-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WJxK7w0GdORxJ5DPbXQj2ZeapOqhW6R6Y8OpOaFfoDz2UO0RY4TLGVH3lfaWo4US ftbgFj98mKQZhzNy37PloQ== /in/edgar/work/20000725/0000004962-00-000051/0000004962-00-000051.txt : 20000921 0000004962-00-000051.hdr.sgml : 20000921 ACCESSION NUMBER: 0000004962-00-000051 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000724 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000725 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN EXPRESS CO CENTRAL INDEX KEY: 0000004962 STANDARD INDUSTRIAL CLASSIFICATION: [6199 ] IRS NUMBER: 134922250 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-07657 FILM NUMBER: 678658 BUSINESS ADDRESS: STREET 1: AMERICAN EXPRESS TWR WORLD FINANCIAL CN STREET 2: 200 VESEY ST 49TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10285 BUSINESS PHONE: 2126402000 MAIL ADDRESS: STREET 1: AMERICAN EXPRESS TOWER STREET 2: 200 VESEY ST 49TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10285 8-K 1 0001.txt 2000 2ND QTR EARNINGS RELEASE =========================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 -------------------------- Date of Report (Date of earliest event reported): July 24, 2000 -------------------------- AMERICAN EXPRESS COMPANY (Exact name of registrant as specified in its charter) -------------------------- New York 1-7657 13-4922250 - ----------------------------- ------------------------ ------------------- (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation or Identification No.) organization) 200 Vesey Street, World Financial Center New York, New York 10285 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 640-2000 --------------------------------------------------- (Former name or former address, if changed since last report) =============================================================================== Item 5. Other Events On July 24, 2000, the Registrant issued a press release announcing its 2000 second quarter earnings and distributed a 2000 Second Quarter Earnings Supplement. Such press release is filed herein as Exhibit 99.1, and such Earnings Supplement is filed herein as Exhibit 99.2. Item 7. Financial Statements, Pro Forma Financial Information And Exhibits (c) Exhibits 99.1 Press release of American Express Company announcing its 2000 second quarter earnings, dated July 24, 2000. 99.2 2000 Second Quarter Earnings Supplement of American Express Company. SIGNATURE 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 hereunto duly authorized. AMERICAN EXPRESS COMPANY (REGISTRANT) By /s/ Stephen P. Norman --------------------- Name: Stephen P. Norman Title: Secretary DATE: July 25, 2000 EXHIBIT INDEX Item No. Description - -------- ----------- 99.1 Press release of American Express Company announcing its 2000 second quarter earnings, dated July 24, 2000. 99.2 2000 Second Quarter Earnings Supplement of American Express Company. EX-99.1 2 0002.txt 2000 2ND QTR PRESS RELEASE NEW YORK - July 24, 2000 -- American Express Company today reported record quarterly net income of $740 million, up from $646 million in the same period a year ago. Diluted earnings per share rose 15 percent to $0.54 compared with $0.47. Net revenues on a managed basis totaled $5.6 billion, up 16 percent from $4.8 billion. The company's return on equity was 25.5 percent. These results reflected strong earnings and revenue growth at Travel Related Services and American Express Financial Advisors, and met the company's long-term targets of 12-15 percent earnings per share growth, at least 8 percent growth in revenues and a return on equity of 18-20 percent. Travel Related Services (TRS) reported record quarterly net income of $472 million, up 15 percent from $411 million in the second quarter a year ago. TRS net revenues increased 17 percent, reflecting higher billed business as well as strong growth in cardmember loans. These improvements resulted from an increase of 5.5 million cards in force, up 12 percent from a year ago, and higher average spending per cardmember. The higher spending was driven by several factors, including rewards programs and expanded merchant coverage. The net interest yield on cardmember loans decreased from year-ago levels, reflecting a higher percentage of loan balances on introductory rates and lower-rate products. Other revenues increased, primarily reflecting higher fee income. The provision for losses on the charge card and lending portfolios grew as a result of higher volume, partly offset by continued improvement in credit quality in the lending portfolio. Charge card interest expense grew as a result of higher volumes and increased borrowing costs. Marketing and promotion expenses rose as a result of increased business-building activities, while human resources expenses increased due to greater business volumes. Other operating expenses rose, reflecting in part the cost of cardmember loyalty programs, business growth and investment spending. Included in other operating expenses for the current quarter was a gain related to the sale of an international leisure travel business. This gain was offset by increased investment spending and therefore did not have a material impact on net income or total expenses. The above discussion presents TRS results "on a managed basis" as if there had been no securitization transactions, which conforms to industry practice. The attached financials present TRS results on both a managed and reported basis. Net income is the same in both formats. On a reported basis, TRS results for the second quarters of 2000 and 1999 included securitization gains of $80 million ($52 million after-tax) and $99 million ($64 million after-tax), respectively. These gains were offset by higher expenses related to card acquisition activities and therefore had no material impact on net income or total expenses. American Express Financial Advisors (AEFA) reported record quarterly net income of $275 million, up 14 percent from $242 million a year ago. Net revenues and earnings growth benefited from higher fee revenues due to an increase in managed assets. This increase reflected positive net sales and market appreciation over the past 12 months, despite market depreciation during the quarter. AEFA reported increases in sales of mutual funds, annuities, and life and other insurance products. Human resources expenses rose, largely because of compensation costs associated with higher sales, asset levels and number of financial advisors. Other operating expenses increased from year-ago levels due to higher business volumes and ongoing investments to build the business. American Express Bank/Travelers Cheque (AEB/TC) reported quarterly net income of $40 million compared with $38 million a year ago. Net income at American Express Bank reflects greater commission and fee revenues, partially offset by decreased net interest income mainly due to higher funding costs. Travelers Cheque results rose slightly due to strong sales and greater interest income. Corporate and Other reported net expenses of $47 million, compared with $45 million a year ago. Results for the current quarter include an investment gain that was offset by expenses related to business-building initiatives during the quarter. Beginning with the 2000 third quarter earnings release, Travelers Cheque results will be reported as part of TRS, rather than AEB, to reflect recent organizational changes. American Express Company (http://www.americanexpress.com), founded in 1850, is a global travel, financial and network services provider.
American Express Company ------------------------ Financial Summary ----------------- (Unaudited) (Dollars in millions) Quarters Ended June 30, -------------- Percentage 2000 1999 Inc/(Dec) ---- ---- -------- Net Revenues (Managed Basis) (A) - -------------------------------- Travel Related Services $4,278 $3,669 17 % American Express Financial Advisors 1,081 916 18 American Express Bank/ Travelers Cheque 262 259 1 ----- ----- 5,621 4,844 16 Corporate and Other, including adjustments and eliminations (63) (33) 91 ----- ----- CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $5,558 $4,811 16 ===== ===== Pretax Income - ------------- Travel Related Services $727 $628 16 American Express Financial Advisors 397 353 12 American Express Bank/ Travelers Cheque 4 6 (34) ----- --- 1,128 987 14 Corporate and Other (82) (92) (12) ----- --- PRETAX INCOME $1,046 $895 17 ===== === Net Income - ---------- Travel Related Services $472 $411 15 American Express Financial Advisors 275 242 14 American Express Bank/ Travelers Cheque 40 38 6 --- --- 787 691 14 Corporate and Other (47) (45) 5 --- --- NET INCOME $740 $646 15 === ===
Six Months Ended June 30, ---------------- Percentage 2000 1999 Inc/(Dec) ---- ---- -------- Net Revenues (Managed Basis) (A) - -------------------------------- Travel Related Services $8,322 $7,103 17 % American Express Financial Advisors 2,100 1,802 17 American Express Bank/ Travelers Cheque 513 506 1 ------ ----- 10,935 9,411 16 Corporate and Other, including adjustments and eliminations (118) (75) 57 ------ ----- CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $10,817 $9,336 16 ====== ===== Pretax Income - ------------- Travel Related Services $1,363 $1,182 15 American Express Financial Advisors 752 665 13 American Express Bank/ Travelers Cheque 7 18 (63) ----- ----- 2,122 1,865 14 Corporate and Other (156) (178) (13) ----- ----- PRETAX INCOME $1,966 $1,687 17 ===== ===== Net Income - ---------- Travel Related Services $888 $774 15 American Express Financial Advisors 520 456 14 American Express Bank/ Travelers Cheque 80 79 1 ----- ----- 1,488 1,309 14 Corporate and Other (92) (88) 5 ----- ----- NET INCOME $1,396 $1,221 14 ===== ===== (A) Managed net revenues are reported net of interest expense, where applicable, and American Express Financial Advisors' provision for losses and benefits, and exclude the effect of TRS' securitization activities.
American Express Company ------------------------ Financial Summary (continued) ----------------------------- (Unaudited) Quarters Ended June 30, -------------- Percentage 2000 1999 Inc/(Dec) ---- ---- -------- EARNINGS PER SHARE Basic - ----- Earnings Per Common Share $0.56 $0.48 17 % ==== ==== Average common shares outstanding (millions) 1,328 1,342 (1) ===== ===== Diluted - ------- Earnings Per Common Share $0.54 $0.47 15 ==== ==== Average common shares outstanding (millions) 1,361 1,371 (1) ===== ===== Cash dividends declared per common share $0.08 $0.075 7 ==== =====
Six Months Ended June 30, ---------------- Percentage 2000 1999 Inc/(Dec) ---- ---- -------- EARNINGS PER SHARE Basic - ----- Earnings Per Common Share $1.05 $0.91 15 % ==== ==== Average common shares outstanding (millions) 1,330 1,342 (1) ===== ===== Diluted - ------- Earnings Per Common Share $1.03 $0.89 16 ==== ==== Average common shares outstanding (millions) 1,361 1,370 (1) ===== ===== Cash dividends declared per common share $0.16 $0.15 7 ==== ====
Selected Statistical Information -------------------------------- (Unaudited) Quarters Ended June 30, --------------- Percentage 2000 1999 Inc/(Dec) ---- ---- -------- Return on Average Equity* 25.5 % 25.3 % - Common Shares Outstanding (millions) 1,333 1,347 (1)% Book Value per Common Share: Actual $7.66 $7.25 6 % Pro Forma* $8.26 $7.26 14 % Shareholders' Equity (billions) $10.2 $9.8 5 %
Six Months Ended June 30, ---------------- Percentage 2000 1999 Inc/(Dec) ---- ---- -------- Return on Average Equity* 25.5 % 25.3 % - Common Shares Outstanding (millions) 1,333 1,347 (1)% Book Value per Common Share: Actual $7.66 $7.25 6 % Pro Forma* $8.26 $7.26 14 % Shareholders' Equity (billions) $10.2 $9.8 5 % * Excludes the effect of SFAS No. 115.
American Express Company ------------------------ Financial Summary ----------------- (Unaudited) (Dollars in millions) Quarters Ended June 30, 2000 ---- Net Revenues (Managed Basis) (A) - -------------------------------- Travel Related Services $4,278 American Express Financial Advisors 1,081 American Express Bank/Travelers Cheque 262 ----- 5,621 Corporate and Other, including adjustments and eliminations (63) ----- CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $5,558 ===== Pretax Income - ------------- Travel Related Services $727 American Express Financial Advisors 397 American Express Bank/Travelers Cheque 4 ----- 1,128 Corporate and Other (82) ----- PRETAX INCOME $1,046 ===== Net Income - ---------- Travel Related Services $472 American Express Financial Advisors 275 American Express Bank/Travelers Cheque 40 --- 787 Corporate and Other (47) --- NET INCOME $740 ===
Quarters Ended March 31, 2000 ---- Net Revenues (Managed Basis) (A) - -------------------------------- Travel Related Services $4,044 American Express Financial Advisors 1,019 American Express Bank/Travelers Cheque 251 ----- 5,314 Corporate and Other, including adjustments and eliminations (55) ----- CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $5,259 ===== Pretax Income - ------------- Travel Related Services $636 American Express Financial Advisors 355 American Express Bank/Travelers Cheque 3 --- 994 Corporate and Other (74) --- PRETAX INCOME $920 === Net Income - ---------- Travel Related Services $416 American Express Financial Advisors 245 American Express Bank/Travelers Cheque 40 --- 701 Corporate and Other (45) --- NET INCOME $656 ===
Quarters Ended December 31, 1999 ---- Net Revenues (Managed Basis) (A) - -------------------------------- Travel Related Services $4,021 American Express Financial Advisors 999 American Express Bank/Travelers Cheque 252 ----- 5,272 Corporate and Other, including adjustments and eliminations (45) ----- CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $5,227 ===== Pretax Income - ------------- Travel Related Services $573 American Express Financial Advisors 347 American Express Bank/Travelers Cheque - --- 920 Corporate and Other (76) --- PRETAX INCOME $844 === Net Income - ---------- Travel Related Services $375 American Express Financial Advisors 238 American Express Bank/Travelers Cheque 35 --- 648 Corporate and Other (42) --- NET INCOME $606 ===
Quarters Ended September 30, 1999 ---- Net Revenues (Managed Basis) (A) - -------------------------------- Travel Related Services $3,778 American Express Financial Advisors 936 American Express Bank/Travelers Cheque 261 ----- 4,975 Corporate and Other, including adjustments and eliminations (55) ----- CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $4,920 ===== Pretax Income - ------------- Travel Related Services $632 American Express Financial Advisors 350 American Express Bank/Travelers Cheque 4 --- 986 Corporate and Other (79) --- PRETAX INCOME $907 === Net Income - ---------- Travel Related Services $413 American Express Financial Advisors 240 American Express Bank/Travelers Cheque 38 -- 691 Corporate and Other (43) --- NET INCOME $648 ===
Quarters Ended June 30, 1999 ---- Net Revenues (Managed Basis) (A) - -------------------------------- Travel Related Services $3,669 American Express Financial Advisors 916 American Express Bank/Travelers Cheque 259 ----- 4,844 Corporate and Other, including adjustments and eliminations (33) ----- CONSOLIDATED NET REVENUES (MANAGED BASIS) (A) $4,811 ===== Pretax Income - ------------- Travel Related Services $628 American Express Financial Advisors 353 American Express Bank/Travelers Cheque 6 --- 987 Corporate and Other (92) --- PRETAX INCOME $895 === Net Income - ---------- Travel Related Services $411 American Express Financial Advisors 242 American Express Bank/Travelers Cheque 38 --- 691 Corporate and Other (45) --- NET INCOME $646 === (A) Managed net revenues are reported net of interest expense, where applicable, and American Express Financial Advisors' provision for losses and benefits, and exclude the effect of TRS' securitization activities.
American Express Company ------------------------ Financial Summary (continued) ----------------------------- (Unaudited) Quarters Ended June 30, 2000 ---- EARNINGS PER SHARE Basic - ----- Earnings Per Common Share $0.56 ==== Average common shares outstanding (millions) 1,328 ===== Diluted - ------- Earnings Per Common Share $0.54 ==== Average common shares outstanding (millions) 1,361 ===== Cash dividends declared per common share $0.08 ====
Quarters Ended March 31, 2000 ---- EARNINGS PER SHARE Basic - ----- Earnings Per Common Share $0.49 ==== Average common shares outstanding (millions) 1,331 ===== Diluted - ------- Earnings Per Common Share $0.48 ==== Average common shares outstanding (millions) 1,362 ===== Cash dividends declared per common share $0.08 ====
Quarters Ended December 31, 1999 ---- EARNINGS PER SHARE Basic - ----- Earnings Per Common Share $0.45 ==== Average common shares outstanding (millions) 1,335 ===== Diluted - ------- Earnings Per Common Share $0.44 ==== Average common shares outstanding (millions) 1,369 ===== Cash dividends declared per common share $0.075 =====
Quarters Ended September 30, 1999 ---- EARNINGS PER SHARE Basic - ----- Earnings Per Common Share $0.48 ==== Average common shares outstanding (millions) 1,338 ===== Diluted - ------- Earnings Per Common Share $0.47 ==== Average common shares outstanding (millions) 1,369 ===== Cash dividends declared per common share $0.075 =====
Quarters Ended June 30, 1999 ---- EARNINGS PER SHARE Basic - ----- Earnings Per Common Share $0.48 ==== Average common shares outstanding (millions) 1,342 ===== Diluted - ------- Earnings Per Common Share $0.47 ==== Average common shares outstanding (millions) 1,371 ===== Cash dividends declared per common share $0.075 =====
Selected Statistical Information -------------------------------- (Unaudited) Quarters Ended June 30, 2000 ---- Return on Average Equity* 25.5 % Common Shares Outstanding (millions) 1,333 Book Value per Common Share: Actual $7.66 Pro Forma* $8.26 Shareholders' Equity (billions) $10.2
Quarters Ended March 31, 2000 ---- Return on Average Equity* 25.4 % Common Shares Outstanding (millions) 1,334 Book Value per Common Share: Actual $7.69 Pro Forma* $7.96 Shareholders' Equity (billions) $10.3
Quarters Ended December 31, 1999 ---- Return on Average Equity* 25.3 % Common Shares Outstanding (millions) 1,341 Book Value per Common Share: Actual $7.52 Pro Forma* $7.74 Shareholders' Equity (billions) $10.1
Quarters Ended September 30, 1999 ---- Return on Average Equity* 25.3 % Common Shares Outstanding (millions) 1,343 Book Value per Common Share: Actual $7.26 Pro Forma* $7.47 Shareholders' Equity (billions) $9.7
Quarters Ended June 30, 1999 ---- Return on Average Equity* 25.3 % Common Shares Outstanding (millions) 1,347 Book Value per Common Share: Actual $7.25 Pro Forma* $7.26 Shareholders' Equity (billions) $9.8 * Excludes the effect of SFAS No. 115.
(Preliminary) Travel Related Services ----------------------- Statements of Income -------------------- (Unaudited, Managed Basis) (Dollars in millions) Quarters Ended June 30, -------------- Percentage 2000 1999 Inc/(Dec) ---- ---- -------- Net Revenues: Discount Revenue $1,949 $1,662 17.3 % Net Card Fees 411 393 4.6 Travel Commissions and Fees 507 469 8.3 Other Revenues 848 669 26.6 Lending: Finance Charge Revenue 948 684 38.7 Interest Expense 385 208 85.2 ----- ----- Net Finance Charge Revenue 563 476 18.4 ----- ----- Total Net Revenues 4,278 3,669 16.6 ----- ----- Expenses: Marketing and Promotion 330 267 23.6 Provision for Losses and Claims: Charge Card 344 288 19.4 Lending 332 260 27.9 Other 20 14 42.3 --- --- Total 696 562 23.9 --- --- Charge Card Interest Expense 350 257 36.4 Human Resources 1,028 968 6.2 Other Operating Expenses 1,147 987 16.2 ----- ----- Total Expenses 3,551 3,041 16.8 ----- ----- Pretax Income 727 628 15.7 Income Tax Provision 255 217 17.5 --- --- Net Income $472 $411 14.8 === ===
These Statements of Income are provided on a Managed Basis for analytical purposes only. They present the income statements of TRS as if there had been no securitization transactions. Under Statement of Financial Accounting Standards No.125 (SFAS No. 125), which prescribes the accounting for securitized receivables, TRS recognized pretax gains of $80 million ($52 million after-tax) and $99 million ($64 million after-tax) in the second quarters of 2000 and 1999, respectively, related to the securitization of U.S. receivables. These gains were invested in additional card acquisition activities and had no material impact on Net Income or Total Expenses in either quarter. For purposes of this presentation such gains and corresponding increases in Marketing and Promotion and Other Operating Expenses have been eliminated in each quarter.
(Preliminary) Travel Related Services ----------------------- Statements of Income -------------------- (Unaudited, GAAP Reporting Basis) (Dollars in millions) Quarters Ended June 30, -------------- Percentage 2000 1999 Inc/(Dec) ---- ---- -------- Net Revenues: Discount Revenue $1,949 $1,662 17.3 % Net Card Fees 411 393 4.6 Travel Commissions and Fees 507 469 8.3 Other Revenues 1,121 845 32.6 Lending: Finance Charge Revenue 500 465 7.6 Interest Expense 258 156 65.6 ----- ----- Net Finance Charge Revenue 242 309 (21.7) ----- ----- Total Net Revenues 4,230 3,678 15.0 ----- ----- Expenses: Marketing and Promotion 378 325 16.3 Provision for Losses and Claims: Charge Card 302 249 21.4 Lending 170 137 24.1 Other 20 14 42.3 --- --- Total 492 400 23.1 --- --- Charge Card Interest Expense 295 198 48.8 Net Discount Expense 131 131 0.5 Human Resources 1,028 968 6.2 Other Operating Expenses 1,179 1,028 14.6 ----- ----- Total Expenses 3,503 3,050 14.9 ----- ----- Pretax Income 727 628 15.7 Income Tax Provision 255 217 17.5 --- --- Net Income $472 $411 14.8 === ===
(Preliminary) Travel Related Services ----------------------- Selected Statistical Information -------------------------------- (Unaudited) (Amounts in billions, except percentages and where indicated) Quarters Ended June 30, ------------- Percentage 2000 1999 Inc/(Dec) ---- ---- -------- Total Cards in Force (millions): United States 32.5 28.7 13.1 % Outside the United States 16.9 15.2 11.2 ---- ---- Total 49.4 43.9 12.5 ==== ==== Basic Cards in Force (millions): United States 25.3 22.5 12.6 Outside the United States 12.9 11.7 10.4 ---- ---- Total 38.2 34.2 11.8 ==== ==== Card Billed Business: United States $55.8 $46.0 21.5 Outside the United States 18.7 16.4 13.3 ---- ---- Total $74.5 $62.4 19.3 ==== ==== Average Discount Rate (A) 2.69 % 2.73 % - Average Basic Cardmember Spending (dollars) (A) $2,085 $1,933 7.9 Average Fee per Card - Managed (dollars) (A) $36 $38 (5.3) Non-Amex Brand (B): Cards in Force (millions) 0.6 0.2 # Billed Business $0.7 $0.2 # Travel Sales $6.2 $6.0 2.9 Travel Commissions and Fees/Sales (C) 8.2 % 7.8 % - Total Debt $31.1 $30.6 1.6 Shareholder's Equity $5.7 $5.3 8.5 Return on Average Equity (D) 31.2 % 28.8 % - Return on Average Assets (D) 3.2 % 3.3 % -
(A) Computed from proprietary card activities only. (B) This data relates to Visa and Eurocards issued in connection with joint venture activities. (C) Computed from information provided herein. (D) Excluding the effect of SFAS No. 115. # Denotes variance of more than 100%.
(Preliminary) Travel Related Services ----------------------- Selected Statistical Information (continued) -------------------------------------------- (Unaudited, Managed Basis) (Amounts in billions, except percentages and where indicated) Quarters Ended June 30, -------------- Percentage 2000 1999 Inc/(Dec) ---- ---- -------- Charge Card Receivables: Total Receivables $27.4 $24.6 11.3 % 90 Days Past Due as a % of Total 2.4 % 2.6 % - Loss Reserves (millions) $986 $932 5.9 % of Receivables 3.6 % 3.8 % - % of 90 Days Past Due 153 % 148 % - Net Loss Ratio 0.36 % 0.39 % - U.S. Cardmember Lending: Total Loans $25.9 $18.3 41.8 Past Due Loans as a % of Total: 30-89 Days 1.6 % 1.8 % - 90+ Days 0.8 % 0.9 % - Loss Reserves (millions): Beginning Balance $689 $623 10.6 Provision 268 209 28.3 Net Charge-Offs/Other (271) (230) 18.0 ---- --- Ending Balance $686 $602 13.9 === === % of Loans 2.6 % 3.3 % - % of Past Due 109 % 124 % - Average Loans $25.2 $17.4 44.7 Net Write-Off Rate 4.4 % 5.3 % - Net Interest Yield 7.4 % 9.3 % -
(Preliminary) Travel Related Services ----------------------- Statements of Income -------------------- (Unaudited, Managed Basis) (Dollars in millions) Quarters Ended June 30, 2000 ---- Net Revenues: Discount Revenue $1,949 Net Card Fees 411 Travel Commissions and Fees 507 Other Revenues 848 Lending: Finance Charge Revenue 948 Interest Expense 385 ----- Net Finance Charge Revenue 563 ----- Total Net Revenues 4,278 ----- Expenses: Marketing and Promotion 330 Provision for Losses and Claims: Charge Card 344 Lending 332 Other 20 --- Total 696 --- Charge Card Interest Expense 350 Human Resources 1,028 Other Operating Expenses 1,147 ----- Total Expenses 3,551 ----- Pretax Income 727 Income Tax Provision 255 --- Net Income $472 ===
Quarters Ended March 31, 2000 ---- Net Revenues: Discount Revenue $1,805 Net Card Fees 405 Travel Commissions and Fees 438 Other Revenues 841 Lending: Finance Charge Revenue 887 Interest Expense 332 ----- Net Finance Charge Revenue 555 ----- Total Net Revenues 4,044 ----- Expenses: Marketing and Promotion 318 Provision for Losses and Claims: Charge Card 278 Lending 335 Other 21 --- Total 634 --- Charge Card Interest Expense 314 Human Resources 998 Other Operating Expenses 1,144 ----- Total Expenses 3,408 ----- Pretax Income 636 Income Tax Provision 220 --- Net Income $416 ===
Quarters Ended December 31, 1999 ---- Net Revenues: Discount Revenue $1,865 Net Card Fees 408 Travel Commissions and Fees 459 Other Revenues 789 Lending: Finance Charge Revenue 802 Interest Expense 302 ----- Net Finance Charge Revenue 500 ----- Total Net Revenues 4,021 ----- Expenses: Marketing and Promotion 338 Provision for Losses and Claims: Charge Card 227 Lending 332 Other 17 --- Total 576 --- Charge Card Interest Expense 300 Human Resources 1,012 Other Operating Expenses 1,222 ----- Total Expenses 3,448 ----- Pretax Income 573 Income Tax Provision 198 --- Net Income $375 ===
Quarters Ended September 30, 1999 ---- Net Revenues: Discount Revenue $1,700 Net Card Fees 399 Travel Commissions and Fees 448 Other Revenues 730 Lending: Finance Charge Revenue 747 Interest Expense 246 ----- Net Finance Charge Revenue 501 ----- Total Net Revenues 3,778 ----- Expenses: Marketing and Promotion 340 Provision for Losses and Claims: Charge Card 247 Lending 312 Other 10 --- Total 569 --- Charge Card Interest Expense 259 Human Resources 968 Other Operating Expenses 1,010 ----- Total Expenses 3,146 ----- Pretax Income 632 Income Tax Provision 219 --- Net Income $413 ===
Quarters Ended June 30, 1999 ---- Net Revenues: Discount Revenue $1,662 Net Card Fees 393 Travel Commissions and Fees 469 Other Revenues 669 Lending: Finance Charge Revenue 684 Interest Expense 208 ----- Net Finance Charge Revenue 476 ----- Total Net Revenues 3,669 ----- Expenses: Marketing and Promotion 267 Provision for Losses and Claims: Charge Card 288 Lending 260 Other 14 --- Total 562 --- Charge Card Interest Expense 257 Human Resources 968 Other Operating Expenses 987 ----- Total Expenses 3,041 ----- Pretax Income 628 Income Tax Provision 217 --- Net Income $411 ===
These Statements of Income are provided on a Managed Basis for analytical purposes only. They present the income statements of TRS as if there had been no securitization transactions. Under Statement of Financial Accounting Standards No. 125 (SFAS No. 125), which prescribes the accounting for securitized receivables, TRS recognized pretax gains of $80 million ($52 million after-tax) in the second quarter of 2000, $36 million ($23 million after-tax) in the first quarter of 2000, $55 million ($36 million after-tax) in the third quarter of 1999 and $99 million ($64 million after-tax) in the second quarter of 1999, related to the securitization of U.S. receivables. These gains were invested in additional card acquisition activities and had no material impact on Net Income or Total Expenses in any quarter. For purposes of this presentation such gains and corresponding increases in Marketing and Promotion and Other Operating Expenses have been eliminated in each quarter.
(Preliminary) Travel Related Services ----------------------- Statements of Income -------------------- (Unaudited, GAAP Reporting Basis) (Dollars in millions) Quarters Ended June 30, 2000 ---- Net Revenues: Discount Revenue $1,949 Net Card Fees 411 Travel Commissions and Fees 507 Other Revenues 1,121 Lending: Finance Charge Revenue 500 Interest Expense 258 ----- Net Finance Charge Revenue 242 ----- Total Net Revenues 4,230 ----- Expenses: Marketing and Promotion 378 Provision for Losses and Claims: Charge Card 302 Lending 170 Other 20 --- Total 492 --- Charge Card Interest Expense 295 Net Discount Expense 131 Human Resources 1,028 Other Operating Expenses 1,179 ----- Total Expenses 3,503 ----- Pretax Income 727 Income Tax Provision 255 --- Net Income $472 ===
Quarters Ended March 31, 2000 ---- Net Revenues: Discount Revenue $1,805 Net Card Fees 405 Travel Commissions and Fees 438 Other Revenues 1,014 Lending: Finance Charge Revenue 524 Interest Expense 231 ----- Net Finance Charge Revenue 293 ----- Total Net Revenues 3,955 ----- Expenses: Marketing and Promotion 339 Provision for Losses and Claims: Charge Card 241 Lending 175 Other 21 --- Total 437 --- Charge Card Interest Expense 260 Net Discount Expense 126 Human Resources 998 Other Operating Expenses 1,159 ----- Total Expenses 3,319 ----- Pretax Income 636 Income Tax Provision 220 --- Net Income $416 ===
Quarters Ended December 31, 1999 ---- Net Revenues: Discount Revenue $1,865 Net Card Fees 408 Travel Commissions and Fees 459 Other Revenues 902 Lending: Finance Charge Revenue 526 Interest Expense 197 ----- Net Finance Charge Revenue 329 ----- Total Net Revenues 3,963 ----- Expenses: Marketing and Promotion 338 Provision for Losses and Claims: Charge Card 213 Lending 241 Other 17 --- Total 471 --- Charge Card Interest Expense 246 Net Discount Expense 101 Human Resources 1,012 Other Operating Expenses 1,222 ----- Total Expenses 3,390 ----- Pretax Income 573 Income Tax Provision 198 --- Net Income $375 ===
Quarters Ended September 30, 1999 ---- Net Revenues: Discount Revenue $1,700 Net Card Fees 395 Travel Commissions and Fees 448 Other Revenues 846 Lending: Finance Charge Revenue 513 Interest Expense 165 ----- Net Finance Charge Revenue 348 ----- Total Net Revenues 3,737 ----- Expenses: Marketing and Promotion 373 Provision for Losses and Claims: Charge Card 222 Lending 187 Other 10 --- Total 419 --- Charge Card Interest Expense 208 Net Discount Expense 105 Human Resources 968 Other Operating Expenses 1,032 ----- Total Expenses 3,105 ----- Pretax Income 632 Income Tax Provision 219 --- Net Income $413 ===
Quarters Ended June 30, 1999 ---- Net Revenues: Discount Revenue $1,662 Net Card Fees 393 Travel Commissions and Fees 469 Other Revenues 845 Lending: Finance Charge Revenue 465 Interest Expense 156 ----- Net Finance Charge Revenue 309 ----- Total Net Revenues 3,678 ----- Expenses: Marketing and Promotion 325 Provision for Losses and Claims: Charge Card 249 Lending 137 Other 14 --- Total 400 --- Charge Card Interest Expense 198 Net Discount Expense 131 Human Resources 968 Other Operating Expenses 1,028 ----- Total Expenses 3,050 ----- Pretax Income 628 Income Tax Provision 217 --- Net Income $411 ===
(Preliminary) Travel Related Services ----------------------- Selected Statistical Information -------------------------------- (Unaudited) (Amounts in billions, except percentages and where indicated) Quarters Ended June 30, 2000 ---- Total Cards in Force (millions): United States 32.5 Outside the United States 16.9 ---- Total 49.4 ==== Basic Cards in Force (millions): United States 25.3 Outside the United States 12.9 ---- Total 38.2 ==== Card Billed Business: United States $55.8 Outside the United States 18.7 ---- Total $74.5 ==== Average Discount Rate (A) 2.69 % Average Basic Cardmember Spending (dollars) (A) $2,085 Average Fee per Card - Managed (dollars) (A) $36 Non-Amex Brand (B): Cards in Force (millions) 0.6 Billed Business $0.7 Travel Sales $6.2 Travel Commissions and Fees/Sales (C) 8.2 % Total Debt $31.1 Shareholder's Equity $5.7 Return on Average Equity (D) 31.2 % Return on Average Assets (D) 3.2 %
Quarters Ended March 31, 2000 ---- Total Cards in Force (millions): United States 31.4 Outside the United States 16.5 ---- Total 47.9 ==== Basic Cards in Force (millions): United States 24.5 Outside the United States 12.6 ---- Total 37.1 ==== Card Billed Business: United States $50.6 Outside the United States 17.7 ---- Total $68.3 ==== Average Discount Rate (A) 2.72 % Average Basic Cardmember Spending (dollars) (A) $1,980 Average Fee per Card - Managed (dollars) (A) $37 Non-Amex Brand (B): Cards in Force (millions) 0.6 Billed Business $0.5 Travel Sales $5.5 Travel Commissions and Fees/Sales (C) 8.0 % Total Debt $34.0 Shareholder's Equity $5.6 Return on Average Equity (D) 30.5 % Return on Average Assets (D) 3.2 %
Quarters Ended December 31, 1999 ---- Total Cards in Force (millions): United States 29.9 Outside the United States 16.1 ---- Total 46.0 ==== Basic Cards in Force (millions): United States 23.4 Outside the United States 12.3 ---- Total 35.7 ==== Card Billed Business: United States $51.7 Outside the United States 19.1 ---- Total $70.8 ==== Average Discount Rate (A) 2.71 % Average Basic Cardmember Spending (dollars) (A) $2,102 Average Fee per Card - Managed (dollars) (A) $38 Non-Amex Brand (B): Cards in Force (millions) 0.3 Billed Business $0.2 Travel Sales $5.6 Travel Commissions and Fees/Sales (C) 8.2 % Total Debt $35.8 Shareholder's Equity $5.4 Return on Average Equity (D) 30.1 % Return on Average Assets (D) 3.2 %
Quarters Ended September 30, 1999 ---- Total Cards in Force (millions): United States 29.2 Outside the United States 15.6 ---- Total 44.8 ==== Basic Cards in Force (millions): United States 22.9 Outside the United States 12.0 ---- Total 34.9 ==== Card Billed Business: United States $47.1 Outside the United States 17.0 ---- Total $64.1 ==== Average Discount Rate (A) 2.73 % Average Basic Cardmember Spending (dollars) (A) $1,935 Average Fee per Card - Managed (dollars) (A) $38 Non-Amex Brand (B): Cards in Force (millions) 0.2 Billed Business $0.2 Travel Sales $5.5 Travel Commissions and Fees/Sales (C) 8.1 % Total Debt $30.8 Shareholder's Equity $5.4 Return on Average Equity (D) 29.3 % Return on Average Assets (D) 3.3 %
Quarters Ended June 30, 1999 ---- Total Cards in Force (millions): United States 28.7 Outside the United States 15.2 ---- Total 43.9 ==== Basic Cards in Force (millions): United States 22.5 Outside the United States 11.7 ---- Total 34.2 ==== Card Billed Business: United States $46.0 Outside the United States 16.4 ---- Total $62.4 ==== Average Discount Rate (A) 2.73 % Average Basic Cardmember Spending (dollars) (A) $1,933 Average Fee per Card - Managed (dollars) (A) $38 Non-Amex Brand (B): Cards in Force (millions) 0.2 Billed Business $0.2 Travel Sales $6.0 Travel Commissions and Fees/Sales (C) 7.8 % Total Debt $30.6 Shareholder's Equity $5.3 Return on Average Equity (D) 28.8 % Return on Average Assets (D) 3.3 %
(A) Computed from proprietary card activities only. (B) This data relates to Visa and Eurocards issued in connection with joint venture activities. (C) Computed from information provided herein. (D) Excluding the effect of SFAS No. 115.
(Preliminary) Travel Related Services ----------------------- Selected Statistical Information (continued) -------------------------------------------- (Unaudited, Managed Basis) (Amounts in billions, except percentages and where indicated) Quarters Ended June 30, 2000 ---- Charge Card Receivables: Total Receivables $27.4 90 Days Past Due as a % of Total 2.4 % Loss Reserves (millions) $986 % of Receivables 3.6 % % of 90 Days Past Due 153 % Net Loss Ratio 0.36 % U.S. Cardmember Lending: Total Loans $25.9 Past Due Loans as a % of Total: 30-89 Days 1.6 % 90+ Days 0.8 % Loss Reserves (millions): Beginning Balance $689 Provision 268 Net Charge-Offs/Other (271) --- Ending Balance $686 === % of Loans 2.6 % % of Past Due 109 % Average Loans $ 25.2 Net Write-Off Rate 4.4 % Net Interest Yield 7.4 %
Quarters Ended March 31, 2000 ---- Charge Card Receivables: Total Receivables $26.8 90 Days Past Due as a % of Total 2.6 % Loss Reserves (millions) $894 % of Receivables 3.3 % % of 90 Days Past Due 129 % Net Loss Ratio 0.34 % U.S. Cardmember Lending: Total Loans $24.2 Past Due Loans as a % of Total: 30-89 Days 1.8 % 90+ Days 0.8 % Loss Reserves (millions): Beginning Balance $672 Provision 285 Net Charge-Offs/Other (268) --- Ending Balance $689 === % of Loans 2.8 % % of Past Due 109 % Average Loans $23.6 Net Write-Off Rate 4.6 % Net Interest Yield 7.8 %
Quarters Ended December 31, 1999 ---- Charge Card Receivables: Total Receivables $27.0 90 Days Past Due as a % of Total 2.5 % Loss Reserves (millions) $857 % of Receivables 3.2 % % of 90 Days Past Due 126 % Net Loss Ratio 0.40 % U.S. Cardmember Lending: Total Loans $23.4 Past Due Loans as a % of Total: 30-89 Days 1.8 % 90+ Days 0.8 % Loss Reserves (millions): Beginning Balance $636 Provision 277 Net Charge-Offs/Other (241) --- Ending Balance $672 === % of Loans 2.9 % % of Past Due 110 % Average Loans $21.7 Net Write-Off Rate 4.5 % Net Interest Yield 7.7 %
Quarters Ended September 30, 1999 ---- Charge Card Receivables: Total Receivables $25.3 90 Days Past Due as a % of Total 2.5 % Loss Reserves (millions) $907 % of Receivables 3.6 % % of 90 Days Past Due 144 % Net Loss Ratio 0.41 % U.S. Cardmember Lending: Total Loans $20.6 Past Due Loans as a % of Total: 30-89 Days 2.0 % 90+ Days 0.8 % Loss Reserves (millions): Beginning Balance $602 Provision 264 Net Charge-Offs/Other (230) --- Ending Balance $636 === % of Loans 3.1 % % of Past Due 111 % Average Loans $19.8 Net Write-Off Rate 4.7 % Net Interest Yield 8.5 %
Quarters Ended June 30, 1999 ---- Charge Card Receivables: Total Receivables $24.6 90 Days Past Due as a % of Total 2.6 % Loss Reserves (millions) $932 % of Receivables 3.8 % % of 90 Days Past Due 148 % Net Loss Ratio 0.39 % U.S. Cardmember Lending: Total Loans $18.3 Past Due Loans as a % of Total: 30-89 Days 1.8 % 90+ Days 0.9 % Loss Reserves (millions): Beginning Balance $623 Provision 209 Net Charge-Offs/Other (230) --- Ending Balance $602 === % of Loans 3.3 % % of Past Due 124 % Average Loans $17.4 Net Write-Off Rate 5.3 % Net Interest Yield 9.3 %
(Preliminary) American Express Financial Advisors ----------------------------------- Statements of Income -------------------- (Unaudited) (Dollars in millions) Quarters Ended June 30, -------------- Percentage 2000 1999 Inc/(Dec) ---- ---- -------- Net Revenues: Investment Income $592 $615 (3.7) % Management and Distribution Fees 701 553 27.0 Other Revenues 248 226 9.5 ----- ----- Total Revenues 1,541 1,394 10.6 Provision for Losses and Benefits: Annuities 254 273 (6.9) Insurance 138 132 4.6 Investment Certificates 68 73 (6.2) ----- ----- Total 460 478 (3.6) ----- ----- Net Revenues 1,081 916 18.0 ----- ----- Expenses: Human Resources 528 430 22.8 Other Operating Expenses 156 133 17.4 --- --- Total Expenses 684 563 21.5 --- --- Pretax Income 397 353 12.4 Income Tax Provision 122 111 9.3 --- --- Net Income $275 $242 13.8 === ===
(Preliminary) American Express Financial Advisors ----------------------------------- Selected Statistical Information -------------------------------- (Unaudited) (Dollars in millions, except where indicated) Quarters Ended June 30, -------------- Percentage 2000 1999 Inc/(Dec) ---- ---- -------- Investments (billions) $30.0 $30.7 (2.0) % Client Contract Reserves (billions) $31.0 $30.8 0.9 Shareholder's Equity (billions) $4.0 $4.0 - Return on Average Equity* 23.1 % 22.8 % - Life Insurance in Force (billions) $93.8 $84.6 10.9 Assets Owned, Managed or Administered (billions): Assets Managed for Institutions $56.1 $49.8 12.7 Assets Owned, Managed or Administered for Individuals: Owned Assets: Separate Account Assets 36.5 30.1 21.3 Other Owned Assets 39.9 37.8 5.5 ---- ----- Total Owned Assets 76.4 67.9 12.5 Managed Assets 119.6 102.1 17.1 Administered Assets 34.1 20.8 64.1 ----- ----- Total $286.2 $240.6 19.0 ===== ===== Market Appreciation (Depreciation) During the Period: Owned Assets: Separate Account Assets $(2,301) $1,520 - Other Owned Assets $(90) $(395) (77.2) Total Managed Assets $(6,488) $5,329 - Cash Sales: Mutual Funds $10,376 $8,872 17.0 Annuities 1,566 980 59.8 Investment Certificates 871 835 4.3 Life and Other Insurance Products 219 169 29.9 Institutional 1,557 1,432 8.7 Other 661 805 (18.0) ------ ------ Total Cash Sales $15,250 $13,093 16.5 ====== ====== Number of Financial Advisors 11,486 10,489 9.5 Fees from Financial Plans and Advice Services $23.9 $22.8 4.6 Percentage of Total Sales from Financial Plans and Advice Services 66.1 % 65.2 % -
* Excluding the effect of SFAS No. 115. Note: In the first quarter of 2000, reporting of data related to cash sales and assets owned, managed and administered was revised to better reflect AEFA's multiple sales channel strategy and broadening of its product portfolio through additional non-proprietary offerings.
(Preliminary) American Express Financial Advisors ----------------------------------- Statements of Income -------------------- (Unaudited) (Dollars in millions) Quarters Ended June 30, 2000 ---- Net Revenues: Investment Income $592 Management and Distribution Fees 701 Other Revenues 248 ----- Total Revenues 1,541 Provision for Losses and Benefits: Annuities 254 Insurance 138 Investment Certificates 68 ----- Total 460 ----- Net Revenues 1,081 ----- Expenses: Human Resources 528 Other Operating Expenses 156 --- Total Expenses 684 --- Pretax Income 397 Income Tax Provision 122 --- Net Income $275 ===
Quarters Ended March 31, 2000 ---- Net Revenues: Investment Income $572 Management and Distribution Fees 688 Other Revenues 246 ----- Total Revenues 1,506 Provision for Losses and Benefits: Annuities 259 Insurance 139 Investment Certificates 89 ----- Total 487 ----- Net Revenues 1,019 ----- Expenses: Human Resources 498 Other Operating Expenses 166 --- Total Expenses 664 --- Pretax Income 355 Income Tax Provision 110 --- Net Income $245 ===
Quarters Ended December 31, 1999 ---- Net Revenues: Investment Income $668 Management and Distribution Fees 616 Other Revenues 245 ----- Total Revenues 1,529 Provision for Losses and Benefits: Annuities 276 Insurance 130 Investment Certificates 124 --- Total 530 --- Net Revenues 999 --- Expenses: Human Resources 443 Other Operating Expenses 209 --- Total Expenses 652 --- Pretax Income 347 Income Tax Provision 109 --- Net Income $238 ===
Quarters Ended September 30, 1999 ---- Net Revenues: Investment Income $566 Management and Distribution Fees 578 Other Revenues 224 ----- Total Revenues 1,368 Provision for Losses and Benefits: Annuities 251 Insurance 135 Investment Certificates 46 --- Total 432 --- Net Revenues 936 --- Expenses: Human Resources 456 Other Operating Expenses 130 --- Total Expenses 586 --- Pretax Income 350 Income Tax Provision 110 --- Net Income $240 ===
Quarters Ended June 30, 1999 ---- Net Revenues: Investment Income $615 Management and Distribution Fees 553 Other Revenues 226 ----- Total Revenues 1,394 Provision for Losses and Benefits: Annuities 273 Insurance 132 Investment Certificates 73 --- Total 478 --- Net Revenues 916 --- Expenses: Human Resources 430 Other Operating Expenses 133 --- Total Expenses 563 --- Pretax Income 353 Income Tax Provision 111 --- Net Income $242 ===
(Preliminary) American Express Financial Advisors ----------------------------------- Selected Statistical Information -------------------------------- (Unaudited) (Dollars in millions, except where indicated) Quarters Ended June 30, 2000 ---- Investments (billions) $30.0 Client Contract Reserves (billions) $31.0 Shareholder's Equity (billions) $4.0 Return on Average Equity* 23.1 % Life Insurance in Force (billions) $93.8 Assets Owned, Managed or Administered (billions): Assets Managed for Institutions $56.1 Assets Owned, Managed or Administered for Individuals: Owned Assets: Separate Account Assets 36.5 Other Owned Assets 39.9 ----- Total Owned Assets 76.4 Managed Assets 119.6 Administered Assets 34.1 ----- Total $286.2 ===== Market Appreciation (Depreciation) During the Period: Owned Assets: Separate Account Assets $(2,301) Other Owned Assets $(90) Total Managed Assets $(6,488) Cash Sales: Mutual Funds $10,376 Annuities 1,566 Investment Certificates 871 Life and Other Insurance Products 219 Institutional 1,557 Other 661 ------ Total Cash Sales $15,250 ====== Number of Financial Advisors 11,486 Fees from Financial Plans and Advice Services $23.9 Percentage of Total Sales from Financial Plans and Advice Services 66.1 %
Quarters Ended March 31, 2000 ---- Investments (billions) $30.3 Client Contract Reserves (billions) $31.0 Shareholder's Equity (billions) $3.9 Return on Average Equity* 23.0 % Life Insurance in Force (billions) $91.7 Assets Owned, Managed or Administered (billions): Assets Managed for Institutions $57.4 Assets Owned, Managed or Administered for Individuals: Owned Assets: Separate Account Assets 38.4 Other Owned Assets 39.8 ----- Total Owned Assets 78.2 Managed Assets 122.7 Administered Assets 31.2 ----- Total $289.5 ===== Market Appreciation (Depreciation) During the Period: Owned Assets: Separate Account Assets $2,332 Other Owned Assets $(120) Total Managed Assets $7,020 Cash Sales: Mutual Funds $12,104 Annuities 1,362 Investment Certificates 835 Life and Other Insurance Products 237 Institutional 1,551 Other 573 ------ Total Cash Sales $16,662 ====== Number of Financial Advisors 11,094 Fees from Financial Plans and Advice Services $26.3 Percentage of Total Sales from Financial Plans and Advice Services 66.9 %
Quarters Ended December 31, 1999 ---- Investments (billions) $30.3 Client Contract Reserves (billions) $31.0 Shareholder's Equity (billions) $3.9 Return on Average Equity* 22.9 % Life Insurance in Force (billions) $89.2 Assets Owned, Managed or Administered (billions): Assets Managed for Institutions $55.5 Assets Owned, Managed or Administered for Individuals: Owned Assets: Separate Account Assets 35.9 Other Owned Assets 38.7 ----- Total Owned Assets 74.6 Managed Assets 115.1 Administered Assets 24.8 ----- Total $270.0 ===== Market Appreciation (Depreciation) During the Period: Owned Assets: Separate Account Assets $6,726 Other Owned Assets $(254) Total Managed Assets $20,745 Cash Sales: Mutual Funds $8,611 Annuities 939 Investment Certificates 993 Life and Other Insurance Products 224 Institutional 1,928 Other 870 ------ Total Cash Sales $13,565 ====== Number of Financial Advisors 11,366 Fees from Financial Plans and Advice Services $22.1 Percentage of Total Sales from Financial Plans and Advice Services 67.4 %
Quarters Ended September 30, 1999 ---- Investments (billions) $30.7 Client Contract Reserves (billions) $31.0 Shareholder's Equity (billions) $3.9 Return on Average Equity* 22.8 % Life Insurance in Force (billions) $86.3 Assets Owned, Managed or Administered (billions): Assets Managed for Institutions $48.2 Assets Owned, Managed or Administered for Individuals: Owned Assets: Separate Account Assets 28.9 Other Owned Assets 38.1 ----- Total Owned Assets 67.0 Managed Assets 99.5 Administered Assets 21.1 ----- Total $235.8 ===== Market Appreciation (Depreciation) During the Period: Owned Assets: Separate Account Assets $(986) Other Owned Assets $(273) Total Managed Assets $(5,318) Cash Sales: Mutual Funds $8,304 Annuities 1,190 Investment Certificates 1,061 Life and Other Insurance Products 196 Institutional 909 Other 953 ------ Total Cash Sales $12,613 ====== Number of Financial Advisors 10,631 Fees from Financial Plans and Advice Services $22.3 Percentage of Total Sales from Financial Plans and Advice Services 67.7 %
Quarters Ended June 30, 1999 ---- Investments (billions) $30.7 Client Contract Reserves (billions) $30.8 Shareholder's Equity (billions) $4.0 Return on Average Equity* 22.8 % Life Insurance in Force (billions) $84.6 Assets Owned, Managed or Administered (billions): Assets Managed for Institutions $49.8 Assets Owned, Managed or Administered for Individuals: Owned Assets: Separate Account Assets 30.1 Other Owned Assets 37.8 ----- Total Owned Assets 67.9 Managed Assets 102.1 Administered Assets 20.8 ----- Total $240.6 ===== Market Appreciation (Depreciation) During the Period: Owned Assets: Separate Account Assets $1,520 Other Owned Assets $(395) Total Managed Assets $5,329 Cash Sales: Mutual Funds $8,872 Annuities 980 Investment Certificates 835 Life and Other Insurance Products 169 Institutional 1,432 Other 805 ------ Total Cash Sales $13,093 ====== Number of Financial Advisors 10,489 Fees from Financial Plans and Advice Services $22.8 Percentage of Total Sales from Financial Plans and Advice Services 65.2 %
* Excluding the effect of SFAS No. 115. Note: In the first quarter of 2000, reporting of data related to cash sales and assets owned, managed and administered was revised to better reflect AEFA's multiple sales channel strategy and broadening of its product portfolio through additional non-proprietary offerings.
(Preliminary) American Express Bank/Travelers Cheque -------------------------------------- Statements of Income -------------------- (Unaudited) (Dollars in millions) Quarters Ended June 30, -------------- Percentage 2000 1999 Inc/(Dec) ---- ---- --------- Net Revenues: Interest Income $183 $183 (0.1) % Interest Expense 120 108 10.5 --- --- Net Interest Income 63 75 (15.5) TC Investment Income 98 86 13.6 Commissions and Fees 59 47 26.0 Foreign Exchange Income & Other Revenue 42 51 (18.1) --- --- Total Net Revenues 262 259 1.1 --- --- Expenses: Human Resources 84 85 (0.5) Other Operating Expenses 159 150 5.4 Provision for Losses 15 18 (15.5) --- --- Total Expenses 258 253 1.9 --- --- Pretax Income 4 6 (34.0) Income Tax Benefit (36) (32) 13.4 -- -- Net Income $40 $38 6.0 == ==
(Preliminary) American Express Bank/Travelers Cheque -------------------------------------- Selected Statistical Information -------------------------------- (Unaudited) (Dollars in billions, except where indicated) Quarters Ended June 30, -------------- Percentage 2000 1999 Inc/(Dec) ---- ---- -------- Selected Statistical Information - -------------------------------- Total Shareholder's Equity (millions) $956 $1,048 (8.8) % Return on Average Common Equity * 17.6 % 18.5 % - Return on Average Assets * 0.80 % 0.86 % - American Express Bank: Shareholder's Equity (millions) $707 $714 (1.0) Total Loans $5.1 $5.2 (2.3) Total Non-performing Loans (millions) $174 $210 (17.0) Other Non-performing Assets (millions) $36 $55 (33.5) Reserve for Credit Losses (millions)** $187 $249 (25.1) Loan Loss Reserves as a % of Total Loans 3.3 % 4.1 % - Deposits $8.2 $8.0 2.1 Assets Managed / Administered *** $10.3 $7.0 47.4 Assets of Non-Consolidated Joint Ventures $2.3 $2.2 8.0 Risk-Based Capital Ratios: Tier 1 10.3 % 9.8 % - Total 11.9 % 12.1 % - Leverage Ratio 5.8 % 5.7 % - Travelers Cheque: Sales $6.7 $6.1 10.6 Average Outstanding $6.5 $6.1 7.3 Average Investments $6.2 $5.7 7.4 Tax Equivalent Yield 8.9 % 8.8 % -
* Excludes the effect of SFAS No. 115 for all periods presented. ** Allocation: Loans $166 $216 Other Assets, primarily derivatives 16 32 Other Liabilities 5 1 --- --- Total Credit Loss Reserves $187 $249 === === *** Includes assets managed by American Express Financial Advisors.
(Preliminary) American Express Bank/Travelers Cheque -------------------------------------- Statements of Income -------------------- (Unaudited) (Dollars in millions) Quarters Ended June 30, 2000 ---- Net Revenues: Interest Income $183 Interest Expense 120 --- Net Interest Income 63 TC Investment Income 98 Commissions and Fees 59 Foreign Exchange Income & Other Revenue 42 --- Total Net Revenues 262 --- Expenses: Human Resources 84 Other Operating Expenses 159 Provision for Losses 15 --- Total Expenses 258 --- Pretax Income 4 Income Tax Benefit (36) -- Net Income $40 ==
Quarters Ended March 31, 2000 ---- Net Revenues: Interest Income $183 Interest Expense 118 --- Net Interest Income 65 TC Investment Income 91 Commissions and Fees 54 Foreign Exchange Income & Other Revenue 41 --- Total Net Revenues 251 --- Expenses: Human Resources 84 Other Operating Expenses 148 Provision for Losses 16 --- Total Expenses 248 --- Pretax Income 3 Income Tax Benefit (37) -- Net Income $40 ==
Quarters Ended December 31, 1999 ---- Net Revenues: Interest Income $180 Interest Expense 112 --- Net Interest Income 68 TC Investment Income 88 Commissions and Fees 51 Foreign Exchange Income & Other Revenue 45 --- Total Net Revenues 252 --- Expenses: Human Resources 90 Other Operating Expenses 151 Provision for Losses 11 --- Total Expenses 252 --- Pretax Income - Income Tax Benefit (35) -- Net Income $35 ==
Quarters Ended September 30, 1999 ---- Net Revenues: Interest Income $181 Interest Expense 106 --- Net Interest Income 75 TC Investment Income 91 Commissions and Fees 49 Foreign Exchange Income & Other Revenue 46 --- Total Net Revenues 261 --- Expenses: Human Resources 86 Other Operating Expenses 159 Provision for Losses 12 --- Total Expenses 257 --- Pretax Income 4 Income Tax Benefit (34) -- Net Income $38 ==
Quarters Ended June 30, 1999 ---- Net Revenues: Interest Income $183 Interest Expense 108 --- Net Interest Income 75 TC Investment Income 86 Commissions and Fees 47 Foreign Exchange Income & Other Revenue 51 --- Total Net Revenues 259 --- Expenses: Human Resources 85 Other Operating Expenses 150 Provision for Losses 18 --- Total Expenses 253 --- Pretax Income 6 Income Tax Benefit (32) -- Net Income $38 ==
(Preliminary) American Express Bank/Travelers Cheque -------------------------------------- Selected Statistical Information -------------------------------- (Unaudited) (Dollars in billions, except where indicated) Quarters Ended June 30, 2000 ---- Selected Statistical Information - -------------------------------- Total Shareholder's Equity (millions) $956 Return on Average Common Equity * 17.6 % Return on Average Assets * 0.80 % American Express Bank: Shareholder's Equity (millions) $707 Total Loans $5.1 Total Non-performing Loans (millions) $174 Other Non-performing Assets (millions) $36 Reserve for Credit Losses (millions)** $187 Loan Loss Reserves as a % of Total Loans 3.3 % Deposits $8.2 Assets Managed / Administered *** $10.3 Assets of Non-Consolidated Joint Ventures $2.3 Risk-Based Capital Ratios: Tier 1 10.3 % Total 11.9 % Leverage Ratio 5.8 % Travelers Cheque: Sales $6.7 Average Outstanding $6.5 Average Investments $6.2 Tax Equivalent Yield 8.9 %
Quarters Ended March 31, 2000 ---- Selected Statistical Information - -------------------------------- Total Shareholder's Equity (millions) $943 Return on Average Common Equity * 17.3 % Return on Average Assets * 0.81 % American Express Bank: Shareholder's Equity (millions) $697 Total Loans $5.0 Total Non-performing Loans (millions) $174 Other Non-performing Assets (millions) $31 Reserve for Credit Losses (millions)** $189 Loan Loss Reserves as a % of Total Loans 3.4 % Deposits $8.4 Assets Managed / Administered *** $9.4 Assets of Non-Consolidated Joint Ventures $2.4 Risk-Based Capital Ratios: Tier 1 10.1 % Total 11.6 % Leverage Ratio 5.6 % Travelers Cheque: Sales $5.1 Average Outstanding $6.1 Average Investments $6.0 Tax Equivalent Yield 8.9 %
Quarters Ended December 31, 1999 ---- Selected Statistical Information - -------------------------------- Total Shareholder's Equity (millions) $875 Return on Average Common Equity * 17.5 % Return on Average Assets * 0.82 % American Express Bank: Shareholder's Equity (millions) $691 Total Loans $5.1 Total Non-performing Loans (millions) $168 Other Non-performing Assets (millions) $37 Reserve for Credit Losses (millions)** $189 Loan Loss Reserves as a % of Total Loans 3.3 % Deposits $8.3 Assets Managed / Administered *** $8.6 Assets of Non-Consolidated Joint Ventures $2.2 Risk-Based Capital Ratios: Tier 1 9.9 % Total 12.0 % Leverage Ratio 5.6 % Travelers Cheque: Sales $5.4 Average Outstanding $6.1 Average Investments $5.9 Tax Equivalent Yield 8.8 %
Quarters Ended September 30, 1999 ---- Selected Statistical Information - -------------------------------- Total Shareholder's Equity (millions) $956 Return on Average Common Equity * 17.7 % Return on Average Assets * 0.83 % American Express Bank: Shareholder's Equity (millions) $702 Total Loans $5.1 Total Non-performing Loans (millions) $181 Other Non-performing Assets (millions) $40 Reserve for Credit Losses (millions)** $204 Loan Loss Reserves as a % of Total Loans 3.5 % Deposits $8.1 Assets Managed / Administered *** $7.7 Assets of Non-Consolidated Joint Ventures $2.4 Risk-Based Capital Ratios: Tier 1 9.9 % Total 12.1 % Leverage Ratio 5.5 % Travelers Cheque: Sales $7.3 Average Outstanding $6.5 Average Investments $6.2 Tax Equivalent Yield 8.8 %
Quarters Ended June 30, 1999 ---- Selected Statistical Information - -------------------------------- Total Shareholder's Equity (millions) $1,048 Return on Average Common Equity * 18.5 % Return on Average Assets * 0.86 % American Express Bank: Shareholder's Equity (millions) $714 Total Loans $5.2 Total Non-performing Loans (millions) $210 Other Non-performing Assets (millions) $55 Reserve for Credit Losses (millions)** $249 Loan Loss Reserves as a % of Total Loans 4.1 % Deposits $8.0 Assets Managed/Administered*** $7.0 Assets of Non-Consolidated Joint Ventures $2.2 Risk-Based Capital Ratios: Tier 1 9.8 % Total 12.1 % Leverage Ratio 5.7 % Travelers Cheque: Sales $6.1 Average Outstanding $6.1 Average Investments $5.7 Tax Equivalent Yield 8.8 %
* Excludes the effect of SFAS No. 115 for all periods presented. Quarters Ended ------------- 06/00 03/00 12/99 09/99 06/99 ** Allocations: ----- ----- ----- ----- ----- Loans $166 $170 $169 $179 $216 Other Assets, primarily derivatives 16 15 16 23 32 Other Liabilities 5 4 4 2 1 --- --- --- --- --- Total Credit Loss Reserves $187 $189 $189 $204 $249 === === === === === ***Includes assets managed by American Express Financial Advisors.
American Express Bank --------------------- Exposures By Country and Region ------------------------------- (Unaudited) ($ in billions) Net Guarantees FX and and 6/30/00 3/31/00 Deriva- Contin- Total Total Country Loans tives gents Other* Exposure** Exposure** - ------------- ----- ------ ------- ----- -------- -------- C> Hong Kong $0.5 - $0.1 $0.1 $0.6 $0.7 Indonesia 0.1 - 0.1 0.1 0.3 0.3 Singapore 0.5 - 0.1 0.1 0.6 0.7 Korea 0.2 - - 0.3 0.5 0.4 Taiwan 0.2 - - 0.1 0.4 0.4 China - - - - - - Japan - - - - 0.1 0.1 Thailand - - - - - - Other 0.1 - - 0.1 0.2 0.3 --- --- --- --- --- ---- Total Asia/Pacific Region** 1.6 - 0.4 0.7 2.7 2.9 --- --- --- --- --- ---- Chile 0.2 - - 0.1 0.4 0.4 Brazil 0.2 - - 0.1 0.3 0.3 Mexico 0.1 - - - 0.1 0.1 Peru - - - - - - Argentina 0.1 - - - 0.1 0.1 Other 0.2 - 0.2 0.1 0.5 0.5 --- --- --- --- --- ---- Total Latin America** 0.9 - 0.2 0.3 1.4 1.3 --- --- --- --- --- ---- India 0.3 - 0.1 0.3 0.7 0.7 Pakistan 0.1 - - 0.2 0.3 0.3 Other 0.1 - 0.1 0.1 0.2 0.2 --- --- --- --- --- ---- Total Sub- continent** 0.5 - 0.2 0.6 1.2 1.2 --- --- --- --- --- ---- Egypt 0.3 - - 0.2 0.5 0.5 Other 0.1 - - - 0.2 0.2 --- --- --- --- --- ---- Total Middle East & Africa** 0.4 - 0.1 0.2 0.7 0.8 --- --- --- --- --- ---- Total Europe*** 1.4 0.1 0.5 2.3 4.4 4.7 Total North America** 0.3 0.1 0.2 1.3 1.8 1.8 --- --- --- --- --- ---- Total Worldwide** $5.1 $0.2 $1.5 $5.4 $12.3 $12.7 === === === === ==== ====
* Includes cash, placements and securities. ** Individual items may not add to totals due to rounding. *** Total exposures at 6/30/00 and 3/31/00 include $5 million and $10 million of exposures to Russia, respectively. Note: Includes cross-border and local exposure and does not net local funding or liabilities against any local exposure. EX-99.2 3 0003.txt 2000 2ND QTR EARNINGS RELEASE AMERICAN EXPRESS LOGO 2000 Second Quarter Earnings Supplement The enclosed summary should be read in conjunction with the text and statistical tables included in American Express Company's (the "Company" or "AXP") Second Quarter 2000 Earnings Release. - ------------------------------------------------------------------------------- This summary contains certain forward-looking statements, each indicated by an asterisk (*), which are subject to risks and uncertainties and speak only as of the date on which they are made. Important factors that could cause actual results to differ materially from these forward-looking statements, including the Company's financial and other goals, are set forth on pages 34-37 of the Company's 1999 10-K Annual Report on file with the Securities and Exchange Commission. - ------------------------------------------------------------------------------- AMERICAN EXPRESS COMPANY ------------------------ SECOND QUARTER 2000 ------------------- HIGHLIGHTS ---------- o Diluted EPS growth of 15%, the net revenue (managed basis) increase of 16%, and ROE of 25% met our financial targets. o Solid performance continued. Compared with the second quarter of 1999: - Worldwide billed business rose 19% (21% excluding foreign exchange translation); - Worldwide lending balances on a managed asset basis of $28.3B were up 42%; - Worldwide cards in force increased 12%, up 5.5MM from last year. In the second quarter, 1.5MM net new cards were added; and - AEFA assets owned, managed and administered of $286B were 19% higher. o American Express expanded its products and services during the quarter as it: - Launched/announced several new proprietary card products: -- Blue for Business, which offers financing and e-commerce services for small business owners; -- Consumer and small business co-branded cards with Costco in Canada; -- Platinum Card linked to American Express Brokerage providing exclusive benefits to customers; -- Corporate Purchasing Card in Argentina; -- American Express Business Card in Taiwan and Hong Kong; -- India's first co-branded Telecom Credit Card with MTNL; and -- The first affinity card in Argentina together with IAE, the Austral University School of Business. - Launched/announced several new network card products and agreements: -- Personal and Gold credit cards with Bangkok Bank in Thailand; -- Hong Leong Bank Classic and Gold American Express Credit Cards in Malaysia; -- American Express-branded credit cards in Argentina with Banco Rio de la Plata; -- The first locally-issued American Express Cards in Peru with Banco de Credito and Interbank; -- The An Shin e-card American Express Card in Taiwan with Aetna Sinopac, a joint venture between Aetna Life Insurance and Bank Sinopac; -- The BankBoston American Express Card in Brazil; and -- A new network agreement with Maduro and Curiel's Bank to issue dual currency American Express Cards in the Netherlands Antilles and Aruba. - Signed an agreement with Delta Air Lines to extend our strategic partnership, which includes offering cobranded Delta SkyMiles Credit Cards and participation in the Membership Rewards program; - Added several new partners to AXP's International Airline Program, benefiting Centurion and Platinum Card members; - Entered into a new global partnership with JCB covering their merchant businesses in Japan, which includes reciprocal card acceptance, merchant acquisition and merchant processing/servicing agreements; - Signed an agreement with Western Union Financial Services, Inc. to provide Western Union Money Transfer services to consumers at American Express owned and operated ATMs; - Signed a global distribution agreement with Credit Suisse Private Banking to market American Express Funds on their "Fund Lab" website; - Announced a strategic alliance between AEFA and Wells Fargo to distribute investment and annuity products and introduce two new annuities; - Signed an agreement to sell all of the assets of Havas Voyages' leisure travel activity to C&N Touristic; and - Announced an investment in and marketing agreement with Indigo for its new public corporate jet service. 1 AMERICAN EXPRESS COMPANY ------------------------ SECOND QUARTER 2000 ------------------- HIGHLIGHTS (cont'd) ------------------- o American Express continued to implement its internet strategy as it: - Signed an agreement with SAPMarkets to integrate the Corporate Purchasing Card platform into the SAP(TM) Business-to-Business Procurement(TM) application; - Introduced a Web-based corporate travel booking system, Corporate Travel Online, with GetThere.com; - Entered into a strategic agreement with VeraSign and Ariba to deliver the first integrated card payment processing utility for online business-to-business transactions; - Formed a marketing alliance with priceline.com whereby Small Business Services' charge cards, credit cards and lines of credit will be the 'premier' payment products at priceline.com's B2B portal; - Announced internet auto insurance shopping from AXP Property Casualty companies; - Launched the American Express Mortgage Center, an online supermarket that offers access to mortgage products, one-stop access to lenders, financial tools and information; and - Announced investments in: -- Protege, an integrated network of businesses and services designed to build internet businesses in Europe; -- HealthAllies.com, a consumer exchange for health services; -- Slam Dunk Networks, Inc., which operates the internet's first global infrastructure guaranteeing transaction message delivery and tracking; -- OutPurchase.com, an online purchasing solution for small and medium-sized businesses in the U.S.; -- WR Hambrecht & Co., an online investment bank; -- The EC Company, a provider of e-commerce solutions for mid-sized suppliers through its Internet Transaction Exchange; and -- AvantGo, Inc., a business-to-business mobile internet company. o Additional progress was made in broadening relationships with existing AXP customers as: - Spending and lending balances per cardmember continued to increase; - Approximately 30% of new AEFA clients were again obtained from the cardmember base; and - AEFA-manufactured certificates and mutual funds sold by AEB to its international clients continued to grow. 2
AMERICAN EXPRESS COMPANY ------------------------ SECOND QUARTER 2000 OVERVIEW ---------------------------- CONSOLIDATED ------------ (unaudited) (millions, except per share amounts) Quarters Ended Percentage June 30, Inc/(Dec) ------------------------------ ----------------- 2000 1999 ---- ---- Consolidated revenues: Net (managed basis) $5,558 $4,811 16% ===== ====== GAAP reporting basis $5,970 $5,298 13% ====== ====== NET INCOME: $740 $646 15% ==== ==== EPS: Basic $0.56 $0.48 17% ===== ===== Diluted $0.54 $0.47 15% ===== =====
o CONSOLIDATED REVENUES: Grew from an increase in cards in force, strong card spending, larger loan balances, and higher managed assets. o CONSOLIDATED EXPENSES: Rose due to greater marketing and promotion and interest costs, larger provisions for losses, and higher human resource and operating expenses. o SHARE REPURCHASES: 5.4MM shares were purchased in 2Q '00; since the inception of repurchase programs in September 1994, 331.8MM shares have been acquired. Millions of Shares ----------------------------------------- - AVERAGE SHARES: 2Q '00 1Q '00 2Q '99 ------ ------ ------ Basic 1,328 1,331 1,342 ===== ===== ===== Diluted 1,361 1,362 1,371 ===== ===== ===== - ACTUAL SHARES: Shares outstanding - beginning of period 1,334 1,341 1,350 Repurchase of common shares (5) (8) (7) Employee benefit plans, compensation and other 4 1 4 Shares outstanding-end of period 1,333 1,334 1,347
CORPORATE AND OTHER ------------------- o The 2Q '00 net expense of $47MM compared with $45MM in 2Q '99 and 1Q '00. Included in the results is a gain related to the completion of sales of assets transferred from AEB in the early 1990's after the decision to discontinue LDC lending activities. This gain was offset by higher internet related spending and, therefore, had no material impact on the reported net expense. 3
AMERICAN EXPRESS COMPANY ------------------------ SECOND QUARTER 2000 OVERVIEW ---------------------------- TRAVEL RELATED SERVICES ----------------------- (preliminary) Statements of Income -------------------- (unaudited, managed basis) Quarters Ended Percentage (millions) June 30, Inc/(Dec) --------------------- --------------- 2000 1999 ---- ---- Net revenues: Discount revenue $1,949 $1,662 17% Net card fees 411 393 5 Travel commissions and fees 507 469 8 Other revenues 848 669 27 Lending: Finance charge revenue 948 684 39 Interest expense 385 208 85 ----- ----- Net finance charge revenue 563 476 18 ----- ----- Total net revenues 4,278 3,669 17 Expenses: Marketing and promotion 330 267 24 Provision for losses and claims: Charge card 344 288 19 Lending 332 260 28 Other 20 14 42 ----- ----- Total 696 562 24 ----- ----- Charge card interest expense 350 257 36 Human resources 1,028 968 6 Other operating expenses 1,147 987 16 ----- ----- Total expenses 3,551 3,041 17 ----- ----- Pretax income 727 628 16 Income tax provision 255 217 17 ----- ----- Net income $472 $411 15 ===== =====
Note: Unless indicated otherwise, the following discussion addresses the "managed basis" Statements of Income. The GAAP Statements of Income are also included in the Company's Earnings Release. o Revenues benefited from increased cards in force, higher worldwide billed business and strong growth in cardmember loans outstanding. o The higher expenses reflect increased operating costs, primarily due to business growth, greater provisions for losses, higher interest expenses and larger marketing and promotion expenditures. o Under Statement of Financial Accounting Standards No. 125 (SFAS 125), which prescribes the accounting for securitizations, TRS recognized pre-tax gains of $80MM ($52MM after-tax) in 2Q '00 and $99MM ($64MM after-tax) in 2Q '99 related to the securitization of $2.2B and $2.5B of U.S. Lending receivables, respectively. These gains were offset by higher expenses related to card acquisition initiatives and, therefore, had no material impact on net income or total expenses in either period. For purposes of the above "managed basis" Statements of Income, which present TRS' results as if there had been no securitizations, such gains (reported on the GAAP Statements of Income as a $53MM and $62MM reduction in the Lending Provision for Losses in 2Q '00 and 2Q '99, respectively, and increases in Other Revenue and Lending Interest Expense) and corresponding growth in Marketing and Promotion and Other Operating Expenses have been eliminated. o During 2Q '00 TRS recognized a gain (reported in Other Operating Expenses) on the sale of the leisure travel activities of Havas Voyages in France. This gain was offset by higher investments in internet related activities, and other business building initiatives, and, therefore, had no material impact on net income or total expenses. o The pre-tax margin was 17.0% in 2Q '00 versus 17.1% last year as we continued to invest heavily in business building activities. o The effective tax rate was 35% in 2Q '00, 2Q '99 and 1Q '00. 4 AMERICAN EXPRESS COMPANY ------------------------ SECOND QUARTER 2000 OVERVIEW ---------------------------- TRAVEL RELATED SERVICES (Cont'd) -------------------------------- o DISCOUNT REVENUE: Stronger billed business and a lower discount rate yielded a 17% increase in discount revenue. - The average discount rate in 2Q '00 was 2.69% versus 2.73% in 2Q '99 and 2.72% in 1Q '00. The decline reflects the cumulative impact on our mix of business of stronger than average growth in lower rate retail and other "everyday spend" merchant categories (e.g., supermarkets, discounters, etc.) -- We believe the AXP value proposition is strong. However, continued changes in the mix of business, the continued shift to electronic data capture, volume related pricing discounts, and selective repricing initiatives will probably result in some rate erosion over time.*
Quarters Ended Percentage June 30, Inc/(Dec) ------------------ --------- 2000 1999 ---- ---- Card billed business (billions): United States $55.8 $46.0 22% Outside the United States 18.7 16.4 13 ----- ----- Total $74.5 $62.4 19 ===== ===== Cards in force (millions): United States 32.5 28.7 13 Outside the United States 16.9 15.2 11 ----- ----- Total 49.4 43.9 12 ===== ===== Basic cards in force (millions): United States 25.3 22.5 13 Outside the United States 12.9 11.7 10 ----- ----- Total 38.2 34.2 12 ===== ===== Spending per basic card in force (dollars) (a): United States $2,242 $2,081 8 Outside the United States $1,688 $1,587 6 Total $2,085 $1,933 8
(a) Proprietary card activity only. - BILLED BUSINESS: The 19% increase in billed business resulted from higher spending per basic cardmember worldwide (due in part to increased merchant coverage and the benefits of rewards programs) and growth in cards in force. -- U.S. billed business increased 22% reflecting continued strong growth, in excess of 20%, within the consumer and small business areas and double-digit volume expansion within Corporate Services. - Spending per basic card in force grew 8% despite the dilutive effect of four consecutive quarters of particularly strong card growth. -- Excluding foreign exchange translation: - Total billed business outside the U.S. rose approximately 18% on strong double-digit increases in all regions. - Spending per proprietary basic card in force outside the U.S. rose 11%. -- Network partnership and Purchasing Card volumes sustained their stronger growth levels, in excess of the consolidated worldwide billed business growth rate. -- Retail and "everyday spend" categories continued to contribute strongly to worldwide business growth. -- Airline related volume rose double digits as the average airline charge was up and transaction volume increased. - Cards in force worldwide rose 12% versus last year. -- Strong U.S. card acquisitions during the quarter (1.1MM net new cards added) reflect the continuation of proactive consumer card and small business services activities, including the successful launch of Blue and co-branded Costco cards. -- Outside the United States, cards in force rose 11% on continued proprietary card growth and particularly strong network card results. 5 AMERICAN EXPRESS COMPANY ------------------------ SECOND QUARTER 2000 OVERVIEW ---------------------------- TRAVEL RELATED SERVICES (Cont'd) -------------------------------- o NON-AMEX BRANDED STATISTICS: Total cards in force and billed business exclude activities on Non-Amex Branded cards (Visa and Eurocards) issued in connection with joint venture activities. These are now reported as separate line items within TRS' selected statistical information. This disclosure is consistent with our previously discussed plans to broaden the scope of our card activities through possible acquisitions of card portfolios and additional joint ventures.
Quarters Ended Percentage June 30, Inc/(Dec) ----------------------- ----------- 2000 1999 ---- ---- Cards in force (millions) 0.6 0.2 # Billed business (billions) $0.7 $0.2 #
# Denotes variance greater than 100%. o NET CARD FEES: Rose 5% as new cards in force were added. The average fee per card in force declined to $36 in 2Q '00, versus $38 in 2Q '99 and $37 in 1Q '00, as the mix evolved toward lower and no fee products. o TRAVEL COMMISSIONS AND FEES: Were up 8% on 3% growth in travel sales. The revenue earned per dollar of sales (8.2% in 2Q '00 and 7.8% in 2Q '99) reflects new fees related to certain client services, which were partially offset by continued efforts by airlines to reduce distribution costs and by corporate clients to contain travel and entertainment expenses. o OTHER REVENUES: Increased 27% due to higher lending and membership rewards fees, greater foreign exchange conversion revenues, Tax and Business Services and ATM acquisitions, and larger interest revenues. o NET FINANCE CHARGE REVENUE: Rose 18% on strong 42% growth in worldwide lending balances, which was partially offset by lower net interest yields. - The yield on the U.S. portfolio declined to 7.4% in 2Q '00 versus 9.3% in 2Q '99 as funding costs rose, a higher proportion of the portfolio was on introductory rates and the mix of products evolved toward more fixed-rate and lower-rate offerings. The yield decline from 7.8% in 1Q '00 reflects the lagged effect of interest rate increases on the revenue earned from cardmembers and the evolving mix of products. - The variance between the gross revenue and interest expense growth rates of 39% and 85%, respectively, also reflects the evolving mix of products and the lagged effect of higher interest rates. o MARKETING AND PROMOTION EXPENSES: Increased by 16% on a GAAP reporting basis on expanded card acquisition and media advertising activities. On a Managed Statement of Income basis, expenses were 24% higher after the elimination of expenses corresponding to the SFAS 125 gain. o CHARGE CARD INTEREST EXPENSE: Rose 36% due to higher billed business volumes and a greater worldwide cost of funds. o HUMAN RESOURCE EXPENSES: Increased 6% versus last year as a result of a higher average number of employees and merit increases. - The employee count at 6/00 of 73,800 was up approximately 2,300 versus last year and 70 versus 1Q '00 primarily due to increased global technology business demands, greater business volumes and the substitution of contract programmers with full-time employees. o Other operating expenses: Rose 16% on higher costs related to business growth, cardmember loyalty programs, professional fees for the outsourcing of certain collection activities and various business building initiatives. 6 AMERICAN EXPRESS COMPANY ------------------------ SECOND QUARTER 2000 OVERVIEW ---------------------------- TRAVEL RELATED SERVICES (Cont'd) -------------------------------- o CREDIT QUALITY: - Overall, charge card and lending credit quality improved in the quarter and versus last year. - The provision for losses on charge card products was 19% above last year due to higher volumes. - The lending provision for losses was 28% above last year, as growth in outstanding loans was partially offset by improved credit quality. - Reserve coverage ratios at more than 100% of past due balances remained strong. - WORLDWIDE CHARGE CARD: -- The write-off rate stayed near its historically low level, rising slightly from last quarter, but remaining below last year. Past due rates improved versus last year and last quarter.
6/00 3/00 6/99 ------- ------- ------- Loss ratio, net of recoveries 0.36% 0.34% 0.39% 90 days past due as a % of receivables 2.4% 2.6% 2.6%
-- Reserve coverage of past due accounts remained strong.
6/00 3/00 6/99 ------- ------ ----- Reserves (MM) $986 $894 $932 % of receivables 3.6% 3.3% 3.8% % of past due accounts 153% 129% 148%
- U.S. Lending: -- The write-off and past due rates improved from last year and last quarter. 6/00 3/00 6/99
------- ------ ------ Write-off rate, net of recoveries 4.4% 4.6% 5.3% 30 days past due as a % of loans 2.4% 2.6% 2.7%
-- The cardmember lending reserve coverage of past due accounts remained strong.
6/00 3/00 6/99 ------- ------ ------ Reserves (MM) $686 $689 $602 % of total loans 2.6% 2.8% 3.3% % of past due accounts 109% 109% 124%
7
AMERICAN EXPRESS COMPANY ------------------------ SECOND QUARTER 2000 OVERVIEW ---------------------------- AMERICAN EXPRESS FINANCIAL ADVISORS ----------------------------------- (Preliminary) Statements of Income -------------------- (unaudited) (millions) Quarters Ended Percentage June 30, Inc/(Dec) ------------------- ------------ 2000 1999 ---- ---- Revenues: Investment income $592 $615 (4)% Management and distribution fees 701 553 27 Other revenues 248 226 9 ----- ----- Total revenues 1,541 1,394 11 Provision for losses and benefits: Annuities 254 273 (7) Insurance 138 132 5 Investment certificates 68 73 (6) ----- ----- Total 460 478 (4) ----- ----- Total net revenues 1,081 916 18 ----- ----- Expenses: Human resources 528 430 23 Other operating expenses 156 133 17 ----- ----- Total expenses 684 563 21 ----- ----- Pretax income 397 353 12 Income tax provision 122 111 9 ----- ----- Net income $275 $242 14 ===== =====
o Net revenue growth of 18% resulted from: - Increased management fees from larger managed asset levels; - Greater distribution fees from product sales and asset levels; and - Higher insurance premiums. o Pretax margin trends reflect higher human resource expenses on substantially greater sales and asset levels, and expenses related to various business building initiatives. Core operating expense growth was well controlled. o The effective tax rate was 30.5% in 2Q '00, 31.4% in 2Q '99 and 31.0% in 1Q '00. 2Q '00 includes the realization of greater tax credits from affordable housing project investments which should continue to provide tax benefits in future quarters. o During 1Q '00, reporting of data related to assets owned, managed and administered and product sales was revised to better reflect AEFA's multiple sales channel strategy and the broadening of its product portfolio through additional non-proprietary offerings. Prior reporting did not capture the full range of products sold by AEFA. Therefore, asset and sales data now include all proprietary, non-proprietary and retirement services (e.g., 401k) products. All non-proprietary product related assets held within a "wrap-like" program are now included in "Assets Managed". All other non-proprietary product related assets are included in "Assets Administered", as are other non-proprietary assets within retirement services. All prior period results have been restated to conform with this presentation. 8 AMERICAN EXPRESS COMPANY ------------------------ FIRST QUARTER 2000 OVERVIEW --------------------------- AMERICAN EXPRESS FINANCIAL ADVISORS (Cont'd) --------------------------------------------
o ASSETS OWNED, MANAGED AND ADMINISTERED: Percentage (billions) June 30, Inc/(Dec) ------------------- --------- 2000 1999 ---- ---- Assets owned (excluding separate accounts) $39.9 $37.8 6% Separate account assets 36.5 30.1 21 Assets managed 175.7 151.9 16 Assets administered 34.1 20.8 64 ------ ------ Total $286.2 $240.6 19 ====== ======
o INVESTMENT INCOME: - Gross investment income decreased 4% due to a lower average yield on invested assets and a decrease in the value of options hedging outstanding stock market certificates. - Average invested assets of $33.3B (excluding unrealized appreciation/depreciation) rose versus $31.4B in 2Q '99. - The average yield on invested assets was 7.3% versus 7.5% in 2Q '99. - Insurance, annuity and certificates spreads were down versus last year and last quarter. o Asset Quality remains strong despite some deterioration in the high yield portfolio. - Non-performing assets relative to invested assets were 0.6% and were 39% covered by reserves. - The SFAS No. 115 related mark-to-market adjustment on the portfolio (reported in assets pre-tax) was depreciation of ($999MM) at 6/00 versus ($881MM) at 3/00 and ($217MM) at 6/99. - Unrealized depreciation on securities held to maturity was ($147MM) at 6/00 and ($63MM) at 3/00 compared with appreciation of $167MM at 6/99. o MANAGEMENT AND DISTRIBUTION FEES: The increase of 27% was due to higher average assets under management, distribution fees from greater mutual fund sales and asset levels, and higher brokerage fees. - ASSETS MANAGED:
Percentage (billions) June 30, Inc/(Dec) ------------------ --------------- 2000 1999 ---- ---- Assets managed for individuals $119.6 $102.1 17% Assets managed for institutions 56.1 49.8 13 Separate account assets 36.5 30.1 21 ------ ------ Total $212.2 $182.0 17 ====== ======
-- The growth in managed assets since 6/99 resulted from $21.6B of market appreciation and $8.6B of net new money. -- The $6.3B decrease in managed assets during 2Q '00 resulted from net new money of $2.5B, offset by market depreciation of $8.8B. o PRODUCT SALES: - Total gross cash sales from all products were up 16% over 2Q '99. - Mutual fund sales increased 17% on particularly strong non-proprietary fund sales, especially in "wrap" accounts. Within proprietary funds: -- Equity and money market fund sales grew; sales of bond funds declined. -- Sales of no-load funds improved; front-load and rear-load fund sales were down. -- Redemption rates continued to compare favorably with industry levels. - Annuity sales were up 60%, as variable annuity sales were particularly strong as a result of new product offerings. - Sales of insurance products increased 30% from new product offerings. - Certificate sales rose 4% reflecting the growth of certificates sold to clients outside the U.S. through a joint venture between AEFA and AEB. - Institutional sales increased 9% reflecting both new accounts and additional contributions. - Product sales generated through financial planning and advice services were 66% of total sales in 2Q '00 and 65% in 2Q '99. 9 AMERICAN EXPRESS COMPANY ------------------------ SECOND QUARTER 2000 OVERVIEW ---------------------------- AMERICAN EXPRESS FINANCIAL ADVISORS (Cont'd) -------------------------------------------- o OTHER REVENUES: Were up 9% reflecting higher life and property-casualty insurance premiums and greater fees from financial planning and advice services. - Financial planning and advice services fees of $23.9MM rose 5% versus 2Q '99. The relatively slower growth versus recent quarters reflects the field force focus on the platform transition process. o Provisions for losses and benefits: Lower annuity product provisions resulted from a smaller fixed annuity inforce level. Insurance provisions rose reflecting a larger inforce level and, to a lesser extent, a higher accrual rate. Certificate provisions decreased as a higher inforce level and accrual rate were offset by the effect of depreciation in the S&P 500 on the stock market certificate product. o HUMAN RESOURCES: Expenses were up 23% because of larger field force compensation-related expenses due to growth in sales and asset levels, the new advisor platforms, as well as higher home office expenses reflecting growth in the client services organization and costs for technology-related initiatives. - TOTAL ADVISOR FORCE: 11,486 at 6/00; +997 advisors, or 10%, versus 6/99 and up 392 advisors versus 3/00. -- The increase in advisors versus 3/00 reflects appointments related to the growing number of advisors in the pipeline over the last 6-9 months, partially offset by transitional factors related to the implementation of the platform strategy. - Recruiting of experienced advisors, a key platform implementation goal, again showed good results in the quarter. - Veteran advisor retention rates remain strong. -- We continue to be optimistic about advisors in the pipeline as 2Q '00 applicant testing levels and hires, who are not appointed to advisor status until training and licensing is completed (typically 12-16 weeks), were both up versus 2Q '99*. -- Overall, field force dynamics were somewhat negatively impacted by transitional factors related to the platform implementation process. While production increased double digits versus last year, advisor productivity and client acquisition rose only slightly. -- The total number of clients was up 8% while accounts per client were flat versus 2Q '99. Client retention continued above 95%. o OTHER OPERATING EXPENSES: The 17% increase reflects costs related to higher business volumes, the implementation of the new advisor platforms, new product development, the evolution of online transaction and third-party distribution capabilities and greater rent and equipment support costs for new advisors. 10 AMERICAN EXPRESS COMPANY ------------------------ SECOND QUARTER 2000 OVERVIEW ---------------------------- AMERICAN EXPRESS BANK/TRAVELERS CHEQUE --------------------------------------
(Preliminary) Statements of Income -------------------- (unaudited) (millions) Quarters Ended Percentage June 30, Inc/(Dec) ---------------- ------------- 2000 1999 ---- ---- Net revenues: Interest income $183 $183 -% Interest expense 120 108 11 ---- ---- Net interest income 63 75 (16) TC investment income 98 86 14 Commissions and fees 59 47 26 Foreign exchange income and other revenue 42 51 (18) ---- ---- Total net revenues 262 259 1 ---- ---- Expenses: Human resources 84 85 - Other operating expenses 159 150 5 Provision for losses 15 18 (16) ---- ---- Total expenses 258 253 2 ---- ---- Pretax income 4 6 (34) Income tax benefit (36) (32) 13 ---- ---- Net income $40 $38 6 ==== ====
o Net income at both American Express Bank and Travelers Cheque was up versus last year. o Revenues rose 1% as higher commissions and fees and TC investment income were offset by lower foreign exchange and other revenue and net interest income. AEB's two individual oriented businesses continued to grow as Private Banking client holdings rose 35% and client volumes in Personal Financial Services increased 26%. - Net interest income at AEB was down 16% versus last year primarily due to the effects of a lower loan portfolio and higher funding costs. - TC investment income increased 14% reflecting a higher TC investment pool and growth in Money Order related activities. - Commissions and fees rose 26% on higher Private Banking, Correspondent Banking and Personal Financial Services fees. - Foreign exchange income and other revenue declined due to lower security gains and joint venture earnings. o Human resources expense was flat reflecting personnel reductions as AEB rationalizes certain country activities. Other operating expenses increased 5% as Travelers Cheque business building initiatives were partially offset by lower costs at AEB. o AEB remained "well capitalized".
6/00 3/00 6/99 Well-Capitalized ---------- -------- ----------- --------------------- Tier 1 10.3% 10.1% 9.8% 6.0% Total 11.9% 11.6% 12.1% 10.0% Leverage Ratio 5.8% 5.6% 5.7% 5.0%
11 AMERICAN EXPRESS COMPANY ------------------------ SECOND QUARTER 2000 OVERVIEW ---------------------------- AMERICAN EXPRESS BANK/TRAVELERS CHEQUE (Cont'd) ----------------------------------------------- o EXPOSURES - AEB's loans outstanding were $5.1B at 6/00 versus $5.2B at 6/99 and $5.0B at 3/00. The reduction since 6/99 resulted from a $330MM decrease in corporate and correspondent bank loans and a $500MM increase in consumer and private banking loans, before the effect of asset sales and securitizations. Compared to 1Q '00, corporate, correspondent bank, consumer and private banking loans were basically flat. As of 6/00, consumer and private banking loans comprised 37% of total loans versus 33% at 6/99. - In addition to the loan portfolio, there are other banking activities, such as forward contracts, various contingencies and market placements, which added approximately $7.2B to the credit exposures at 6/00, $7.6B at 6/99, and $7.7B at 3/00. Of the $7.2B of additional exposures at 6/00, $4.8B were relatively less risky cash and securities related balances.
($ in billions) 6/30/00 ----------------------------------------------------------- Net Guarantees 3/31/00 FX and and Total Total Country Loans Derivatives Contingents Other(1) Exposure(2) Exposure(2) ------- ----- ----------- ----------- -------- ----------- ----------- Hong Kong $0.5 - $0.1 $0.1 $0.6 $0.7 Indonesia 0.1 - 0.1 0.1 0.3 0.3 Singapore 0.5 - 0.1 0.1 0.6 0.7 Korea 0.2 - - 0.3 0.5 0.4 Taiwan 0.2 - - 0.1 0.4 0.4 China - - - - - - Japan - - - - 0.1 0.1 Thailand - - - - - - Other 0.1 - - 0.1 0.2 0.3 ---- ---- ---- ---- ---- ---- Total Asia/Pacific Region (2) 1.6 - 0.4 0.7 2.7 2.9 ---- ---- ---- ---- ---- ---- Chile 0.2 - - 0.1 0.4 0.4 Brazil 0.2 - - 0.1 0.3 0.3 Mexico 0.1 - - - 0.1 0.1 Peru - - - - - - Argentina 0.1 - - - 0.1 0.1 Other 0.2 - 0.2 0.1 0.5 0.5 ---- ---- ---- ---- ---- ---- Total Latin America (2) 0.9 - 0.2 0.3 1.4 1.3 ---- ---- ---- ---- ---- ---- India 0.3 - 0.1 0.3 0.7 0.7 Pakistan 0.1 - - 0.2 0.3 0.3 Other 0.1 - 0.1 0.1 0.2 0.2 ---- ---- ---- ---- ---- ---- Total Subcontinent (2) 0.5 - 0.2 0.6 1.2 1.2 ---- ---- ---- ---- ---- ---- Egypt 0.3 - - 0.2 0.5 0.5 Other 0.1 - - - 0.2 0.2 ---- ---- ---- ---- ---- ---- Total Middle East and Africa (2) 0.4 - 0.1 0.2 0.7 0.8 ---- ---- ---- ---- ---- ---- Total Europe (2) (3) 1.4 $0.1 0.5 2.3 4.4 4.7 Total North America (2) 0.3 0.1 0.2 1.3 1.8 1.8 ---- ---- ---- ---- ---- ---- Total Worldwide (2) $5.1 $0.2 $1.5 $5.4 $12.3 $12.7 ==== ==== ==== ==== ===== =====
(1) Includes cash, placements and securities. (2) Individual items may not add to totals due to rounding. (3) Total exposures at 6/30/00 and 3/31/00 include $5MM and $10MM of exposures to Russia, respectively. Note: Includes cross-border and local exposure and does not net local funding or liabilities against any local exposure. 12 AMERICAN EXPRESS COMPANY ------------------------ SECOND QUARTER 2000 OVERVIEW ---------------------------- AMERICAN EXPRESS BANK/TRAVELERS CHEQUE (Cont'd) ----------------------------------------------- o Total non-performing loans for AEB of $174MM were down from $210MM at 6/99 and flat with 3/00. The decline versus last year reflects write-offs, mainly in Indonesia, and loan payments. o Other non-performing assets at AEB of $36MM at 6/00, primarily foreign exchange and derivatives contracts, decreased from $55MM at 6/99, and compared with $31MM at 3/00. The decline versus last year primarily reflects upgrades of the risk status of assets and write-offs, mainly in Indonesia. o AEB's total reserves at 6/00 of $187MM compared with $249MM at 6/99 and $189MM at 3/00 and are allocated as follows:
(millions) 6/00 3/00 6/99 -------- -------- ----------- Loans $166 $170 $216 Other Assets, primarily derivatives 16 15 32 Other Liabilities 5 4 1 ---- ---- ---- Total $187 $189 $249 ==== ==== ====
- The decline versus 6/99 reflects the write-offs cited above. o Management formally reviews the loan portfolio and evaluates credit risk throughout the year. This evaluation takes into consideration the financial condition of the borrowers, fair market value of collateral, status of delinquencies, historical loss experience, industry trends, and the impact of current economic conditions. As of June 30, 2000 management believes the loss reserve is appropriate. 13 -----END PRIVACY-ENHANCED MESSAGE-----