non-interest-bearing
Cardmember receivables:
December 31,
1994 1993
-------------------------------------------------------------------
Current 78.4% 80.5%
30 to 59 days 15.8 14.0
60 to 89 days 2.4 2.0
90 days and over 3.4 3.5
-3-<PAGE>
<PAGE>
Loss Experience
Credco generally writes off against its reserve for doubtful accounts
the total balance in an account for which any portion remains unpaid 12
months from the date of original billing for non-interest-bearing
Cardmember receivables and after six contractual payments are past due for
interest-bearing Cardmember receivables. Accounts are written off earlier
if deemed uncollectible.
The following table sets forth Credco's write-offs, net of recoveries
for the year, expressed as a percentage of the volume of Cardmember
receivables purchased by Credco, net of Cardmember receivables sold to
affiliates, in each of the years indicated:
Year
---------------------------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
.41% .57% .70% .81% .70%
Sources of Funds
Credco's business is financed by short-term borrowings consisting
principally of commercial paper, borrowings under bank lines of credit and
issuances of medium and long-term debt, as well as through operations. The
weighted average interest costs on an annual basis of all borrowings, after
giving effect to commitment fees under lines of credit and the impact of
interest rate swaps, during the following years were:
Weighted Average
Year Interest Cost
---- -------------
1994 5.06%
1993 4.61
1992 5.80
1991 7.54
1990 8.85
From time to time, American Express and certain of its subsidiaries
purchase Credco's commercial paper at prevailing rates, enter into variable
rate note agreements at interest rates generally above the 13-week treasury
bill rate and provide lines of credit. The largest amount of borrowings
from American Express or its subsidiaries at any month end during the five
years ended December 31, 1994 was $2.7 billion. At December 31, 1994, the
amount borrowed was $2.0 billion. See notes 4 and 5 in "Notes to
Consolidated Financial Statements" appearing herein for information about
Credco's debt, including Credco's lines of credit from various banks and
long-term debt.
Foreign Operations
See notes 2, 7 and 10 in "Notes to Consolidated Financial Statements"
appearing herein for information about Credco's foreign exchange risks and
operations in different geographical regions.
Employees
At December 31,1994, Credco had 51 employees.
-4-<PAGE>
<PAGE>
Item 2. PROPERTIES.
Credco neither owns nor leases any material physical properties.
Item 3. LEGAL PROCEEDINGS.
There are no material pending legal proceedings to which Credco or its
subsidiaries is a party or of which any of their property is the subject.
Credco knows of no such proceedings being contemplated by government
authorities or other parties.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Omitted pursuant to General Instruction J(2)(c) to Form 10-K.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS.
American Express, through a wholly-owned subsidiary, TRS, owns all of
the outstanding common stock of Credco. Therefore, there is no market for
Credco's common stock.
Credco paid dividends of $100 million and $125 million to TRS in
December, 1994 and 1993, respectively.
For information about limitations on Credco's ability to pay
dividends, see note 6 in "Notes to Consolidated Financial Statements"
appearing herein.
-5-<PAGE>
<PAGE>
Item 6. SELECTED FINANCIAL DATA.
The following summary of certain consolidated financial information of
Credco was derived from audited financial statements for the five years
ended December 31, 1994.
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(dollars in millions)
Income Statement Data
Revenues 1,401 1,282 1,605 2,070 2,131
Interest expense 736 599 728 946 1,022
Provision for doubtful
accounts, net of
recoveries 443 475 661 855 811
Income tax provision 75 64 70 87 99
Extraordinary charge net
of taxes - 22 - - -
Net income 139 115 138 174 191
Balance Sheet Data
Accounts receivable 14,020 12,968 11,699 12,220 13,068
Reserve for doubtful
accounts (498) (542) (603) (731) (719)
Total assets 16,868 14,943 13,631 14,127 14,222
Short-term debt 11,525 9,738 7,581 7,918 7,450
Current portion of
long-term debt 405 692 969 768 823
Long-term debt 2,282 1,776 2,303 3,136 3,403
Shareholder's equity 1,733 1,662 1,672 1,784 1,610
Cash Dividends 100 125 250 - -
-6-<PAGE>
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources
Credco's receivables portfolio consists of charge card receivables,
participation interests in charge card receivables and extended payment
plan receivables purchased without recourse from TRS throughout the world.
At December 31, 1994 and 1993, respectively, Credco owned $12.6 billion
and $11.8 billion of charge card receivables and participations in charge
card receivables, representing 89.6 percent and 91.2 percent of the total
receivables owned, and $1.5 billion and $1.1 billion of extended payment
plan receivables, representing 10.4 percent and 8.8 percent of the total
receivables owned.
At December 31, 1994 and 1993, $2 billion of variable rate loans made to
American Express Centurion Bank ("Centurion Bank") were outstanding, which
are secured by Optima receivables owned by Centurion Bank. The loan
agreements require Centurion Bank to maintain, as collateral, Optima
receivables equal to the outstanding loan balance plus an amount equal to
three times the receivable reserve applicable to such Optima receivables.
Credco's assets are financed through a combination of short-term debt,
long-term senior notes, equity capital and retained earnings. Daily funding
requirements are met primarily by the sale of commercial paper. Credco has
readily sold the volume of commercial paper necessary to meet its funding
needs as well as to cover the daily maturities of commercial paper issued.
The average amount of commercial paper outstanding was $10.0 billion for
1994 and $8.7 billion for 1993.
An alternate source of borrowing consists of committed credit line
facilities. The aggregate commitment of these facilities is generally
maintained at 50 percent of short-term debt, net of short-term investments
and cash equivalents. At December 31, 1994 and 1993, Credco, through its
wholly-owned subsidiary, American Express Overseas Credit Corporation
Limited ("AEOCC"), had outstanding borrowings of $42 million and $58
million, respectively, under these committed lines of credit. In addition,
Credco, through AEOCC, had short-term borrowings under uncommitted lines of
credit totaling $150 million and $65 million at December 31, 1994 and 1993,
respectively.
In May 1994, Credco issued a $910 million variable rate bond at current
interest rates to American Express due June 1, 2004, as part of a
redeployment of corporate assets by American Express. In July 1994 and
December 1994, Credco purchased $300 million and $350 million,
respectively, of variable rate bonds at current interest rates from
American Express due July 15, 2004. At December 31, 1994, these amounts
were included in long-term debt and loans and deposits with affiliates,
respectively. During 1994, 1993 and 1992, Credco's average long-term debt
outstanding was $2.6 billion, $2.8 billion and $3.7 billion, respectively.
At December 31, 1994, Credco had $810 million of medium and long-term debt
which may be issued under shelf registrations filed with the Securities and
Exchange Commission.
Credco paid dividends to TRS of $100 million and $125 million in December,
1994 and 1993, respectively.
-7-<PAGE>
<PAGE>
Results of Operations
Credco purchases Cardmember receivables without recourse from TRS. Non-
interest-bearing Cardmember receivables are purchased at face amount less a
specified discount agreed upon from time to time, and interest-bearing
Cardmember receivables are generally purchased at face amount. Non-
interest-bearing receivables are purchased under Receivables Agreements
that generally provide that the discount rate shall not be lower than a
rate that yields earnings of at least 1.25 times fixed charges on an annual
basis. The ratio of earnings to fixed charges was 1.29, 1.34 and 1.29 in
1994, 1993 and 1992, respectively. The ratio of earnings to fixed charges
in 1993 calculated in accordance with the Receivables Agreements after the
impact of the extraordinary charge, resulting from the early retirement of
debt, was 1.28. The Receivables Agreements also provide that consideration
will be given from time to time to revising the discount rate applicable to
purchases of new receivables to reflect changes in money market interest
rates or significant changes in the collectibility of receivables. Pretax
income depends primarily on the volume of Cardmember receivables purchased,
the discount rates applicable thereto, the relationship of total discount
to Credco's interest expense and the collectibility of the receivables
purchased. The average life of Cardmember receivables was 43 days for each
of the years ended December 31, 1994, 1993 and 1992.
-8-<PAGE>
<PAGE>
The following is an analysis of the increase (decrease) in key revenue
and expense accounts (millions):
---------------------------------------------------------------------------
1994 1993 1992
---------------------------------------------------------------------------
Revenue earned from purchased accounts
receivable-changes attributable to:
Volume of receivables purchased $ 186 $ 24 $ (89)
Discount rate (112) (334) (333)
---------------------------------------------------------------------------
Total $ 74 $(310) $(422)
---------------------------------------------------------------------------
Interest income from affiliates-changes
attributable to:
Average loans $ 3 $ (7) $ 19
Interest rates 28 (14) (51)
---------------------------------------------------------------------------
Total $ 31 $ (21) $ (32)
---------------------------------------------------------------------------
Interest income from investments-changes
attributable to:
Average investments $ (8) $ 14 $ 34
Interest rates 21 (11) (40)
---------------------------------------------------------------------------
Total $ 13 $ 3 $ (6)
---------------------------------------------------------------------------
Interest expense-changes attributable to:
Average debt $ 73 $ 24 $ 1
Interest rates 64 (153) (219)
---------------------------------------------------------------------------
Total $ 137 $(129) $(218)
---------------------------------------------------------------------------
Provision for doubtful accounts-changes
attributable to:
Volume of receivables purchased $ 104 $ 9 $ (57)
Provision rates and volume of recoveries (136) (195) (137)
---------------------------------------------------------------------------
Total $ (32) $(186) $(194)
---------------------------------------------------------------------------
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
1. Financial Statements.
See "Index to Financial Statements" at page F-1 hereof.
2. Supplementary Financial Information.
(a) Selected quarterly financial data. See note 11 in
"Notes to Consolidated Financial Statements" appearing
herein.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
-9-<PAGE>
<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Omitted pursuant to General Instruction J(2)(c) to Form 10-K.
Item 11. EXECUTIVE COMPENSATION.
Omitted pursuant to General Instruction J(2)(c) to Form 10-K.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Omitted pursuant to General Instruction J(2)(c) to Form 10-K.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Omitted pursuant to General Instruction J(2)(c) to Form 10-K.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON
FORM 8-K.
(a) 1. Financial Statements:
See "Index to Financial Statements" at page F-1 hereof.
2. Financial Statement Schedule:
See "Index to Financial Statements" at page F-1 hereof.
3. Exhibits:
See "Exhibit Index" hereof.
(b) Reports on Form 8-K:
None.
-10-
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
DATE March 30, 1995 /s/ Vincent P. Lisanke
-------------- -------------------------------
Vincent P. Lisanke
President and
Chief Executive Officer
Pursuant to the requirement of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
DATE March 30, 1995 /s/ Vincent P. Lisanke
-------------- --------------------------------
Vincent P. Lisanke
President, Chief Executive
Officer and Director
(principal executive and
principal accounting
officer)
DATE March 30, 1995 /s/ Walter S. Berman
-------------- --------------------------------
Walter S. Berman
Chairman of the Board
and Director (principal financial
officer)
DATE March 30, 1995 /s/ Michael P. Monaco
-------------- --------------------------------
Michael P. Monaco
Director
-11-
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<PAGE>
AMERICAN EXPRESS CREDIT CORPORATION
INDEX TO FINANCIAL STATEMENTS
COVERED BY REPORT OF INDEPENDENT AUDITORS
(Item 14(a))
Page Number
-----------------------
Financial Statements
Report of independent auditors............... F - 2
Consolidated statements of income for the
three years ended December 31, 1994 ......... F - 3
Consolidated balance sheets at December 31,
1994 and 1993 ............................... F - 4
Consolidated statements of cash flows for
the three years ended December 31, 1994...... F - 5
Consolidated statements of shareholder's equity
for the three years ended December 31, 1994 F - 6
Notes to consolidated financial statements .. F - 7 to F - 15
Schedule:
II - Valuation and qualifying accounts for
the years ended December 31, 1994,
1993 and 1992 ......................... F - 16
All other schedules are omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the
consolidated financial statements or notes thereto.
F-1
<PAGE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
---------------------------------------------------------------------------
The Board of Directors
American Express Credit Corporation
We have audited the accompanying consolidated balance sheets of American
Express Credit Corporation as of December 31, 1994 and 1993, and the
related consolidated statements of income, shareholder's equity and cash
flows for each of the three years in the period ended December 31, 1994.
Our audits also included the financial statement schedule listed in the
Index at Item 14(a). These financial statements and schedule are the
responsibility of American Express Credit Corporation's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of American
Express Credit Corporation at December 31, 1994 and 1993, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles. Also, in our opinion, the
related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
Ernst & Young LLP
New York, New York
February 2, 1995
F-2
<PAGE>
<PAGE>
AMERICAN EXPRESS CREDIT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(millions)
-------------------------------------------------------------------------
Year Ended December 31, 1994 1993 1992
-------------------------------------------------------------------------
Revenues
Revenue earned from purchased
accounts receivable $1,213 $1,139 $1,449
Interest income from affiliates 101 70 91
Interest income from investments 80 67 64
Other income 7 6 1
---------------------------------------------------------------------------
Total 1,401 1,282 1,605
---------------------------------------------------------------------------
Expenses
Interest 736 599 728
Provision for doubtful accounts, net
of recoveries of $177, $175 and $201 443 475 661
Operating expenses 8 7 8
---------------------------------------------------------------------------
Total 1,187 1,081 1,397
---------------------------------------------------------------------------
Income before taxes 214 201 208
Income tax provision 75 64 70
---------------------------------------------------------------------------
Income before extraordinary charges 139 137 138
Extraordinary charges for early
retirement of debt (net of income
taxes of $12 million) - 22 -
---------------------------------------------------------------------------
Net income $ 139 $ 115 $ 138
---------------------------------------------------------------------------
---------------------------------------------------------------------------
See notes to consolidated financial statements.
F-3
<PAGE>
<PAGE>
AMERICAN EXPRESS CREDIT CORPORATION
CONSOLIDATED BALANCE SHEETS
(millions)
-----------------------------------------------------------------------------
December 31, 1994 1993
-----------------------------------------------------------------------------
Assets
Cash and cash equivalents $ 460 $ 257
Accounts receivable 14,020 12,968
Less reserve for doubtful accounts 498 542
-----------------------------------------------------------------------------
13,522 12,426
Loans and deposits with affiliates 2,650 2,000
Deferred charges and other assets 236 260
-----------------------------------------------------------------------------
Total assets $16,868 $14,943
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Liabilities and shareholder's equity
Short-term debt $11,525 $ 9,738
Current portion of long-term debt 405 692
Long-term debt 2,282 1,776
Due to affiliates 707 932
Accrued interest and other liabilities 121 97
-----------------------------------------------------------------------------
Total liabilities 15,040 13,235
-----------------------------------------------------------------------------
Deferred discount revenue 95 46
-----------------------------------------------------------------------------
Shareholder's equity:
Common stock-authorized 3,000,000
shares of $.10 par value; issued
and outstanding 1,504,938 shares 1 1
Capital surplus 161 129
Retained earnings 1,571 1,532
-----------------------------------------------------------------------------
Total shareholder's equity 1,733 1,662
-----------------------------------------------------------------------------
Total liabilities and shareholder's
equity $16,868 $14,943
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
See notes to consolidated financial statements.
F-4<PAGE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN EXPRESS CREDIT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------
(millions)
Year Ended December 31, 1994 1993 1992
------------------------------------------------------------------------------
Cash Flows From Operating Activities:
<S> <C> <C> <C>
Net Income $ 139 $ 115 $ 138
Adjustments to reconcile net income to net cash
provided by operating activities:
Extraordinary charge for early retirement of debt - 34 -
Provision for doubtful accounts, net of recoveries 443 475 661
Amortization of deferred underwriting fees and
bond discount/premium 2 5 4
Increase (decrease) in deferred discount revenue 48 (26) (23)
Decrease in deferred tax assets 38 46 6
(Increase) decrease in interest receivable
and operating assets (23) (33) 24
Increase (decrease) in accrued interest and other
liabilities 24 (43) (1)
Decrease in due to affiliates (10) (16) (5)
------------------------------------------------------------------------------
Net cash provided by operating activities 661 557 804
------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Increase in accounts receivable (2,434) (2,488) (1,874)
Sale of net accounts receivable to an affiliate 1,192 914 2,202
Sale of participation interests in accounts
receivable to an affiliate 920 - 297
Repurchase of participation interests from
affiliates (1,170) (435) (1,207)
Purchase of net secured receivables from an
affiliate (85) - -
Recoveries of accounts receivable previously
written off 177 175 201
Loans and deposits with affiliates (650) - (140)
Repayment from affiliates of loans and deposits - 141 -
Net (decrease) increase in loans from affiliates
with maturities less than ninety days (487) 62 692
------------------------------------------------------------------------------
Net cash (used in) provided by investing
activities (2,537) (1,631) 171
------------------------------------------------------------------------------
<PAGE>
Cash Flows From Financing Activities:
Increase in short-term debt, net 5,238 6 197
Proceeds from issuance of debt 2,633 9,071 4,750
Redemption of debt (5,692) (7,747) (5,871)
Dividend paid to TRS (100) (125) (250)
------------------------------------------------------------------------------
Net cash provided by (used in) financing
activities 2,079 1,205 (1,174)
------------------------------------------------------------------------------
Effect of exchange rate changes on cash and
cash equivalents - - (2)
------------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents 203 131 (201)
------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 257 126 327
------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 460 $ 257 $ 126
------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
<PAGE>
AMERICAN EXPRESS CREDIT CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
Years Ended December 31, 1994, 1993 and 1992
(millions)
Total
Shareholder's Common Capital Retained
Equity Shares Surplus Earnings
-------------------------------------------
Balances at January 1, 1992 $1,784 $ 1 $ 129 $1,654
Net Income 138 138
Dividends to TRS (250) (250)
----- ----- ----- -----
Balances at December 31, 1992 1,672 1 129 1,542
Net Income 115 115
Dividends to TRS (125) (125)
----- ----- ----- -----
Balances at December 31, 1993 1,662 1 129 1,532
Net Income 139 139
Dividends to TRS (100) (100)
Contributions from TRS 32 32
----- ----- ----- -----
Balances at December 31, 1994 $1,733 $ 1 $ 161 $1,571
===== ===== ===== =====
See notes to consolidated financial statements.
F-6
<PAGE>
<PAGE>
AMERICAN EXPRESS CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
___________________________________________________________________________
1. Basis of Presentation
American Express Credit Corporation together with its subsidiaries
("Credco") is a wholly-owned subsidiary of American Express Travel Related
Services Company, Inc. ("TRS"), which is a wholly-owned subsidiary of
American Express Company ("American Express"). American Express Overseas
Credit Corporation Limited together with its subsidiaries ("AEOCC") and
Credco Receivables Corp. ("CRC") are wholly-owned subsidiaries of Credco.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Credco and all its subsidiaries. All significant intercompany transactions
have been eliminated.
Revenue Earned from Purchased Accounts Receivable
A portion of discount revenue earned on purchases of non-interest-bearing
Cardmember receivables equal to the provision for doubtful accounts is
recognized as income at the time of purchase; the remaining portion is
deferred and recorded as income ratably over the period that the
receivables are outstanding.
Finance charge income on interest-bearing extended payment plan receivables
is recognized as it is earned. Credco ceases accruing this income after
six contractual payments are past due, or earlier, if deemed uncollectible.
Accruals that cease generally are not resumed.
Reserve for Doubtful Accounts
The reserve for doubtful accounts is established at the time receivables
are purchased and is based on historical collection experience and
evaluation of the current status of existing receivable balances. Credco
generally writes off against its reserve for doubtful accounts the total
balance in an account for which any portion remains unpaid twelve months
from the date of original billing for non-interest-bearing Cardmember
receivables and after six contractual payments are past due for interest-
bearing Cardmember receivables. Accounts are written off earlier if deemed
uncollectible.
Fair Values of Financial Instruments
The fair values of financial instruments are estimates based upon current
market conditions and perceived risks and require varying degrees of
management judgment.
The fair values of long-term debt and derivative and other off-balance-
sheet financial instruments are included in the related footnotes. For all
other financial instruments, the carrying amounts in the consolidated
balance sheets approximate the fair values.
F-7
<PAGE>
<PAGE>
Interest Rate Transactions
Credco enters into various interest rate agreements as a means of hedging
its interest rate exposure. The net interest receivable or payable in
these agreements is recorded as an adjustment to interest expense and is
recognized in earnings over the life of the agreements.
Foreign Currency
Foreign currency assets and liabilities are translated into their U.S.
dollar equivalents based on rates of exchange prevailing at the end of each
year. Revenue and expense accounts are translated at exchange rates
prevailing during the year. Credco enters into various foreign exchange
transactions as a means of hedging foreign exchange exposure. Foreign
exchange contracts generally are marked-to-market, with the unrealized gain
or loss offset by the gain or loss on the hedged position.
Cash and Cash Equivalents
Credco has defined cash and cash equivalents as cash and short-term
investments with a maturity of ninety days or less at the time of purchase.
At December 31, 1994 and 1993, included in cash and cash equivalents was
$75 million and $200 million, respectively, of overnight securities
purchased to resell.
3. Accounts Receivable
At December 31, 1994 and 1993, respectively, Credco owned $12.6 billion and
$11.8 billion of charge card receivables and participations in charge card
receivables, representing 89.6 percent and 91.2 percent of the total
receivables owned. In 1992, Credco purchased participation interests in
the seller's interest in Cardmember receivables owned by a Master Trust
which was formed by TRS as part of an asset securitization program. In
1994 and 1993, Credco purchased additional participation interests. At
December 31, 1994 and 1993, Credco owned approximately $2.2 billion and
$2.0 billion, respectively, of participation interests in securitized
receivables, representing 15.9 percent and 15.4 percent, respectively, of
its total accounts receivable.
Credco purchases certain billed and unbilled Cardmember receivables arising
from extended payment plans from certain TRS subsidiaries. Credco owned
$1.5 billion and $1.1 billion of these receivables as of December 31, 1994
and 1993, representing 10.4 percent and 8.8 percent, respectively, of its
total accounts receivable. Finance charges on such interest-bearing
extended payment plan receivables ranged from .67 percent to 1.75 percent
per month of the unpaid receivable balance as of December 31, 1994. These
finance charges, which are included in revenues, were $181 million, $136
million and $149 million for 1994, 1993 and 1992, respectively.
F-8
<PAGE>
<PAGE>
4. Short-term Debt
At December 31, short-term debt consisted of (millions):
---------------------------------------------------------------------------
1994 1993
---------------------------------------------------------------------------
Commercial paper $ 9,849 $8,810
Borrowings from affiliates 1,127 588
Borrowings under lines of credit 192 123
Borrowing agreements with bank trust departments
and others 357 217
---------------------------------------------------------------------------
Total short-term debt $11,525 $9,738
---------------------------------------------------------------------------
Credco has various facilities available to obtain short-term credit,
including the issuance of commercial paper and agreements with banks.
Credco had unused committed credit lines totaling $4.9 billion and $4.4
billion at December 31, 1994 and 1993, respectively. Credco pays fees to
the financial institutions that provide these credit line facilities. The
fair value of the unused lines of credit is not significant at December 31,
1994 and 1993.
At December 31, 1994 and 1993, Credco, through AEOCC, had short-term
borrowings under uncommitted lines of credit totaling $150 million and $65
million, respectively, and borrowings under committed lines of credit
totaling $42 million and $58 million, respectively.
Credco's annual weighted average short-term interest rate was 4.74 percent,
3.57 percent and 4.73 percent for the years ended December 31, 1994, 1993
and 1992, respectively. These rates include the cost of maintaining credit
line facilities for the periods and the impact of interest rate swaps. At
December 31, 1994, $1.9 billion of short-term debt outstanding was modified
by interest rate swaps, resulting in a year-end weighted average effective
interest rate of 5.80%.
Credco paid $508 million, $347 million and $356 million of interest on
short-term debt obligations in 1994, 1993 and 1992, respectively.
<PAGE>
5. Long-term Debt
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
1994 1993
--------------------------------------------------------------------------------- --------------------------
Year-End
Effective
Notional Year-End Interest Year-End
Outstanding Amount of Stated Rate Rate with Maturity Outstanding Stated Rate
December 31, (millions) Balance Swaps on Debt(a,b) Swaps (b) of Swaps Balance on Debt(b)
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Senior notes
due 1995-2005 1,285 $825 7.43% 7.64% 1996-2000 $1,687 7.56%
Japanese yen senior bonds,
due 1995-1996 217 98 8.00% 8.75% 1996 251 7.56%
Variable rate debt with
American Express due 2004 910 - 5.59% - - - -
Medium-term notes 270 25 5.40% 5.61% 1997 424 5.40%
Other senior notes 6 - 7.33% - - 7 7.33%
Pound sterling note due 1994 - - - - - 60 10.00%
Canadian dollar note due 1994 - - - - - 45 4.90%
Net unamortized bond discount (1) - - - - (6) -
-------------------------------------------------------------------------------------------------------------
Total long-term debt $2,687 $948 $2,468
-------------------------------------------------------------------------------------------------------------
</TABLE>
(a) For the floating rate debt issuance, the stated rate was based on the
rate at December 31, 1994; this rate is not an indication of future
interest rates.
(b) Weighted average rates were determined where appropriate.
F-9<PAGE>
<PAGE>
The above table includes the current portion of long-term debt of $405
million and $692 million at December 31, 1994 and 1993, respectively.
The book value of variable rate long-term debt that reprices within a year
approximates fair value. The fair value of other long-term debt is based
on quoted market price or discounted cash flow. The aggregate fair value
of long-term debt, including the current portion outstanding at December
31, 1994 and 1993, was $2.6 billion for both years.
Aggregate annual maturities of long-term debt for the five years ending
December 31, 1999 are as follows (millions): 1995, $405; 1996, $407; 1997,
$217; 1998, $0; 1999, $350.
Credco paid $222 million, $290 million and $332 million of interest on
long-term debt obligations in 1994, 1993 and 1992, respectively.
6. Restrictions as to Dividends and Limitations on Indebtedness
The most restrictive limitation on dividends imposed by the debt
instruments issued by Credco is the requirement that Credco maintain a
minimum consolidated net worth of $50 million. There are no limitations on
the amount of debt that can be issued by Credco.
7. Derivative and Other Off-Balance-Sheet Financial Instruments
Credco enters into transactions involving derivative financial instruments
for purposes other than trading. Credco uses such derivatives to manage
its exposure to interest and foreign exchange rate risks and to manage its
funding costs. These instruments are used to provide a more efficient
means for Credco to manage its risk exposure than if Credco entered into
the cash marketplace. Credco manages risks associated with derivatives as
described below.
Market risk is the possibility that the value of the derivative financial
instrument will change due to fluctuations in a factor from which the
instrument derives its value, primarily an interest rate or a foreign
exchange rate. Credco is not impacted by market risk beyond that inherent
in cash market transactions. Foreign currency and certain interest rate
products that manage related risks have cash flow and income effects that
are inverse to the effects of the underlying transactions. Credco does not
enter into derivative contracts with imbedded options or other complex
features that would expose it to additional market risk.
Credit exposure is the possibility that the counterparty will not fulfill
the terms of the contract. Credco monitors credit exposure related to
derivative financial instruments through established approval procedures,
including setting concentration limits by counterparty and industry,
reviewing credit ratings and requiring collateral where appropriate.
The majority of Credco's counterparties are rated A or better by nationally
recognized credit rating agencies. Whenever possible, Credco's credit
exposure is further reduced through the use of master netting agreements,
which allows Credco to settle all contracts under the agreement in one
net receipt or payment in the event of counterparty default.
F-10
<PAGE>
<PAGE>
The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid over
the life of the agreement. Notional amounts do not represent market risk
or credit exposure. The aggregate notional amount of Credco's derivative
instruments at December 31, 1994 and 1993 was $5.9 billion ($105 million
with an affiliate) and $4.7 billion ($1.3 billion with affiliates),
respectively. At December 31, 1994 and 1993, the related credit exposure,
which approximates the fair value of contracts in a gain position (asset),
was $58 million ($.4 million with an affiliate) and $56 million ($18
million with an affiliate), respectively. The fair value of interest rate
and foreign currency products in a loss position (liability) at December
31, 1993 was $90 million ($25 million with affiliates). The fair value
represents the replacement cost and is determined by the market values,
dealer quotes or pricing models.
The following tables detail information regarding Credco's derivatives:
(millions)
Notional Carrying Value Fair Value
December 31, 1994 Amount Asset Liability Asset Liability
----------------- ------ ----- --------- ----- ---------
Interest rate swaps $4,760 $ 33 $ 36 $ 35 $ 109
Forward contracts 1,125 7 1 23 1
----- -- -- -- ---
Total $5,885 $ 40 $ 37 $ 58 $ 110
----- -- -- -- ---
At December 31, 1994, foreign currency forward contracts with an affiliate
had a notional amount of $105 million with a carrying value asset and
liability of $.4 million and $.1 million, respectively, and a fair value
asset and liability of $.4 million and $.1 million, respectively.
(millions)
Total
Notional Credit
December 31, 1993 Amount Exposure
----------------- ------ --------
Interest rate swaps $3,903 $ 52
Forward contracts 751 4
----- ---
Total $4,654 $ 56
----- ---
Interest Rate Products
Credco uses interest rate products, for the most part, to manage funding
costs related to charge Card and consumer lending businesses. The
principal products used are interest rate swaps, which involve the exchange
for a specified period of time of fixed or floating rate interest payments
based on a notional or contractual amount.
F-11
<PAGE>
<PAGE>
Credco uses interest rate swaps to obtain the most cost effective and
flexible funding structure to fund its charge Card and consumer lending
receivables, as well as to lock in the spread on consumer lending
receivables. Credco uses interest rate swaps to achieve a targeted,
predetermined mix of fixed and floating rate debt to fund its charge Card
receivables. These agreements have varying maturities through 2000.
Interest rates charged on Credco's consumer lending receivables are linked
to a floating rate base and reprice at three and six month intervals.
Credco generally enters into interest rate swaps paying a rate that
reprices when the base rate of the underlying consumer lending receivables
changes. At December 31, 1994 and 1993, the notional amount of interest
rate swaps includes $975 million and $575 million, respectively, of swaps
that go into effect subsequent to each such year.
For interest rate swaps that meet the criteria for hedge accounting,
interest is accrued and reported in accounts receivable and other assets, or
accrued interest and other liabilities, and interest expense, as appropriate.
Foreign Currency Products
Credco uses foreign currency products to manage transactions denominated in
foreign currencies.
Foreign currency exposures are hedged, where practicable, through foreign
currency forward contracts. Foreign currency forward contracts involve the
purchase and sale of a designated currency at an agreed upon rate for
settlement on a specified date. Foreign currency forward contracts
generally mature within one year. At December 31, 1994, Credco had no
significant unhedged foreign currency exposures.
For foreign currency contracts that manage transactions denominated in
foreign currencies, unrealized gains and losses are reported in other
assets and other income, as appropriate. Related premiums and discounts
are reported in other assets or other liabilities, as appropriate, and
amortized into interest expense over the term of the contract.
Other Off-Balance-Sheet Financial Instruments
Financial institutions have extended lines of credit to Credco of $4.9
billion and $4.4 billion at December 31, 1994 and 1993, respectively.
8. Transactions with Affiliates
In 1994, 1993 and 1992, Credco purchased Cardmember receivables without
recourse from TRS and certain of its subsidiaries totaling approximately
$109 billion, $95 billion and $94 billion, respectively. Receivables
Agreements for non-interest-bearing receivables generally provide that
Credco purchase such receivables at a discount rate which yields earnings
to Credco equal to at least 1.25 times its fixed charges on an annual
basis.
F-12
<PAGE>
<PAGE>
The agreements require TRS, at its expense, to perform accounting, clerical
and other services necessary to bill and collect all Cardmember receivables
owned by Credco. Since settlements under the agreements occur monthly, an
amount due from, or payable to, such affiliates may arise at the end of the
month.
As part of TRS's asset securitization program, in July 1994, Credco sold
back to TRS $1.2 billion of gross receivables arising under specified
domestic, consumer Cardmember accounts. TRS sold these receivables,
together with the right to receive subsequent receivables arising from such
Cardmember accounts, to its subsidiary, American Express Receivables
Financing Corporation ("RFC"), which conveyed them to American Express
Master Trust (the "Trust"). As Credco purchases the sellers' interest in
the Trust, this resulted in an increase in the participation interest owned
by CRC, in securitized receivables, for which CRC paid $1.2 billion. In
September 1994, the Trust issued $900 million of receivables trust
certificates in three series. At the time of such issuance, CRC, sold, at
face amount less applicable reserve, $972 million of gross participation
interest in RFC's sellers interest to RFC.
In July 1993, Credco began repurchasing certain foreign currency Cardmember
receivables which had been sold to an affiliate during the period from
December 1991 through June 1993. In December 1993, Credco repurchased the
participation interests in a portion of its foreign currency receivables
which had been previously sold to an affiliate during the period from
December 1991 through November 1993.
Other transactions with American Express and its subsidiaries for the years
ended December 31 were as follows (millions):
------------------------------------------------------------------------------
1994 1993 1992
------------------------------------------------------------------------------
Cash and cash equivalents at December 31 $ - $ 3 $ 27
Maximum month-end level of cash and cash
equivalents during the year 20 229 475
Secured loans to American Express Centurion
Bank at December 31 2,000 2,000 2,000
Other loans and deposits to affiliates
at December 31 650 - 140
Maximum month-end level of loans and deposits to
affiliates during the year 2,650 2,001 2,140
Borrowings at December 31 2,037 588 390
Maximum month-end level of borrowings during
the year 2,734 2,451 1,439
Interest income 101 70 91
Other income 6 6 7
Interest expense 96 48 78
------------------------------------------------------------------------------
At December 31, 1994, 1993 and 1992, Credco held $2 billion of variable
rate secured loans from American Express Centurion Bank ("Centurion Bank"),
a wholly-owned subsidiary of TRS, and $650 million of variable rate loans
with American Express due in 2004. The loans with Centurion Bank are
secured by certain interest-bearing extended payment plan receivables owned
by Centurion Bank. Interest income from these variable rate loans was $101
million, $67 million and $81 million for 1994, 1993 and 1992, respectively.
F-13<PAGE>
<PAGE>
In 1994, American Express spun-off Lehman Brothers Holdings Inc. ("Lehman")
to its shareholders through a special dividend. References to an affiliate
contained in the footnotes, for periods prior to May 1994, include
subsidiaries of Lehman.
In 1994, TRS made a noncash contribution to Credco of AEB-CFS Limited, a
foreign company incorporated to fund certain Optima Card receivables
outside the U.S., for book value.
9. Income Taxes
The taxable income of Credco is included in the consolidated U.S. federal
income tax return of American Express. Under an agreement with TRS, taxes
are recognized on a stand-alone basis. If benefits for all future tax
deductions, foreign tax credits and net operating losses cannot be
recognized on a stand-alone basis, such benefits are then recognized based
upon a share, derived by formula, of those deductions and credits that are
recognizable on a TRS consolidated reporting basis.
Deferred income tax assets and liabilities result from the recognition of
temporary differences. Temporary differences are differences between the
tax bases of assets and liabilities and their reported amounts in the
financial statements that will result in differences between income for tax
purposes and income for financial statement purposes in future years. The
current and deferred components of the provision (benefit) for income taxes
consist of the following (millions):
---------------------------------------------------------------------------
1994 1993 1992
---------------------------------------------------------------------------
Current $36 $ 18 $64
Deferred 39 46 6
-----------------------------------------------------------------------------
Total income tax provision before
extraordinary item 75 64 70
Income tax benefit from extraordinary item - (12) -
-----------------------------------------------------------------------------
Total income tax provision $75 $ 52 $70
-----------------------------------------------------------------------------
Credco's net deferred tax assets consisted of the following (millions):
----------------------------------------------------------------------------
1994 1993
-----------------------------------------------------------------------------
Gross deferred tax assets:
Reserve for loan losses $158 $181
-----------------------------------------------------------------------------
Total gross deferred tax assets 158 181
Gross deferred tax liabilities:
Foreign exchange contracts (5) (5)
Other (3) (2)
-----------------------------------------------------------------------------
Total gross deferred tax liabilities (8) (7)
-----------------------------------------------------------------------------
Net deferred tax assets $150 $174
-----------------------------------------------------------------------------
F-14<PAGE>
<PAGE>
Credco has not recorded a valuation allowance.
Federal tax overpayments of $33 million and $14 million at December 31,
1994 and 1993, respectively, are included in due to affiliates.
Income taxes paid to TRS during 1994, 1993 and 1992 were $55 million, $21
million and $75 million, respectively.
The U.S. statutory tax rate and effective tax rate for 1994 and 1993 was
approximately 35 percent. In 1993, the U.S. federal tax rate increased
from 34 percent to 35 percent, resulting in a one-time benefit of $6
million in Credco's deferred tax assets. As a result of this one-time
benefit, the income tax provision for continuing operations for 1993 is
different than that computed using the U.S. statutory tax rate of 35
percent. The U.S. statutory tax rate and effective tax rate in 1992 was 34
percent.
10. Geographic Segments
Credco is principally engaged in the business of purchasing Cardmember
receivables arising from the use of the American Express Card in the United
States and foreign locations. The following presents information about
operations in different geographic areas (millions):
1994 1993 1992
-----------------------------------------------------------------------
Revenues
United States $ 1,180 $ 1,134 $ 1,425
International 221 148 180
-----------------------------------------------------------------------
Consolidated $ 1,401 $ 1,282 $ 1,605
-----------------------------------------------------------------------
Income before taxes
United States $ 171 $ 173 $ 192
International 43 28 16
-----------------------------------------------------------------------
Consolidated $ 214 $ 201 $ 208
-----------------------------------------------------------------------
Identifiable assets
United States $14,174 $12,787 $12,233
International 2,694 2,156 1,398
-----------------------------------------------------------------------
Consolidated $16,868 $14,943 $13,631
-----------------------------------------------------------------------
<PAGE>
11. Quarterly Financial Data (Unaudited)
Summarized quarterly financial data is as follows (millions):
------------------------------------------------------------------------------
Quarter Ended 12/31 9/30 6/30 3/31
------------------------------------------------------------------------------
1994
------------------------------------------------------------------------------
Revenues $391 $340 $356 $314
Income before taxes 64 53 53 44
Net income 41 35 34 29
1993
------------------------------------------------------------------------------
Revenues $295 $321 $336 $330
Income before taxes 40 64 39 58
Net income 26 35 25 29
------------------------------------------------------------------------------
F-15
<PAGE>
<PAGE>
AMERICAN EXPRESS CREDIT CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(millions)
1994 1993 1992
------ ------ ------
Reserve for doubtful accounts:
Balance at beginning of year $ 542 $ 603 $731
Additions:
Provision for doubtful accounts
charged to income (1) 620 650 862
Other credits (2) 75 55 121
Foreign translation 3 - -
Deductions:
Accounts written off 621 704 864
Other charges (3) 121 62 240
Foreign translation - - 7
----- ----- -----
Balance at end of year $ 498 $ 542 $ 603
===== ===== =====
Reserve for doubtful accounts as a
percentage of Cardmember receivables
owned at year end 3.55% 4.18% 5.15%
===== ===== =====
(1) Before recoveries on accounts previously written off of (millions):
1994-$177, 1993-$175 and 1992-$201.
(2) Reserve balances applicable to new groups of Cardmember receivables
purchased from TRS and certain of its subsidiaries.
(3) Reserve balances applicable to certain groups of Cardmember
receivables and participation interests sold to affiliates.
F-16
<PAGE>
<PAGE>
EXHIBIT INDEX
Pursuant to Item 601 of Regulation S-K
Exhibit No. Description
3(a) Registrant's Certificate of Incorporated by
Incorporation, as amended reference to
Exhibit 3(a) to
Registrant's
Registration
Statement on Form S-1
dated February 25, 1972
(File No. 2-43170).
3(b) Registrant's By-Laws, amended Incorporated by
and restated as of November 24, reference to Exhibit
1980 3(b) to Registrant's
Annual Report on Form
10-K for the year
ended December 31,
1985.
4(a) Registrant's Debt Securities Incorporated by ref-
Indenture dated as of erence to Exhibit 4(s)
September 1, 1987 to Registrant's
Registration Statement
on Form S-3 dated
September 2, 1987
(File No. 33-16874).
4(b) Form of Note with optional Incorporated by
redemption provisions reference to Exhibit
4(t) to Registrant's
Registration Statement
on Form S-3 dated
September 2, 1987
(File No. 33-16874).
4(c) Form of Debenture with Incorporated by
optional redemption and reference to Exhibit
sinking fund provisions 4(u) to Registrant's
Registration Statement
on Form S-3 dated
September 2, 1987
(File No. 33-16874).
4(d) Form of Original Issue Incorporated by
Discount Note with reference to Exhibit
optional redemption 4(v) to Registrant's
provision Registration Statement
on Form S-3 dated
September 2, 1987
(File No. 33-16874).
<PAGE>
<PAGE>
4(e) Form of Zero Coupon Note Incorporated by
with optional redemption reference to Exhibit
provisions 4(w) to Registrant's
Registration Statement
on Form S-3 dated
September 2, 1987
(File No. 33-16874).
4(f) Form of Variable Rate Note Incorporated by
with optional redemption and reference to Exhibit
repayment provisions 4(x) to Registrant's
Registration Statement
on Form S-3 dated
September 2, 1987
(File No. 33-16874).
4(g) Form of Extendible Note Incorporated by
with optional redemption reference to Exhibit
and repayment provisions 4(y) to Registrant's
Registration Statement
on Form S-3 dated
September 2, 1987
(File No. 33-16874).
4(h) Form of Fixed Rate Incorporated by
Medium-Term Note reference to Exhibit
4(z) to Registrant's
Registration Statement
on Form S-3 dated
September 2, 1987
(File No. 33-16874).
4(i) Form of Floating Rate Incorporated by
Medium-Term Note reference to Exhibit
4(aa) to Registrant's
Registration Statement
on Form S-3 dated
September 2, 1987
(File No. 33-16874).
4(j) Form of Warrant Agreement Incorporated by
reference to Exhibit
4(bb) to Registrant's
Registration Statement
on Form S-3 dated
September 2, 1987
(File No. 33-16874).
4(k) Form of Supplemental Indenture Incorporated by
reference to Exhibit
4(cc) to Registrant's
Registration Statement
on Form S-3 dated
September 2, l987
(File No. 33-16874).
<PAGE>
<PAGE>
4(l) The Registrant hereby agrees to
furnish the Commission, upon request,
with copies of the instruments
defining the rights of holders of
each issue of long-term debt of the
Registrant for which the total
amount of securities authorized
thereunder does not exceed 10%
of the total assets of the
Registrant
10(a) Receivables Agreement Incorporated by
dated as of January 1, 1983 reference to Exhibit
between the Registrant and 10(b) to Registrant's
American Express Travel Annual Report on Form
Related Services Company, 10-K for the year
Inc. ended December 31,
1987.
10(b) Secured Loan Agreement Incorporated by
dated as of June 30, 1988 reference to Exhibit
between the Registrant 10(b) to Registrant's
and American Express Annual Report on
Centurion Bank Form 10-K for the
year ended December
31, 1988.
10(c) Participation Agreement Incorporated by
dated as of August 3, 1992 reference to Exhibit
between American Express 10(c) to Registrant's
Receivables Financing Annual Report on
Corporation and Credco Form 10-K for the year
Receivables Corp. ended December 31, 1992.
12 Statement re: computation of ratios Electronically filed
herewith.
23 Consent of Independent Auditors Electronically filed
herewith.
27 Financial Data Schedule Electronically filed
herewith.
<PAGE>
<PAGE>
EXHIBIT 12
AMERICAN EXPRESS CREDIT CORPORATION
COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES
(millions)
Year Ended December 31,
------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Earnings:
Income before
extraordinary
charge $139 $137 $138 $ 174 $ 191
Income tax provision 75 64 70 87 99
Interest expense 736 599 728 946 1,022
--- --- --- ----- -----
Total earnings $950 $800 $936 $1,207 $1,312
=== === === ===== =====
Fixed charges -
interest expense $736 $599 $728 $ 946 $1,022
=== === === ===== =====
Ratio of earnings
to fixed charges 1.29 1.34* 1.29 1.28 1.28
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 $34 million (pretax) was 1.28.
<PAGE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration
statements on Form S-3 (Registration Statement Nos. 2-79851, 2-94851,
33-2956, 33-9303, 33-16874, 33-22347 and 33-47497) of American Express
Credit Corporation and in the related prospecti of our report dated
February 2, 1995, with respect to the consolidated financial statements
and schedules of American Express Credit Corporation included in this
Annual Report on Form 10-K for the year ended December 31, 1994.
By: /s/ Ernst & Young LLP
-----------------
ERNST & YOUNG LLP
New York, New York
March 30, 1995
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Consolidated Balance Sheet at December 31, 1994 and Consolidated
Statement of Income for the year ended December 31, 1994 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 460
<SECURITIES> 0
<RECEIVABLES> 14,020
<ALLOWANCES> 498
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,868
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 1
0
0
<OTHER-SE> 1,732
<TOTAL-LIABILITY-AND-EQUITY> 16,868
<SALES> 0
<TOTAL-REVENUES> 1,401
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8
<LOSS-PROVISION> 443
<INTEREST-EXPENSE> 736
<INCOME-PRETAX> 214
<INCOME-TAX> 75
<INCOME-CONTINUING> 139
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 139
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
