American Express Reports Second Quarter Earnings of $762 Million
Record Results Driven by Strong
Cardmember Billings, Lending and Credit Quality
NEW YORK, July 29 -- American Express Company today
reported record net income of $762 million for the second quarter, up 11
percent from $683 million a year ago. Diluted earnings per share (EPS) rose
to $0.59, up 16 percent from $0.51.
(Dollars in millions, except per share amounts)
Six Months
Quarters Ended Percentage Ended Percentage
June 30 Inc/(Dec) June 30 Inc/(Dec)
2003 2002 2003 2002
Net Income $762 $683 11% $ 1,454 $ 1,301 12%
Revenues $6,356 $ 5,945 7% $12,379 $11,704 6%
Per Share Net Income
Basic $ 0.59 $0.52 13% $1.13 $0.98 15%
Diluted $ 0.59 $0.51 16% $1.12 $0.97 15%
Average Common Shares
Outstanding
Basic 1,283 1,325 (3%) 1,290 1,325 (3%)
Diluted 1,295 1,341 (3%) 1,300 1,338 (3%)
Return on Average
Total Shareholders'
Equity* 20.1% 15.2%** - 20.1% 15.2%** -
* Computed on a trailing 12-month basis using total Shareholders' Equity
as reported in the Consolidated Financial Statements prepared in
accordance with accounting principles generally accepted in the United
States (GAAP).
** Revised from previously reported amounts that excluded the effect on
Shareholders' Equity of unrealized gains or losses related to Statement
of Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," and SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities."
The company's return on equity was 20.1 percent.
Revenues on a GAAP basis totaled $6.4 billion, up seven percent from
$5.9 billion a year ago. This growth reflects greater spending on American
Express cards, higher cardmember lending balances, and the initial impact of
improved financial markets on revenues at American Express Financial Advisors
(AEFA).
Consolidated expenses on a GAAP basis totaled $5.3 billion, up five
percent from $5.0 billion a year ago. This increase reflects in part higher
cardmember loyalty costs, higher human resources expense and increased card
marketing program costs. Partially offsetting this increase were lower
provisions for losses and benefits, reflecting continued strong credit
performance, as well as lower funding costs.
Kenneth I. Chenault, Chairman and CEO, said: "The record 2003 results
reflect our success in adapting to a more difficult and uncertain economic
environment. This -- along with our decision to ramp up investment spending a
year ago while many others were cutting back -- generated one of our strongest
quarters in recent years.
"Despite the fallout from the war in Iraq and the SARS outbreak, we
delivered double-digit growth in cardmember billings and lending, added
2.7 million cards in force in the last year, and sustained our
industry-leading credit quality indicators. In addition, we saw the initial
benefit of improved financial markets on revenues at AEFA.
"During the quarter we also expanded our rewards programs to include new
airline partners and reached agreement to acquire London-based Threadneedle
Asset Management, a move that will help us to expand our investment products
both in the U.S. and abroad. In addition, we recently agreed to acquire
Rosenbluth International, a leading global travel management company.
"The strong momentum we're now generating gives us additional confidence
in our ability to deliver earnings growth for the medium and long term. It
also provides us with the flexibility to capitalize on competitive
opportunities at a time when we are seeing some early signs of an economic
recovery. While we are still cautious about the outlook for economic growth,
we plan to increase our spending on business-building initiatives during the
second half of the year rather than flow the full benefits of our progress to
the bottom line.
"We expect our diluted earnings per share before accounting changes to
exceed the current 2003 Wall Street consensus of $2.26. However, in light of
our plans to increase investment spending, such earnings are not likely to
exceed $2.29 for the year. This would allow us to deliver strong growth this
year while also building on the momentum that we've generated from earlier
investments."
Second Quarter Results/GAAP Basis
The second quarter revenue growth reflected increases of six percent at
TRS and 11 percent at both AEB and AEFA. More specifically,
-- Discount revenue from cardmember spending increased eight percent.
-- Net finance charge revenue increased nine percent from strong growth in
the cardmember lending portfolio.
-- Securitization income rose 17 percent, primarily reflecting a higher
level of securitized lending balances for this portfolio.
-- Investment income and insurance-related revenue rose at AEFA.
These items were partially offset by:
-- A six percent decline in management and distribution fees reflecting a
decrease in the assets managed for AEFA clients.
The rise in second quarter expenses reflected an increase of four percent
at TRS, 12 percent at AEFA and five percent at AEB. More specifically, the
overall increase reflected:
-- A nine percent increase in other operating expenses, including a
10 percent increase at TRS. This increase was driven primarily by
higher cardmember loyalty program costs and the impact of technology
and service-related outsourcing, which transferred certain costs that
had previously been included as human resources expense.
-- A 15 percent increase in marketing and promotion expenses, driven by a
15 percent increase at TRS. This is in addition to a 14 percent
increase in marketing and promotion at TRS in the year-ago period.
-- An eight percent increase in human resources expense, partially due to
increased costs related to merit increases and employee benefits.
These items were partially offset by:
-- A 17 percent decline in interest expense, primarily reflecting a
20 percent decline in charge card interest expense at TRS.
-- A three percent decrease in total provision for losses. Credit quality
remained very strong in TRS' charge and credit card portfolios as the
charge card provision declined 27 percent and the lending provision
declined four percent. Reserve coverage ratios remained strong.
Travel Related Services (TRS) reported record net income of $634 million
for the second quarter, up 12 percent from $565 million a year ago.
On a GAAP basis, TRS' results for both periods included net cardmember
lending securitization gains. Net gains for the 2003 quarter totaled
$81 million ($53 million after-tax) compared with net gains of $85 million
($55 million after-tax) a year ago.
The following discussion of second quarter results presents TRS segment
results on a "managed basis," as if there had been no cardmember lending
securitization transactions. This is the basis used by management to evaluate
operations and is consistent with industry practice. For further information
about managed basis and reconciliation of GAAP and managed TRS information,
see the "Managed Basis" section below. The AEFA, AEB and Corporate and Other
sections below are presented on a GAAP basis.
Total net revenues increased six percent from the year-ago period,
reflecting strong growth in spending and borrowing on American Express cards.
Higher cardmember spending contributed to an eight percent rise in
discount revenue. The spending increase reflected growth in the number of
American Express cards, higher average cardmember spending and the continued
benefit of rewards programs. Cardmember spending was particularly strong in
the retail and everyday spending categories.
Net finance charge revenue increased nine percent, reflecting strong
growth in loan balances offset in part by a lower net interest yield. Net
card fees increased as a result of higher cards in force.
Total expenses increased five percent. Marketing and promotion expenses
rose 18 percent from year-ago levels, primarily reflecting the continued
expansion of card-acquisition programs. This is in addition to a 17 percent
increase in marketing and promotion in the year-ago period.
Human resources expense increased 10 percent largely due to higher costs
related to merit increases and employee benefits. Other operating expenses
increased due in part to higher cardmember loyalty program costs and the
impact of technology and service-related outsourcing, which transferred
certain costs that had previously been included in human resources expense.
The total provision for losses declined eight percent, reflecting very
strong overall credit quality in both the charge card and lending portfolios.
Charge card interest expense decreased 19 percent largely due to lower
funding costs.
American Express Financial Advisors (AEFA) reported second quarter net
income of $157 million, up eight percent from $145 million a year ago. Total
revenues increased 11 percent.
Investment income rose 31 percent reflecting a higher level of owned
investments, which was partially offset by lower yields on invested assets.
Invested assets increased due to strong cash sales of annuities, insurance and
certificate products.
AEFA realized a net loss of $16 million in its investment portfolio during
the second quarter. On a gross basis, AEFA realized gains of $64 million
versus $80 million of impairments and losses. Year-ago net investment losses
of $85 million included a $78 million pre-tax investment loss related to
WorldCom debt holdings. On a gross basis for the year-ago period, AEFA
realized gains of $58 million versus $143 million of impairments and losses.
Despite recent improvements in the market, average equity values for the
quarter were below last year's levels. This, along with net outflows,
contributed to lower levels of assets under management and management fees
compared with year-ago levels.
Total expenses increased 12 percent. Human resources expense increased
three percent, reflecting increased costs related to employee benefits. These
costs were partially offset by lower sales-related compensation and continued
benefits of re-engineering and cost controls. Other operating expenses
increased 23 percent. This reflected in part higher expenses resulting from
fewer capitalized costs due to the ongoing impact of the comprehensive review
of Deferred Acquisition Costs-related practices discussed in the third quarter
of 2002. Other operating expenses also increased due to a higher minority
interest expense related to a premium deposits joint venture with American
Express Bank.
American Express Bank (AEB) reported net income for the second quarter of
$27 million up 45 percent from $18 million a year ago.
AEB's results reflect greater fee-related, foreign exchange and other
revenues in Private Banking and the Financial Institutions Group, as well as
lower provisions for losses primarily due to the continued stabilization of
write-offs in the consumer lending portfolio. These benefits were partially
offset by higher technology and human resources expenses.
Corporate and Other reported second quarter net expenses of $56 million in
2003 compared with $45 million in 2002.
Other Items
As previously announced, the company increased its quarterly dividend to
$0.10 per share for shareholders of record on July 3, 2003.
As previously noted in year-end and first quarter filings, the company
will adopt a new accounting rule in the third quarter of 2003: FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46).
FIN 46 requires the consolidation for reporting purposes of assets within
certain structured investments that AEFA either owns or manages for third
parties.
The company is still evaluating the impact of this rule. However, it
plans to recognize a below-the-line charge relating to this accounting change
when it consolidates those assets in the third quarter. The preliminary
estimate of this impact is approximately $150 million. It will have no effect
on cash flow, and the company expects that it will be reversed at a later date
as the structured investments mature.
Managed Basis - TRS
Managed basis means the presentation assumes there have been no
securitization transactions, i.e. all securitized cardmember loans and related
income effects are reflected as if they were in the company's balance sheet
and income statement, respectively. The company presents TRS information on a
managed basis because that is the way the company's management views and
manages the business. Management believes that a full picture of trends in
the company's cardmember lending business can only be derived by evaluating
the performance of both securitized and non-securitized cardmember loans.
Asset securitization is just one of several ways for the company to fund
cardmember loans. Use of a managed basis presentation, including
non-securitized and securitized cardmember loans, presents a more accurate
picture of the key dynamics of the cardmember lending business, avoiding
distortions due to the mix of funding sources at any particular point in time.
For example, irrespective of the funding mix, it is important for
management and investors to see metrics, such as changes in delinquencies and
write-off rates, for the entire cardmember lending portfolio because they are
more representative of the economics of the aggregate cardmember relationships
and ongoing business performance and trends over time. It is also important
for investors to see the overall growth of cardmember loans and related
revenue and changes in market share, which are all significant metrics in
evaluating the company's performance and which can only be properly assessed
when all non-securitized and securitized cardmember loans are viewed together
on a managed basis.
The Consolidated Section of this press release and attachments provide the
GAAP presentation for items described on a managed basis.
The following table reconciles the GAAP-basis TRS income statements to the
managed basis information.
Travel Related Services
Selected Financial Information
(Unaudited)
Quarters Ended June 30,
(millions)
Preliminary
GAAP Basis
---------------------------------
Percentage
2003 2002 Inc/(Dec)
---------------------------------
Net revenues:
Discount revenue $ 2,152 $ 1,997 7.7%
Net card fees 455 429 6.0
Lending:
Finance charge revenue 512 493 4.1
Interest expense 115 127 (9.2)
-------- --------
Net finance charge revenue 397 366 8.6
Travel commissions and fees 373 369 1.0
Travelers Cheque investment
income 92 95 (2.2)
Securitization income 630 540 16.8
Other revenues 635 666 (4.7)
-------- --------
Total net revenues 4,734 4,462 6.1
-------- --------
Expenses:
Marketing and promotion 417 365 14.5
Provision for losses and
claims:
Charge card 205 280 (27.0)
Lending 278 290 (4.4)
Other 37 37 1.1
-------- --------
Total 520 607 (14.5)
Charge card interest expense 204 256 (20.1)
Human resources 965 879 9.8
Other operating expenses 1,691 1,539 9.9
Restructuring charges - (6) -
-------- --------
Total expenses 3,797 3,640 4.3
-------- --------
Pretax income 937 822 14.0
Income tax provision 303 257 18.2
-------- --------
Net income $ 634 $ 565 12.1
======== ========
Travel Related Services
Selected Financial Information
(Unaudited)
Quarters Ended June 30,
(millions)
Preliminary
Securitization
Effect Managed Basis
---------------- ----------------------------
Percentage
2003 2002 2003 2002 Inc/(Dec)
---------------- ----------------------------
Net revenues:
Discount revenue
Net card fees
Lending:
Finance charge revenue $ 652 $ 623 $ 1,164 $ 1,116 4.3%
Interest expense 50 73 165 200 (17.7)
------- ------- -------- --------
Net finance
charge revenue 602 550 999 916 9.1
Travel commissions and fees
Travelers Cheque investment
income
Securitization income (630) (540) - - -
Other revenues 244 183 879 849 3.6
------- ------- -------- --------
Total net revenues 216 193 4,950 4,655 6.3
------- ------- -------- --------
Expenses:
Marketing and promotion (48) (51) 369 314 17.6
Provision for losses and
claims:
Charge card
Lending 297 282 575 572 0.4
Other
------- ------- -------- --------
Total 297 282 817 889 (8.2)
Charge card
interest expense - (4) 204 252 (19.0)
Human resources
Other operating expenses (33) (34) 1,658 1,505 10.2
Restructuring charges
------- ------- -------- --------
Total expenses $ 216 $ 193 $ 4,013 $ 3,833 4.7
------- ------- -------- --------
American Express Company (www.americanexpress.com), founded in 1850, is a
global travel, financial and network services provider.
Note: The 2003 Second Quarter Earnings Supplement, as well as CFO Gary
Crittenden's presentation from the investor conference call referred to below,
will be available today on the American Express web site at
http://ir.americanexpress.com. An investor conference call to discuss second
quarter earnings results, operating performance and other topics that may be
raised during the discussion will be held at 5:00 p.m. (ET) today. Live audio
of the conference call will be accessible to the general public on the
American Express web site at http://ir.americanexpress.com. A replay of the
conference call also will be available today at the same web site address.
This release includes forward-looking statements, which are subject to
risks and uncertainties. The words "believe," "expect," "anticipate,"
"optimistic," "intend," "plan," "aim," "will," "should," "could," "likely,"
and similar expressions are intended to identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date on which they are made. The
company undertakes no obligation to update or revise any forward-looking
statements. Factors that could cause actual results to differ materially from
these forward-looking statements include, but are not limited to: the
company's ability to successfully implement a business model that allows for
significant earnings growth based on revenue growth that is lower than
historical levels, including the ability to improve its operating expense to
revenue ratio both in the short-term and over time, which will depend in part
on the effectiveness of re-engineering and other cost control initiatives, as
well as factors impacting the company's revenues; the company's ability to
grow its business and meet or exceed its return on shareholders' equity target
by reinvesting approximately 35% of annually-generated capital, and returning
approximately 65% of such capital to shareholders, over time, which will
depend on the company's ability to manage its capital needs and the effect of
business mix, acquisitions and rating agency requirements; the ability of the
company to generate sufficient revenues for expanded investment spending, to
actually spend such funds over the remainder of the year to the extent
available, particularly if funds for discretionary spending are higher than
anticipated, and to capitalize on such investments to improve business
metrics; credit risk related to consumer debt, business loans, merchant
bankruptcies and other credit exposures both in the U.S. and internationally;
fluctuation in the equity and fixed income markets, which can affect the
amount and types of investment products sold by AEFA, the market value of its
managed assets, and management, distribution and other fees received based on
the value of those assets; AEFA's ability to recover Deferred Acquisition
Costs (DAC), as well as the timing of such DAC amortization, in connection
with the sale of annuity, insurance and certain mutual fund products; changes
in assumptions relating to DAC, which could impact the amount of DAC
amortization; the level of guaranteed minimum death benefits paid to clients;
potential deterioration in AEFA's high-yield and other investments, which
could result in further losses in AEFA's investment portfolio; the ability to
improve investment performance in AEFA's businesses, including attracting and
retaining high-quality personnel; the success, timeliness and financial
impact, including costs, cost savings and other benefits including increased
revenues, of re-engineering initiatives being implemented or considered by the
company, including cost management, structural and strategic measures such as
vendor, process, facilities and operations consolidation, outsourcing
(including, among others, technologies operations), relocating certain
functions to lower cost overseas locations, moving internal and external
functions to the Internet to save costs, and planned staff reductions relating
to certain of such re-engineering actions; the ability to control and manage
operating, infrastructure, advertising and promotion and other expenses as
business expands or changes, including balancing the need for longer-term
investment spending; the potential negative effect on the company's businesses
and infrastructure, including information technology systems, of terrorist
attacks, disasters or other catastrophic events in the future; the impact on
the company's businesses resulting from the recent war in Iraq and its
aftermath and other geopolitical uncertainty; the overall level of consumer
confidence; consumer and business spending on the company's travel related
services products, particularly credit and charge cards and growth in card
lending balances, which depend in part on the ability to issue new and
enhanced card products and increase revenues from such products, attract new
cardholders, capture a greater share of existing cardholders' spending,
sustain premium discount rates, increase merchant coverage, retain cardmembers
after low introductory lending rates have expired, and expand the global
network services business; the impact of severe acute respiratory syndrome
(SARS) on consumer and business spending on travel, including its potential
spread to the United States and other locales that have not, to date, been
significantly affected; the ability to manage and expand cardmember benefits,
including Membership Rewards(R), in a cost effective manner; the triggering of
obligations to make payments to certain co-brand partners, merchants, vendors
and customers under contractual arrangements with such parties under certain
circumstances; successfully cross-selling financial, travel, card and other
products and services to the company's customer base, both in the U.S. and
internationally; a downturn in the company's businesses and/or negative
changes in the company's and its subsidiaries' credit ratings, which could
result in contingent payments under contracts, decreased liquidity and higher
borrowing costs; fluctuations in interest rates, which impact the company's
borrowing costs, return on lending products and spreads in the investment and
insurance businesses; credit trends and the rate of bankruptcies, which can
affect spending on card products, debt payments by individual and corporate
customers and businesses that accept the company's card products and returns
on the company's investment portfolios; fluctuations in foreign currency
exchange rates; political or economic instability in certain regions or
countries, which could affect lending and other commercial activities, among
other businesses, or restrictions on convertibility of certain currencies;
changes in laws or government regulations; the costs and integration of
acquisitions; the ability to accurately interpret and apply FASB
Interpretation No. 46, the recently issued accounting rule related to the
consolidation of variable interest entities, including those involving
collateralized debt obligations (CDOs) and secured loan trusts (SLTs) that the
company manages and/or invests in, and the impact of the rule on both the
company's balance sheet and results of operations, which could be greater or
less than that estimated by management to the extent that certain assumptions
have to be revised, such as estimates of the valuations of the underlying
collateral of the CDO or SLT structures, or the application of the rule to
certain types of structures has to be re-evaluated; and outcomes and costs
associated with litigation and compliance and regulatory matters. A further
description of these and other risks and uncertainties can be found in the
company's Annual Report on Form 10-K for the year ended December 31, 2002, and
its other reports filed with the SEC.
All information in the following tables is presented on a basis prepared
in accordance with accounting principles generally accepted in the United
States (GAAP), unless otherwise indicated.
(Preliminary)
AMERICAN EXPRESS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Millions)
Quarters Ended
June 30,
------------------------ Percentage
2003 2002 Inc/(Dec)
---------- ---------- ----------
Revenues
Discount revenue $ 2,152 $ 1,997 7.7 %
Interest and dividends, net 780 658 18.6
Securitization income 630 540 16.8
Management and distribution fees 569 609 (6.5)
Net card fees 455 429 6.0
Cardmember lending net
finance charge revenue 397 366 8.6
Travel commissions and fees 373 369 1.0
Other revenues 1,000 977 2.3
---------- ----------
Total revenues 6,356 5,945 6.9
Expenses
Human resources 1,576 1,454 8.4
Provision for losses and benefits 1,075 1,104 (2.8)
Marketing and promotion 443 386 14.5
Interest 231 277 (16.6)
Other operating expenses 1,934 1,776 9.0
Restructuring charges - (6) -
Disaster recovery charge - (7) -
---------- ----------
Total expenses 5,259 4,984 5.5
---------- ----------
Pretax income 1,097 961 14.3
Income tax provision 335 278 21.0
---------- ----------
Net income $ 762 $ 683 11.5 %
========== ==========
(Preliminary)
AMERICAN EXPRESS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Millions)
Six Months Ended
June 30,
------------------------ Percentage
2003 2002 Inc/(Dec)
---------- ---------- ----------
Revenues
Discount revenue $ 4,128 $ 3,842 7.4 %
Interest and dividends, net 1,547 1,416 9.3
Securitization income 1,116 923 21.0
Management and distribution fees 1,089 1,206 (9.7)
Net card fees 906 852 6.3
Cardmember lending net
finance charge revenue 855 771 11.0
Travel commissions and fees 713 697 2.2
Other revenues 2,025 1,997 1.4
---------- ----------
Total revenues 12,379 11,704 5.8
Expenses
Human resources 3,066 2,932 4.6
Provision for losses and benefits 2,185 2,263 (3.5)
Marketing and promotion 807 748 7.8
Interest 461 548 (15.8)
Other operating expenses 3,767 3,420 10.2
Restructuring charges - (19) -
Disaster recovery charge - (7) -
---------- ----------
Total expenses 10,286 9,885 4.0
---------- ----------
Pretax income 2,093 1,819 15.1
Income tax provision 639 518 23.5
---------- ----------
Net income $ 1,454 $ 1,301 11.7 %
========== ==========
(Preliminary)
AMERICAN EXPRESS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Billions)
June 30, December 31,
2003 2002
------------ ------------
Assets
Cash and cash equivalents $ 7 $ 10
Accounts receivable 29 29
Investments 56 54
Loans 28 28
Separate account assets 24 22
Other assets 15 14
------------ ------------
Total assets $ 159 $ 157
============ ============
Liabilities and Shareholders' Equity
Separate account liabilities $ 24 $ 22
Short-term debt 17 21
Long-term debt 18 16
Other liabilities 86 84
------------ ------------
Total liabilities 145 143
------------ ------------
Shareholders' Equity 14 14
------------ ------------
Total liabilities and
shareholders' equity $ 159 $ 157
============ ============
Note: Certain prior period amounts have been restated to conform to
current year presentation.
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY
(Unaudited)
(Millions)
Quarters Ended
June 30,
------------------------ Percentage
2003 2002 Inc/(Dec)
---------- ---------- ----------
REVENUES (A)
Travel Related Services $ 4,734 $ 4,462 6 %
American Express Financial Advisors 1,496 1,351 11
American Express Bank 200 180 11
---------- ----------
6,430 5,993 7
Corporate and other,
including adjustments and
eliminations (74) (48) (52)
---------- ----------
CONSOLIDATED REVENUES $ 6,356 $ 5,945 7 %
========== ==========
PRETAX INCOME (LOSS)
Travel Related Services $ 937 $ 822 14 %
American Express Financial Advisors 209 202 4
American Express Bank 39 27 43
---------- ----------
1,185 1,051 13
Corporate and other (88) (90) 3
---------- ----------
PRETAX INCOME $ 1,097 $ 961 14 %
========== ==========
NET INCOME (LOSS)
Travel Related Services $ 634 $ 565 12 %
American Express Financial Advisors 157 145 8
American Express Bank 27 18 45
---------- ----------
818 728 12
Corporate and other (56) (45) (21)
---------- ----------
NET INCOME $ 762 $ 683 11 %
========== ==========
(A) Managed net revenues are reported net of American Express Financial
Advisors' provision for losses and benefits and exclude the effect of
TRS' securitization activities. The following table reconciles
consolidated GAAP revenues to Managed Basis net revenues:
GAAP revenues $ 6,356 $ 5,945 7 %
Effect of TRS securitizations 216 193
Effect of AEFA provisions (526) (458)
---------- ----------
Managed net revenues $ 6,046 $ 5,680 6 %
========== ==========
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY
(Unaudited)
(Millions)
Six Months Ended
June 30,
------------------------ Percentage
2003 2002 Inc/(Dec)
---------- ---------- ----------
REVENUES (A)
Travel Related Services $ 9,220 $ 8,661 6 %
American Express Financial Advisors 2,907 2,785 4
American Express Bank 397 358 11
---------- ----------
12,524 11,804 6
Corporate and other,
including adjustments and
eliminations (145) (100) (45)
---------- ----------
CONSOLIDATED REVENUES $ 12,379 $ 11,704 6 %
========== ==========
PRETAX INCOME (LOSS)
Travel Related Services $ 1,795 $ 1,488 21 %
American Express Financial Advisors 387 454 (15)
American Express Bank 68 47 46
---------- ----------
2,250 1,989 13
Corporate and other (157) (170) 7
---------- ----------
PRETAX INCOME $ 2,093 $ 1,819 15 %
========== ==========
NET INCOME (LOSS)
Travel Related Services $ 1,218 $ 1,032 18 %
American Express Financial Advisors 290 327 (11)
American Express Bank 46 31 49
---------- ----------
1,554 1,390 12
Corporate and other (100) (89) (12)
---------- ----------
NET INCOME $ 1,454 $ 1,301 12 %
========== ==========
(A) Managed net revenues are reported net of American Express Financial
Advisors' provision for losses and benefits and exclude the effect of
TRS' securitization activities. The following table reconciles
consolidated GAAP revenues to Managed Basis net revenues:
GAAP revenues $ 12,379 $ 11,704 6 %
Effect of TRS securitizations 480 446
Effect of AEFA provisions (1,032) (928)
---------- ----------
Managed net revenues $ 11,827 $ 11,222 5 %
========== ==========
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY (CONTINUED)
(Unaudited)
Quarters Ended
June 30,
------------------------ Percentage
2003 2002 Inc/(Dec)
---------- ---------- ----------
EARNINGS PER SHARE
BASIC
Earnings per common share $ 0.59 $ 0.52 13 %
========== ==========
Average common shares
outstanding (millions) 1,283 1,325 (3) %
========== ==========
DILUTED
Earnings per common share $ 0.59 $ 0.51 16 %
========== ==========
Average common shares
outstanding (millions) 1,295 1,341 (3) %
========== ==========
Cash dividends declared
per common share $ 0.10 $ 0.08 25 %
========== ==========
SELECTED STATISTICAL INFORMATION
(Unaudited)
Quarters Ended
June 30,
------------------------ Percentage
2003 2002 Inc/(Dec)
---------- ---------- ----------
Return on average total
shareholders' equity (A) 20.1% 15.2% -
Common shares outstanding (millions) 1,286 1,332 (3) %
Book value per common share $ 11.27 $ 9.98 13 %
Shareholders' equity (billions) $ 14.5 $ 13.3 9 %
(A) Computed on a trailing 12-month basis using total shareholders'
equity as reported in the Consolidated Financial Statements prepared
in accordance with GAAP. All return on average total shareholders'
equity and return on average total asset calculations in this and
following tables are revised from amounts previously reported.
Previously, these calculations excluded the effect on shareholders'
equity and total assets of Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt
and Equity Securities" and SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities."
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY (CONTINUED)
(Unaudited)
Six Months Ended
June 30,
------------------------ Percentage
2003 2002 Inc/(Dec)
---------- ---------- ----------
EARNINGS PER SHARE
BASIC
Earnings per common share $ 1.13 $ 0.98 15 %
========== ==========
Average common shares
outstanding (millions) 1,290 1,325 (3) %
========== ==========
DILUTED
Earnings per common share $ 1.12 $ 0.97 15 %
========== ==========
Average common shares
outstanding (millions) 1,300 1,338 (3) %
========== ==========
Cash dividends declared
per common share $ 0.18 $ 0.16 13 %
========== ==========
SELECTED STATISTICAL INFORMATION
(Unaudited)
Six Months Ended
June 30,
------------------------ Percentage
2003 2002 Inc/(Dec)
---------- ---------- ----------
Return on average total
shareholders' equity (A) 20.1% 15.2% -
Common shares outstanding (millions) 1,286 1,332 (3) %
Book value per common share $ 11.27 $ 9.98 13 %
Shareholders' equity (billions) $ 14.5 $ 13.3 9 %
(A) Computed on a trailing 12-month basis using total shareholders'
equity as reported in the Consolidated Financial Statements prepared
in accordance with GAAP. All return on average total shareholders'
equity and return on average total asset calculations in this and
following tables are revised from amounts previously reported.
Previously, these calculations excluded the effect on shareholders'
equity and total assets of Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt
and Equity Securities" and SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities."
To view additional business segment financials go to:
http://ir.americanexpress.com
SOURCE American Express Company
-0- 07/29/2003
/CONTACT: Molly Faust, +1-212-640-0624, molly.faust@aexp.com, Michael J.
O'Neill, +1-212-640-5951, mike.o'neill@aexp.com, both of American Express
Company/
/FCMN Contact: diana.r.baez@aexp.com /
/Web site: http://www.americanexpress.com /
(AXP)
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