<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 March 31, 1996
( ) 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, Delaware 19801-2919
(Address of principal executive offices) (Zip Code)
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 May 14, 1996
- ---------------------------- ---------------------------
Common Stock, $.10 par value 1,504,938 shares
<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 months ended March 31, 1996 and 1995 3
Condensed consolidated balance
sheets - March 31, 1996 and
December 31, 1995 4
Condensed consolidated statements
of cash flows - three months ended
March 31, 1996 and 1995 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-
<PAGE>
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 Ends
March 31,
1996 1995
---- ----
Revenues
Revenue earned from purchased
accounts receivable $ 448 $ 381
Interest income from affiliates 40 41
Interest income from investments 42 36
Other income 2 2
----- -----
Total 532 460
----- -----
Expenses
Interest expense - affiliates 38 40
Interest expense - other 236 213
Provision for doubtful accounts,
net of recoveries 172 128
Other expenses 1 2
----- -----
Total 447 383
----- -----
Income before taxes 85 77
Income tax provision 30 27
----- -----
Net Income 55 50
Retained earnings at
beginning of period 1,618 1,571
----- -----
Retained earnings at end of period $1,673 $1,621
====== ======
See notes to condensed consolidated financial statements.
-3-
<PAGE>
AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions)
(Unaudited)
March 31, December 31,
1996 1995
----------- ------------
Assets
Cash and cash equivalents $ 3,318 $ 1,190
Accounts receivable 15,856 16,439
Less: reserve for doubtful accounts 647 624
------- ------
15,209 15,815
Loans and deposits with affiliates 2,850 2,850
Deferred charges and other assets 337 337
------ ------
Total assets $21,714 $20,192
======= =======
Liabilities and shareholder's equity
Short-term debt with affiliates $ 1,296 $ 1,087
Short-term debt - other 14,736 13,115
Current portion of long-term
debt - other 455 409
Long-term debt with affiliate 910 910
Long-term debt - other 1,552 1,763
------- -------
Total debt 18,949 17,284
Due to affiliates 732 882
Accrued interest and other liabilities 120 130
------ ------
Total liabilities 19,801 18,296
------ ------
Deferred discount revenue 78 116
------ ------
Shareholder's equity:
Common stock 1 1
Capital surplus 161 161
Retained earnings 1,673 1,618
------ ------
Total shareholder's equity 1,835 1,780
------ ------
Total liabilities and
shareholder's equity $21,714 $20,192
======= =======
See notes to condensed consolidated financial statements.
-4-
<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)
Three Months Ended
March 31,
------------------
1996 1995
---- ----
Cash Flows from Operating Activities:
Net income $ 55 $ 50
Adjustments to reconcile net income to net
cash and cash equivalents provided by
by operating activities:
Provision for doubtful accounts, net of
recoveries 172 128
Amortization of deferred underwriting
fees and bond discount/premium 1 1
Changes in operating assets and liabilities:
Increase in deferred tax assets (5) (5)
Decrease in interest receivable and other
operating assets 27 150
Decrease in accrued interest and other
liabilities (5) (7)
(Decrease)increase in due to affiliates (34) 29
Decrease in deferred discount revenue (38) (7)
----- -----
Net cash provided by operating activities 173 339
----- -----
Cash Flows from Investing Activities:
Decrease in accounts receivable 321 753
Recoveries of accounts receivable previously
written off 45 42
Decrease in due to affiliates from purchased
receivables (63) (406)
----- -----
Net cash provided by investing activities 303 389
----- -----
Cash Flows from Financing Activities:
Net increase(decrease) in short-term debt
with affiliates with maturity less than
ninety days 209 (46)
Net increase(decrease) in short-term debt
-other with maturity less than ninety days 2,321 (2,329)
Proceeds from issuance of debt 3,333 2,776
Repayment of debt (4,211) (184)
------- ------
Net cash provided by financing activities 1,652 217
------- ------
Net increase in cash and cash equivalents 2,128 945
Cash and cash equivalents at beginning of period 1,190 460
------ ------
Cash and cash equivalents at end of period $3,318 $1,405
====== ======
See notes to condensed consolidated financial statements.
-5-<PAGE>
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, 1995. 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 March 31, 1996
and the consolidated results of its operations and changes
in its retained earnings for the three-month periods ended
March 31, 1996 and 1995 and cash flows for the three-month
periods ended March 31, 1996 and 1995. Results of
operations reported for interim periods are not necessarily
indicative of results for the entire year.
2. For the three-month periods ended March 31, 1996 and 1995,
Credco paid $270 million and $305 million of interest,
respectively. Income taxes paid for each of the three-month
periods ended March 31, 1996 and 1995 were $21.6 million and
$0.8 million, respectively.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At March 31, 1996, Credco had the ability to issue $1 billion
of medium and long-term debt securities under shelf
registrations filed with the Securities and Exchange Commission.
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 three
-6-
<PAGE>
AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
months ended March 31, 1996 and 1995 was 1.31 and 1.30,
respectively. The ratio of earnings to fixed charges for
American Express Company (the "Company"), the parent of TRS,
for the three-month period ended March 31, 1996 was 1.96.
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
an 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 $32 billion and $27 billion of Cardmember
receivables during the three-month periods ended March 31,
1996 and 1995, respectively. At March 31, 1996 and December
31, 1995, Credco owned $14.1 billion and $14.8 billion,
respectively, of non-interest-bearing receivables. At March
31, 1996 and December 31, 1995, non-interest-bearing
receivables included $3.5 billion and $2.3 billion,
respectively, of gross 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. The gross participation interests represent
undivided interests in the receivables conveyed to the Master
Trust by American Express Receivables Financing Corp., a
subsidiary of TRS. In addition, at both March 31, 1996 and
December 31, 1995, Credco owned extended payment plan
receivables totaling $1.7 billion.
For the three-month periods ended March 31, 1996 and 1995, the
average life of Cardmember receivables owned by Credco was 44
days and 43 days, respectively.
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, 1996 and 1995 was .46 percent and .41
percent, respectively.
Credco's increase in revenue for the three-month period ended
March 31, 1996, is due to increased volume of receivables
purchased. Increased interest income for the three-month
period ended March 31, 1996 is attributable to increased
levels of average investments. Interest expense increased
for the three-month period ended March 31, 1996 reflecting
increased volume offset by a decrease in borrowing rates. Provision
for doubtful accounts for the three-month period also increased
reflecting volume growth as well as higher loss rates.
-7-
<PAGE>
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, 1996, compared with the three-month period
ended March 31, 1995 (in millions):
Three
Month
Period
------
Revenue earned from purchased accounts receivable-
changes attributable to:
Volume of receivables purchased $ 68
Discount and interest rates (1)
-----
Total $ 67
=====
Interest income from affiliates-changes
attributable to:
Volume of average investments outstanding $ 3
Interest rates (4)
-----
Total $(1)
=====
Interest income from investments-changes
attributed to:
Volume of average investments outstanding $ 10
Interest rates (4)
-----
Total $ 6
=====
Interest expense (affiliates)-changes
attributable to:
Volume of average debt outstanding $ 4
Interest rates (6)
-----
Total $(2)
=====
Interest expense (other)-changes attributable
to:
Volume of average debt outstanding $ 44
Interest rates (21)
-----
Total $ 23
=====
Provision for doubtful accounts-changes
attributable to:
Volume of receivables purchased $ 32
Provision rates and volume of recoveries 12
-----
Total $ 44
=====
-8-<PAGE>
AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
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.
27. Financial data schedule.
(b) Reports on Form 8-K
None.
-9-<PAGE>
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 May 14, 1996 /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 Computation in support of ratio of Electronically
12.1 earnings to fixed charges of American filed herewith.
Express Credit Corporation.
Exhibit Computation in support of ratio of Electronically
12.2 earnings to fixed charges of filed herewith.
American Express Company.
Exhibit Financial data schedule. Electronically
27 filed herewith.
-10-<PAGE>
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)
Three
Months
Ended Year Ended December 31,
March 31,
(Unaudited)
-----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
Earnings:
Income before
extraordinary
charge $ 55 $ 50 $ 197 $ 139 $ 137 $ 138 $ 174
Income tax
provision 30 27 105 75 64 70 87
Interest expense 274 253 1,054 736 599 728 946
---- ---- ------ ----- ----- ----- ------
Total earnings $359 $330 $1,356 $ 950 $ 800 $ 936 $1,207
==== ==== ====== ===== ===== ===== ======
Fixed charges -
interest expense $274 $253 $1,054 $ 736 $ 599 $ 728 $ 946
==== ==== ====== ===== ===== ===== ======
Ratio of earnings
to fixed charges 1.31 1.30 1.29 1.29 1.34* 1.29 1.28
Note: Gross rentals on long-term leases were minimal 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.
-11-<PAGE>
AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
EXHIBIT 12.2
COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES
OF AMERICAN EXPRESS COMPANY
(millions)
<TABLE>
<CAPTION>
Three
Months
Ended Year Ended December 31,
March 31,
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
Earnings:
Pretax income from
continuing operations $ 565 $2,183 $1,891 $2,326 $ 896 $ 622
Interest expense 554 2,343 1,925 1,776 2,171 2,761
Other adjustments 31 95 103 88 196 142
----- ----- ----- ----- ----- -----
Total earnings(a) $1,150 $4,621 $3,919 $4,190 $3,263 $3,525
====== ====== ====== ====== ====== ======
Fixed charges -
Interest expense $ 554 $2,343 $1,925 $1,776 $2,171 $2,761
Other adjustments 32 135 142 130 154 147
---- ----- ----- ----- ----- -----
Total fixed charges(b)$ 586 $2,478 $2,067 $1,906 $2,325 $2,908
====== ====== ====== ====== ====== ======
Ratio of earnings
to fixed charges(a/b) 1.96 1.86 1.90 2.20 1.40 1.21
</TABLE>
Included in interest expense in the above computation is
interest expense related to the international banking
operations of American Express Company and TRS' Cardmember
lending activities, which is netted against interest and
dividends and Cardmember lending net finance charge revenue,
respectively, in the Consolidated Statement of Income.
For purposes of the "earnings" computation, other adjustments
include adding the amortization of capitalized interest, the
net loss of affiliates accounted for at equity whose debt is
not guaranteed by the Company, the minority interest in the
earnings of majority-owned subsidiaries with fixed charges, and
the interest component of rental expense and subtracting
undistributed net income of affiliates accounted for at equity.
For purposes of the "fixed charges" computation, other
adjustments include capitalized interest costs and the interest
component of rental expense.
-12-<PAGE>
AMERICAN EXPRESS CREDIT CORPORATION
(a wholly-owned subsidiary of American Express
Travel Related Services Company, Inc.)
On May 31, 1994, the Company completed the spin-off of Lehman
Brothers through a dividend to American Express common
shareholders. Accordingly, Lehman Brothers' results are
reported as a discontinued operation and are excluded from the
above computation for all periods presented. In March 1993,
the Company reduced its ownership in First Data
Corporation to approximately 22 percent through a public
offering. As a result, beginning in 1993, FDC was reported as
an equity investment in the above computation. In the fourth
quarter of 1995, the Company's ownership was further reduced
to approximately 10 percent as a result of shares issued by
FDC in connection with a merger transaction. Accordingly, as
of December 31, 1995, the Company's investment in FDC is
accounted for as Investments - Available for Sale.
-13-<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Credco's
Condensed Consolidated Balance Sheet at March 31, 1996 and Condensed
Consolidated Statement of Income for the three months ended March 31, 1996 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,318
<SECURITIES> 0
<RECEIVABLES> 15,856
<ALLOWANCES> 647
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 21,714
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 1,834
<TOTAL-LIABILITY-AND-EQUITY> 21,714
<SALES> 0
<TOTAL-REVENUES> 532
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1
<LOSS-PROVISION> 172
<INTEREST-EXPENSE> 274
<INCOME-PRETAX> 85
<INCOME-TAX> 30
<INCOME-CONTINUING> 55
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
