<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Nos. 000-20787-01; 000-20787-00
American Express Credit Account Master Trust
(Issuer of Certificates)
American Express Centurion Bank
Co-Originator of the Trust and a Transferor
-------------------------------------------
(Exact name of registrant as specified in its charter)
Utah 11-2869526
- --------------------------------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
6985 Union Park Center, Midvale, Utah 84047
- ------------------------------------- -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (801) 565-5000
American Express Receivables Financing Corporation II
Co-Originator of the Trust and a Transferor
-------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3854638
- -------------------------------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
200 Vesey Street, New York, New York 10285
- ------------------------------------ -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (212) 640-4473
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Class A Series 1996-1 6.80% Asset Backed Certificates,
Class B Series 1996-l 6.95% Asset Backed Certificates,
Class A Series 1997-1 6.40% Asset Backed Certificates,
Class B Series 1997-1 6.55% Asset Backed Certificates,
Class A Series 1998-1 Floating Rate Asset Backed Certificates and
Class B Series 1998-1 Floating Rate Asset Backed Certificates.
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. Not applicable.
State the aggregate market value of the voting stock held by non-affiliates of
the registrant: Not applicable.
Documents Incorporated By Reference: NONE
-----------------------------------------
<PAGE>
PART I
Item 1. Business
The American Express Credit Account Master Trust (the "Trust") was formed
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of May
16, 1996, among American Express Centurion Bank and American Express Receivables
Financing Corporation II ("RFC II"), each as an originator ("Originator"),
American Express Travel Related Services Company, Inc. ("TRS"), as servicer (the
"Servicer"), and The Bank of New York, as trustee (the "Trustee"). RFC II, a
Delaware corporation, is a wholly owned subsidiary of TRS. It was incorporated
on August 7, 1995. Its principal executive offices are located at 200 Vesey
Street, New York, New York. TRS is a wholly owned subsidiary of American Express
Company ("American Express"). It was incorporated in the State of New York on
May 3, 1982 and its principal executive offices are located at 200 Vesey Street,
New York, New York. American Express Centurion Bank was incorporated under
Delaware banking laws as a limited service bank in 1985. As of July 1, 1996, its
business was combined by merger with another subsidiary of TRS that is a
Utah-chartered, FDIC-insured industrial loan company. The surviving institution
was renamed as American Express Centurion Bank ("Centurion"). Its principal
executive offices are located at 6985 Union Park Center, Midvale, Utah.
The Trust was formed for the purpose of acquiring and holding the Trust
Assets (defined below) and from time to time issuing asset-backed certificates
(the "Certificates") under the Agreement and one or more supplements thereto
(each, a "Supplement"), including issuing and selling certain Certificates to
investors in underwritten public offerings and private placements ("Investor
Certificates"). Each Certificate represents an undivided interest in the Trust
and the right to receive payments of interest at a specified rate and payments
of principal at certain times during the term of the Trust. Each series of
Investor Certificates (each, a "Series") will have its own Supplement to govern
the individual terms and allocations applicable to such Series.
The property of the Trust (the "Trust Assets") includes a portfolio of
receivables (the "Receivables") generated from time to time in a portfolio of
OptimaR Card, Optima Line of Credit and Sign & TravelR revolving credit accounts
and other charge or credit accounts (collectively, the "Accounts") owned by
Centurion or other eligible account owners (each, including Centurion, an
"Account Owner"), all monies due or to become due in payment of the Receivables,
all proceeds of such Receivables and any Series Enhancement provided for any
particular Series or class of Certificates. "Series Enhancement" may include,
with respect to any Series or class of Certificates, the subordination of one or
more classes or Series of Certificates to one or more other classes or Series of
Certificates, a letter of credit, a cash collateral guaranty, a cash collateral
account, a surety bond, a collateral interest, a spread account, a guaranteed
rate agreement, a maturity liquidity facility, a tax protection agreement or an
insurance policy.
The Receivables that, to date, have been conveyed to the Trust arise from
Accounts selected from Centurion's portfolio and consist of amounts charged or
otherwise borrowed by Account holders for goods and services and cash advances
("Principal Receivables"), plus the related periodic finance charges, amounts
charged to Accounts in respect of late charges and certain other items (the
"Finance Charge Receivables").
No Originator or Account Owner will act as a guarantor with respect to any
payments on the Certificates, and neither the Trustee nor the holders of the
Certificates will have general recourse against any Originator or Account Owner
or the assets of any Originator or Account Owner. Instead, the Trustee's and the
Certificateholders' only recourse in any action seeking to collect amounts owing
under the Certificates will be against, and limited to, the Trust Assets.
Each Series of Investor Certificates will belong to a certain group of
Series (each, a "Group"). The Series included in a particular Group will share a
common distribution date and other terms, and certain cash collections may be
allocated among the Series within a Group (any Group for which collections will
be so allocated is hereinafter referred to as a "Reallocation Group"). The
Agreement and Supplements govern the allocation of collections in respect of
Principal Receivables and Finance Charge Receivables between the interests of
the transferors and the Investor Certificateholders and, for the Investor
Certificateholders, to each Group, based generally on the sum of the principal
amounts of Investor Certificates for all Series in all Groups. Each Supplement
will prescribe the manner in which collections will be allocated among Series.
2
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Each Group may have a certain number of Series which will share, to a
limited extent, the collections in respect of Principal Receivables and Finance
Charge Receivables allocated to such Group. In addition, certain excess
collections of Principal Receivables ("Shared Principal Collections") or Finance
Charge Receivables ("Excess Finance Charge Collections") allocated to a Series
in one Group that are not required to make distributions with respect to the
Certificates of the Series in such Group may be shared with the Series in
another Group (each such Series is hereinafter referred to, respectively, as a
"Principal Sharing Series" and an "Excess Allocation Series"). For each Series,
the Supplement relating to such Series will govern the terms and timing of
payment of interest and principal and the allocations of collections of
Principal Receivables and Finance Charge Receivables among the various Series
within such Series' Group and among Series in a different Group.
The Trust will not engage in any business activity other than acquiring and
holding the Trust Assets, issuing Certificates, making payments thereon and
related activities. Pursuant to the Agreement, the Trustee will hold the Trust
Assets in trust for the benefit of the holders of the Certificates, and TRS or
any successor servicer, as the Servicer, will be responsible for the
administration and servicing of the Receivables. The Trust has issued six
classes of Investor Certificates: Class A Series 1996-1 6.80% Asset Backed
Certificates and Class B Series 1996-1 6.95% Asset Backed Certificates
(collectively, the "Series 1996-1 Certificates"), Class A Series 1997-1 6.40%
Asset Backed Certificates and Class B Series 1997-1 6.55% Asset Backed
Certificates (collectively, the "Series 1997-1 Certificates"), and on June 23,
1998, the Trust issued Class A Series 1998-1 Floating Rate Asset Backed
Certificates and Class B Series 1998-1 Floating Rate Asset Backed Certificates
(collectively, the "Series 1998-1 Certificates") which have been registered
under Section 12(g) of the Securities Exchange Act of 1934. The Series 1998-1
Certificates were offered pursuant to a Prospectus Supplement dated June 17,
1998 to Prospectus dated June 17, 1998 issued under the Agreement and the Series
1998-1 Supplement dated as of June 23, 1998 to the Agreement (the "Series 1998-1
Supplement"). Interest on the Series 1998-1 Certificates accrues from June 23,
1998 and is payable on July 14, 1998 and on the fifteenth day of each month
thereafter each of which is a Distribution Date. Principal with respect to the
Series 1998-1 Certificates is scheduled to be distributed on the June 2003
Distribution Date, but may be paid earlier or later under certain limited
circumstances as provided in the Agreement and the Series 1998-1 Supplement.
Information concerning the performance of the Trust Assets for each monthly
due period of the Trust is contained in monthly Servicer's reports provided to
the Trustee and filed monthly on Form 8-K, and information concerning
distributions made on the Investor Certificates is contained in payment date
statements prepared by the Servicer and also filed on Form 8-K. The Servicer has
prepared a report that sets forth, with respect to certain of the items reported
on monthly in the monthly Servicer's reports, the aggregate amount of such items
for the full year 1998 or, as applicable, the amount of such items as at
December 25, 1998. This annual report is filed herewith as Exhibit 99.3.
Item 2. Properties.
See Exhibit 99.3.
Item 3. Legal Proceedings.
The Registrant knows of no material pending legal proceedings with respect
to the Trust, involving the Trust, the Trustee, the Trust Assets or the
Originators, exclusive of ordinary routine litigation incidental to the
Trustee's, Originators' or Servicer's duties under the Agreement.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
3
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
(a) To the best knowledge of the Registrant, there is no established public
trading market for the Investor Certificates.
(b) The Investor Certificates, representing investors' interests in the
Trust, were delivered in book-entry form through the facilities of The
Depository Trust Company ("DTC") and the nominee for DTC, Cede & Co., is the
sole registered holder of the Investor Certificates.
(c) Not applicable.
Item 6. Selected Financial Data.
Not applicable.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Year 2000
The Year 2000 ("Y2K") issue is the result of computer programs having been
written using two digits rather than four to define a year. Any programs that
have time-sensitive software may recognize a date using "00" as the year 1900
rather than 2000. American Express has conducted a comprehensive review of its
computer systems and business processes (including systems and processes of RFC
II and Centurion) to identify the major systems that could be affected by the
Y2K issue. Steps are being taken by American Express to resolve any potential
problems including modifications to existing software and the purchase of new
software. These measures are scheduled to be completed and tested on a timely
basis. American Express' goals are to complete testing of critical systems by
early 1999 and to continue compliance efforts, including but not limited to, the
testing of systems on an integrated basis and independent validation of such
testing, through 1999.** The costs related to the Y2K issue, which are expensed
by American Express as incurred have not had, nor are they expected to have a
material impact on RFC II's or Centurion's results of operations or financial
condition.** For further discussion of American Express' addresing of the Y2K
issue, please see pages 22 and 23 of American Express' 1998 Annual Report to
Shareholders, which discussion is incorporated herein by reference.
Various statements in this Y2K discussion marked with two asterisks (**),
are forward-looking statements which are subject to risks and uncertainties.
Important factors that could cause results to differ materially from these
forward-looking statments include, among other things, the ability of RFC II,
Centurion and American Express to successfully identify systems containing
two-digit codes, the nature and amount of programming required to fix the
affected systems, the costs of labor and consultants related to such efforts,
the continued availability of such resources, and the ability of third parties
that interface with RFC II, Centurion and American Express to successfully
address their Y2K issues.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 8. Financial Statements and Supplementary Data.
See Exhibit 99.3.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
4
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PART III
Item 10. Directors and Executive Officers of the Registrant.
Not applicable.
Item 11. Executive Compensation.
Not applicable.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) The Investor Certificates were delivered in book-entry form through the
facilities of DTC. As a consequence, the nominee for DTC, Cede & Co., is the
sole registered holder of Investor Certificates. An investor holding an interest
in the Trust is not entitled to receive a certificate representing such interest
except in limited circumstances. Cede & Co. holds the Investor Certificates on
behalf of brokers, dealers, banks and other direct participants in the DTC
system. DTC participants may own Investor Certificates for their own account or
hold them for the accounts of their customers. As of January 22, 1999, the
following direct DTC participants held positions in Investor Certificates
representing interests in the Trust equal to or exceeding 5% of the total
principal amount of the Investor Certificates of each class of each Series
outstanding on that date:
<TABLE>
<CAPTION>
Principal Amount
Name of Certificates Percent of Class
- ---- --------------- ----------------
<S> <C> <C>
Class A Series 1996-1
6.80% Asset Backed
Certificates:
Bankers Trust Company $ 76,153,000 8.8%
Boston Safe Deposit & $120,940,000 13.9%
Trust Company
Bank of Toyko - $ 80,000,000 9.2%
Mitsubishi Trust Company
Chase Manhattan Bank $218,459,000 25.3%
Citibank, N.A. $ 64,960,000 7.5%
State Street Bank and Trust $ 64,340,000 7.4%
Company
Class B Series 1996-1
6.95% Asset Backed
Certificates:
Bankers Trust Company $ 4,250,000 7.1%
Chase Manhattan Bank $ 38,000,000 63.3%
Commerce Bank of $ 4,750,000 7.9%
Kansas City
LBI - Lehman Government $ 10,000,000 16.7%
Securities Inc.
5
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Principal Amount
Name of Certificates Percent of Class
- ---- --------------- ----------------
Class A Series 1997-1
6.40% Asset Backed
Certificates:
The Bank of New York $ 49,230,000 5.7%
Bankers Trust Company $154,798,000 17.9%
Boston Safe Deposit & $ 60,171,000 6.9%
Trust Co.
Citibank, N.A. $ 72,000,000 8.3%
First Union National Bank- $ 77,400,000 8.9%
Philadelphia
Chase Manhattan Bank $283,170,000 32.7%
Class B Series 1997-1
6.55% Asset Backed
Certificates:
The Bank of New York $ 14,000,000 23.3%
Chase Manhattan Bank $ 29,600,000 49.3%
State Street Bank and Trust $ 10,000,000 16.7%
Company
Class A Series 1998-1
Floating Rate Asset
Backed Certificates:
The Bank of New York $ 55,000,000 6.7%
Bankers Trust Company $120,000,000 14.5%
Boston Safe Deposit $116,000,000 14.1%
and Trust Company
Chase Manhattan Bank $223,800,000 27.1%
Citibank, N.A. $176,000,000 21.3%
Warburg Dillion Read LLC $ 50,000,000 6.1%
Class B Series 1998-1
Floating Rate Asset
Backed Certificates:
Bankers Trust Company $ 68,000,000 85.0%
Chase Manhattan Bank $ 12,000,000 15.0%
</TABLE>
6
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The address of each of the above participants is:
c/o The Depository Trust Company
55 Water Street
New York, New York 10041
(b) Not applicable.
(c) Not applicable.
Item 13. Certain Relationships and Related Transactions.
The Bank of New York acts as Trustee under the Agreement.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Financial Statements:
1. Annual Servicing Statement Delivered to the Trustee (filed as
Exhibit 99.1).
2. Annual Accountant's Report of Ernst & Young LLP (filed as
Exhibit 99.2).
3. Annual Report containing Aggregate Information for the Fiscal
Year (filed as Exhibit 99.3).
(b) Reports on Form 8-K:
The Trust has filed the following reports on Form 8-K for the
monthly due periods occurring since December 26, 1997.
1. Form 8-K, dated February 19, 1998, attaching the Monthly
Servicer's Certificate for the due period December 26, 1997
to January 25, 1998.
2. Form 8-K, dated March 16, 1998, attaching the Monthly
Servicer's Certificate for the due period January 26, 1998
through February 24, 1998.
3. Form 8-K, dated April 20, 1998, attaching the Monthly
Servicer's Certificate for the due period February 25, 1998
through March 26, 1998.
4. Form 8-K, dated May 15, 1998, attaching the Monthly
Servicer's Certificate for the due period March 27, 1998
through April 25, 1998.
5. Form 8-K, dated June 15, 1998, attaching the Monthly
Servicer's Certificate for the due period April 26, 1998
through May 25, 1998.
6. Form 8-K, dated July 15, 1998, attaching the Monthly
Servicer's Certificate for the due period May 26, 1998
through June 24, 1998.
7. Form 8-K, dated August 17, 1998, attaching the Monthly
Servicer's Certificate for the due period June 25, 1998
through July 24, 1998.
8. Form 8-K, dated September 15, 1998, attaching the Monthly
Servicer's Certificate for the due period July 25, 1998
through August 25, 1998.
9. Form 8-K, dated October 15, 1998, attaching the Monthly
Servicer's Certificate for the due period August 26, 1998
through September 25, 1998.
7
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10. Form 8-K, dated November 16, 1998, attaching the Monthly
Servicer's Certificate for the due period September 26, 1998
through October 25, 1998.
11. Form 8-K, dated December 15, 1998, attaching the Monthly
Servicer's Certificate for the due period October 26, 1998
through November 25, 1998.
12. Form 8-K, dated January 15, 1999, attaching the Monthly
Servicer's Certificate for the due period November 26, 1998
through December 25, 1998.
13. Form 8-K, dated February 12, 1999, attaching the Monthly
Servicer's Certificate for the due period December 26, 1998
through January 25, 1999.
14. Form 8-K, dated March 15, 1999, attaching the Monthly
Servicer's Certificate for the due period January 26, 1999
through February 24, 1999.
(c) Exhibits:
4.1 Pooling and Servicing Agreement dated as of May 16, 1996
(incorporated by reference to Exhibit 4.1 of Form 8-A
filed by registrant on May 30, 1996, File No. 000-20787).
4.2 Series 1996-1 Supplement to the Pooling and Servicing
Agreement dated as of May 16, 1996 (incorporated by
reference to Exhibit 4.2 of Form 8-A filed by registrant on
May 30, 1996, File No. 000-20787).
4.3 Supplemental Assumption Agreement dated as of June 27, 1996
between American Express Centurion Bank, as Assignor, and
American Express Deposit Corporation, as Assignee, with
respect to the Pooling and Servicing Agreement governing the
American Express Credit Account Master Trust (incorporated
by reference to Exhibit 4.3 of Form 8-K filed by registrant
on July 16, 1996, File No. 000-20787).
4.4 Series 1997-1 Supplement to the Pooling and Servicing
Agreement dated as of August 28, 1997 (incorporated by
reference to Exhibit 4.2 of Form 8A-12G dated September 16,
1997, File Nos. 000-20787-01 and 000-20787-00).
4.5 Assignment No. 1 of Receivables in Additional Accounts dated
as of August 7, 1997, by and among American Express
Centurion Bank and American Express Receivables Financing
Corporation II, as transferors, and The Bank of New York, as
trustee (incorporated by reference to Exhibit 20.2 of Form
8-K dated August 15, 1997, File Nos. 000-20787-01 and
000-20787-00).
4.6 Supplemental Conveyance No. 1 dated as of August 7, 1997 by
and between American Express Credit Corporation as seller
and American Express Receivables Financing Corporation II as
purchaser (incorporated by reference to Exhibit 20.3 of Form
8-K dated August 15, 1997, File Nos. 000-20787-01 and
000-20787-00).
4.7 Series 1998-1 Supplement to the Pooling and Servicing
Agreement dated as of June 23, 1998 (incorporated by
reference to Exhibit 4.1 of Form 8-K dated July 15, 1998,
File Nos. 000-20787-01 and 000-20787-00).
10.1 Form of RFC II Purchase Agreement (incorporated by
reference to Exhibit 10.1 of Registration Statement on Form
S-3, filed March 6, 1996, File No. 33-95784).
24.1 Power of Attorney for American Express Centurion Bank.
24.2 Power of Attorney for American Express Receivables Financing
Corporation II.
99.1 Annual Servicing Statement Delivered to the Trustee.
8
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99.2 Annual Accountant's Report of Ernst & Young LLP.
99.3 Annual Report Containing Aggregated Information for the
Fiscal Year.
99.4 Pages 22 through 23 of American Express Company's 1998
Annual Report to Shareholders, discussing Year 2000.
9
<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
ACCOUNT MASTER TRUST
AMERICAN EXPRESS CENTURION
BANK,
Co-originator of the Trust and Registrant
By: /s/ Rhonda Halpern
-------------------------
Rhonda Halpern
Chief Financial Officer,
Treasurer and
Chief Compliance Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons in the capacities
indicated.
Signature Title
/s/ Frank L. SKillern
- ------------------------
Frank L. Skillern Director and Chairman
*
- ------------------------
David Poulsen Director, President and Chief Executive Officer
*
- ------------------------
Gilbert E. Ahye Director
*
- ------------------------
Maria J.Garciaz Director
*
- ------------------------
Ash Gupta Director
*
- ------------------------
Peter A. Lefferts Director
*
- ------------------------
Raymond F. Pettit Director
*
- ------------------------
Rosalyn M. Watson Director
*
- ------------------------
James F. Welch Director
*By: /s/ Robert D. Kraus
--------------------
Robert D. Kraus
Attorney-in-Fact
Dated: March 29, 1999
10
<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 ACCOUNT
MASTER TRUST
AMERICAN EXPRESS RECEIVABLES
FINANCING CORPORATION II,
Co-originator of the Trust and Registrant
By: /s/ Leslie R. Scharfstein
---------------------------
Leslie R. Scharfstein
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons in the capacities
indicated.
Signature Title
*
- ------------------------
John D. Koslow Director
*
- ------------------------
Donald J. Puglisi Director
*
- ------------------------
Jay B. Stevelman Director
*
- ------------------------
Leslie R. Scharfstein President
(Principal Executive Officer)
*
- ------------------------
Ellen J. Casey Vice President and Treasurer
(Principal Finance Officer and
Principal Accounting Officer)
*By: /s/ Leslie R. Scharfstein
----------------------------
Leslie R. Scharfstein
Attorney-in-Fact
Dated: March 29, 1999
11
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this Annual Report or, where
indicated, were heretofore filed and are hereby incorporated by reference
(*indicates exhibits electronically filed herewith).
Description
4.1 Pooling and Servicing Agreement dated as of May 16, 1996
(incorporated by reference to Exhibit 4.1 of Form 8-A filed by
registrant on May 30, 1996, File No. 000-20787-00).
4.2 Series 1996-1 Supplement to the Pooling and Servicing Agreement dated
as of May 16, 1996 (incorporated by reference to Exhibit 4.2 of Form
8-A filed by registrant on May 30, 1996, File No. 000-20787-00).
4.3 Supplemental Assumption Agreement dated as of June 27, 1996 between
American Express Centurion Bank, as Assignor, and American Express
Deposit Corporation, as Assignee, with respect to the Pooling and
Servicing Agreement governing the American Express Credit Account
Master Trust (incorporated by reference to Exhibit 4.3 of Form 8-K
filed by registrant on July 16, 1996, File No. 000-20787-00).
4.4 Series 1997-1 Supplement to the Pooling and Servicing Agreement dated
as of August 28, 1997 (incorporated by reference to Exhibit 4.2 of
Form 8A-12G dated September 16, 1997, File Nos. 000-20787-01 and
000-20787-00).
4.5 Assignment No. 1 of Receivables in Additional Accounts dated as of
August 7, 1997, by and among American Express Centurion Bank and
American Express Receivables Financing Corporation II, as
transferors, and The Bank of New York, as trustee (incorporated by
reference to Exhibit 20.2 of Form 8-K dated August 15, 1997, File
Nos. 000-20787-01 and 000-20787-00).
4.6 Supplemental Conveyance No. 1 dated as of August 7, 1997 by and
between American Express Credit Corporation as seller and American
Express Receivables Financing Corporation II as purchaser
(incorporated by reference to Exhibit 20.3 of Form 8-K dated August
15, 1997, File Nos. 000-20787-01 and 000-20787-00).
4.7 Series 1998-1 Supplement to the Pooling and Servicing Agreement dated
as of June 23, 1998 (incorporated by reference to Exhibit 4.1 of Form
8-K dated July 15, 1998, File Nos. 000-20787-01 and 000-20787-00).
10.1 Form of RFC II Purchase Agreement (incorporated by reference to
Exhibit 10.1 of Registration Statement on Form S-3, filed March 6,
1996, File No. 33-95784).
24.1* Power of Attorney for American Express Centurion Bank.
24.2* Power of Attorney for American Express Receivables Financing
Corporation II.
99.1* Annual Servicing Statement Delivered to the Trustee.
99.2* Annual Accountant's Report of Ernst & Young LLP.
99.3* Annual Servicing Statement Delivered to the Trustee.
99.4* Pages 22 through 23 of American Express Company's 1998 Annual
Report to Shareholders, discussing Year 2000.
<PAGE>
EXHIBIT 24.1
AMERICAN EXPRESS CENTURION BANK
POWER OF ATTORNEY
American Express Centurion Bank, a Utah corporation (the "Company"),
and each of the undersigned officers and directors of the Company, hereby
constitute and appoint Robert D. Kraus, Stephen P. Norman, Gilbert E. Ahye and
Rhonda Halpern, jointly and severally, with full power of substitution and
revocation, their true and lawful attorneys-in-fact and agents, for them and on
their behalf and in their respective names, places and steads, in any and all
capacities, to sign, execute and affix their respective seals thereto and file
any of the documents referred to below relating to the American Express Credit
Account Master Trust; all filings and reports required under the Securities
Exchange Act of 1934, including Current Reports on Form 8-K and Annual Reports
on Form 10-K, including any amendments thereto, on behalf of the Company, with
all exhibits and any and all documents required to be filed with respect thereto
with any regulatory authority, granting unto said attorneys, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as they might or could
do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
This Power of Attorney may be executed in counterparts.
IN WITNESS WHEREOF, American Express Centurion Bank has caused this
Power of Attorney to be executed in its name by its Chairman and attested by its
Assistant Secretary, and the undersigned officers and directors have
hereunto set their hand as of the 25th day of March 1999.
AMERICAN EXPRESS CENTURION BANK
By: /s/ Frank L. Skillern
---------------------
Frank L. Skillern
Chairman
ATTEST:
/s/ Robert D. Kraus
- ------------------------
Robert D. Kraus
Assistant Secretary
<PAGE>
/s/ Frank L. Skillern
- ----------------------------
Frank L. Skillern
Director and Chairman
/s/ David E. Poulsen
- ----------------------------
David E. Poulsen
Director, President and Chief Executive Officer
/s/ Gilbert E. Ahye
- ----------------------------
Gilbert E. Ahye
Director
/s/ Maria J. Garciaz
- ----------------------------
Maria J. Garciaz
Director
/s/ Ash Gupta
- ----------------------------
Ash Gupta
Director
/s/ Peter A. Lefferts
- ----------------------------
Peter A. Lefferts
Director
/s/ Raymond F. Pettit
- ----------------------------
Raymond F. Pettit
Director
/s/ Rosalyn M. Watson
- ----------------------------
Rosalyn M. Watson
Director
/s/ James F. Welch
- ----------------------------
James F. Welch
Director
<PAGE>
EXHIBIT 24.2
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II
POWER OF ATTORNEY
American Express Receivables Financing Corporation II, a Delaware
corporation (the "Company"), and each of the undersigned officers and directors
of the Company, hereby constitute and appoint Jay B. Stevelman, John D. Koslow,
Leslie R. Scharfstein and Stephen P. Norman, jointly and severally, with full
power of substitution and revocation, their true and lawful attorneys-in-fact
and agents, for them and on their behalf and in their respective names, places
and steads, in any and all capacities, to sign, execute and affix their
respective seals thereto and file any of the documents referred to below
relating to the American Express Credit Account Master Trust; all filings and
reports required under the Securities Exchange Act of 1934 including Current
Reports on Form 8-K and Annual Reports on Form 10-K, including any amendments
thereto, on behalf of the Company, with all exhibits and any and all documents
required to be filed with respect thereto with any regulatory authority,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as they might or could do if personally present, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be executed in counterparts.
IN WITNESS WHEREOF, American Express Receivables Financing Corporation
II has caused this Power of Attorney to be executed in its name by its President
and its corporate seal to be affixed and attested by its Secretary, and the
undersigned officers and directors have hereunto set their hand as of the 23rd
day of March 1999.
AMERICAN EXPRESS RECEIVABLES
FINANCING CORPORATION II
By: /s/ Leslie R. Scharfstein
--------------------------
Leslie R. Scharfstein
President
ATTEST:
/s/ Michael Kuchs
- ---------------------------
Michael Kuchs
Secretary
<PAGE>
/s/ John D. Koslow
- ----------------------------
John D. Koslow
Director
/s/ Donald J. Puglisi
- ----------------------------
Donald J. Puglisi
Director
/s/ Jay B. Stevelman
- ----------------------------
Jay B. Stevelman
Director
/s/ Leslie R. Scharfstein
- ----------------------------
Leslie R. Scharfstein
President
(Principal Executive Officer)
/s/ Ellen J. Casey
- ----------------------------
Ellen J. Casey
Vice President and Treasurer
(Principal Finance Officer and
Principal Accounting Officer)
<PAGE>
EXHIBIT 99.1
ANNUAL SERVICER'S CERTIFICATE
AMERICAN EXPRESS TRAVEL
RELATED SERVICES COMPANY, INC.
--------------------------------------------------------------
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
--------------------------------------------------------------
The undersigned, a duly authorized representative of American Express
Travel Related Services Company, Inc., as Servicer ("TRS"), pursuant to the
Pooling and Servicing Agreement dated as of May 16, 1996, (as amended and
supplemented, the "Agreement"), by and among TRS, as Servicer, American Express
Centurion Bank, a Utah banking institution, and American Express Receivables
Financing Corporation II, each as Transferor, and The Bank of New York, as
trustee (the "Trustee"), does hereby certify to the best of his knowledge after
reasonable investigation that:
1. TRS is as of the date hereof the Servicer under the Agreement.
Capitalized terms used in this Certificate have their respective meanings set
forth in the Agreement.
2. The undersigned is duly authorized pursuant to the Agreement to
execute and deliver this Certificate to the Trustee.
3. A review of the activities of the Servicer during the calendar year
ended December 31, 1998 and of its performance under the Agreement was conducted
under my supervision.
4. Based on such review, the Servicer has, to the best of my knowledge,
performed in all material respects its obligations under the Agreement
throughout such calendar year and no default in the performance of such
obligations has occurred or is continuing except as set forth in paragraph 5
below.
5. The following is a description of each default in the performance of
the Servicer's obligations under the provisions of the Agreement known to me to
have been made by the Servicer during the calendar year ended December 31, 1998,
which sets in detail (i) the nature of each such default, (ii) the action taken
by the Servicer, if any, to remedy each such default, and (iii) the current
status of each such default: NONE.
IN WITNESS WHEREOF, the undersigned, has duly executed this Certificate
this 19th day of March, 1999.
AMERICAN EXPRESS
TRAVEL RELATED SERVICES COMPANY, INC.,
as Servicer
By: /s/ Lawrence Fazzari
-----------------------------------
Name: Lawrence Fazzari
Title: Vice President - Business Results
<PAGE>
EXHIBIT 99.2
REPORT OF INDEPENDENT ACCOUNTANTS
American Express Travel Related Services Company, Inc.
3 World Financial Center
200 Vesey Street
New York, New York 10285
American Express Centurion Bank
6985 Union Park Center, Suite 235
Midvale, UT 84047
American Express Receivables Financing Corporation II
3 World Financial Center
200 Vesey Street
New York, New York 10285
and
The Bank of New York
101 Barclay Street, Floor 12E
New York, New York 10286
We have audited in accordance with generally accepted auditing standards the
consolidated balance sheet of American Express Travel Related Services Company,
Inc. (the "Company") as of December 31, 1998, and the related consolidated
statements of income, shareholder's equity, and cash flows for the year then
ended, and have issued our report thereon dated February 4, 1999.
In connection with our audit, nothing came to our attention that caused us to
believe that the Company failed to comply with the terms, covenants, provisions,
or conditions of Articles III and IV and Section 8.08 of the Master Pooling and
Servicing Agreement, dated as of May 16, 1996, as amended and supplemented by
the Series' 1996-1, 1997-1, and 1998-1 Supplements (together the "Agreement"),
among the Company, as Servicer, American Express Receivables Financing
Corporation II ("RFCII") and American Express Centurion Bank ("Centurion"), as
Transferors, and The Bank of New York ("BONY"), as Trustee on behalf of the
Certificateholders of the Trust, insofar as they relate to accounting matters.
However, our audit is not directed primarily toward obtaining knowledge of such
noncompliance. Also, it should be understood that we make no representations as
to questions of legal interpretation.
<PAGE>
This report is intended solely for the information and use of the Company,
RFC II, Centurion, BONY, Moody's Investors Services and Standard & Poor's
Corporation and is not intended to be and should not be used by anyone other
than these specified parties. However, this report is a matter of public record,
as a result of inclusion as an exhibit to the Annual Report to Shareholders on
Form 10-K filed by RFC II on behalf of the Trust, and its distribution is not
limited.
March 15, 1999 /s/ Ernst & Young LLP
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
American Express Travel Related Services Company, Inc.
3 World Financial Center
200 Vesey Street
New York, New York 10285
American Express Centurion Bank
6985 Union Park Center, Suite 235
Midvale, UT 84047
American Express Receivables Financing Corporation II
3 World Financial Center
200 Vesey Street
New York, New York 10285
and
The Bank of New York
101 Barclay Street, Floor 12E
New York, New York 10286
We have examined management's assertion that American Express Travel Related
Services Company, Inc. ("TRS"), a wholly owned subsidiary of American Express
Company ("American Express"), maintained internal control policies and
procedures over the functions performed as Servicer of the American Express
Credit Account Master Trust (the "Trust") that are effective, as of December 31,
1998, in providing reasonable assurance that Trust assets are safeguarded
against loss from unauthorized use or disposition and that transactions are
executed in accordance with management's authorization in conformity with the
Master Pooling and Servicing Agreement, dated as of May 16, 1996, as amended and
supplemented by the Series' 1996-1, 1997-1 and 1998-1 Supplements (together the
"Agreements"), among TRS as Servicer, American Express Receivables Financing
Corporation II ("RFCII") and American Express Centurion Bank ("Centurion") as
Transferors, and The Bank of New York as Trustee on behalf of the
Certificateholders of the Trust, and are recorded properly to permit the
preparation of the required financial reports. This assertion is included in the
accompanying report of management titled, "Report of Management on Credit
Account Master Trust Internal Control Policies and Procedures and Pooling and
Servicing Agreement Compliance" (the "Report").
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants, and accordingly, included
obtaining an understanding of the internal
<PAGE>
control policies and procedures over the functions performed by TRS as
Servicer of the Trust, testing and evaluating the design and operating
effectiveness of the policies and procedures, and such other procedures as we
considered necessary in the circumstances. We believe that our examination
provides a reasonable basis for our opinion.
Because of inherent limitations in any internal control policy and procedure,
errors or irregularities may occur and not be detected. Also, projections of any
evaluation of the internal control policies and procedures over the functions
performed by TRS as Servicer of the Trust to future periods are subject to the
risk that the policies and procedures may become inadequate because of changes
in conditions or that the degree of compliance with the policies or procedures
may deteriorate.
In our opinion, management's assertion that TRS maintained internal control
policies and procedures over the functions performed as Servicer of the Trust
that are effective, as of December 31, 1998, in providing reasonable assurance
that Trust assets are safeguarded against loss from unauthorized use or
disposition and that transactions are executed in accordance with management's
authorization in conformity with the Agreements between TRS, as Servicer,
Centurion and RFCII, as Transferors, and The Bank of New York, as Trustee on
behalf of the Certificateholders of the Trust, and are recorded properly to
permit the preparation of the required financial reports, is fairly stated, in
all material respects, based upon the criteria specified in the Report.
This report is intended solely for the information and use of the Board of
Directors and management of TRS as Servicer, RFCII and Centurion as Transferors,
and The Bank of New York as Trustee, and is not intended to be and should not be
used by anyone other than these specified parties. However, this report is a
matter of public record, as a result of inclusion as an exhibit to the Annual
Report to Shareholders on Form 10-K filed by RFCII on behalf of the Trust, and
its distribution is not limited.
March 15, 1999 /s/ Ernst & Young LLP
<PAGE>
REPORT OF MANAGEMENT ON CREDIT ACCOUNT
MASTER TRUST INTERNAL CONTROL
POLICIES AND PROCEDURES AND POOLING AND SERVICING
AGREEMENT COMPLIANCE
Internal Control Policies and Procedures
- ----------------------------------------
American Express Travel Related Services Company, Inc. ("TRS") which is a wholly
owned subsidiary of American Express Company, is responsible for establishing
and maintaining effective internal control policies and procedures over the
functions performed as Servicer of the American Express Credit Account Master
Trust (the "Trust"). These policies and procedures are designed to provide
reasonable assurance to TRS's management and board of directors that Trust
assets are safeguarded against loss from unauthorized use or disposition and
that transactions are executed in conformity with the Master Pooling and
Servicing Agreement, dated as of May 16, 1996, as amended supplemented by the
Series' 1996-1, 1997-1 and 1998-1 Supplements (together the "Agreements"),
between TRS as Servicer, American Express Receivables Financing Corporation II
("RFCII") and American Express Centurion Bank ("Centurion") as Transferors, and
The Bank of New York, as Trustee on behalf of the Certificateholders of the
Trust and are recorded properly to permit the preparation of the required
financial reports.
There are inherent limitations in any internal control policy and procedure,
including the possibility of human error and the circumvention or overriding of
controls. Accordingly, even effective internal control policies and procedures
can provide only reasonable assurance with respect to the achievement of any
objectives of internal control. Further, because of changes in conditions, the
effectiveness of the internal control policies and procedures may vary over
time.
TRS has determined that the objectives of its internal control policies and
procedures, with respect to servicing and reporting of transferred loans, are to
provide reasonable, but not absolute assurance that:
o Funds collected are appropriately allocated to the Trust in accordance with
the Agreements.
o The addition of Accounts to the Trust are authorized in accordance with the
Agreements.
o The removal of Accounts from the Trust are authorized in accordance with
the Agreements.
<PAGE>
o Trust assets amortizing out of the Trust are calculated in accordance with
the Agreements.
o Daily records as specified in the Agreements are maintained and are
available for inspection by the Trustee upon request.
o Monthly Servicer's Certificates are prepared and contain the required
information in accordance with the Agreements.
o Monthly Servicer's Certificates generated pursuant to the Agreements are
materially correct and are derived from and reconcile to the computer
reports which are the source of such amounts contained in the reports.
o On an annual basis, the Servicer will deliver to the Trustee an
Annual Servicer's Certificate.
o The payments to the Trustee are made by the Servicer in accordance
with the Agreements.
TRS has assessed its internal control policies and procedures over the functions
performed as Servicer of the Trust in relation to these criteria. Based upon
this assessment, TRS maintained that, as of December 31, 1998, its internal
control policies and procedures over the functions performed as Servicer of the
Trust are effective in providing reasonable assurance that Trust assets are
safeguarded against loss from unauthorized use or disposition and the
transactions are executed in accordance with management's authorization in
conformity with the Agreements between the TRS, as Servicer, Centurion and
RFCII, as Transferors, and The Bank of New York, as Trustee, and are recorded
properly to permit the preparation of the required financial reports.
Pooling and Servicing Agreement Compliance
- ------------------------------------------
TRS is responsible for complying with the Agreements. TRS assessed its
compliance, as of December 31, 1998 and for the compliance period then ended,
with the relevant covenants and conditions identified in the Agreements. Based
upon this assessment and the delivery of the independent accountant's letters
pursuant to Section 3.06 (a) and (b) of the Agreements, TRS was in compliance,
as of December 31, 1998 and for the compliance period then ended, with the
relevant covenants and conditions identified in the Agreements. In addition, TRS
did not identify any instances of noncompliance in performing the assessment.
March 15, 1999
<PAGE>
American Express Travel Related Services Company, Inc. by:
/s/ Kevin Mahoney
---------------------------
Kevin Mahoney
Senior Vice President
Global Business Management and Analysis
/s/ Gilbert E. Ahye
---------------------------
Gil Ahye
Senior Vice President & CFO,
CCSG Finance
/s/ Lawrence Fazzari
---------------------------
Lawrence Fazzari
Vice President, Business Results
/s/ Michael Del Priore
---------------------------
Michael Del Priore
Director, Business Results
<PAGE>
EXHIBIT 99.3
SERVICER'S CERTIFICATE
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
--------------------------------------------
ANNUAL STATEMENT
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
SERIES 1996-1,1997-1, & 1998-1
FOR THE PERIOD DECEMBER 26, 1997 THROUGH DECEMBER 25, 1998
--------------------------------------------
The undersigned, a duly authorized representative of American Express
Travel Related Services Company, Inc., as Servicer ("TRS"), pursuant to the
Pooling and Servicing Agreement, dated as of May 16, 1996 (as amended and
supplemented, the "Agreement"), as supplemented by the Series 1996-1,1997-1 and
1998-1 Supplements (the "Series Supplements"),among TRS,as Servicer, American
Express Centurion Bank and American Express Receivables Financing Corporation
II, as Transferors, and The Bank of New York, as Trustee, does hereby certify as
follows:
1. Capitalized terms used in this Certificate have their respective meanings
as set forth in the Agreement or the Series Supplements, as applicable.
2. TRS is, as of the date hereof, the Servicer under the Agreement.
3. The undersigned is a Servicing Officer.
4. This Annual Statement is delivered pursuant to sections 5.02(d) of the
Series Supplements and contains information with respect to the Trust aggregated
for the period December 26, 1997 through December 25, 1998 (the end of the last
monthly period of the Trust in 1998.)
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Certificate this 11th day of March, 1999.
AMERICAN EXPRESS TRAVEL RELATED
SERVICES COMPANY, INC., as Servicer
By: /s/ Lawrence Fazzari
--------------------------------
Name: Lawrence Fazzari
Title: Vice President
Business Results
<PAGE>
<TABLE>
<CAPTION>
ACTIVITY AGGREGATE FOR THE PERIOD DECEMBER 26, 1997 THROUGH DECEMBER 25, 1998
- -----------------------------------------------------------------------------
I. Trust Activity
A. Aggregated Trust Activity
- -----------------------------
<S> <C> <C> <C> <C>
Balances at December 26, 1997
Principal Receivable Balance 3,945,286,169
Special Funding Account Balance 0
Total Principal Balance 3,945,286,169
Aggregate Finance Charge Collections 690,234,468
(excluding Discount Option & Recoveries)
Discount Percentage 2.00%
Discount Option Receivables Collections 79,248,154
Premium Option Receivables Collections 0
Recoveries 44,642,684
Total Collections of Finance Charge Receivables 814,125,306
Total Collections of Principal Receivables 3,883,159,538
Defaulted amount 251,653,033
Account Addition 0
New Principal Receivables 4,205,413,690
Balances at December 25, 1998
Principal Receivables Balance 4,015,887,288
Required Minimum Principal Balance 3,210,000,000
Transferor Amount 1,015,887,288
Special Funding Account Balance 0
Total Principal Balance 4,015,887,288
B. Series Allocations Series 1996-1 Series 1997-1 Series 1998-1 Trust Total
- --------------------- ------------- ------------- -------------
Group Number 1 1 2
Invested Amount 1,000,000,000 1,000,000,000 1,000,000,000 3,000,000,000
Adjusted Invested Amount 1,000,000,000 1,000,000,000 1,000,000,000 3,000,000,000
Principal Funding Account Balance 0 0 0
Series Allocation Percentage at 12/25/98 33.33% 33.33% 33.33% 100.00%
Series Alloc. Finance Charge Collections 328,447,415 328,447,415 157,230,475 656,894,831
Series Allocable Recoveries 18,123,395 18,123,395 8,395,894 44,642,684
Series Alloc. Principal Collections 1,572,433,993 1,572,433,993 738,291,553 3,883,159,538
Shared Principal Collections N/A N/A
Series Allocable Defaulted Amount 101,907,333 101,907,333 47,838,366 251,653,033
C. Group I Allocations Series 1996-1 Series 1997-1 Group I Total
- ---------------------- ------------- ------------- -------------
Investor Finance Charge Collections 210,455,857 210,455,857 420,911,714
Investor Monthly Interest 67,538,920 63,819,892 131,358,812
Investor Default Amount 65,073,937 65,073,937 130,147,875
Investor Service Fees 20,000,000 20,000,000 40,000,000
Investor Additional Amounts 0 0 0
Total 152,612,858 148,893,830 301,506,687
Reallocated Investor Finance Charge Collections N/A N/A N/A
Available Excess 57,842,999 61,562,028 119,405,027
D. Group II Allocations Series 1998-1 Group II Total
- ----------------------- ------------- --------------
Investor Finance Charge Collections 121,682,109 121,682,109
Investor Monthly Interest 32,534,879 32,534,879
Investor Default Amount 37,025,328 37,025,328
Investor Service Fees 11,666,667 11,666,667
Investor Additional Amounts 0 0
Total 81,226,875 81,226,875
Reallocated Investor Finance Charge Collections N/A N/A
Available Excess 40,455,234 40,455,234
- 2 -
<PAGE>
ACTIVITY AGGREGATE FOR THE PERIOD DECEMBER 26, 1997 THROUGH DECEMBER 25, 1998
II. Series 1996-1 Certificates
- ------------------------------------------------------------------------------------------------------------------------------
Series Total Investor Transferors
A. Aggregate Investor/Transferor Allocations Allocations Interest Interest
- -------------------------------------------- ------------- -------- -----------
Invested/Transferor Amount at 12/26/97 1,972,643,084 1,000,000,000 972,643,084
Adjusted Invested Amount at 12/26/97 N/A 1,000,000,000 N/A
Collections of Finance Chg. Receivables 328,447,415 210,455,857 117,991,558
Collections of Principal Receivables 1,572,433,993 1,003,893,803 568,540,189
Defaulted Amount 101,907,333 65,073,937 36,833,396
Invested/Transferor Amount at 12/25/98 1,338,629,096 1,000,000,000 338,629,096
Collateral
B. Monthly Period Funding Requirements Class A Class B Interest Total
- -------------------------------------- ------- ------- ---------- -----
Monthly Interest 58,820,000 4,170,000 4,548,920 67,538,920
Investor Default Amount 56,288,956 3,904,436 4,880,545 65,073,937
Investor Monthly Fees 17,300,000 1,200,000 1,500,000 20,000,000
Investor Additional Amounts 0 0 0 0
Total 132,408,956 9,274,436 10,929,466 152,612,858
Reallocated Investor Finance Charge Collections N/A
Collateral
C. Certificates - Balances and Distributions Class A Class B Interest Total
- -------------------------------------------- ------- ------- ---------- -----
Certificates Balance at 12/26/97 865,000,000 60,000,000 75,000,000 1,000,000,000
Interest Distributions 58,820,000 4,170,000 4,548,920 67,538,920
Principal Deposits - Prin. Funding Account 0 0 0 0
Principal Distributions 0 0 0 0
Total Distributions 58,820,000 4,170,000 4,548,920 67,538,920
Certificates Balance at 12/25/98 865,000,000 60,000,000 75,000,000 1,000,000,000
</TABLE>
- 3 -
<PAGE>
D. Aggregate Distributions in respect of the Class A Certificates per $1,000
original certificate principal amount.
1. Total $ 68.00
2. Amount in respect of Class A Monthly Interest $ 68.00
3. Amount in respect of Class A Outstanding
Monthly Interest $ 0.00
4. Amount in respect of Class A Additional
Interest $ 0.00
5. Amount in respect of Class A Principal $ 0.00
E. Aggregate Class A Investor Charge-Offs and Reimbursement of Class A
Investor Charge-Offs.
1. Total amount of Class A Investor Charge-Offs: $ 0.00
2. Amount of Class A Investor Charge-
Offs per $1,000 original certificate
principal amount: $ 0.00
3. Total amount reimbursed in respect of
Class A Investor Charge-Offs: $ 0.00
4. Amount reimbursed in respect of Class
A Investor Charge-Offs per $1,000
original certificate principal amount: $ 0.00
F. Aggregate Distributions in respect of the Class B Certificates,
per $1,000 original certificate principal amount.
1. Total $ 69.50
2. Amount in respect of Class B Monthly Interest $ 69.50
3. Amount in respect of Class B Outstanding
Monthly Interest $ 0.00
4. Amount in respect of Class B Additional
Interest $ 0.00
5. Amount in respect of Class B Principal $ 0.00
G. Reductions in Class B Invested Amount pursuant to clauses (c),
(d), and (e) of the definition of Class B Invested Amount as of December 25,
1998.
1. The amount of reductions in Class B
Invested Amount pursuant to clauses
(c), (d), and (e) of the definition
of Class B Invested Amount: $ 0.00
- 4 -
<PAGE>
2. The amount of reductions in the
Class B Invested Amount set forth in
paragraph 1 above, per $1,000 original
certificate principal amount: $ 0.00
3. The total amount reimbursed in respect
of such reductions in the Class B
Invested Amount: $ 0.00
4. The amount set forth in paragraph 3
above, per $1,000 original certificate
principal amount: $ 0.00
H. Aggregate Distributions to the Collateral Interest Holder.
1. Total amount distributed to the Collateral
Interest Holder: $ 4,548,920.00
2. Amount distributed in respect of Collateral
Monthly Interest: $ 4,548,920.00
3. Amount distributed in respect of Collateral
Additional Interest: $ 0.00
4. The amount distributed to the Collateral
Interest Holder in respect of principal
on the Collateral Invested Amount: $ 0.00
I. Amount of reductions in Collateral Invested Amount pursuant to clauses
(c), (d), and (e) of the definition of Collateral Invested Amount as of
December 25, 1998.
1. The amount of reductions in the
Collateral Invested Amount pursuant
to clauses (c), (d), and (e) of the
definition of Collateral Invested Amount: $ 0.00
2. The total amount reimbursed in respect
of such reductions in the Collateral
Invested Amount: $ 0.00
J. Aggregate Reallocated Principal Collections.
1. Reallocated Principal Collections
Required to fund the Required Amount: $ 0.00
2 Shared Principal Collections from other
Series allocated to Series 1996-1: N/A
K. Aggregate Available Principal Collections treated as Shared
Principal Collections: $ 0.00
L. Amount of Series Enhancement drawn upon and allocated to
Series 1996-1: $ 0.00
- 5 -
<PAGE>
<TABLE>
<CAPTION>
ACTIVITY AGGREGATE FOR THE PERIOD DECEMBER 26, 1997 THROUGH DECEMBER 25, 1998
- ------------------------------------------------------------------------------------------------------------------------------
III. Series 1997-1 Certificates
Series Total Investor Transferors
A. Aggregate Investor/Transferor Allocations Allocations Interest Interest
- -------------------------------------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Invested/Transferor Amount at 12/26/97 1,972,643,084 1,000,000,000 972,643,084
Adjusted Invested Amount at 12/26/97 N/A 1,000,000,000 N/A
Collections of Finance Chg. Receivables 328,447,415 210,455,857 117,991,558
Collections of Principal Receivables 1,572,433,993 1,003,893,803 568,540,189
Defaulted Amount 101,907,333 65,073,937 36,833,396
Invested/Transferor Amounts at 12/25/98 1,338,629,096 1,000,000,000 338,629,096
Collateral
B. Monthly Period Funding Requirements Class A Class B Interest Total
- -------------------------------------- ------- ---------- -------- -----
Monthly Interest 55,360,000 3,930,000 4,529,892 63,819,892
Investor Default Amount 56,288,956 3,904,436 4,880,545 65,073,937
Investor Monthly Fees 17,300,000 1,200,000 1,500,000 20,000,000
Investor Additional Amounts
Total 128,948,956 9,034,436 10,910,437 148,893,830
Reallocated Investor Finance Charge Collections N/A
Collateral
C. Certificates - Balances and Distributions Class A Class B Interest Total
- -------------------------------------------- ------- ------- ---------- -----
Certificates Balance at 12/26/97 865,000,000 60,000,000 75,000,000 1,000,000,000
Interest Distributions 55,360,000 3,930,000 4,529,892 63,819,892
Principal Deposits - Prin. Funding Account 0 0 0 0
Principal Distributions 0 0 0 0
Total Distributions 55,360,000 3,930,000 4,529,892 63,819,892
Certificates Balance at 12/25/98 865,000,000 60,000,000 75,000,000 1,000,000,000
</TABLE>
- 6 -
<PAGE>
D. Aggregate Distributions in respect of the Class A Certificates per $1,000
original certificate principal amount.
1. Total $ 64.00
2. Amount in respect of Class A Monthly Interest $ 64.00
3. Amount in respect of Class A Outstanding
Monthly Interest $ 0.00
4. Amount in respect of Class A Additional
Interest $ 0.00
5. Amount in respect of Class A Principal $ 0.00
E. Aggregate Class A Investor Charge-Offs and Reimbursement of Class A
Investor Charge-Offs.
1. Total amount of Class A Investor Charge-Offs: $ 0.00
2. Amount of Class A Investor Charge-
Offs per $1,000 original certificate
principal amount: $ 0.00
3. Total amount reimbursed in respect of
Class A Investor Charge-Offs: $ 0.00
4. Amount reimbursed in respect of Class
A Investor Charge-Offs per $1,000
original certificate principal amount: $ 0.00
F. Aggregate Distributions in respect of the Class B Certificates,
per $1,000 original certificate principal amount.
1. Total $ 65.50
2. Amount in respect of Class B Monthly Interest $ 65.50
3. Amount in respect of Class B Outstanding
Monthly Interest $ 0.00
4. Amount in respect of Class B Additional
Interest $ 0.00
5. Amount in respect of Class B Principal $ 0.00
G. Reductions in Class B Invested Amount pursuant to clauses (c), (d), and
(e) of the definition of Class B Invested Amount as of December 25, 1998.
1. The amount of reductions in Class B
Invested Amount pursuant to clauses
(c), (d), and (e) of the definition
of Class B Invested Amount: $ 0.00
- 7 -
<PAGE>
2. The amount of reductions in the
Class B Invested Amount set forth in
paragraph 1 above, per $1,000 original
certificate principal amount: $ 0.00
3. The total amount reimbursed in respect
of such reductions in the Class B
Invested Amount: $ 0.00
4. The amount set forth in paragraph 3
above, per $1,000 original certificate
principal amount: $ 0.00
H. Aggregate Distributions to the Collateral Interest Holder.
1. Total amount distributed to the Collateral
Interest Holder: $ 4,529,892.00
2. Amount distributed in respect of Collateral
Monthly Interest: $ 4,529,892.00
3. Amount distributed in respect of Collateral
Additional Interest: $ 0.00
4. The amount distributed to the Collateral
Interest Holder in respect of principal
on the Collateral Invested Amount: $ 0.00
I. Amount of reductions in Collateral Invested Amount pursuant to clauses
(c), (d), and (e) of the definition of Collateral Invested Amount as of
December 25, 1998.
1. The amount of reductions in the
Collateral Invested Amount pursuant
to clauses (c), (d), and (e) of the
definition of Collateral Invested Amount: $ 0.00
2. The total amount reimbursed in respect
of such reductions in the Collateral
Invested Amount: $ 0.00
J. Aggregate Reallocated Principal Collections.
1. Reallocated Principal Collections
Required to fund the Required Amount: $ 0.00
2 Shared Principal Collections from other
Series allocated to Series 1997-1: N/A
K. Aggregate Available Principal Collections treated as Shared
Principal Collections: $ 0.00
L. Amount of Series Enhancement drawn upon and allocated to
Series 1997-1: $ 0.00
- 8 -
<PAGE>
<TABLE>
<CAPTION>
ACTIVITY AGGREGATE FOR THE PERIOD DECEMBER 26, 1997 THROUGH DECEMBER 25, 1998
- -------------------------------------------------------------------------------------------------------------------------------
IV. Series 1998-1 Certificates
Series Total Investor Transferors
A. Aggregate Investor/Transferor Allocations Allocations Interest Interest
- -------------------------------------------- ----------- -------- --------
<S> <C> <C> <C> <C>
Invested/Transferor Amount at 12/26/97 0 0 0
Adjusted Invested Amount at 12/26/97 N/A 0 N/A
Collections of Finance Chg. Receivables 157,230,475 121,682,109 35,548,366
Collections of Principal Receivables 738,291,553 571,385,003 166,906,550
Defaulted Amount 47,838,366 37,025,328 10,813,038
Invested/Transferor Amount at 12/25/98 1,338,629,096 1,000,000,000 338,629,096
Collateral
B. Monthly Period Funding Requirements Class A Class B Interest Total
- -------------------------------------- ------- ------- -------- -----
Monthly Interest 26,552,125 2,647,996 3,334,759 32,534,879
Investor Default Amount 30,545,896 2,962,026 3,517,406 37,025,328
Investor Monthly Fees 9,625,000 933,333 1,108,333 11,666,667
Investor Additional Amounts 0 0 0 0
Total 66,723,020 6,543,356 7,960,499 81,226,875
Reallocated Investor Finance Charge Collections N/A
Collateral
C. Certificates - Balances and Distributions Class A Class B Interest Total
- -------------------------------------------- ------- ------- -------- -----
Certificates Balance at Issuance 825,000,000 80,000,000 95,000,000 0
Interest Distributions 26,552,125 2,647,996 3,334,759 32,534,879
Principal Deposits - Prin. Funding Account 0 0 0 0
Principal Distributions 0 0 0 0
Total Distributions 26,552,125 2,647,996 3,334,759 32,534,879
Certificates Balance at 12/25/98 825,000,000 80,000,000 95,000,000 1,000,000,000
</TABLE>
-9-
<PAGE>
D. Aggregate Distributions in respect of the Class A Certificates per $1,000
original certificate principal amount.
1. Total $ 32.18
2. Amount in respect of Class A Monthly Interest $ 32.18
3. Amount in respect of Class A Outstanding
Monthly Interest $ 0.00
4. Amount in respect of Class A Additional
Interest $ 0.00
5. Amount in respect of Class A Principal $ 0.00
E. Aggregate Class A Investor Charge-Offs and Reimbursement of Class A
Investor Charge-Offs.
1. Total amount of Class A Investor Charge-Offs: $ 0.00
2. Amount of Class A Investor Charge-
Offs per $1,000 original certificate
principal amount: $ 0.00
3. Total amount reimbursed in respect of
Class A Investor Charge-Offs: $ 0.00
4. Amount reimbursed in respect of Class
A Investor Charge-Offs per $1,000
original certificate principal amount: $ 0.00
F. Aggregate Distributions in respect of the Class B Certificates,
per $1,000 original certificate principal amount.
1. Total $ 33.10
2. Amount in respect of Class B Monthly Interest $ 33.10
3. Amount in respect of Class B Outstanding
Monthly Interest $ 0.00
4. Amount in respect of Class B Additional
Interest $ 0.00
5. Amount in respect of Class B Principal $ 0.00
G. Reductions in Class B Invested Amount pursuant to clauses (c), (d), and
(e) of the definition of Class B Invested Amount as of December 25, 1998.
1. The amount of reductions in Class B
Invested Amount pursuant to clauses
(c), (d), and (e) of the definition
of Class B Invested Amount: $ 0.00
- 10 -
<PAGE>
2. The amount of reductions in the
Class B Invested Amount set forth in
paragraph 1 above, per $1,000 original
certificate principal amount: $ 0.00
3. The total amount reimbursed in respect
of such reductions in the Class B
Invested Amount: $ 0.00
4. The amount set forth in paragraph 3
above, per $1,000 original certificate
principal amount: $ 0.00
H. Aggregate Distributions to the Collateral Interest Holder.
1. Total amount distributed to the Collateral
Interest Holder: $ 3,334,759.00
2. Amount distributed in respect of Collateral
Monthly Interest: $ 3,334,759.00
3. Amount distributed in respect of Collateral
Additional Interest: $ 0.00
4. The amount distributed to the Collateral
Interest Holder in respect of principal
on the Collateral Invested Amount: $ 0.00
I. Amount of reductions in Collateral Invested Amount pursuant to clauses
(c), (d), and (e) of the definition of Collateral Invested Amount as of
December 25, 1998.
1. The amount of reductions in the
Collateral Invested Amount pursuant
to clauses (c), (d), and (e) of the
definition of Collateral Invested Amount: $ 0.00
2. The total amount reimbursed in respect
of such reductions in the Collateral
Invested Amount: $ 0.00
J. Aggregate Reallocated Principal Collections.
1. Reallocated Principal Collections
Required to fund the Required Amount: $ 0.00
2 Shared Principal Collections from other
Series allocated to Series 1998-1: N/A
K. Aggregate Available Principal Collections treated as Shared
Principal Collections: $ 0.00
L. Amount of Series Enhancement drawn upon and allocated to
Series 1998-1: $ 0.00
- 11 -
<PAGE>
EXHIBIT 99.4
PAGES 22 THROUGH 23 OF
AMERICAN EXPRESS COMPANY'S
1998 ANNUAL REPORT TO
SHAREHOLDERS, DISCUSSING
YEAR 2000
YEAR 2000
The Year 2000 (Y2K) issue is the result of computer programs having been written
using two digits rather than four to define a year. Some programs may recognize
a date using "00" as the year 1900 rather than 2000. This misinterpretation
could result in the failure of major systems or miscalculations, which could
have a material impact on the Company and its businesses or subsidiaries through
business interruption or shutdown, financial loss, reputational damage and legal
liability to third parties. The Company began addressing the Y2K issue in 1995
and has established a plan for resolution, which involves the remediation,
decommissioning and replacement of relevant systems, including mainframe,
mid-range and desktop computers, application software, operating systems,
systems software, date back-up archival and retrieval services, telephone and
other communications systems, and hardware peripherals and facilities dependent
on embedded technology. As a part of our plan, we have generally followed and
utilized the specific policies and guidelines established by the Federal
Financial Institutions Examination Council, as well as other U.S. and
international regulatory agencies. Additionally, we continue to participate in
Y2K related industry consortia sponsored by various partners and suppliers.
Progress is reviewed regularly with the Company's senior management and Board of
Directors.
Our Y2K compliance effort related to information technology (IT) systems is
divided into two initiatives. The first, which is the much larger initiative, is
known internally as "Millenniax," and relates to mainframe and other
technological systems maintained by the American Express Technologies
organization (AET). The second, known as "Business T," relates to the
technological assets that are owned, managed or maintained by the Company's
individual business units. Business T also encompasses the remediation of non-IT
systems. These initiatives involve a substantial number of employees and
external consultants. This multiple sourcing approach is intended to mitigate
the risk of becoming dependent on any one vendor or resource. While the vast
majority of our systems that require modification are being remediated, in some
cases we have chosen to migrate to new applications that are already Y2K
compliant.
The Company's plans for remediation with respect to Millenniax and Business T
include the following program phases: (i) employee awareness and mobilization,
(ii) inventory collection and assessment, (iii) impact analysis, (iv)
remediation/decommission, (v) testing and (vi) implementation. As part of the
first three phases, we have identified the Company's mission-critical systems
for purposes of prioritization. The Company's goals are to complete testing of
critical systems by early 1999, and to continue compliance efforts, including
but not limited to, the testing of systems on an integrated basis and
independent validation of such testing,
22
<PAGE>
through 1999.* We are currently on schedule to meet these goals. With respect to
systems maintained by the Company, the first three phases referred to above have
been substantially completed for both Millenniax and Business T. In addition,
remediation of critical systems is substantially complete. As of December 31,
1998, for Millenniax, the remediation/decommission, testing and implementation
phases for critical and non-critical systems in total are 82%, 75% and 60%
complete, respectively. For Business T, such phases are 85%, 70% and 69%
complete, respectively. Certain critical systems have already been made Y2K
compliant, such as the Worldwide Credit Authorization System, and we have
completed testing of the global point of sale infrastructure. As a result, we
have begun issuing Year 2000 dated charge and credit cards.
Our most commonly used methodology for remediation is the sliding window. Once
an application/system has been remediated, we apply specific types of tests,
such as stress, regression, unit, future date and baseline to ensure that the
remediation process has achieved Y2K compliance while maintaining the
fundamental data processing integrity of the particular system. To assist with
remediation and testing, we are using various standardized tools obtained from a
variety of vendors.
The Company's cumulative costs since inception of the Y2K initiatives were $383
million through December 31, 1998 and are estimated to be in the range of
$135-$160 million for the remainder through 2000.* These include both
remediation costs and costs related to replacements that were or will be
required as a result of Y2K. These costs, which are expensed as incurred, relate
to both Millenniax and Business T, and have not had, nor are they expected to
have, a material adverse impact on the Company's results of operations or
financial condition.* Costs related to Millenniax, which represent most of the
total Y2K costs of the Company, are managed by and included in the Corporate and
Other segment; costs related to Business T are included in the business
segments. Y2K costs related to Millenniax represent 14%, 6% and 1% of the AET
budget for the years 1998, 1999 and 2000, respectively. The Company has not
deferred other critical technology projects or investment spending as a result
of Y2K. However, because the Company must continually prioritize the allocation
of finite financial and human resources, certain non-critical spending
initiatives have been deferred.
The Company's major businesses are heavily dependent upon internal computer
systems, and all have significant interaction with systems of third parties,
both domestically and internationally. The Company is working with key external
parties, including merchants, clients, counterparties, vendors, exchanges,
utilities, suppliers, agents and regulatory agencies to mitigate the potential
risks to us of Y2K. The failure of external parties to resolve their own Y2K
issues in a timely manner could result in a material financial risk to the
Company. As part of our overall compliance program, the Company is actively
communicating with third parties through face-to-face meetings and
correspondence, on an ongoing basis, to ascertain their state of readiness.
Although numerous third parties have indicated to us in writing that they are
addressing their Y2K issues on a timely basis, the readiness of third parties
overall varies across the spectrum. Because the Company's Y2K compliance is
dependent on key third parties being compliant on a timely basis, there can be
no assurances that the Company's efforts alone will resolve all Y2K issues.
At this point, the Company is in the process of performing an assessment of
reasonably likely Y2K systems failures and related consequences. The Company is
also preparing specific Y2K contingency plans for all key American Express
business units to mitigate the potential impact of such failures. This effort is
a full-scale initiative that includes both internal and external experts under
the guidance of a Company-wide steering committee. Our contingency plans, which
will be based in part on an assessment of the magnitude and probability of
potential risks, will primarily focus on proactive steps to prevent Y2K failures
from occurring, or if they should occur, to detect them quickly, minimize their
impact and expedite their repair. The Y2K contingency plans will supplement
disaster recovery and business continuity plans already in place, and are
expected to include measures such as selecting alternative suppliers and
channels of distribution, and developing our own technology infrastructure in
lieu of those provided by third parties. Development of the Y2K contingency
plans is expected to be substantially complete by the end of the first quarter
of 1999, and will continue to be refined throughout 1999 as additional
information related to our exposures is gathered.*
*Statements in this Y2K discussion marked with an asterisk are forward-looking
statements which are subject to risks and uncertainties. Important factors that
could cause results to differ materially from these forward-looking statements
include, among other things, the ability of the Company to successfully identify
systems containing two-digit codes, the nature and amount of programming
required to fix the affected systems, the costs of labor and consultants related
to such efforts, the continued availability of such resources, and the ability
of third parties that interface with the Company to successfully address their
Y2K issues.
23
