EX-99.2 FINANCIALS 4 ex_992.txt EXHIBIT 99.2 EXHIBIT 99.2 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 Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2003 2002 Inc/(Dec) 2003 2002 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Revenues Discount revenue $ 2,432 $ 2,122 14.6 % $ 8,781 $ 7,931 10.7 % Net investment income 786 816 (3.7) 3,063 2,991 2.4 Management and distribution fees 758 528 43.4 2,450 2,285 7.2 Cardmember lending net finance charge revenue 531 470 12.9 2,042 1,828 11.7 Net card fees 467 435 7.1 1,835 1,726 6.3 Travel commissions and fees 445 369 20.9 1,507 1,408 7.0 Other commissions and fees 487 505 (3.8) 1,977 1,928 2.5 Insurance and annuity revenues 366 317 15.7 1,366 1,218 12.2 Securitization income, net 293 284 3.2 1,150 1,049 9.7 Other 503 350 44.4 1,695 1,443 17.5 ---------- ---------- ---------- ---------- Total revenues 7,068 6,196 14.1 25,866 23,807 8.7 Expenses Human resources 1,708 1,379 23.8 6,333 5,725 10.6 Provision for losses and benefits 1,164 1,250 (6.9) 4,429 4,586 (3.4) Marketing, promotion, rewards and cardmember services 1,166 822 41.9 3,901 3,119 25.1 Interest 205 270 (24.0) 905 1,082 (16.4) Other operating expenses 1,735 1,512 14.8 6,053 5,582 8.5 Restructuring charges - 14 - (2) (7) (75.8) Disaster recovery charge - - - - (7) - ---------- ---------- ---------- ---------- Total expenses 5,978 5,247 13.9 21,619 20,080 7.7 ---------- ---------- ---------- ---------- Pretax income before accounting change 1,090 949 14.8 4,247 3,727 13.9 Income tax provision 314 266 17.5 1,247 1,056 18.0 ---------- ---------- ---------- ---------- Income before accounting change 776 683 13.7 3,000 2,671 12.3 Cumulative effect of accounting change, net of tax (A) (13) - - (13) - - ---------- ---------- ---------- ---------- Net income $ 763 $ 683 11.8 % $ 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. 13 (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. 14 (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (Unaudited)
(Millions) Quarters Ended Years Ended December 31, December 31, -------------------------- Percentage -------------------------- Percentage 2003 2002 Inc/(Dec) 2003 2002 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- REVENUES (A) Travel Related Services $ 5,211 $ 4,665 12 % $ 19,189 $ 17,721 8 % American Express Financial Advisors 1,740 1,444 20 6,172 5,617 10 American Express Bank 205 188 9 801 745 7 ---------- ---------- ---------- ---------- 7,156 6,297 14 26,162 24,083 9 Corporate and other, including adjustments and eliminations (88) (101) 13 (296) (276) (7) ---------- ---------- ---------- ---------- CONSOLIDATED REVENUES $ 7,068 $ 6,196 14 % $ 25,866 $ 23,807 9 % ========== ========== ========== ========== PRETAX INCOME (LOSS) BEFORE ACCOUNTING CHANGE Travel Related Services $ 884 $ 794 11 % $ 3,571 $ 3,080 16 % American Express Financial Advisors 248 206 20 859 865 (1) American Express Bank 42 36 16 151 121 24 ---------- ---------- ---------- ---------- 1,174 1,036 13 4,581 4,066 13 Corporate and other (84) (87) 3 (334) (339) 2 ---------- ---------- ---------- ---------- PRETAX INCOME BEFORE ACCOUNTING CHANGE $ 1,090 $ 949 15 % $ 4,247 $ 3,727 14 % ========== ========== ========== ========== NET INCOME (LOSS) Travel Related Services $ 606 $ 550 10 % $ 2,430 $ 2,135 14 % American Express Financial Advisors 182 (B) 153 19 669 (B) 632 6 American Express Bank 29 24 22 102 80 27 ---------- ---------- ---------- ---------- 817 727 12 3,201 2,847 12 Corporate and other (54) (44) (23) (214) (176) (21) ---------- ---------- ---------- ---------- NET INCOME $ 763 (B) $ 683 12 % $ 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 $ 7,068 $ 6,196 14 % $ 25,866 $ 23,807 9 % Effect of TRS securitizations 208 224 943 948 Effect of AEFA provisions (555) (539) (2,122) (1,954) ---------- ---------- ---------- ---------- Managed net revenues $ 6,721 $ 5,881 14 % $ 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. 15 (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (CONTINUED) (Unaudited)
Quarters Ended Years Ended December 31, December 31, --------------------------- Percentage --------------------------- Percentage 2003 2002 Inc/(Dec) 2003 2002 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- EARNINGS PER SHARE BASIC Income before accounting change $ 0.61 $ 0.52 17 % $ 2.34 $ 2.02 16 % Net income $ 0.60 (A) $ 0.52 15 % $ 2.33 (A) $ 2.02 15 % ========== ========== ========== ========== Average common shares outstanding (millions) 1,277 1,309 (2) % 1,284 1,320 (3) % ========== ========== ========== ========== DILUTED Income before accounting change $ 0.60 $ 0.52 15 % $ 2.31 $ 2.01 15 % Net income $ 0.59 (A) $ 0.52 13 % $ 2.30 (A) $ 2.01 14 % ========== ========== ========== ========== Average common shares outstanding (millions) 1,299 1,317 (1) % 1,298 1,330 (2) % ========== ========== ========== ========== Cash dividends declared per common share $ 0.10 $ 0.08 25 % $ 0.38 $ 0.32 19 % ========== ========== ========== ==========
SELECTED STATISTICAL INFORMATION (Unaudited)
Quarters Ended Years Ended December 31, December 31, --------------------------- Percentage --------------------------- Percentage 2003 2002 Inc/(Dec) 2003 2002 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Return on average total shareholders' equity (B) 20.6% 20.2% - 20.6% 20.2% - Common shares outstanding (millions) 1,284 1,305 (2) % 1,284 1,305 (2) % Book value per common share $ 11.93 $ 10.63 12 % $ 11.93 $ 10.63 12 % Shareholders' equity (billions) $ 15.3 $ 13.9 11 % $ 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. 16 (Preliminary) AMERICAN EXPRESS COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Millions) Quarters Ended ------------------------------------------------------------------------ December 31, September 30, June 30, March 31, December 31, 2003 2003 2003 2003 2002 ------------ ------------- ----------- ----------- ------------ Revenues Discount revenue $ 2,432 $ 2,221 $ 2,152 $ 1,976 $ 2,122 Net investment income 786 730 780 767 816 Management and distribution fees 758 603 569 520 528 Cardmember lending net finance charge revenue 531 476 483 552 470 Net card fees 467 462 455 451 435 Travel commissions and fees 445 349 373 340 369 Other commissions and fees 487 514 479 497 505 Insurance and annuity revenues 366 345 341 314 317 Securitization income, net 293 301 345 211 284 Other 503 418 379 395 350 ------------ ------------- ----------- ----------- ------------ Total revenues 7,068 6,419 6,356 6,023 6,196 Expenses Human resources 1,708 1,559 1,576 1,490 1,379 Provision for losses and benefits 1,164 1,080 1,075 1,110 1,250 Marketing, promotion, rewards and cardmember services 1,166 1,016 944 775 822 Interest 205 239 231 230 270 Other operating expenses 1,735 1,463 1,433 1,422 1,512 Restructuring charges - (2) - - 14 ------------ ------------- ----------- ----------- ------------ Total expenses 5,978 5,355 5,259 5,027 5,247 ------------ ------------- ----------- ----------- ------------ Pretax income before accounting change 1,090 1,064 1,097 996 949 Income tax provision 314 294 335 304 266 ------------ ------------- ----------- ----------- ------------ Income before accounting change 776 770 762 692 683 Cumulative effect of accounting change, net of tax (A) (13) - - - - ------------ ------------- ----------- ----------- ------------ Net income $ 763 $ 770 $ 762 $ 692 $ 683 ============ ============= =========== =========== ============
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. 17 (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (Unaudited)
(Millions) Quarters Ended ---------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2003 2003 2003 2003 2002 ------------ ------------- ------------ ------------ ------------ REVENUES (A) Travel Related Services $ 5,211 $ 4,758 $ 4,734 $ 4,486 $ 4,665 American Express Financial Advisors 1,740 1,525 1,496 1,411 1,444 American Express Bank 205 199 200 197 188 ------------ ------------- ------------ ------------ ------------ 7,156 6,482 6,430 6,094 6,297 Corporate and other, including adjustments and eliminations (88) (63) (74) (71) (101) ------------ ------------- ------------ ------------ ------------ CONSOLIDATED REVENUES $ 7,068 $ 6,419 $ 6,356 $ 6,023 $ 6,196 ============ ============= ============ ============ ============ PRETAX INCOME (LOSS) BEFORE ACCOUNTING CHANGE Travel Related Services $ 884 $ 892 $ 937 $ 858 $ 794 American Express Financial Advisors 248 224 209 178 206 American Express Bank 42 41 39 29 36 ------------ ------------- ------------ ------------ ------------ 1,174 1,157 1,185 1,065 1,036 Corporate and other (84) (93) (88) (69) (87) ------------ ------------- ------------ ------------ ------------ PRETAX INCOME BEFORE ACCOUNTING CHANGE $ 1,090 $ 1,064 $ 1,097 $ 996 $ 949 ============ ============= ============ ============ ============ NET INCOME (LOSS) Travel Related Services $ 606 $ 606 $ 634 $ 584 $ 550 American Express Financial Advisors 182 (B) 197 157 133 153 American Express Bank 29 27 27 19 24 ------------ ------------- ------------ ------------ ------------ 817 830 818 736 727 Corporate and other (54) (60) (56) (44) (44) ------------ ------------- ------------ ------------ ------------ NET INCOME $ 763 (B) $ 770 $ 762 $ 692 $ 683 ============ ============= ============ ============ ============ (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 $ 6,419 $ 6,356 $ 6,023 $ 6,196 Effect of TRS securitizations 208 255 216 264 224 Effect of AEFA provisions (555) (535) (526) (506) (539) ------------ ------------- ------------ ------------ ------------ Managed net revenues $ 6,721 $ 6,139 $ 6,046 $ 5,781 $ 5,881 ============ ============= ============ ============ ============ (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.
18 (Preliminary) AMERICAN EXPRESS COMPANY FINANCIAL SUMMARY (CONTINUED) (Unaudited)
Quarters Ended ------------------------------------------------------------------------------ December 31, September 30, June 30, March 31, December 31, 2003 2003 2003 2003 2002 ------------- ------------- ------------ ------------ ------------ EARNINGS PER SHARE BASIC Income before accounting change $ 0.61 $ 0.60 $ 0.59 $ 0.53 $ 0.52 Net income $ 0.60 (A) $ 0.60 $ 0.59 $ 0.53 $ 0.52 ============= ============= ============ ============ ============ Average common shares outstanding (millions) 1,277 1,278 1,283 1,297 1,309 ============= ============= ============ ============ ============ DILUTED Income before accounting change $ 0.60 $ 0.59 $ 0.59 $ 0.53 $ 0.52 Net income $ 0.59 (A) $ 0.59 $ 0.59 $ 0.53 $ 0.52 ============= ============= ============ ============ ============ Average common shares outstanding (millions) 1,299 1,297 1,295 1,305 1,317 ============= ============= ============ ============ ============ Cash dividends declared per common share $ 0.10 $ 0.10 $ 0.10 $ 0.08 $ 0.08 ============= ============= ============ ============ ============
SELECTED STATISTICAL INFORMATION (Unaudited)
Quarters Ended ------------------------------------------------------------------------------ December 31, September 30, June 30, March 31, December 31, 2003 2003 2003 2003 2002 ------------- ------------- ------------ ------------ ------------ Return on average total shareholders' equity (B) 20.6% 20.4% 20.1% 20.0% 20.2% Common shares outstanding (millions) 1,284 1,285 1,286 1,298 1,305 Book value per common share $ 11.93 $ 11.54 $ 11.27 $ 10.84 $ 10.63 Shareholders' equity (billions) $ 15.3 $ 14.8 $ 14.5 $ 14.1 $ 13.9
(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. 19 (Preliminary) TRAVEL RELATED SERVICES STATEMENTS OF INCOME (Unaudited)
(Millions) Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2003 2002 Inc/(Dec) 2003 2002 Inc/(Dec) ---------- ---------- ----------- ---------- ---------- ---------- Net revenues: Discount revenue $ 2,432 $ 2,122 14.6 % $ 8,781 $ 7,931 10.7 % Net card fees 467 435 7.1 1,835 1,726 6.3 Lending: Finance charge revenue 654 602 8.7 2,525 2,338 8.0 Interest expense 123 132 (6.0) 483 510 (5.2) ---------- ---------- ---------- ---------- Net finance charge revenue 531 470 12.9 2,042 1,828 11.7 Travel commissions and fees 445 369 20.9 1,507 1,408 7.0 Other commissions and fees 515 476 8.2 1,901 1,833 3.7 Travelers Cheque investment income 93 94 (1.2) 367 375 (2.2) Securitization income, net 293 284 3.2 1,150 1,049 9.7 Other revenues 435 415 5.2 1,606 1,571 2.3 ---------- ---------- ---------- ---------- Total net revenues 5,211 4,665 11.7 19,189 17,721 8.3 ---------- ---------- ---------- ---------- Expenses: Marketing, promotion, rewards and cardmember services 1,141 796 43.3 3,814 3,027 26.0 Provision for losses and claims: Charge card 227 237 (3.8) 853 960 (11.1) Lending 330 414 (20.2) 1,218 1,369 (11.0) Other 28 26 11.1 127 149 (14.1) ---------- ---------- ---------- ---------- Total 585 677 (13.3) 2,198 2,478 (11.3) Charge card interest expense 187 252 (26.0) 786 1,001 (21.6) Human resources 1,003 852 17.7 3,822 3,503 9.1 Other operating expenses 1,411 1,279 10.3 4,998 4,636 7.8 Restructuring charges - 15 - - (4) - ---------- ---------- ---------- ---------- Total expenses 4,327 3,871 11.8 15,618 14,641 6.7 ---------- ---------- ---------- ---------- Pretax income 884 794 11.3 3,571 3,080 15.9 Income tax provision 278 244 13.9 1,141 945 20.7 ---------- ---------- ---------- ---------- Net income $ 606 $ 550 10.2 % $ 2,430 $ 2,135 13.8 % ========== ========== ========== ==========
Note: Certain prior period amounts have been reclassified to conform to current year presentation. 20 (Preliminary) TRAVEL RELATED SERVICES SELECTED FINANCIAL INFORMATION (Unaudited)
Years Ended December 31, (Millions) Securitization GAAP Basis Effect Managed Basis --------------------- Percentage --------------------- --------------------- Percentage 2003 2002 Inc/(Dec) 2003 2002 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 $ 2,172 $ 2,166 $ 4,697 $ 4,504 4.3 % Interest expense 483 510 (5.2) 272 340 755 850 (11.1) --------- --------- --------- --------- --------- --------- Net finance charge revenue 2,042 1,828 11.7 1,900 1,826 3,942 3,654 7.9 Travel commissions and fees 1,507 1,408 7.0 Other commissions and fees 1,901 1,833 3.7 193 185 2,094 2,018 3.8 Travelers Cheque investment income 367 375 (2.2) Securitization income, net 1,150 1,049 9.7 (1,150) (1,049) - - - Other revenues 1,606 1,571 2.3 - (14) 1,606 1,557 3.2 --------- --------- --------- --------- --------- --------- Total net revenues 19,189 17,721 8.3 943 948 20,132 18,669 7.8 --------- --------- --------- --------- --------- --------- Expenses: Marketing, promotion, rewards and cardmember services 3,814 3,027 26.0 (74) (81) 3,740 2,946 27.0 Provision for losses and claims: Charge card 853 960 (11.1) Lending 1,218 1,369 (11.0) 1,067 1,098 2,285 2,467 (7.4) Other 127 149 (14.1) --------- --------- --------- --------- --------- --------- Total 2,198 2,478 (11.3) 1,067 1,098 3,265 3,576 (8.7) Charge card interest expense 786 1,001 (21.6) - (14) 786 987 (20.4) Human resources 3,822 3,503 9.1 Other operating expenses 4,998 4,636 7.8 (50) (55) 4,948 4,581 8.0 Restructuring charges - (4) - --------- --------- --------- --------- --------- --------- Total expenses 15,618 14,641 6.7 $ 943 $ 948 $ 16,561 $ 15,589 6.2 --------- --------- --------- --------- --------- --------- Pretax income 3,571 3,080 15.9 Income tax provision 1,141 945 20.7 --------- --------- Net income $ 2,430 $ 2,135 13.8 % ========= =========
Note: Certain prior period amounts have been reclassified to conform to current year presentation. Securitization income, net represents revenue related to the Company's securitized loan receivables, which includes gains recorded at the time of securitization, net finance charge revenue on retained interests in securitized loans and servicing income net of related discounts. Management views the gains from securitizations as discretionary benefits to be used for card acquisition expenses, which are reflected in marketing, promotion, rewards and cardmember services expenses and other operating expenses. Consequently, the above managed Selected Financial Information for the years ended December 31, 2003 and 2002 assumes that net gains of $124 million and $136 million, respectively, from lending securitizations were offset by higher marketing, promotion, rewards and cardmember services expenses of $74 million and $81 million, respectively, and other operating expenses of $50 million and $55 million, respectively. Accordingly, the incremental expenses, as well as the gains, have been eliminated. 21 (Preliminary) TRAVEL RELATED SERVICES SELECTED FINANCIAL INFORMATION (Unaudited)
Quarters Ended December 31, (Millions) Securitization GAAP Basis Effect Managed Basis --------------------- Percentage --------------------- --------------------- Percentage 2003 2002 Inc/(Dec) 2003 2002 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 $ 532 $ 553 $ 1,186 $ 1,155 2.8 % Interest expense 123 132 (6.0) 84 89 207 221 (5.1) --------- --------- --------- --------- --------- --------- Net finance charge revenue 531 470 12.9 448 464 979 934 4.6 Travel commissions and fees 445 369 20.9 Other commissions and fees 515 476 8.2 53 48 568 524 8.5 Travelers Cheque investment income 93 94 (1.2) Securitization income, net 293 284 3.2 (293) (284) - - - Other revenues 435 415 5.2 - (4) 435 411 6.1 --------- --------- --------- --------- --------- --------- Total net revenues 5,211 4,665 11.7 208 224 5,419 4,889 10.8 --------- --------- --------- --------- --------- --------- 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) 208 227 538 641 (16.3) Other 28 26 11.1 --------- --------- --------- --------- --------- --------- Total 585 677 (13.3) 208 227 793 904 (12.3) Charge card interest expense 187 252 (26.0) - (3) 187 249 (24.9) 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 $ 208 $ 224 $ 4,535 $ 4,095 10.7 --------- --------- --------- --------- --------- --------- Pretax income 884 794 11.3 Income tax provision 278 244 13.9 --------- --------- Net income $ 606 $ 550 10.2 % ========= =========
Note: Certain prior period amounts have been reclassified to conform to current year presentation. 22 (Preliminary) TRAVEL RELATED SERVICES SELECTED FINANCIAL INFORMATION (Unaudited)
Quarters Ended (Millions) GAAP Basis Securitization Effect Managed Basis ----------------------------- --------------------------- ------------------------------ September June March September June March September June March 30, 30, 31, 30, 30, 31, 30, 30, 31, 2003 2003 2003 2003 2003 2003 2003 2003 2003 --------- ------- ------- --------- ------ ------ --------- ------- -------- Net revenues: Discount revenue $ 2,221 $ 2,152 $ 1,976 Net card fees 462 455 451 Lending: Finance charge revenue 592 598 681 $ 585 $ 566 $ 489 $ 1,177 $ 1,164 $ 1,170 Interest expense 116 115 129 74 50 64 190 165 193 --------- ------- -------- --------- ------ ------ --------- ------- -------- Net finance charge revenue 476 483 552 511 516 425 987 999 977 Travel commissions and fees 349 373 340 Other commissions and fees 465 457 464 45 45 50 510 502 514 Travelers Cheque investment income 90 92 92 Securitization income, net 301 345 211 (301) (345) (211) - - - Other revenues 394 377 400 --------- ------- -------- --------- ------ ------ --------- ------- -------- Total net revenues 4,758 4,734 4,486 255 216 264 5,013 4,950 4,750 --------- ------- -------- --------- ------ ------ --------- ------- -------- Expenses: Marketing, promotion, rewards and cardmember services 994 918 761 - (48) (26) 994 870 735 Provision for losses and claims: Charge card 213 205 208 Lending 279 278 331 255 297 307 534 575 638 Other 31 37 31 --------- ------- -------- --------- ------ ------ --------- ------- -------- Total 523 520 570 255 297 307 778 817 877 Charge card interest expense 186 204 209 Human resources 938 965 916 Other operating expenses 1,225 1,190 1,172 - (33) (17) 1,225 1,157 1,155 --------- ------- -------- --------- ------ ------ --------- ------- -------- Total expenses 3,866 3,797 3,628 $ 255 $ 216 $ 264 $ 4,121 $ 4,013 $ 3,892 --------- ------- -------- --------- ------ ------ --------- ------- -------- Pretax income 892 937 858 Income tax provision 286 303 274 --------- ------- -------- Net income $ 606 $ 634 $ 584 ========= ======= ========
Note: Certain prior period amounts have been reclassified to conform to current year presentation. Securitization income, net represents revenue related to the Company's securitized loan receivables, which includes gains recorded at the time of securitization, net finance charge revenue on retained interests in securitized loans and servicing income net of related discounts. Management views the gains from securitizations as discretionary benefits to be used for card acquisition expenses, which are reflected in marketing, promotion, rewards and cardmember services expenses and other operating expenses. Consequently, the above managed Selected Financial Information for the quarters ended June 30, 2003 and March 31, 2003 assume that net gains of $81 million and $43 million, respectively, from lending securitizations were offset by higher marketing, promotion, rewards and cardmember services expenses of $48 million and $26 million, respectively, and other operating expenses of $33 million and $17 million, respectively. Accordingly, the incremental expenses, as well as the gains, have been eliminated. 23 (Preliminary) TRAVEL RELATED SERVICES SELECTED STATISTICAL INFORMATION (Unaudited)
(Billions, except percentages and where indicated) Quarters Ended Years Ended December 31, December 31, --------------------- Percentage --------------------- Percentage 2003 2002 Inc/(Dec) 2003 2002 Inc/(Dec) -------- -------- ---------- -------- -------- ---------- Total cards-in-force (millions) (A): United States 36.4 34.8 4.3 % 36.4 34.8 4.3 % Outside the United States 24.1 22.2 8.8 24.1 22.2 8.8 -------- -------- -------- -------- Total 60.5 57.0 6.1 % 60.5 57.0 6.1 % ======== ======== ======== ======== Basic cards-in-force (millions): United States 27.7 26.9 2.7 % 27.7 26.9 2.7 % Outside the United States 19.9 18.3 9.2 19.9 18.3 9.2 -------- -------- -------- -------- Total 47.6 45.2 5.3 % 47.6 45.2 5.3 % ======== ======== ======== ======== Card billed business United States $ 72.3 $ 62.9 15.0 % $ 262.1 $ 234.1 11.9 % Outside the United States 26.2 21.2 23.6 90.1 77.3 16.6 -------- -------- -------- -------- Total $ 98.5 $ 84.1 17.1 % $ 352.2 $ 311.4 13.1 % ======== ======== ======== ======== Average discount rate (B) 2.56 % 2.62 % 2.59 % 2.64 % Average basic cardmember spending (dollars) (B) $ 2,314 $ 2,050 12.9 % $ 8,367 $ 7,645 9.4 % Average fee per card (dollars) (B) $ 35 $ 34 2.9 % $ 35 $ 34 2.9 % Non-Amex brand (C): Cards-in-force (millions) 0.7 0.7 (0.6)% 0.7 0.7 (0.6)% Billed business $ 1.1 $ 1.0 10.5 % $ 3.9 $ 3.7 7.0 % Travel sales $ 4.7 $ 3.8 22.1 % $ 16.0 $ 15.5 3.2 % Travel commissions and fees/sales (D) 9.5 % 9.6 % 9.4 % 9.1 % Travelers Cheque: Sales $ 4.7 $ 4.8 (4.1)% $ 19.2 $ 22.1 (13.1)% Average outstanding $ 6.6 $ 6.5 2.2 % $ 6.6 $ 6.5 1.8 % Average investments $ 7.1 $ 6.8 3.9 % $ 7.1 $ 6.9 2.9 % Investment yield 5.5 % 5.6 % 5.4 % 5.6 % Tax equivalent yield 8.4 % 8.7 % 8.4 % 8.7 % Total debt $ 38.4 $ 36.4 5.4 % $ 38.4 $ 36.4 5.4 % Shareholder's equity $ 7.9 $ 7.3 8.7 % $ 7.9 $ 7.3 8.7 % Return on average total shareholder's equity (E) 31.3 % 30.3 % 31.3 % 30.3 % Return on average total assets (F) 3.4 % 3.2 % 3.4 % 3.2 %
(A) Total cards-in-force for prior periods have been reduced, reflecting a correction to the number of supplemental cards-in-force. (B) Cards-in-force include proprietary cards and cards issued under network partnership agreements outside the U.S. Average discount rate, average basic cardmember spending and average fee per card are computed from proprietary card activities only. (C) These data relate to Visa and Eurocards issued in connection with joint venture activities. (D) Computed from information provided herein. (E) Computed on a trailing 12-month basis using total shareholder's equity as included in the Consolidated Financial Statements prepared in accordance with GAAP. (F) Computed on a trailing 12-month basis using total assets as included in the Consolidated Financial Statements prepared in accordance with GAAP. 24 (Preliminary) TRAVEL RELATED SERVICES SELECTED STATISTICAL INFORMATION (CONTINUED) (Unaudited)
(Billions, except percentages and where indicated) Quarters Ended Years Ended December 31, December 31, --------------------- Percentage --------------------- Percentage 2003 2002 Inc/(Dec) 2003 2002 Inc/(Dec) -------- -------- ---------- -------- -------- ---------- Charge card receivables: Total receivables $ 28.4 $ 26.3 7.9 % $ 28.4 $ 26.3 7.9 % 90 days past due as a % of total 1.9 % 2.2 % 1.9 % 2.2 % Loss reserves (millions) $ 916 $ 930 (1.5)% $ 916 $ 930 (1.5)% % of receivables 3.2 % 3.5 % 3.2 % 3.5 % % of 90 days past due 171 % 162 % 171 % 162 % Net loss ratio 0.27 % 0.32 % 0.28 % 0.38 % U.S. Lending (Owned Basis): Total loans $ 19.0 $ 17.1 11.0 % $ 19.0 $ 17.1 11.0 % Past due loans as a % of total: 30-89 days 1.6 % 2.0 % 1.6 % 2.0 % 90+ days 1.0 % 1.3 % 1.0 % 1.3 % Loss reserves (millions): Beginning balance $ 759 $ 669 13.6 % $ 798 $ 668 19.5 % Provision 226 318 (29.0) 765 954 (19.8) Net charge-offs (192) (206) (6.5) (817) (903) (9.7) Other 19 17 15.2 66 79 (18.1) --------- -------- --------- -------- Ending balance $ 812 $ 798 1.8 % $ 812 $ 798 1.8 % ========= ======== ========= ======== % of loans 4.3 % 4.7 % 4.3 % 4.7 % % of past due 162 % 143 % 162 % 143 % Average loans $ 17.3 $ 15.7 10.3 % $ 16.7 $ 15.3 9.1 % Net write-off rate 4.4 % 5.2 % 4.9 % 5.9 % Net interest yield (A) 8.1 % 8.8 % 8.2 % 8.8 % U.S. Lending - Managed Basis: Total loans $ 38.5 $ 34.3 12.2 % $ 38.5 $ 34.3 12.2 % Past due loans as a % of total: 30-89 days 1.7 % 1.9 % 1.7 % 1.9 % 90+ days 1.0 % 1.2 % 1.0 % 1.2 % Loss reserves (millions): Beginning balance $ 1,340 $ 1,193 12.3 % $ 1,297 $ 1,077 20.5 % Provision 433 547 (20.8) 1,832 2,053 (10.8) Net charge-offs (437) (460) (4.8) (1,840) (1,912) (3.8) Other 19 17 15.2 66 79 (18.1) --------- -------- --------- -------- Ending balance $ 1,355 $ 1,297 4.5 % $ 1,355 $ 1,297 4.5 % ========= ======== ========= ======== % of loans 3.5 % 3.8 % 3.5 % 3.8 % % of past due 131 % 120 % 131 % 120 % Average loans $ 36.8 $ 32.9 12.0 % $ 35.6 $ 32.0 11.3 % Net write-off rate 4.7 % 5.5 % 5.1 % 6.0 % Net interest yield 8.6 % 9.8 % 8.9 % 9.8 %
(A) Certain prior period amounts have been recomputed to conform to current year presentation. 25 (Preliminary) TRAVEL RELATED SERVICES STATEMENTS OF INCOME (Unaudited)
(Millions) Quarters Ended ------------------------------------------------------------------------ December 31, September 30, June 30, March 31, December 31, 2003 2003 2003 2003 2002 ------------- ------------- ---------- ----------- ------------- Net revenues: Discount revenue $ 2,432 $ 2,221 $ 2,152 $ 1,976 $ 2,122 Net card fees 467 462 455 451 435 Lending: Finance charge revenue 654 592 598 681 602 Interest expense 123 116 115 129 132 ------------- ------------- ---------- ----------- ------------- Net finance charge revenue 531 476 483 552 470 Travel commissions and fees 445 349 373 340 369 Other commissions and fees 515 465 457 464 476 Travelers Cheque investment income 93 90 92 92 94 Securitization income, net 293 301 345 211 284 Other revenues 435 394 377 400 415 ------------- ------------- ---------- ----------- ------------- Total net revenues 5,211 4,758 4,734 4,486 4,665 ------------- ------------- ---------- ----------- ------------- Expenses: Marketing, promotion, rewards and cardmember services 1,141 994 918 761 796 Provision for losses and claims: Charge card 227 213 205 208 237 Lending 330 279 278 331 414 Other 28 31 37 31 26 ------------- ------------- ---------- ----------- ------------- Total 585 523 520 570 677 Charge card interest expense 187 186 204 209 252 Human resources 1,003 938 965 916 852 Other operating expenses 1,411 1,225 1,190 1,172 1,279 Restructuring charges - - - - 15 ------------- ------------- ---------- ----------- ------------- Total expenses 4,327 3,866 3,797 3,628 3,871 ------------- ------------- ---------- ----------- ------------- Pretax income 884 892 937 858 794 Income tax provision 278 286 303 274 244 ------------- ------------- ---------- ----------- ------------- Net income $ 606 $ 606 $ 634 $ 584 $ 550 ============= ============= ========== =========== =============
Note: Certain prior period amounts have been reclassified to conform to current year presentation. 26 (Preliminary) TRAVEL RELATED SERVICES SELECTED MANAGED BASIS INFORMATION (Unaudited)
(Millions) Quarters Ended ---------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2003 2003 2003 2003 2002 -------------- --------------- ---------- ----------- -------------- Lending finance charge revenue $ 1,186 $ 1,177 $ 1,164 $ 1,170 $ 1,155 Lending interest expense 207 190 165 193 221 Other commissions and fees 568 510 502 514 524 Other revenues 435 394 377 400 411 Marketing, promotion, rewards and cardmember services 1,141 994 870 735 796 Lending provision 538 534 575 638 641 Charge card interest expense 187 186 204 209 249 Other operating expenses 1,411 1,225 1,157 1,155 1,279
Note: Certain prior period amounts have been reclassified to conform to current year presentation. See prior page for comparable GAAP measures. 27 (Preliminary) TRAVEL RELATED SERVICES SELECTED STATISTICAL INFORMATION (Unaudited)
(Billions, except percentages and where indicated) Quarters Ended ---------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2003 2003 2003 2003 2002 -------------- --------------- ---------- ----------- -------------- Total cards-in-force (millions) (A): United States 36.4 35.9 35.4 35.2 34.8 Outside the United States 24.1 23.4 22.9 22.4 22.2 -------------- --------------- ---------- ----------- -------------- Total 60.5 59.3 58.3 57.6 57.0 ============== =============== ========== =========== ============== Basic cards-in-force (millions): United States 27.7 27.3 27.3 27.1 26.9 Outside the United States 19.9 19.3 18.9 18.5 18.3 -------------- --------------- ---------- ----------- -------------- Total 47.6 46.6 46.2 45.6 45.2 ============== =============== ========== =========== ============== Card billed business United States $ 72.3 $ 66.3 $ 64.6 $ 58.9 $ 62.9 Outside the United States 26.2 22.5 21.5 19.9 21.2 -------------- --------------- ---------- ----------- -------------- Total $ 98.5 $ 88.8 $ 86.1 $ 78.8 $ 84.1 ============== =============== ========== =========== ============== Average discount rate (B) 2.56 % 2.60 % 2.59 % 2.60 % 2.62 % Average basic cardmember spending (dollars) (B) $ 2,314 $ 2,101 $ 2,054 $ 1,894 $ 2,050 Average fee per card - managed (dollars) (B) $ 35 $ 35 $ 34 $ 35 $ 34 Non-Amex brand (C): Cards-in-force (millions) 0.7 0.7 0.7 0.7 0.7 Billed business $ 1.1 $ 1.0 $ 1.0 $ 0.9 $ 1.0 Travel sales $ 4.7 $ 3.7 $ 3.9 $ 3.7 $ 3.8 Travel commissions and fees/sales (D) 9.5 % 9.3 % 9.6 % 9.3 % 9.6 % Travelers Cheque: Sales $ 4.7 $ 6.0 $ 4.4 $ 4.1 $ 4.8 Average outstanding $ 6.6 $ 7.0 $ 6.4 $ 6.5 $ 6.5 Average investments $ 7.1 $ 7.4 $ 6.9 $ 6.9 $ 6.8 Investment yield 5.5 % 5.2 % 5.5 % 5.6 % 5.6 % Tax equivalent yield 8.4 % 8.0 % 8.4 % 8.6 % 8.7 % Total debt $ 38.4 $ 33.3 $ 34.2 $ 34.1 $ 36.4 Shareholder's equity $ 7.9 $ 8.0 $ 7.8 $ 7.5 $ 7.3 Return on average total shareholder's equity (E) 31.3 % 31.2 % 31.5 % 31.3 % 30.3 % Return on average total assets (F) 3.4 % 3.4 % 3.4 % 3.3 % 3.2 %
(A) Total cards-in-force for prior periods have been reduced, reflecting a correction to the number of supplemental cards-in-force. (B) Cards-in-force include proprietary cards and cards issued under network partnership agreements outside the U.S. Average discount rate, average basic cardmember spending and average fee per card are computed from proprietary card activities only. (C) These data relate to Visa and Eurocards issued in connection with joint venture activities. (D) Computed from information provided herein. (E) Computed on a trailing 12-month basis using total shareholder's equity as included in the Consolidated Financial Statements prepared in accordance with GAAP. (F) Computed on a trailing 12-month basis using total assets as included in the Consolidated Financial Statements prepared in accordance with GAAP. 28 (Preliminary) TRAVEL RELATED SERVICES SELECTED STATISTICAL INFORMATION (CONTINUED) (Unaudited)
(Billions, except percentages and where indicated) Quarters Ended -------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2003 2003 2003 2003 2002 ------------- ------------- ----------- ------------ ------------- Charge card receivables: Total receivables $ 28.4 $ 26.4 $ 26.0 $ 24.3 $ 26.3 90 days past due as a % of total 1.9 % 2.0 % 2.1 % 2.4 % 2.2 % Loss reserves (millions) $ 916 $ 921 $ 943 $ 923 $ 930 % of receivables 3.2 % 3.5 % 3.6 % 3.8 % 3.5 % % of 90 days past due 171 % 174 % 171 % 159 % 162 % Net loss ratio 0.27 % 0.28 % 0.29 % 0.28 % 0.32 % U.S. Lending (Owned Basis): Total loans $ 19.0 $ 16.4 $ 16.5 $ 16.5 $ 17.1 Past due loans as a % of total: 30-89 days 1.6 % 1.7 % 1.7 % 1.9 % 2.0 % 90+ days 1.0 % 1.0 % 1.1 % 1.2 % 1.3 % Loss reserves (millions): Beginning balance $ 759 $ 773 $ 790 $ 798 $ 669 Provision 226 174 165 200 318 Net charge-offs (192) (201) (199) (225) (206) Other 19 13 17 17 17 ------------- ------------- ----------- ------------ ------------- Ending balance $ 812 $ 759 $ 773 $ 790 $ 798 ============= ============= =========== ============ ============= % of loans 4.3 % 4.6 % 4.7 % 4.8 % 4.7 % % of past due 162 % 169 % 169 % 155 % 143 % Average loans $ 17.3 $ 16.4 $ 16.1 $ 16.6 $ 15.7 Net write-off rate 4.4 % 4.9 % 4.9 % 5.4 % 5.2 % Net interest yield (A) 8.1 % 7.5 % 7.8 % 8.9 % 8.8 % U.S. Lending - Managed Basis: Total loans $ 38.5 $ 35.9 $ 36.0 $ 34.6 $ 34.3 Past due loans as a % of total: 30-89 days 1.7 % 1.8 % 1.7 % 1.9 % 1.9 % 90+ days 1.0 % 1.0 % 1.0 % 1.2 % 1.2 % Loss reserves (millions): Beginning balance $ 1,340 $ 1,350 $ 1,347 $ 1,297 $ 1,193 Provision 433 431 461 507 547 Net charge-offs (437) (454) (475) (474) (460) Other 19 13 17 17 17 ------------- ------------- ----------- ------------ ------------- Ending balance $ 1,355 $ 1,340 $ 1,350 $ 1,347 $ 1,297 ============= ============= =========== ============ ============= % of loans 3.5 % 3.7 % 3.7 % 3.9 % 3.8 % % of past due 131 % 133 % 136 % 127 % 120 % Average loans $ 36.8 $ 36.0 $ 35.3 $ 34.2 $ 32.9 Net write-off rate 4.7 % 5.0 % 5.4 % 5.5 % 5.5 % Net interest yield 8.6 % 8.9 % 8.9 % 9.4 % 9.8 %
(A) Certain prior period amounts have been recomputed to conform to current year presentation. 29 (Preliminary) AMERICAN EXPRESS FINANCIAL ADVISORS STATEMENTS OF INCOME (Unaudited)
(Millions) Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2003 2002 Inc/(Dec) 2003 2002 Inc/(Dec) ---------- ---------- ---------- ---------- ---------- ---------- Revenues: Investment income $ 599 $ 577 3.9 % $ 2,279 $ 2,058 10.7 % Management and distribution fees 759 535 41.8 2,458 2,292 7.2 Other revenues 382 332 14.7 1,435 1,267 13.3 ---------- ---------- ---------- ---------- Total revenues 1,740 1,444 20.5 6,172 5,617 9.9 ---------- ---------- ---------- ---------- Expenses: Provision for losses and benefits: Annuities 274 283 (3.1) 1,104 1,034 6.8 Insurance 226 203 10.5 817 737 10.8 Investment certificates 55 53 5.1 201 183 10.2 ---------- ---------- ---------- ---------- Total 555 539 2.8 2,122 1,954 8.6 Human resources 592 449 31.9 2,090 1,898 10.1 Other operating expenses 345 250 38.2 1,101 907 21.4 Disaster recovery charge - - - - (7) - ---------- ---------- ---------- ---------- Total expenses 1,492 1,238 20.5 5,313 4,752 11.8 ---------- ---------- ---------- ---------- Pretax income before accounting change 248 206 20.2 859 865 (0.7) Income tax provision 53 53 (1.5) 177 233 (24.2) ---------- ---------- ---------- ---------- Income before accounting change 195 153 27.8 682 632 8.0 Cumulative effect of accounting change, net of tax (A) (13) - - (13) - - ---------- ---------- ---------- ---------- Net income $ 182 $ 153 19.3 % $ 669 $ 632 5.9 % ========== ========== ========== ==========
(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. 30 (Preliminary) AMERICAN EXPRESS FINANCIAL ADVISORS SELECTED STATISTICAL INFORMATION (Unaudited)
(Millions, except where indicated) Quarters Ended December 31, --------------------------- Percentage 2003 2002 Inc/(Dec) ---------- ----------- ---------- Investments (billions) (A) $ 42.1 $ 38.2 10.2 % Client contract reserves (billions) $ 41.2 $ 37.3 10.2 % Shareholder's equity (billions) $ 7.1 $ 6.3 12.5 % Return on average total shareholder's equity (B) 10.4 % 10.9 % - Life insurance inforce (billions) $ 131.4 $ 119.0 10.4 % Assets owned, managed or administered (billions): Assets managed for institutions (C) $ 116.4 (F) $ 42.3 # Assets owned, managed or administered for individuals: Owned assets: Separate account assets (C) 30.8 22.0 40.2 % Other owned assets (C) 53.8 (E) 51.7 3.9 ---------- ----------- Total owned assets 84.6 73.7 14.7 Managed assets (C) 110.2 81.6 35.1 Administered assets (D) 54.1 33.0 64.0 ---------- ----------- Total $ 365.3 $ 230.6 58.4 % ========== =========== Market appreciation (depreciation) during the period: Owned assets: Separate account assets $ 2,754 $ 1,040 # Other owned assets $ (275) $ 23 - Managed assets $ 16,164 $ 3,334 # Cash sales: Mutual funds $ 9,096 $ 6,563 38.6 % Annuities 1,683 2,284 (26.3) Investment certificates 1,520 959 58.6 Life and other insurance products 212 182 16.8 Institutional 939 521 80.2 Other 978 1,269 (23.0) ---------- ----------- Total cash sales $ 14,428 $ 11,778 22.5 % ========== =========== Number of financial advisors 12,121 11,689 3.7 % Fees from financial plans and advice services $ 20.6 $ 26.8 (23.3)% Percentage of total sales from financial plans and advice services 74.6 % 74.4 % - (Millions, except where indicated) Years Ended December 31, --------------------------- Percentage 2003 2002 Inc/(Dec) ---------- ----------- ---------- Investments (billions) (A) $ 42.1 $ 38.2 10.2 % Client contract reserves (billions) $ 41.2 $ 37.3 10.2 % Shareholder's equity (billions) $ 7.1 $ 6.3 12.5 % Return on average total shareholder's equity (B) 10.4 % 10.9 % - Life insurance inforce (billions) $ 131.4 $ 119.0 10.4 % Assets owned, managed or administered (billions): Assets managed for institutions (C) $ 116.4 (F) $ 42.3 # Assets owned, managed or administered for individuals: Owned assets: Separate account assets (C) 30.8 22.0 40.2 % Other owned assets (C) 53.8 (E) 51.7 3.9 ---------- ----------- Total owned assets 84.6 73.7 14.7 Managed assets (C) 110.2 81.6 35.1 Administered assets (D) 54.1 33.0 64.0 ---------- ----------- Total $ 365.3 $ 230.6 58.4 % ========== =========== Market appreciation (depreciation) during the period: Owned assets: Separate account assets $ 5,516 $ (5,057) - Other owned assets $ (244) $ 898 - Managed assets $ 26,610 $ (16,788) - Cash sales: Mutual funds $ 30,407 $ 31,945 (4.8)% Annuities 8,335 8,541 (2.4) Investment certificates 5,736 4,088 40.3 Life and other insurance products 760 710 7.0 Institutional 3,033 3,331 (9.0) Other 5,787 5,201 11.3 ---------- ----------- Total cash sales $ 54,058 $ 53,816 0.4 % ========== =========== Number of financial advisors 12,121 11,689 3.7 % Fees from financial plans and advice services $ 120.7 $ 113.9 5.9 % Percentage of total sales from financial plans and advice services 74.8 % 73.3 % -
# - Denotes a variance of more than 100%. (A) Excludes cash, derivatives, short-term and other investments. (B) Computed on a trailing 12-month basis using income before cumulative effect of accounting change and total shareholder's equity as included in the Consolidated Financial Statements prepared in accordance with GAAP. (C) At September 30, 2003 includes $73.2 billion of assets managed for institutions, $2.6 billion of separate account assets, $1.0 billion of other owned assets and $7.9 billion of assets managed for individuals related to the September 30, 2003 Threadneedle acquisition. (D) Excludes non-branded administered assets of $3.6 billion at December 31, 2002. Assuming such assets had been included, the increase in administered assets would have been 47.8%. (E) As a result of AEFA's December 31, 2003 adoption of FIN 46, as revised, $0.5 billion of additional assets were consolidated. (F) As a result of AEFA's December 31, 2003 adoption of FIN 46, as revised, managed assets decreased by $3.8 billion. 31 (Preliminary) AMERICAN EXPRESS FINANCIAL ADVISORS STATEMENTS OF INCOME (Unaudited)
(Millions) Quarters Ended ------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2003 2003 2003 2003 2002 ------------ ------------- ----------- ----------- ------------ Revenues: Investment income $ 599 $ 551 $ 571 $ 558 $ 577 Management and distribution fees 759 606 571 522 535 Other revenues 382 368 354 331 332 ------------ ------------- ----------- ----------- ------------ Total revenues 1,740 1,525 1,496 1,411 1,444 ------------ ------------- ----------- ----------- ------------ Expenses: Provision for losses and benefits: Annuities 274 277 280 273 283 Insurance 226 212 187 192 203 Investment certificates 55 46 59 41 53 ------------ ------------- ----------- ----------- ------------ Total 555 535 526 506 539 Human resources 592 511 508 479 449 Other operating expenses 345 255 253 248 250 ------------ ------------- ----------- ----------- ------------ Total expenses 1,492 1,301 1,287 1,233 1,238 ------------ ------------- ----------- ----------- ------------ Pretax income before accounting change 248 224 209 178 206 Income tax provision 53 27 52 45 53 ------------ ------------- ----------- ----------- ------------ Income before accounting change 195 197 157 133 153 Cumulative effect of accounting change, net of tax (A) (13) - - - - ------------ ------------- ----------- ----------- ------------ Net income $ 182 $ 197 $ 157 $ 133 $ 153 ============ ============= =========== =========== ============
(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. 32 (Preliminary) AMERICAN EXPRESS FINANCIAL ADVISORS SELECTED STATISTICAL INFORMATION (Unaudited)
(Millions) Quarters Ended ---------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2003 2003 2003 2003 2002 ------------ ------------- ----------- ----------- ------------ Investments (billions) (A) $ 42.1 $ 42.3 $ 42.4 $ 40.3 $ 38.2 Client contract reserves (billions) $ 41.2 $ 40.8 $ 40.2 $ 38.6 $ 37.3 Shareholder's equity (billions) $ 7.1 $ 7.1 $ 6.7 $ 6.3 $ 6.3 Return on average total shareholder's equity (B) 10.4 % 10.1 % 9.6 % 9.8 % 10.9 % Life insurance inforce (billions) $ 131.4 $ 127.5 $ 124.4 $ 121.4 $ 119.0 Assets owned, managed or administered (billions): Assets managed for institutions (C) $ 116.4 (F) $ 116.7 $ 43.8 $ 41.4 $ 42.3 Assets owned, managed or administered for individuals: Owned assets: Separate account assets (C) 30.8 27.6 24.1 21.3 22.0 Other owned assets (C) 53.8 (E) 53.3 52.2 51.5 51.7 ------------ ------------- ----------- ----------- ------------ Total owned assets 84.6 80.9 76.3 72.8 73.7 Managed assets (C) 110.2 96.6 87.3 79.9 81.6 Administered assets (D) 54.1 45.6 37.4 34.0 33.0 ------------ ------------- ----------- ----------- ------------ Total $ 365.3 $ 339.8 $ 244.8 $ 228.1 $ 230.6 ============ ============= =========== =========== ============ Market appreciation (depreciation) during the period: Owned assets: Separate account assets $ 2,754 $ 613 $ 2,620 $ (471) $ 1,040 Other owned assets $ (275) $ (388) $ 399 $ 20 $ 23 Managed assets $ 16,164 $ 2,134 $ 9,457 $ (1,145) $ 3,334 Cash sales: Mutual funds $ 9,096 $ 7,361 $ 7,150 $ 6,800 $ 6,563 Annuities 1,683 1,866 2,581 2,205 2,284 Investment certificates 1,520 1,542 1,607 1,067 959 Life and other insurance products 212 198 188 162 182 Institutional 939 680 722 692 521 Other 978 1,595 1,531 1,683 1,269 ------------ ------------- ----------- ----------- ------------ Total cash sales $ 14,428 $ 13,242 $ 13,779 $ 12,609 $ 11,778 ============ ============= =========== =========== ============ Number of financial advisors 12,121 11,742 11,667 11,606 11,689 Fees from financial plans and advice services $ 20.6 $ 34.9 $ 33.5 $ 31.7 $ 26.8 Percentage of total sales from financial plans and advice services 74.6 % 75.0 % 74.0 % 75.6 % 74.4 %
(A) Excludes cash, derivatives, short-term and other investments. (B) Computed on a trailing 12-month basis using income before cumulative effect of accounting change and total shareholder's equity as included in the Consolidated Financial Statements prepared in accordance with GAAP. (C) At September 30, 2003, includes $73.2 billion of assets managed for institutions, $2.6 billion of separate account assets, $1.0 billion of other owned assets and $7.9 billion of assets managed for individuals, related to the September 30, 2003 Threadneedle acquisition. (D) Excludes non-branded administered assets of $5.4 billion, $3.8 billion and $3.6 billion for the periods ended June 30, 2003, March 31, 2003 and December 31, 2002, respectively. (E) As a result of AEFA's December 31, 2003 adoption of FIN 46, as revised, $0.5 billion of additional assets were consolidated. (F) As a result of AEFA's December 31, 2003 adoption of FIN 46, as revised, managed assets decreased by $3.8 billion. 33 (Preliminary) AMERICAN EXPRESS BANK STATEMENTS OF INCOME (Unaudited)
(Millions) Quarters Ended December 31, ------------------------- Percentage 2003 2002 Inc/(Dec) ---------- ----------- ---------- Net revenues: Interest income $ 139 $ 156 (11.8)% Interest expense 57 65 (11.8) ---------- ----------- Net interest income 82 91 (11.8) Commissions and fees 68 58 20.2 Foreign exchange income & other revenues 55 39 39.8 ---------- ----------- Total net revenues 205 188 8.7 ---------- ----------- Expenses: Human resources 75 59 26.4 Other operating expenses 67 63 5.8 Provision for losses 21 31 (33.3) Restructuring charges - (1) # ---------- ----------- Total expenses 163 152 6.8 ---------- ----------- Pretax income 42 36 16.5 Income tax provision 13 12 5.8 ---------- ----------- Net income $ 29 $ 24 22.1 % ========== =========== (Millions) Years Ended December 31, ------------------------- Percentage 2003 2002 Inc/(Dec) ---------- ----------- ---------- Net revenues: Interest income $ 575 $ 606 (5.2)% Interest expense 226 246 (8.0) ---------- ----------- Net interest income 349 360 (3.2) Commissions and fees 238 215 10.9 Foreign exchange income & other revenues 214 170 25.8 ---------- ----------- Total net revenues 801 745 7.5 ---------- ----------- Expenses: Human resources 271 236 14.9 Other operating expenses 279 244 14.0 Provision for losses 102 147 (30.6) Restructuring charges (2) (3) (49.9) ---------- ----------- Total expenses 650 624 4.2 ---------- ----------- Pretax income 151 121 24.2 Income tax provision 49 41 18.7 ---------- ----------- Net income $ 102 $ 80 27.1 % ========== ===========
# Denotes a variance of more than 100%. 34 (Preliminary) AMERICAN EXPRESS BANK SELECTED STATISTICAL INFORMATION (Unaudited)
(Billions, except where indicated) Quarters Ended Years Ended December 31, December 31, ----------------------- Percentage ----------------------- Percentage 2003 2002 Inc/(Dec) 2003 2002 Inc/(Dec) ---------- ---------- ----------- ---------- ---------- ---------- Total shareholder's equity (millions) $ 949 $ 947 0.2 % $ 949 $ 947 0.2 % Return on average total shareholder's equity (A) 10.8 % 9.6 % 10.8 % 9.6 % Return on average total assets (B) 0.74 % 0.66 % 0.74 % 0.66 % Total loans $ 6.5 $ 5.6 15.4 % $ 6.5 $ 5.6 15.4 % Total non-performing loans (millions) (C) $ 78 $ 119 (34.7)% $ 78 $ 119 (34.7)% Other non-performing assets (millions) $ 15 $ 15 (2.7)% $ 15 $ 15 (2.7)% Reserve for credit losses (millions) (D) $ 121 $ 158 (23.3)% $ 121 $ 158 (23.3)% Loan loss reserves as a % of total loans 1.7 % 2.7 % 1.7 % 2.7 % Total Personal Financial Services (PFS) loans $ 1.4 $ 1.6 (14.1)% $ 1.4 $ 1.6 (14.1)% 30+ days past due PFS loans as a % of total 6.6 % 5.4 % 6.6 % 5.4 % Deposits $ 10.8 $ 9.5 13.4 % $ 10.8 $ 9.5 13.4 % Assets managed (E) / administered $ 16.2 $ 12.5 29.0 % $ 16.2 $ 12.5 29.0 % Assets of non-consolidated joint ventures $ 1.7 $ 1.8 (7.4)% $ 1.7 $ 1.8 (7.4)% Risk-based capital ratios (F): Tier 1 11.4 % 10.9 % 11.4 % 10.9 % Total 11.3 % 11.4 % 11.3 % 11.4 % Leverage ratio 5.5 % 5.3 % 5.5 % 5.3 %
(A) Computed on a trailing 12-month basis using total shareholder's equity as included in the Consolidated Financial Statements prepared in accordance with GAAP. Prior period amounts have been revised to conform to current presentation. (B) Computed on a trailing 12-month basis using total assets as included in the Consolidated Financial Statements prepared in accordance with GAAP. Prior period amounts have been revised to conform to current presentation. (C) AEB defines non-performing loans as loans (other than certain smaller-balance loans) on which the accrual of interest is discontinued because the contractual payment of principal or interest has become 90 days past due or if, in management's opinion, the borrower is unlikely to meet its contractual obligations. For smaller-balance loans, management establishes reserves it believes to be adequate to absorb credit losses inherent in the portfolio. Generally, these loans are written off in full when an impairment is determined or when the loan becomes 120 or 180 days past due, depending on loan type. (D) Allocation (millions): Loans $ 113 $ 151 $ 113 $ 151 Other assets, primarily foreign exchange and other derivatives 6 6 6 6 Unfunded contingents 2 1 2 1 ---------- ---------- ---------- ---------- Total reserve for credit losses $ 121 $ 158 $ 121 $ 158 ========== ========== ========== ==========
(E) Includes assets managed by American Express Financial Advisors. (F) Based on legal entity financial information. 35 (Preliminary) AMERICAN EXPRESS BANK STATEMENTS OF INCOME (Unaudited)
(Millions) Quarters Ended ------------------------------------------------------------------------------ December 31, September 30, June 30, March 31, December 31, 2003 2003 2003 2003 2002 ------------- ------------- ------------- ------------- ------------- Net revenues: Interest income $ 139 $ 139 $ 148 $ 149 $ 156 Interest expense 57 52 57 60 65 ------------- ------------- ------------- ------------- ------------- Net interest income 82 87 91 89 91 Commissions and fees 68 58 57 55 58 Foreign exchange income & other revenues 55 54 52 53 39 ------------- ------------- ------------- ------------- ------------- Total net revenues 205 199 200 197 188 ------------- ------------- ------------- ------------- ------------- Expenses: Human resources 75 71 64 61 59 Other operating expenses 67 69 70 73 63 Provision for losses 21 20 27 34 31 Restructuring charges - (2) - - (1) ------------- ------------- ------------- ------------- ------------- Total expenses 163 158 161 168 152 ------------- ------------- ------------- ------------- ------------- Pretax income 42 41 39 29 36 Income tax provision 13 14 12 10 12 ------------- ------------- ------------- ------------- ------------- Net income $ 29 $ 27 $ 27 $ 19 $ 24 ============= ============= ============= ============= =============
36 (Preliminary) AMERICAN EXPRESS BANK SELECTED STATISTICAL INFORMATION (Unaudited)
(Billions, except where indicated) Quarters Ended ------------------------------------------------------------------------- December 31, September 30, June 30, March 31, December 31, 2003 2003 2003 2003 2002 ------------ ------------- ------------ ------------ ------------ Total shareholder's equity (millions) $ 949 $ 952 $ 955 $ 918 $ 947 Return on average total shareholder's equity (A) 10.8 % 10.4 % 10.5 % 10.0 % 9.6 % Return on average total assets (B) 0.74 % 0.74 % 0.75 % 0.71 % 0.66 % Total loans $ 6.5 $ 6.2 $ 5.8 $ 5.7 $ 5.6 Total non-performing loans (millions) (C) $ 78 $ 84 $ 102 $ 106 $ 119 Other non-performing assets (millions) $ 15 $ 15 $ 16 $ 15 $ 15 Reserve for credit losses (millions) (D) $ 121 $ 125 $ 151 $ 155 $ 158 Loan loss reserves as a % of total loans 1.7 % 1.9 % 2.4 % 2.5 % 2.7 % Total Personal Financial Services (PFS) loans $ 1.4 $ 1.4 $ 1.5 $ 1.5 $ 1.6 30+ days past due PFS loans as a % of total 6.6 % 5.3 % 5.5 % 5.0 % 5.4 % Deposits $ 10.8 $ 10.6 $ 10.1 $ 9.5 $ 9.5 Assets managed (E) / administered $ 16.2 $ 15.0 $ 14.1 $ 13.1 $ 12.5 Assets of non-consolidated joint ventures $ 1.7 $ 1.7 $ 1.8 $ 1.7 $ 1.8 Risk-based capital ratios (F): Tier 1 11.4 % 10.5 % 10.5 % 10.8 % 10.9 % Total 11.3 % 10.8 % 10.7 % 11.0 % 11.4 % Leverage ratio 5.5 % 6.0 % 5.5 % 5.5 % 5.3 %
(A) Computed on a trailing 12-month basis using total shareholder's equity as included in the Consolidated Financial Statements prepared in accordance with GAAP. Prior period amounts have been revised to conform to current presentation. (B) Computed on a trailing 12-month basis using total assets as included in the Consolidated Financial Statements prepared in accordance with GAAP. Prior period amounts have been revised to conform to current presentation. (C) AEB defines non-performing loans as loans (other than certain smaller-balance loans) on which the accrual of interest is discontinued because the contractual payment of principal or interest has become 90 days past due or if, in management's opinion, the borrower is unlikely to meet its contractual obligations. For smaller-balance loans, management establishes reserves it believes to be adequate to absorb credit losses inherent in the portfolio. Generally, these loans are written off in full when an impairment is determined or when the loan becomes 120 or 180 days past due, depending on loan type. (D) Allocation (millions): Loans $ 113 $ 117 $ 142 $ 145 $ 151 Other assets, primarily foreign exchange and other derivatives 6 6 5 5 6 Unfunded contingents 2 2 4 5 1 ------------ ------------- ------------ ------------ ------------ Total reserve for credit losses $ 121 $ 125 $ 151 $ 155 $ 158 ============ ============= ============ ============ ============
(E) Includes assets managed by American Express Financial Advisors. (F) Based on legal entity financial information. 37