<PAGE>
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 September 30, 1995
( ) 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 Christina Centre, Wilmington, 19801-2919
Delaware
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (302) 594-3350
- ----------------------------------------------------------------------------
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 INSTRUCTIONS 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 ___
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 November 14, 1995
- ---------------------------- --------------------------------
Common Stock, $.10 par value 1,504,938 shares
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<PAGE>
AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
FORM 10-Q
INDEX
Page No.
PART I. FINANCIAL INFORMATION --------
Item 1. Financial Statements
Condensed consolidated statements
of income and retained earnings -
three and nine months ended
September 30, 1995 and 1994 3
Condensed consolidated balance
sheets - September 30, 1995 and
December 31, 1994 4
Condensed consolidated statements
of cash flows - nine months ended
September 30, 1995 and 1994 5
Notes to condensed consolidated
financial statements 6
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 8
-2-
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AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
PART I
Item 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
(millions)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Revenues ---- ---- ---- ----
Revenue earned from purchased
accounts receivable $ 408 $ 287 $1,191 $879
Interest income from
affiliates 43 25 126 64
Interest income from
investments 27 26 96 62
Other income 2 2 6 5
----- ----- ----- -----
Total 480 340 1,419 1,010
----- ----- ----- -----
Expenses
Interest expense - affiliates 29 24 101 57
Interest expense - other 231 171 672 464
Provision for doubtful accounts,
net of recoveries 149 90 429 333
Other expenses 2 2 5 6
----- ----- ----- -----
Total 411 287 1,207 860
----- ----- ----- -----
Income before taxes 69 53 212 150
Income tax provision 24 18 74 52
----- ----- ----- -----
Net income 45 35 138 98
Retained earnings at
beginning of period 1,664 1,595 1,571 1,532
----- ----- ----- -----
Retained earnings at end
of period $1,709 $1,630 $1,709 $1,630
===== ===== ===== =====
See notes to condensed consolidated financial statements.
-3-
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AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions)
(Unaudited)
September 30, December 31,
1995 1994
Assets ------------- ------------
Cash and cash equivalents $ 1,493 $ 460
Accounts receivable 14,852 14,020
Less: reserve for doubtful
accounts 569 498
------- -------
14,283 13,522
Loans and deposits with
affiliates 2,850 2,650
Deferred charges and other assets 314 236
------- -------
Total assets $18,940 $16,868
======= =======
Liabilities and shareholder's equity
Short-term debt with affiliates $ 887 $ 1,127
Short-term debt - other 12,663 10,398
Current portion of long-term
debt - other 170 405
Long-term debt with affiliate 910 910
Long-term debt - other 1,706 1,372
------- -------
Total debt 16,336 14,212
Due to affiliates 516 707
Accrued interest and other
liabilities 133 121
------- -------
Total liabilities 16,985 15,040
------- -------
Deferred discount revenue 84 95
------- -------
Shareholder's equity:
Common stock 1 1
Capital surplus 161 161
Retained earnings 1,709 1,571
------- -------
Total shareholder's equity 1,871 1,733
------- -------
Total liabilities and
shareholder's equity $18,940 $16,868
======= =======
See notes to condensed consolidated financial statements.
-4-
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<PAGE>
AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
(Unaudited)
Nine Months Ended
September 30,
------------------
1995 1994
---- ----
Cash Flows from Operating Activities:
Net income $ 138 $ 98
Adjustments to reconcile net income to net
cash and cash equivalents provided by
operating activities:
Provision for doubtful accounts, net of
recoveries 429 333
Amortization of deferred underwriting fees
and bond discount/premium 1 1
Changes in operating assets and liabilities:
Increase in deferred tax assets (15) (14)
Increase in interest receivable and other
operating assets (50) (7)
Increase in accrued interest and other
liabilities 1 1
Increase in due to affiliates 31 13
Decrease in deferred discount revenue (11) (2)
----- -----
Net cash provided by operating activities 524 423
----- -----
Cash Flows from Investing Activities:
Increase in accounts receivable (1,261) (551)
Sale of net accounts receivable to an
affiliate - 1,192
Purchase of participation interest in seller's
interest in accounts receivable from an
affiliate - (1,170)
Sale of participation in seller's interest in
accounts receivable to an affiliate - 920
Purchase of net secured receivables from
an affiliate - (85)
Recoveries of accounts receivable previously
written off 124 132
Increase in loans and deposits with affiliate (200) -
Decrease in due to affiliates from purchased
receivables (239) (887)
----- -----
Net cash used in investing activities (1,576) (449)
----- -----
Cash Flows from Financing Activities:
Net (decrease) increase in short-term debt
with affiliates with maturity less than
ninety days (240) 412
Net (decrease) increase in short-term debt -
other with maturity less than ninety days (5,353) 5,630
Proceeds from issuance of debt 14,033 2,044
Repayment of debt (6,355) (5,624)
----- -----
Net cash provided by financing activities 2,085 2,462
----- -----
Net increase in cash and cash equivalents 1,033 2,436
Cash and cash equivalents at beginning of
period 460 257
----- -----
Cash and cash equivalents at end of period $1,493 $2,693
===== =====
See notes to condensed consolidated financial statements.
-5-
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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
1. The condensed consolidated financial statements should be read in
conjunction with the Annual Report of American Express Credit
Corporation, including its subsidiaries where appropriate, (``Credco'')
on Form 10-K for the year ended December 31, 1994. Certain prior year
amounts have been reclassified to conform to the current year's
presentation. 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 September 30, 1995 and
the consolidated results of its operations and changes in its retained
earnings for the three-and nine-month periods ended September 30, 1995
and 1994 and cash flows for the nine-month periods ended September 30,
1995 and 1994. Results of operations reported for interim periods are
not necessarily indicative of results for the entire year.
2. In June and August 1995, Credco issued long-term senior notes of $250
million at 6 3/4 percent due June 1, 2001 and 6 1/2 percent due August
1, 2000, respectively.
3. For the nine-month periods ended September 30, 1995 and 1994, Credco
paid $869 million and $539 million of interest, respectively. Income
taxes paid for each of the nine-month periods ended September 30, 1995
and 1994 were $103 million and $55 million, respectively.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
During the first nine months of 1995, Credco issued long-term senior notes
of $250 million at 6 3/4 percent due 2001 and $250 million at 6 1/2 percent
due 2000, the proceeds of which were used to reduce short-term debt. At
September 30, 1995, Credco had $310 million of debt securities which may be
issued under a shelf registration statement filed with the Securities and
Exchange Commission. In September 1995, Credco filed a shelf registration
with the Securities and Exchange Commission to register an additional
$1 billion of debt securities.
Results of Operations
Credco purchases Cardmember receivables without recourse from American
Express Travel Related Services Company, Inc. ("TRS") or its subsidiaries.
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 for the nine months ended
September 30, 1995 and 1994 was 1.27 and
-6-
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<PAGE>
AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
1.29, respectively. The ratio of earnings to fixed charges for American
Express Company, the parent of TRS, for the nine-month periods ended
September 30, 1995 and 1994 was 1.87 and 1.94, respectively. 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.
Credco purchased $30.7 billion and $27.0 billion of Cardmember receivables
during the three-month periods ended September 30, 1995 and 1994,
respectively and for the nine-month periods ended September 30, 1995 and
1994 purchased $87.8 billion and $80.5 billion, respectively. At September
30, 1995 and December 31, 1994, Credco owned $13.3 billion and $12.6
billion, respectively, of non-interest-bearing receivables. At September
30, 1995 and December 31, 1994, non-interest-bearing receivables included
$1.6 billion and $2.2 billion, respectively, of gross participation
interests in seller's interests in non-securitized receivables retained by
an unconsolidated affiliate of Credco pursuant to TRS's asset securitization
program. In addition, at September 30, 1995 and December 31, 1994, Credco
owned extended payment plan receivables totaling $1.6 billion and $1.5
billion, respectively.
For each of the nine-month periods ended September 30, 1995 and 1994, the
average life of Cardmember receivables owned by Credco was 43 days.
Credco's write-offs, net of recoveries, as a percentage of the volume of
Cardmember receivables purchased for both of the nine-month periods ended
September 30, 1995 and 1994 was .42 percent.
The following is an analysis of the increase (decrease) in key revenue and
expense accounts for the three-month and nine-month periods ended
September 30, 1995, compared with the three-month and nine-month periods
ended September 30, 1994 (in millions):
three nine
month month
period period
------ ------
Revenue earned from purchased accounts receivable-
changes attributable to:
Volume of receivables purchased $ 52 $ 94
Discount and interest rates 69 218
---- ----
Total $121 $312
==== ====
Interest income from affiliates - changes
attributable to:
Volume of average investments outstanding $ 10 $ 23
Interest rates 8 39
---- ----
Total $ 18 $ 62
==== ====
-7-
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AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
Interest income from investments - changes
attributable to:
Volume of average investments outstanding $ (4) $ 3
Interest rates 5 31
---- ----
Total $ 1 $ 34
==== ====
Interest expense (affiliates) - changes attributable
to:
Volume of average debt outstanding $ 1 $ 15
Interest rates 4 29
---- ----
Total $ 5 $ 44
==== ====
Interest expense (other) - changes attributable to:
Volume of average debt outstanding $ 21 $ 49
Interest rates 39 159
---- ----
Total $ 60 $208
==== ====
Provision for doubtful accounts - changes
attributable to:
Volume of receivables purchased $ 20 $ 43
Provision rates and volume of recoveries 39 53
---- ----
Total $ 59 $ 96
==== ====
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
12.1 Computation in support of ratio of earnings to
fixed charges of American Express Credit Corporation.
12.2 Computation in support of ratio of earnings to
fixed charges of American Express Company.
(Incorporated by reference to Exhibit 12.1 of
the American Express Company Form 10-Q for the
quarter ended September 30, 1995).
27. Financial data schedule.
(b) Reports on Form 8-K
None.
-8-
<PAGE>
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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)
DATE November 14, 1995 /s/Vincent P. Lisanke
-----------------------------------
Vincent P. Lisanke
(President, Chief Executive Officer
and Chief Accounting Officer)
EXHIBIT INDEX
Pursuant to Item 601 of Regulation S-K
Description How Filed
----------- ---------
Exhibit 12.1 Computation in support of Electronically filed herewith.
ratio of earnings to fixed
charges of American Express
Credit Corporation.
Exhibit 12.2 Computation in support of Incorporated by reference to
ratio of earnings to fixed Exhibit 12.1 of the American
charges of American Express Express Company Form 10-Q
Company. for the quarter ended
September 30, 1995.
Exhibit 27. Financial data schedule. Electronically filed herewith.
-9-
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AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
EXHIBIT 12.1
COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES
OF AMERICAN EXPRESS CREDIT CORPORATION
(millions)
Nine Months
Ended
September 30, Year Ended December 31,
(Unaudited)
--------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
Earnings:
Income before
extraordinary
charge $138 $ 98 $139 $137 $138 $174 $191
Income tax provision 74 52 75 64 70 87 99
Interest expense 773 521 736 599 728 946 1,022
---- ---- ---- ---- ---- ----- -----
Total earnings $985 $671 $950 $800 $936 $1,207 $1,312
==== ==== ==== ==== ==== ===== =====
Fixed charges -
interest expense $773 $521 $736 $599 $728 $946 $1,022
==== ==== ==== ==== ==== ===== =====
Ratio of earnings
to fixed charges 1.27 1.29 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 charges of $34 million (pretax) was 1.28.
-10-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the Company's Consolidated Balance Sheet at September 30, 1995
and Consolidated Statement of Income for the nine months ended
September 30, 1995 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,493
<SECURITIES> 0
<RECEIVABLES> 14,852
<ALLOWANCES> 569
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,940
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 1
0
0
<OTHER-SE> 1,870
<TOTAL-LIABILITY-AND-EQUITY> 18,940
<SALES> 0
<TOTAL-REVENUES> 1,419
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5
<LOSS-PROVISION> 429
<INTEREST-EXPENSE> 773
<INCOME-PRETAX> 212
<INCOME-TAX> 74
<INCOME-CONTINUING> 138
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 138
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
