<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, 1997
( ) 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, 1997
- ------------------------------ --------------------------------
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, 1997
and 1996 3
Condensed consolidated balance
sheets - March 31, 1997 and
December 31, 1996 4
Condensed consolidated statements
of cash flows - three months ended
March 31, 1997 and 1996 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 9
<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 Ended
March 31,
1997 1996
---- ----
Revenues
Revenue earned from
purchased accounts receivable $ 403 $ 448
Interest income from affiliates 40 40
Interest income from investments 26 42
Other income 2 2
------ ------
Total 471 532
------ ------
Expenses
Interest expense - affiliates 42 38
Interest expense - other 212 236
Provision for doubtful accounts,
net of recoveries 124 172
Other expenses 2 1
------ ------
Total 380 447
------ ------
Income before taxes 91 85
Income tax provision 32 30
------ ------
Net income 59 55
Retained earnings at begining of period 1,683 1,618
------ ------
Retained earnings at end of period $1,742 $1,673
====== ======
See notes to condensed consolidated financial statements.
<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,
1997 1996
---- ----
Assets
Cash and cash equivalents $ 391 $ 267
Accounts receivable 16,370 17,359
Less: reserve for doubtful accounts 622 638
------- -------
15,748 16,721
Loans and deposits with affiliates 2,850 2,850
Deferred charges and other assets 328 327
------- -------
Total assets $19,317 $20,165
======= =======
Liabilities and shareholder's equity
Short-term debt with affiliates $ 1,151 $ 1,275
Short-term debt - other 13,053 13,262
Current portion of long-term debt - 211
Long-term debt with affiliate 910 910
Long-term debt - other 1,559 1,559
------- -------
Total debt 16,673 17,217
Due to affiliates 533 858
Accrued interest and other liabilities 120 145
------- -------
Total liabilities 17,326 18,220
------- -------
Deferred discount revenue 87 100
------- -------
Shareholder's equity:
Common stock 1 1
Capital surplus 161 161
Retained earnings 1,742 1,683
------- -------
Total shareholder's equity 1,904 1,845
------- -------
Total liabilities and shareholder's
equity $19,317 $20,165
======= =======
See notes to condensed consolidated financial statements.
<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,
1997 1996
---- ----
Cash Flows from Operating Activities:
Net income $ 59 $ 55
Adjustments to reconcile net income
to net cash and cash equivalents
provided by operating activities:
Provision for doubtful accounts,
net of recoveries 124 172
Amortization of deferred underwriting
fees and bond discount/premium 1 1
Changes in operating assets and liabilities:
Increase in deferred tax assets (13) (5)
Decrease in interest receivable and
other operating assets 34 27
Increase (decrease) in accrued interest
and other liabilities 12 (5)
Increase (decrease) in due to affiliates 30 (34)
Decrease in deferred discount revenue (13) (38)
------ ------
Net cash provided by operating activities 234 173
------ ------
Cash Flows from Investing Activities:
Decrease in accounts receivable 706 321
Recoveries of accounts receivable previously
written off 44 45
Decrease in due to affiliates from purchased
receivables (328) (63)
------ ------
Net cash provided by investing activities 422 303
------ ------
Cash Flows from Financing Activities:
Net (decrease) increase in short-term debt
with affiliates with maturity less than
ninety days (124) 209
Net increase in short-term debt - other with
maturity less than ninety days 1,089 2,321
Proceeds from issuance of debt 1,052 3,333
Repayment of debt (2,549) (4,211)
------- -------
Net cash (used in) provided by financing
activities (532) 1,652
------- -------
Net increase in cash and cash equivalents 124 2,128
Cash and cash equivalents at beginning of period 267 1,190
------- -------
Cash and cash equivalents at end of period $ 391 $3,318
====== =======
See notes to condensed consolidated financial statements.
<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, 1996. 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, 1997 and the
consolidated results of its operations and changes in its retained
earnings for the three-month periods ended March 31, 1997 and 1996 and
cash flows for the three-month periods ended March 31, 1997 and 1996.
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, 1997 and 1996, Credco paid
$243 million and $270 million of interest, respectively. Income taxes
paid for each of the three-month periods ended March 31, 1997 and 1996
were $1 million and $21.6 million, respectively.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
At March 31, 1997, 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.
Subsequent to March 31, 1997, Credco issued and sold, exclusively outside
the United States to non-U.S. persons, $400 million Floating Rate Notes due
2002 listed on the Luxembourg Stock Exchange. These notes were issued under
a program established during 1996 by Credco, American Express Travel Related
Services Company, Inc. ("TRS"), American Express Overseas Credit Corporation
Limited ("AEOCC"), a wholly-owned subsidiary of Credco, and American Express
Bank Ltd. The maximum aggregate principal amount of debt instruments
outstanding at any one time under the program will not exceed $3 billion.
Results of Operations
Credco purchases Cardmember receivables without recourse from TRS or its
subsidiaries. Non-interest-bearing charge Cardmember receivables are
purchased at face amount less a specified discount agreed upon from time to
time, and interest-bearing revolving credit 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-month periods ended March 31, 1997 and 1996
was 1.36 and 1.31, respectively. The ratio of earnings to fixed charges
for American Express Company (the "Company"), the parent of TRS, for the
three-month periods ended March 31, 1997 and 1996 was 2.26 and 1.96,
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 $32 billion of Cardmember receivables during both three-
month periods ended March 31, 1997 and 1996. At March 31, 1997 and
December 31, 1996, Credco owned $14.5 billion and $15.6 billion,
respectively, of non-interest-bearing receivables, of which $2.2 billion
and $3.4 billion, respectively, were participation interests owned by
Credco Receivables Corp. ("CRC"), a wholly-owned subsidiary of Credco. CRC
owns a participation in the seller's interest in charge Cardmember
receivables that have been conveyed to the American Express Master Trust
(the "Trust"). This Trust was formed in 1992 by TRS to securitize U.S.
consumer charge Cardmember receivables.
In addition, at March 31, 1997 and December 31, 1996, Credco owned extended
payment plan receivables totaling $1.9 billion and $1.8 billion,
respectively, including revolving credit loans purchased directly from
American Express Centurion Bank ("Centurion Bank"), a subsidiary of TRS.
The extended payment plan receivables owned at March 31, 1997 and December
31, 1996, include $101 million and $104 million, respectively, of
participation interest owned by CRC. This represents a participation in
the seller's interest in revolving credit receivables that have been
conveyed to the American Express Credit Account Master Trust (the "Master
Trust"). This Master Trust was formed by Centurion Bank during the second
quarter of 1996 to securitize revolving credit loans.
For both three-month periods ended March 31, 1997 and 1996, the average
life of Cardmember receivables owned by Credco was 44 days.
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, 1997 and 1996 was .41 percent and .46 percent, respectively.
Credco's decrease in revenue for the three-month period ended March 31,
1997, is due primarily to a decrease in discount rates earned on purchased
accounts receivable. Decreased interest income for the three-month period
ended March 31, 1997 is attributable to a decrease in average investments.
Interest expense decreased for the three-month period ended March 31, 1997
due to both a decrease in volume and interest rates. Provision for
doubtful accounts for the three-month period also decreased primarily due
to a decline in provision rates.
The following is an analysis of the increase (decrease) in key revenue and
expense accounts for the three-month period ended March 31, 1997, compared
with the three-month period ended March 31, 1996 (in millions):
Three
Month
Period
------
Revenue earned from purchased accounts receivable-
changes attributable to:
Volume of receivables purchased $ 1
Discount and interest rates (46)
-------
Total $ (45)
=======
Interest income from affiliates - changes
attributable to:
Volume of average investments outstanding $ -
Interest rates (-)
-------
Total $ -
=======
Interest income from investments - changes
attributable to:
Volume of average investments outstanding $ (15)
Interest rates (1)
-------
Total $ (16)
=======
Interest expense (affiliates) - changes
attributable to:
Volume of average debt outstanding $ 3
Interest rates 1
-------
Total $ 4
=======
Interest expense (other) - changes attributable to:
Volume of average debt outstanding $ (10)
Interest rates (14)
-------
Total $ (24)
=======
Provision for doubtful accounts - changes
attributable to:
Volume of receivables purchased $ -
Provision rates and volume of recoveries (48)
-------
Total $ (48)
=======
<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.
<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, 1997 /s/Vincent P. Lisanke
------------------------------------
Vincent P. Lisanke
(President, Chief Executive Officer
and Chief Accounting Officer)
<PAGE>
EXHIBIT INDEX
Pursuant to Item 601 of Regulation S-K
Description How Filed
----------- ---------
Exhibit 12.1 Computation in support of ratio of Electronically
earnings to fixed charges of filed herewith.
American Express Credit Corporation.
Exhibit 12.2 Computation in support of ratio of Electronically
earnings to fixed charges of filed herewith.
American Express Company.
Exhibit 27. Financial data schedule. Electronically
filed herewith.
<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
March 31, Year Ended December 31,
(Unaudited)
-------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
Earnings:
Income before
extraordianry charge $ 59 $ 55 $ 215 $ 197 $ 139 $ 137 $ 138
Income tax provision 32 30 115 105 75 64 70
Interest expense 254 274 1,117 1,054 736 599 728
------ ------ ----- ----- ----- ----- -----
Total earnings $ 345 $ 359 $1,447 $1,356 $ 950 $ 800 $ 936
====== ====== ====== ====== ===== ===== =====
Fixed charges :
Interest expense $ 254 $ 274 $1,117 $1,054 $ 736 $ 599 $ 728
====== ====== ====== ====== ===== ===== =====
Ratio of earnings
to fixed charges 1.36 1.31 1.30 1.29 1.29 1.34* 1.29
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.
<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)
Three Months
Ended
March 31, Year Ended December 31,
(Unaudited)
-------------------------------------------------------
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
Earnings:
Pretax income from
continuing operations $ 640 $2,664 $2,183 $1,891 $2,326 $ 896
Interest expense 474 2,160 2,343 1,925 1,776 2,171
Other adjustments 32 139 95 103 88 196
------ ------ ------ ------ ------ ------
Total earnings (a) $1,146 $4,963 $4,621 $3,919 $4,190 $3,263
====== ====== ====== ====== ====== ======
Fixed charges :
Interest expense $ 474 $2,160 $2,343 $1,925 $1,776 $2,171
Other adjustments 33 130 135 142 130 154
------ ------ ------ ------ ------ ------
Total fixed charges (b) $ 507 $2,290 $2,478 $2,067 $1,906 $2,325
====== ====== ====== ====== ====== ======
Ratio of earnings
to fixed charges (a/b) 2.26 2.17 1.86 1.90 2.20 1.40
Included in interest expense in the above computation is interest expense
related to the international banking operations of American Express Company
(the "Company") and Travel Related Services' Cardmember lending activities,
which is netted against interest and dividends and Cardmember lending net
finance charge revenue, respectively, in the Consolidated Statement of
Income of American Express Company.
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.
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.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Credco's
Condensed Consolidated Balance Sheet at March 31, 1997 and Condensed
Consolidated Statement of Income for the three months ended March 31, 1997 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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 391
<SECURITIES> 0
<RECEIVABLES> 16,370
<ALLOWANCES> 622
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,317
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 1,903
<TOTAL-LIABILITY-AND-EQUITY> 19,317
<SALES> 0
<TOTAL-REVENUES> 471
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2
<LOSS-PROVISION> 124
<INTEREST-EXPENSE> 254
<INCOME-PRETAX> 91
<INCOME-TAX> 32
<INCOME-CONTINUING> 59
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 59
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
