American Express Reports Record Results for 2003 and Fourth Quarter
NEW YORK, Jan. 26 -- American Express Company today
reported record earnings for 2003.
Growth in Cardmember Spending and Borrowing,
Excellent Credit Quality and Higher Client Assets
Reflect Strong Momentum in Key Businesses
(Dollars in millions, except per share amounts)
Quarters Ended Percentage Years Ended Percentage
December 31 Inc/(Dec) December 31 Inc/(Dec)
2003 2002 2003 2002
Revenues $7,068 $6,196 14% $25,866 $23,807 9%
Income Before
Accounting
Change $776 $683 14% $3,000 $2,671 12%
Net Income $763* $683 12% $2,987* $2,671 12%
Earnings Per
Common Share
- Basic:
Income Before
Accounting
Change $0.61 $0.52 17% $2.34 $2.02 16%
Net income $0.60* $0.52 15% $2.33* $2.02 15%
Earnings Per
Common Share
- Diluted:
Income Before
Accounting
Change $0.60 $0.52 15% $2.31 $2.01 15%
Net income $0.59* $0.52 13% $2.30* $2.01 14%
Average Common
Shares
Outstanding
Basic 1,277 1,309 (2)% 1,284 1,320 (3)%
Diluted 1,299 1,317 (1)% 1,298 1,330 (2)%
Return on
Average Total
Shareholders'
Equity** 20.6% 20.2% - 20.6% 20.2% -
* Reflects a $20 million non-cash pre-tax charge ($13 million after-tax),
or $0.01 on both a basic and diluted per share basis, relating to the
December 31, 2003 adoption of Financial Accounting Standards Board (FASB)
Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN
46), revised December 2003.
** Computed on a trailing 12-month basis using total Shareholders' Equity
as included in the Consolidated Financial Statements prepared in
accordance with accounting principles generally accepted in the United
States (GAAP).
Diluted earnings per share (EPS) before accounting change rose to $2.31,
up 15 percent from $2.01 a year ago. EPS after accounting change was $2.30, up
14 percent. Income before accounting change was $3.0 billion, up 12 percent
from $2.67 billion. Net income was $2.99 billion, also up 12 percent.
On December 31, 2003, the company adopted Financial Accounting Standards
Board's (FASB) accounting rule FIN 46 (as revised) and recognized a fourth
quarter $20 million non-cash pre-tax charge ($13 million after-tax) at
American Express Financial Advisors (AEFA).
The company's 2003 return on equity was 20.6 percent.
Revenues totaled $25.9 billion, up 9 percent from $23.8 billion a year
ago. This growth reflects a strong rise in cardmember spending, lending
balances and cards-in-force. It also reflects increased revenue from higher
asset levels at AEFA.
Consolidated expenses totaled $21.6 billion, up 8 percent from $20.1
billion a year ago. This increase primarily reflects higher expenses for
marketing, promotion, rewards and cardmember services, human resources and
other operating costs.
For the fourth quarter, American Express reported EPS before accounting
change of $0.60, up 15 percent from $0.52 a year ago. EPS after accounting
change was $0.59, up 13 percent. Income before accounting change was $776
million, up 14 percent from $683 million. Net income was $763 million, up 12
percent.
"We delivered record results for the full year as well as the fourth
quarter and are in an excellent position to capitalize on an improving economy
as we enter 2004," said Kenneth I. Chenault, Chairman and CEO.
"Higher investment spending over the past year or so has substantially
improved our competitive position and is generating strong growth in
cardmember spending and loan volumes. Credit quality continues to be
outstanding. We are also benefiting from stronger equity markets as well as an
improvement in the travel sector.
"During the latter part of 2003 our momentum was even better than we
originally expected and produced results that exceeded our earlier forecast."
In October, the company said that it believed 2003 EPS before accounting
change would be at the high end of its previous guidance of $2.26 to $2.29. As
noted earlier, EPS for 2003 before accounting change was $2.31.
2003 Results
The overall increase in 2003 revenues reflected 8 percent growth at Travel
Related Services (TRS), 10 percent growth at AEFA and 7 percent growth at
American Express Bank (AEB). More specifically,
* Discount revenue rose 11 percent, reflecting a 13 percent increase in
cardmember spending.
* Net finance charge revenue increased 12 percent, reflecting continued
strong growth in the cardmember lending portfolio.
* Management and distribution fees rose 7 percent, reflecting in part
higher asset levels at AEFA.
* Insurance and annuity-related revenues rose 12 percent.
The overall rise in expenses for 2003 reflected increases of 7 percent at
TRS, 12 percent at AEFA and 4 percent at AEB. More specifically, the overall
increase reflected:
* A 25 percent increase in marketing, promotion, rewards and cardmember
services expenses, driven by a 26 percent increase at TRS.
* An 11 percent increase in human resources expense, driven by merit
increases, employee benefits and management incentives, reflecting in
part the decision to expense stock options in 2003.
* An 8 percent increase in other operating expenses, including an 8
percent increase at TRS.
These items were partially offset by a 16 percent decline in interest
expense, reflecting a 22 percent decline in charge card interest expense at
TRS, and a 3 percent decrease in provision for losses, including an 11 percent
decline at TRS.
Travel Related Services (TRS) reported record 2003 net income of $2.43
billion, up 14 percent from $2.14 billion a year ago.
The following discussion of full-year 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 rose 8 percent to a record $20.1 billion, reflecting
strong growth in spending and borrowing on American Express Cards.
The 2003 results reflected higher average cardmember spending, the
continued benefit of rewards programs and the addition of 3.5 million cards-
in-force. The higher business volumes were driven by strong growth in retail
and everyday spending categories, and by a notable improvement in the travel
and entertainment sector particularly during the fourth quarter.
Net finance charge revenue increased 8 percent, reflecting 13 percent
growth in average loan balances partially offset by a lower net interest
yield. Net card fees increased 6 percent primarily as a result of a higher
number of cards-in-force. Travel commissions and fees grew 7 percent driven by
improving travel sales and the acquisition of Rosenbluth International in the
fourth quarter.
Total expenses increased 6 percent reflecting greater expenses for
marketing, promotion, rewards and cardmember services, human resources and
other operating costs. These increases were partially offset by lower interest
costs, reduced provisions for losses and cost-control initiatives.
Marketing, promotion, rewards and cardmember services expenses increased
27 percent, primarily reflecting the previously announced plans to expand
card-acquisition and cardmember loyalty programs.
Human resources expense increased 9 percent largely due to merit
increases, higher employee benefits and management incentives. Other
operating expenses increased 8 percent.
Credit quality remained very strong in both the charge and credit card
portfolios. The total provision for losses declined 9 percent, reflecting a
decline of 7 percent in the lending provision and a decline of 11 percent in
the charge card provision. Reserve coverage ratios remained at historically
strong levels despite higher loan and receivable balances.
Charge card interest expense decreased 20 percent largely due to lower
funding costs. This decrease was partially offset by higher average
receivable balances.
TRS reported fourth quarter 2003 net income of $606 million, up 10 percent
from $550 million a year ago. On both a GAAP and managed basis, the increase
reflected improved business volumes, as well as a decrease in provision for
losses and lower funding costs. These factors were partially offset by an
increase in marketing, promotion, rewards and cardmember services expenses.
American Express Financial Advisors (AEFA) reported 2003 income before
accounting change of $682 million, up 8 percent from $632 million a year ago.
Net income rose to $669 million, up 6 percent. Total revenues increased 10
percent.
Investment income rose 11 percent, reflecting a higher level of owned
investments and lower investment losses, which were partially offset by lower
yields. Owned assets increased due to the cumulative benefit of sales during
the past two years of annuities, insurance and certificate products.
Management and distribution fees as well as assets under management
increased from year-ago levels. This improvement reflected the Threadneedle
acquisition and higher brokerage revenue.
Other revenues rose from last year reflecting strong performance in the
property-casualty and life insurance businesses.
Human resources and other operating expenses rose a combined 14 percent
from year-ago levels, reflecting merit increases, higher employee benefits,
management incentive costs and the Threadneedle acquisition.
The after-tax results reflect a tax benefit related to the tax treatment
of dividend income.
AEFA reported fourth quarter income before accounting change of $195
million, up 28 percent from $153 million a year ago. Net income rose to $182
million, up 19 percent. This increase primarily reflected improved equity
market conditions.
American Express Bank (AEB) reported net income for 2003 of $102 million,
up 27 percent from $80 million a year ago.
AEB's results reflect lower provision for losses primarily due to the
continued stabilization of write-offs in the consumer-lending portfolio. The
results also reflected higher fee-related, foreign exchange and other revenues
in Private Banking and the Financial Institutions Group. These benefits were
partially offset by lower net interest income and higher operating expenses.
AEB reported fourth quarter 2003 net income of $29 million, up 22 percent
from $24 million a year ago.
Corporate and Other reported 2003 net expenses of $214 million compared
with $176 million in 2002. Included in results for 2002 were the final
preferred stock dividends from Lehman Brothers, totaling $69 million ($59
million after-tax). These dividends were offset by expenses related to
business-building initiatives.
Corporate and Other reported fourth quarter 2003 net expenses of $54
million, compared with $44 million a year ago.
Other Items
The company adopted a new accounting rule on December 31, 2003: FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46),
as revised.
FIN 46 requires the consolidation of certain structured investments that
AEFA either owns or manages for third parties.
The company recognized a below-the-line, non-cash charge of $13 million
after-tax relating to this accounting change. The charge is lower than the
company's preliminary estimate provided in July 2003 due to subsequent revised
FASB guidance related to the rules and market factors as of December 31, 2003.
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 statements, 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)
Years Ended December 31,
(millions)
Preliminary
GAAP Basis
---------------------------------
Percentage
2003 2002 Inc/(Dec)
---------------------------------
Net revenues:
Discount revenue $8,781 $7,931 10.7%
Net card fees 1,835 1,726 6.3
Lending:
Finance charge revenue 2,525 2,338 8.0
Interest expense 483 510 (5.2)
-------- --------
Net finance charge revenue 2,042 1,828 11.7
Travel commissions and fees 1,507 1,408 7.0
Other commissions and fees 1,901 1,833 3.7
Travelers Cheque investment
income 367 375 (2.2)
Securitization income, net 1,150 1,049 9.7
Other revenues 1,606 1,571 2.3
-------- --------
Total net revenues 19,189 17,721 8.3
-------- --------
Expenses:
Marketing, promotion, rewards
and cardmember services 3,814 3,027 26.0
Provision for losses and
claims:
Charge card 853 960 (11.1)
Lending 1,218 1,369 (11.0)
Other 127 149 (14.1)
-------- --------
Total 2,198 2,478 (11.3)
Charge card interest expense 786 1,001 (21.6)
Human resources 3,822 3,503 9.1
Other operating expenses 4,998 4,636 7.8
Restructuring charges - (4) -
-------- --------
Total expenses 15,618 14,641 6.7
-------- --------
Pretax income 3,571 3,080 15.9
Income tax provision 1,141 945 20.7
-------- --------
Net income $2,430 $2,135 13.8
======== ========
Travel Related Services
Selected Financial Information
(Unaudited)
Years Ended December 31,
(millions)
Preliminary
Securitization
Effect Managed Basis
---------------- --------------------------
Percentage
2003 2002 2003 2002 Inc/(Dec)
---------------- --------------------------
Net revenues:
Discount revenue
Net card fees
Lending:
Finance charge revenue $2,172 $2,166 $4,697 $4,504 4.3%
Interest expense 272 340 755 850 (11.1)
------- ------- ------- -------
Net finance charge
revenue 1,900 1,826 3,942 3,654 7.9
Travel commissions and fees
Other commissions and fees 193 185 2,094 2,018 3.8
Travelers Cheque investment
income
Securitization income, net (1,150) (1,049) - - -
Other revenues - (14) 1,606 1,557 3.2
------- ------- ------- -------
Total net revenues 943 948 20,132 18,669 7.8
------- ------- ------- -------
Expenses:
Marketing, promotion, rewards
and cardmember services (74) (81) 3,740 2,946 27.0
Provision for losses and
claims:
Charge card
Lending 1,067 1,098 2,285 2,467 (7.4)
Other
------- ------- ------- -------
Total 1,067 1,098 3,265 3,576 (8.7)
Charge card interest
expense - (14) 786 987 (20.4)
Human resources
Other operating expenses (50) (55) 4,948 4,581 8.0
Restructuring charges
------- ------- ------- -------
Total expenses $943 $948 $16,561 $15,589 6.2
------- ------- ------- -------
Travel Related Services
Selected Financial Information
(Unaudited)
Quarters Ended December 31,
(millions)
Preliminary
GAAP Basis
---------------------------------
Percentage
2003 2002 Inc/(Dec)
---------------------------------
Net revenues:
Discount revenue $2,432 $2,122 14.6%
Net card fees 467 435 7.1
Lending:
Finance charge revenue 654 602 8.7
Interest expense 123 132 (6.0)
-------- --------
Net finance charge revenue 531 470 12.9
Travel commissions and fees 445 369 20.9
Other commissions and fees 515 476 8.2
Travelers Cheque investment
income 93 94 (1.2)
Securitization income, net 293 284 3.2
Other revenues 435 415 5.2
-------- --------
Total net revenues 5,211 4,665 11.7
-------- --------
Expenses:
Marketing, promotion, rewards
and cardmember services 1,141 796 43.3
Provision for losses and
claims:
Charge card 227 237 (3.8)
Lending 330 414 (20.2)
Other 28 26 11.1
-------- --------
Total 585 677 (13.3)
Charge card interest expense 187 252 (26.0)
Human resources 1,003 852 17.7
Other operating expenses 1,411 1,279 10.3
Restructuring charges - 15 -
-------- --------
Total expenses 4,327 3,871 11.8
-------- --------
Pretax income 884 794 11.3
Income tax provision 278 244 13.9
-------- --------
Net income $606 $550 10.2
======== ========
Travel Related Services
Selected Financial Information
(Unaudited)
Quarters Ended December 31,
(millions)
Preliminary
Securitization
Effect Managed Basis
---------------- --------------------------
Percentage
2003 2002 2003 2002 Inc/(Dec)
---------------- --------------------------
Net revenues:
Discount revenue
Net card fees
Lending:
Finance charge revenue $532 $553 $1,186 $1,155 2.8%
Interest expense 84 89 207 221 (5.1)
------- ------- ------- -------
Net finance charge
revenue 448 464 979 934 4.6
Travel commissions and fees
Other commissions and fees 53 48 568 524 8.5
Travelers Cheque investment
income
Securitization income, net (293) (284) - - -
Other revenues - (4) 435 411 6.1
------- ------- ------- -------
Total net revenues 208 224 5,419 4,889 10.8
------- ------- ------- -------
Expenses:
Marketing, promotion, rewards
and cardmember services
Provision for losses and
claims:
Charge card
Lending 208 227 538 641 (16.3)
Other
------- ------- ------- -------
Total 208 227 793 904 (12.3)
Charge card interest
expense - (3) 187 249 (24.9)
Human resources
Other operating expenses
Restructuring charges
------- ------- ------- -------
Total expenses $208 $224 $4,535 $4,095 10.7
------- ------- ------- -------
American Express Company (www.americanexpress.com), founded in 1850, is a
global travel, financial and network services provider.
Note: The 2003 Fourth Quarter/Full Year 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 fourth
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," "may," "should," "could,"
"would," "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 moderate the quarterly growth rate of its marketing,
promotion, rewards and cardmember services expenses to levels below the fourth
quarter of 2003; 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 and to actually spend such funds to
the extent available, and the ability 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 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, terrorist attacks,
disasters or other catastrophic events in the future; the impact on the
company's businesses resulting from continuing 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 ability to
manage and expand cardmember benefits, including Membership Rewards(R), in a
cost effective manner and to accurately estimate the provision for the cost of
the Membership Rewards program; 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 United States 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; 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
December 31,
------------------ Percentage
2003 2002 Inc/(Dec)
------ ------ ----------
Revenues
Discount revenue $2,432 $2,122 14.6 %
Net investment income 786 816 (3.7)
Management and distribution fees 758 528 43.4
Cardmember lending net
finance charge revenue 531 470 12.9
Net card fees 467 435 7.1
Travel commissions and fees 445 369 20.9
Other commissions and fees 487 505 (3.8)
Insurance and annuity revenues 366 317 15.7
Securitization income, net 293 284 3.2
Other 503 350 44.4
------ ------
Total revenues 7,068 6,196 14.1
Expenses
Human resources 1,708 1,379 23.8
Provision for losses and benefits 1,164 1,250 (6.9)
Marketing, promotion, rewards
and cardmember services 1,166 822 41.9
Interest 205 270 (24.0)
Other operating expenses 1,735 1,512 14.8
Restructuring charges - 14 -
Disaster recovery charge - - -
------ ------
Total expenses 5,978 5,247 13.9
------ ------
Pretax income before
accounting change 1,090 949 14.8
Income tax provision 314 266 17.5
------ ------
Income before accounting change 776 683 13.7
Cumulative effect of accounting
change, net of tax (A) (13) - -
------ ------
Net income $763 $683 11.8 %
====== ======
Note: Certain prior period amounts have been reclassified to conform
to current year presentation.
(A) Reflects a $20 million non-cash pre-tax charge ($13 million after-tax)
related to the December 31, 2003 adoption of FIN 46, as revised.
(Preliminary)
AMERICAN EXPRESS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Millions)
Years Ended
December 31,
------------------ Percentage
2003 2002 Inc/(Dec)
------ ------ ----------
Revenues
Discount revenue $8,781 $7,931 10.7 %
Net investment income 3,063 2,991 2.4
Management and distribution fees 2,450 2,285 7.2
Cardmember lending net
finance charge revenue 2,042 1,828 11.7
Net card fees 1,835 1,726 6.3
Travel commissions and fees 1,507 1,408 7.0
Other commissions and fees 1,977 1,928 2.5
Insurance and annuity revenues 1,366 1,218 12.2
Securitization income, net 1,150 1,049 9.7
Other 1,695 1,443 17.5
------ ------
Total revenues 25,866 23,807 8.7
Expenses
Human resources 6,333 5,725 10.6
Provision for losses and benefits 4,429 4,586 (3.4)
Marketing, promotion, rewards
and cardmember services 3,901 3,119 25.1
Interest 905 1,082 (16.4)
Other operating expenses 6,053 5,582 8.5
Restructuring charges (2) (7) (75.8)
Disaster recovery charge - (7) -
------ ------
Total expenses 21,619 20,080 7.7
------ ------
Pretax income before
accounting change 4,247 3,727 13.9
Income tax provision 1,247 1,056 18.0
------ ------
Income before accounting change 3,000 2,671 12.3
Cumulative effect of accounting
change, net of tax (A) (13) - -
------ ------
Net income $2,987 $2,671 11.8 %
====== ======
Note: Certain prior period amounts have been reclassified to conform to
current year presentation.
(A) Reflects a $20 million non-cash pre-tax charge ($13 million after-tax)
related to the December 31, 2003 adoption of FIN 46, as revised.
(Preliminary)
AMERICAN EXPRESS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Billions)
December 31, December 31,
2003 2002
------------ ------------
Assets
Cash and cash equivalents $ 6 $ 10
Accounts receivable 31 29
Investments 57 54
Loans 32 28
Separate account assets 31 22
Other assets 18 14
------------ ------------
Total assets $ 175 $ 157
============ ============
Liabilities and Shareholders' Equity
Separate account liabilities $ 31 $ 22
Short-term debt 19 21
Long-term debt 21 16
Other liabilities 89 84
------------ ------------
Total liabilities 160 143
------------ ------------
Shareholders' Equity 15 14
------------ ------------
Total liabilities and
shareholders' equity $ 175 $ 157
============ ============
Note: Certain prior period amounts have been reclassified to conform
to current year presentation.
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY
(Unaudited)
(Millions)
Quarters Ended
December 31,
------------------ Percentage
2003 2002 Inc/(Dec)
------ ------ ----------
REVENUES (A)
Travel Related Services $ 5,211 $ 4,665 12 %
American Express Financial Advisors 1,740 1,444 20
American Express Bank 205 188 9
------ ------
7,156 6,297 14
Corporate and other,
including adjustments
and eliminations (88) (101) 13
------ ------
CONSOLIDATED REVENUES $ 7,068 $ 6,196 14 %
====== ======
PRETAX INCOME (LOSS) BEFORE
ACCOUNTING CHANGE
Travel Related Services $ 884 $ 794 11 %
American Express Financial Advisors 248 206 20
American Express Bank 42 36 16
------ ------
1,174 1,036 13
Corporate and other (84) (87) 3
------ ------
PRETAX INCOME BEFORE ACCOUNTING CHANGE $ 1,090 $ 949 15 %
====== ======
NET INCOME (LOSS)
Travel Related Services $ 606 $ 550 10 %
American Express Financial Advisors 182(B) 153 19
American Express Bank 29 24 22
------ ------
817 727 12
Corporate and other (54) (44) (23)
------ ------
NET INCOME $ 763(B) $ 683 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 $ 7,068 $ 6,196 14 %
Effect of TRS securitizations 208 224
Effect of AEFA provisions (555) (539)
------ ------
Managed net revenues $ 6,721 $ 5,881 14 %
====== ======
(B) Reflects a $20 million non-cash pre-tax charge ($13 million after-
tax) related to the December 31, 2003 adoption of FIN 46, as revised.
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY
(Unaudited)
(Millions)
Years Ended
December 31,
------------------ Percentage
2003 2002 Inc/(Dec)
------ ------ ----------
REVENUES (A)
Travel Related Services $19,189 $17,721 8 %
American Express Financial Advisors 6,172 5,617 10
American Express Bank 801 745 7
------ ------
26,162 24,083 9
Corporate and other,
including adjustments
and eliminations (296) (276) (7)
------ ------
CONSOLIDATED REVENUES $25,866 $23,807 9 %
====== ======
PRETAX INCOME (LOSS) BEFORE
ACCOUNTING CHANGE
Travel Related Services $ 3,571 $ 3,080 16 %
American Express Financial Advisors 859 865 (1)
American Express Bank 151 121 24
------ ------
4,581 4,066 13
Corporate and other (334) (339) 2
------ ------
PRETAX INCOME BEFORE ACCOUNTING CHANGE $ 4,247 $ 3,727 14 %
====== ======
NET INCOME (LOSS)
Travel Related Services $ 2,430 $ 2,135 14 %
American Express Financial Advisors 669(B) 632 6
American Express Bank 102 80 27
------ ------
3,201 2,847 12
Corporate and other (214) (176) (21)
------ ------
NET INCOME $ 2,987(B) $ 2,671 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 $25,866 $23,807 9 %
Effect of TRS securitizations 943 948
Effect of AEFA provisions (2,122) (1,954)
------ ------
Managed net revenues $24,687 $22,801 8 %
====== ======
(B) Reflects a $20 million non-cash pre-tax charge ($13 million after-
tax) related to the December 31, 2003 adoption of FIN 46, as revised.
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY (CONTINUED)
(UNAUDITED)
Quarters Ended
December 31,
---------------- Percentage
2003 2002 Inc/(Dec)
------ ------ ----------
EARNINGS PER SHARE
BASIC
Income before accounting change $ 0.61 $ 0.52 17 %
Net income $ 0.60(A) $ 0.52 15 %
====== ======
Average common shares outstanding
(millions) 1,277 1,309 (2)%
====== ======
DILUTED
Income before accounting change $ 0.60 $ 0.52 15 %
Net income $ 0.59(A) $ 0.52 13 %
====== ======
Average common shares outstanding
(millions) 1,299 1,317 (1)%
====== ======
Cash dividends declared
per common share $ 0.10 $ 0.08 25 %
====== ======
SELECTED STATISTICAL INFORMATION
(Unaudited)
Quarters Ended
December 31,
---------------- Percentage
2003 2002 Inc/(Dec)
------ ------ ----------
Return on average total shareholders'
equity (B) 20.6 % 20.2 % -
Common shares outstanding (millions) 1,284 1,305 (2)%
Book value per common share $ 11.93 $ 10.63 12 %
Shareholders' equity (billions) $ 15.3 $ 13.9 11 %
(A) Reflects a $20 million non-cash pre-tax charge ($13 million
after-tax), or $0.01 per share on both a basic and diluted basis,
related to the December 31, 2003 adoption of FIN 46, as revised.
(B) Computed on a trailing 12-month basis using total shareholders'
equity as included in the Consolidated Financial Statements
prepared in accordance with GAAP.
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY (CONTINUED)
(UNAUDITED)
Years Ended
December 31,
----------------- Percentage
2003 2002 Inc/(Dec)
------ ------ ----------
EARNINGS PER SHARE
BASIC
Income before accounting change $ 2.34 $ 2.02 16 %
Net income $ 2.33(A) $ 2.02 15 %
====== ======
Average common shares outstanding
(millions) 1,284 1,320 (3)%
====== ======
DILUTED
Income before accounting change $ 2.31 $ 2.01 15 %
Net income $ 2.30(A) $ 2.01 14 %
====== ======
Average common shares outstanding
(millions) 1,298 1,330 (2)%
====== ======
Cash dividends declared
per common share $ 0.38 $ 0.32 19 %
====== ======
SELECTED STATISTICAL INFORMATION
(Unaudited)
Years Ended
December 31,
----------------- Percentage
2003 2002 Inc/(Dec)
------ ------ -----------
Return on average total shareholders'
equity (B) 20.6 % 20.2 % -
Common shares outstanding (millions) 1,284 1,305 (2)%
Book value per common share $ 11.93 $ 10.63 12 %
Shareholders' equity (billions) $ 15.3 $ 13.9 11 %
(A) Reflects a $20 million non-cash pre-tax charge ($13 million
after-tax), or $0.01 per share on both a basic and diluted basis,
related to the December 31, 2003 adoption of FIN 46, as revised.
(B) Computed on a trailing 12-month basis using total shareholders'
equity as included in the Consolidated Financial Statements
prepared in accordance with GAAP.
To view additional business segment financials go to:
http://ir.americanexpress.com
SOURCE American Express Company
-0- 01/26/2004
/CONTACT: Molly Faust, +1-212-640-0624, molly.faust@aexp.com, or Michael
J. O'Neill, +1-212-640-5951, mike.o'neill@aexp.com, both of American Express
Company/
/FCMN Contact: alexandra.a.martinez@aexp.com /
/Web site: http://www.americanexpress.com /
(AXP)
-end-
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