form 8-k

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 31, 2002

AMERICAN EXPRESS COMPANY

(Exact name of registrant as specified in its charter)

New York		1-7657		13-4922250
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

200 Vesey Street, World Financial Center

New York, New York 10285

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (212) 640-2000

(Former name or former address, if changed since last report)

Item 9. Regulation FD Disclosure.

On July 31, 2002, Ken Chenault, Chairman and Chief Executive Officer of the Company, and Gary Crittenden, Executive Vice President and Chief Financial Officer of the Company, delivered presentations to the financial analyst community. Information contained in such presentations, as well as certain other information, is furnished herein on Exhibit 99.1.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

AMERICAN EXPRESS COMPANY (REGISTRANT)

By:		/s/ STEPHEN P. NORMAN
		Stephen P. Norman Secretary

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

THIS DOCUMENT INCLUDES FORWARD-LOOKING STATEMENTS, WHICH ARE SUBJECT TO RISKS AND UNCERTAINTIES. THE WORDS “BELIEVE,” “EXPECT,” “ANTICIPATE,” “OPTIMISTIC,” “INTEND,” “PLAN,” “AIM,” “WILL,” “SHOULD,” “COULD,” “LIKELY,” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD- LOOKING STATEMENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO: THE COMPANY’S ABILITY TO SUCCESSFULLY IMPLEMENT A BUSINESS MODEL THAT ALLOWS FOR SIGNIFICANT EARNINGS GROWTH BASED ON REVENUE GROWTH THAT IS LOWER THAN HISTORICAL LEVELS, INCLUDING THE ABILITY TO IMPROVE ITS OPERATING EXPENSE TO REVENUE RATIO BOTH IN THE SHORT TERM AND OVER TIME, WHICH WILL DEPEND IN PART ON THE EFFECTIVENESS OF REENGINEERING AND OTHER COST CONTROL INITIATIVES, AS WELL AS FACTORS IMPACTING THE COMPANY'S REVENUES; THE COMPANY’S ABILITY TO GROW ITS BUSINESS AND MEET OR EXCEED ITS RETURN ON 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 TO INCREASE INVESTMENT SPENDING IN THE SECOND HALF OF 2002, WHICH WILL DEPEND IN PART ON THE EQUITY MARKETS AND OTHER FACTORS EFFECTING REVENUES, AND THE ABILITY TO CAPITALIZE ON SUCH INVESTMENTS TO IMPROVE BUSINESS METRICS; FLUCTUATION IN THE EQUITY MARKETS, WHICH CAN AFFECT THE AMOUNT AND TYPES OF INVESTMENT PRODUCTS SOLD BY AEFA, THE MARKET VALUE OF ITS MANAGED ASSETS, AND MANAGEMENT AND DISTRIBUTION FEES RECEIVED BASED ON THOSE ASSETS; POTENTIAL DETERIORATION IN AEFA’S HIGH-YIELD AND OTHER INVESTMENTS, WHICH COULD RESULT IN FURTHER LOSSES IN AEFA’S INVESTMENT PORTFOLIO; THE ABILITY OF AEFA TO SELL CERTAIN HIGH-YIELD INVESTMENTS AT EXPECTED VALUES AND WITHIN ANTICIPATED TIMEFRAMES AND TO MAINTAIN ITS HIGH-YIELD PORTFOLIO AT CERTAIN LEVELS IN THE FUTURE; DEVELOPMENTS RELATING TO AEFA’S PLATFORM STRUCTURE FOR FINANCIAL ADVISORS, INCLUDING THE ABILITY TO INCREASE ADVISOR PRODUCTIVITY, INCREASE THE GROWTH OF PRODUCTIVE NEW ADVISORS AND CREATE EFFICIENCIES IN THE INFRASTRUCTURE; AEFA’S ABILITY TO ROLL OUT NEW AND ATTRACTIVE PRODUCTS IN A TIMELY MANNER AND EFFECTIVELY MANAGE THE ECONOMICS IN SELLING A GROWING VOLUME OF NON PROPRIETARY PRODUCTS; INVESTMENT PERFORMANCE IN AEFA’S BUSINESSES; THE SUCCESS, TIMELINESS AND FINANCIAL IMPACT, INCLUDING COSTS, COST SAVINGS AND OTHER BENEFITS, OF REENGINEERING 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, THE SCALE-BACK OF CORPORATE LENDING IN CERTAIN REGIONS, AND PLANNED STAFF REDUCTIONS RELATING TO CERTAIN OF SUCH REENGINEERING 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 IMPACT ON THE COMPANY’S BUSINESSES AND UNCERTAINTY CREATED BY THE SEPTEMBER 11TH TERRORIST ATTACKS, AND THE POTENTIAL NEGATIVE EFFECT ON THE COMPANY OF ANY SUCH ATTACKS IN THE FUTURE; THE COMPANY’S ABILITY TO RECOVER UNDER ITS INSURANCE POLICIES FOR LOSSES RESULTING FROM THE SEPTEMBER 11TH TERRORIST ATTACKS; 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 EXECUTE THE COMPANY’S GLOBAL CORPORATE SERVICES STRATEGY, INCLUDING GREATER PENETRATION OF MIDDLE MARKET COMPANIES, INCREASING CAPTURE OF NON-T&E SPENDING THROUGH GREATER USE OF THE COMPANY’S PURCHASING CARD AND OTHER MEANS, AND FURTHER GLOBALIZING BUSINESS CAPABILITIES; THE ABILITY TO MANAGE AND EXPAND CARDMEMBER BENEFITS, INCLUDING MEMBERSHIP REWARDS(R), IN A COST EFFECTIVE MANNER; THE TRIGGERING OF OBLIGATIONS TO MAKE PAYMENTS TO CERTAIN CO-BRAND PARTNERS UNDER CONTRACTUAL ARRANGEMENTS WITH SUCH PARTIES UNDER CERTAIN CIRCUMSTANCES; SUCCESSFULLY EXPANDING THE COMPANY’S ON-LINE AND OFF-LINE DISTRIBUTION CHANNELS AND CROSS-SELLING FINANCIAL, TRAVEL, CARD AND OTHER PRODUCTS AND SERVICES TO ITS CUSTOMER BASE, BOTH IN THE U.S. AND ABROAD; EFFECTIVELY LEVERAGING THE COMPANY’S ASSETS, SUCH AS ITS BRAND, CUSTOMERS AND INTERNATIONAL PRESENCE, IN THE INTERNET ENVIRONMENT; INVESTING IN AND COMPETING AT THE LEADING EDGE OF TECHNOLOGY ACROSS ALL BUSINESSES; 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; INCREASING COMPETITION IN ALL OF THE COMPANY’S MAJOR BUSINESSES; 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; FOREIGN CURRENCY EXCHANGE RATES; POLITICAL OR ECONOMIC INSTABILITY IN CERTAIN REGIONS OR COUNTRIES, WHICH COULD AFFECT LENDING ACTIVITIES, AMONG OTHER BUSINESSES; LEGAL AND REGULATORY DEVELOPMENTS, SUCH AS IN THE AREAS OF CONSUMER PRIVACY AND DATA PROTECTION; ACQUISITIONS; AND OUTCOMES IN LITIGATION. 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, 2001, AND ITS OTHER REPORTS FILED WITH THE SEC.

FINANCIAL COMMUNITY MEETING

Please note: the accompanying slides follow this script.

Ken Chenault’s portion (part 1 of 2 parts)

Welcome to our 2^nd Financial Community meeting of the year.

I am pleased to welcome all of you back to the American Express Tower.

As you could tell when you arrived, there have been some changes and challenges along the way, but we are happy to be back.

Including the 500 employees who moved in on Monday, we have now relocated approximately 2,100 people back to New York City.

We expect to have our full complement of 4,000 employees in by year end.

Let me take you through today’s agenda.

I will start by discussing the company’s performance through the second quarter, including our financial and business highlights.

As you know, at this meeting we normally cover one of our businesses in depth, such as we did with Corporate Services in February.

For today’s session, however, I’ve decided to go a slightly different way.

As the creation of shareholder value is an important and timely issue, I thought it would be a useful topic to discuss today.

At its core, shareholder value is increased by 3 actions:

Improving operating margins,

Effectively managing capital, and

Growing the business.

Today we’ll discuss what we are doing in each of these areas.

Gary Crittenden, our Chief Financial Officer:

will take you through the actions we are taking to improve our margins,

and will also cover how we manage our businesses to increase our return on capital.

take you through some of our current growth initiatives,

and give you my thinking on our prospects for growth over the moderate to long-term.

We will then end, as always, with any questions you may have for me, Gary or the rest of the management team.

* * * * * * * * *

Before starting on our results, let me give you some context.

Given the continued volatility of the external environment, my goal has been to keep the organization focused on the things that we can control:

our growth initiatives . . . . . . . . .

our expense base . . . . . . . . . .

and maintaining our drive for results in spite of external challenges.

As you will hear, I believe we have made good progress against each of these goals.

Given all that is going on externally it is natural to ask—“Can you keep the organization focused on your strategy and execution?”

I believe we can and we have, although it is clearly challenging.

In addition to the ongoing market and economic volatility, there is also the issue of corporate credibility, which has been top of mind for employees, shareholders, and customers.

To answer some of the questions employees have raised on this issue, here is what I have been telling them.

First, we are a company that has been around for a long time.

In our 152 year history we’ve been tested:

by natural disasters,

by economic depression,

Regardless of circumstances, we’ve dealt with challenges openly and head-on.

And when we made mistakes along the way, we faced up to them and learned from them.

That’s because, while our businesses and products have evolved substantially over our history, our core values of integrity and customer service have never changed.

Second, a long history has produced an organization with a long-term outlook.

Our actions are based on the company’s long-term interest, rather than on what may be the most expedient solution or produce the best short-term outcome.

We have clearly followed this practice over the last 18 months as we took a number of difficult actions. . . . . . . . actions which, while negatively impacting the short-term, served to strengthen the company for the future.

Third, many of the proposed solutions for the corporate credibility issue are already in place in our company.

For example, in looking at the governance guidelines recommended by the New York Stock Exchange, we will not need to make significant changes in order to comply with the proposals.

As a company and a management team we are fully supportive of recommendations:

that will improve financial transparency,

and also those that reassure shareholders, such as the current proposals on certification.

In terms of certification, we already have good control systems in place.

As a result, we are comfortable with both our historical and current financial results.

Based on the review process currently underway, we are on target to certify our SEC reports by the 14^th.

I have been very open with employees in dealing with the corporate credibility issue.

And while they are reassured by the messages, employees have also told me that it doesn’t represent “new news” for them.

It is simply a reiteration of the values to which our company has always adhered.

Before moving on to the Company’s financial performance, I want stop here for a moment and cover another issue. . . . . . .. an issue being actively discussed in a range of forums—the use and accounting treatment of stock options.

As there is a great deal of debate going on, I thought it would be useful to give you—at least directionally—my thinking on this issue.

Given the generally weaker economic environment, and the evolving compensation practices in our industries, I recognized I would likely want to make changes to some of our existing compensation programs.

That is why, over the last few months, I started a comprehensive review of our compensation strategy.

All elements of our current compensation—cash, stock, and options—are being reviewed and evaluated.

In addition, as we are committed to ensuring that our total compensation remains competitive, we are also reviewing industry benchmarking and market trends.

With compensation, as with other issues, I believe you shouldn’t make one-off decisions before having a view of the full picture.

The plan is to complete the review over the next several months, and make any resulting changes on a going forward basis.

While we haven’t completed the work I have decided to make one change.

It is evident that the amount of our share repurchase benefit consumed by option dilution is too high.

As a result, I have decided to reduce the level of new stock options we grant.

The other issue around options is whether and how their value should be expensed in a company’s P&L.

Like all other companies, we disclose the pro forma EPS impact of options in our annual report.

The proforma expense is determined using a consistent methodology and valuation.

In our case, for 2001, that pro forma expense was 18 cents per share.

As to whether this expense should be reflected in the P&L for future grants, I have no objection to expensing options.

But I believe there needs to be consistency of methodology and practice.

I believe having individual companies deciding on “how” and “if” they expense options makes it more difficult for investors to compare financial performance across companies.

As the goal here is one of clarity and transparency, consistency must be a key consideration.

Now, let me now turn to the company’s year to date performance.

Given all of the uncertainty in the environment, focusing on the things we can control has not always been easy.

But I believe our 2^nd quarter results are evidence of our success.

On a reported basis for the first 6 months:

Earnings per share were up 83%..........................

Return on Equity (as calculated on a trailing 12 month basis) was 15.4%;

And revenue growth was 9%.

These reported growth rates were impacted by investment gains and losses in both 2001 and 2002.

As we expected given the environment, our business volumes were not robust.

However, because of the deliberate actions taken over the last 2 years to improve our business models, and the year over year benefit of interest rates, we were able to deliver solid earnings despite the weak revenue environment.

As I discussed at our February meeting, I am assessing the company’s performance during the year based on a number of key “signposts”.

Each of these signposts represents a key component of our short- and moderate term growth.

Therefore, I thought it would be useful to use them today as a structure for discussing our results.

The first signpost is a company-wide one.

And the question here is ..................................

“Are we making progress in continuing to improve our operating margins?”

As a result of our continued reengineering progress, the answer to this question is “Yes”.

In terms of the restructuring charges we took in 2001, they are delivering the savings we expected.

In the 2^nd quarter our employee count declined by 2,700.

And, against our year end numbers, our work force is now down by 14,200, or approximately 16%.

But our margin improvement is driven by more than just restructuring activities.

We continue to make progress in:

Driving service activity online to lower unit costs in Travel, Payments and Financial Services;

We are also performing certain processes in lower-cost markets, while maintaining or improving quality and productivity;

And we are using Six Sigma as a tool to improve quality and efficiency ............... such as in our U.S. merchant business, where we reengineered our merchant welcome process and increased activation levels for new merchants by 10 percentage points.

I mentioned in February that we expected to deliver at least $1 billion of reengineering benefits this calendar year and we remain on track to do so.

Because of the impact of certain non-core transactions within our operating expense line, I recognize that our improvement is not readily evident as you analyze our financials.

For example, $46 million (pretax) of strategic investment gains are reflected in last year’s operating expense line against $48 million (pretax) of losses in the current year numbers.

An item such as this serves to understate the margin improvement at TRS, which continues to be on track against their plans.

At AEFA, reported margin improvement has been dampened by the negative impact of the equity market on their revenues, but progress in reducing their expense base continues to be good.

I am confident we will see improvement in our reported margins in the 3^rd and 4^th quarters, subject—as I said—to equity market conditions, and that our full year results will show the progress we are making against last year.

My second signpost was also a company-wide one.

“Are we on the offensive in terms of growth, launching products and services, signing deals and partnerships, outperforming the competition?”

I believe our results in this area have been good to mixed.

Over the first half of the year you have already seen a number of announcements from us .......................

Launches such as OPEN—our business dedicated to small businesses, and our newest Cash Rebate Card, which we announced on Monday.

We’ve also signed partnerships, such as with AOL/Time Warner and our travelers cheque agreement with Citi.

I’ll discuss our performance vs. competitors in a moment.

For now I want to focus on how—and how much—we are spending on growth.

Given our reengineering progress, and business results that have come in somewhat above our expectations, I decided to increase our marketing and promotion spend during the first half of the year.

And we anticipate even further increases in this line between now and year end.

This spend has gone to support specific initiatives, such as OPEN, in addition to the launch of our new brand advertising campaign—“Make Life Rewarding”.

Here is the first research we have on customer and prospect reaction to both of these campaigns.

To date, our OPEN advertising has successfully increased the awareness and imagery of American Express among our small business cardmembers.

The recognition of American Express as a company that provides financial services to small businesses is significantly higher post versus pre-launch.

40% of cardmembers are aware of OPEN

and about 25% are aware of our advertising.

These awareness levels are quite favorable and, to give you some context, are comparable to where Blue was at this point in its launch cycle.

Results for our new brand campaign are also positive.

In research conducted with customers and prospects, both the imagery and messages of the ads scored well.

When evaluated against our past advertising, the new campaign has generally exceeded our prior results.

The highest rating on the scale we used was defined as not just outscoring our historical norm, but beating the top quartile of past results.

Scoring at this high level were some very important statements ............. statements such as:

American Express is more than a card,

American Express is relevant for an “everyday person”...............

and—the all important—I am interested in using an American Express product.

We expect to continue to spend on both of these campaigns during the remainder of the year, in addition to supporting other initiatives.

With a number of new products and services launching over the next few months, we have no shortage of productive opportunities on which to spend our M&P money.

While marketing and promotion is one component of our spending, it is not the whole story.

Here is a look at our overall investment spending by category. As a reminder, our definition of investment spending is not related to capital.

As we use the term, investment spending is the net P&L impact of initiatives such as:

new product launches,

major system improvements,

and direct mail campaigns.

The costs of these investments are not contained on a single P&L line, but are spread across a number of lines, including:

marketing and promotion,

and other operating expense.

There are two points to note from this slide.

First, after appropriately scaling back investments last year in response to economic conditions, our investment spend is now back in the range of the spending we had in 1999 and 2000.

Second, our proportion of spending has shifted.

Some of the technology and internet investments of 1999 and 2000 are now being fully leveraged as we add new applications and capabilities to an already established infrastructure. As a result of this, more of our investments are being targeted directly on growth initiatives at both TRS and AEFA.

As I said, last year’s challenges caused us to postpone some of our investments ............ slowing the metric growth we would have liked to see this year.

But with our absolute investment spending now up versus last year, and with our focus on growth initiatives, I believe we are well positioned to improve our metric performance coming out of the current year, and into next.

Changes to our business model have allowed us to increase our level of investment spending this year.

But the changes we made also played an important role in how our investments are funded.

In the mid to late 90’s we had the benefit of a number of items that positively impacted our earnings:

sales of shares of First Data,

gains from our internet portfolio and some of our international businesses.

Each of these items was put to good use in funding investments.

But because their benefit was, or is, more or less finite, they are not a sustainable source of investment funds.

The changes to our business models have now allowed us to lower our reliance on these types of items to fund growth.

With the actions we have taken, we are now at the point where almost all of our investment funding comes from operating earnings—a much healthier and more sustainable position to be in.

With solid results in the first two quarters of this year, we stepped up our marketing efforts, as you have seen.

Based on current conditions, we plan to have less of our credit and reengineering benefits fall to the bottom line and invest more into growth during the second half of the year.

As a result, and as we noted in our second quarter disclosures, this is one of the key reasons our earnings are not likely to exceed a full year level of $2.01 per share, which was the EPS consensus prior to our 2^nd quarter release.

The third signpost in my assessment relates to financial services ...................

“Have we generated traction against the strategy at AEFA as measured by improvements in our metrics and earnings?”

While the Worldcom losses were certainly a hit to AEFA’s earnings during the quarter, I believe we are making progress in several areas of the business.

At AEFA we have no choice but to focus on the things that we can control.

Declines in equity values have lowered our level of assets under management, and pressured management fee revenues.

The roller coaster market environment has been difficult for every player in financial services.

This is the one major area of the company where we are underperforming our internal expectations .............. and, should the market environment weaken, it remains a risk for the full year.

Item No.		Description
99.1		Information from presentations by Ken Chenault and Gary Crittenden on July 31, 2002 to the financial community.