RNS No 3654c
AMERICAN EXPRESS CO
30th January 1998
PART 1
CONTACT: Susan D. Miller
212-640-4953
Michael J. O'Neill
212-640-5951
AMERICAN EXPRESS REPORTS HIGHER OPERATING INCOME
FOR 1997 FOURTH-QUARTER AND FULL-YEAR
(millions, except per share amounts)
Quarter Ended Percentage Year Ended Percentage
December 31 Inc./(Dec) December 31 Inc./(Dec)
1997 1996 1997 1996
Operating
Income $ 493 $ 433* 13.9% $ 1,991 $ 1,739* 14.5%
Revenues $ 4,674 $ 4,301 8.7% $17,760 $16,380 8.4%
Per Share
Operating
Income:
Primary $ 1.04 $ 0.90* 15.6% $ 4.16 $ 3.57* 16.5%
Basic $ 1.07 $ 0.92* 16.3% $ 4.29 $ 3.67* 16.9%
Diluted $ 1.04 $ 0.89* 16.9% $ 4.15 $ 3.56* 16.6%
Average Common
Shares
Outstanding:
Primary 475 482 (1.5)% 479 486 (1.5)%
Basic 461 469 (1.8)% 464 472 (1.7)%
Diluted 475 483 (1.7)% 479 488 (1.9)%
Return on Average
Equity 23.5% 22.8% -
--------------------------------------------------------------------------------
* Fourth-quarter and full-year 1996 amounts exclude a $300 million gain
(after-tax) on the exchange of the Company's DECS (Debt Exchangeable for Common
Stock of First Data Corporation) and a $138 million restructuring charge
(after-tax).
NEW YORK, January 26, 1998 -- American Express Company today reported record
net income for 1997 of $1.99 billion, 14 percent higher than operating income
of $1.74 billion a year ago. The 1996 results exclude two fourth-quarter
items: a $300 million gain (after-tax) on the exchange of DECS for shares of
common stock of First Data Corporation and a $138 million restructuring charge
(after-tax). On a per share basis, 1997 primary earnings were $4.16, an
increase of 17 percent from $3.57 a year ago. Diluted earnings per share of
$4.15 also increased 17 percent, compared with $3.56 last year. Revenues of
$17.8 billion were up 8.4 percent from a year ago. The Company's return on
equity was 23.5 percent. These results exceeded American Express' long-term
targets of: 12-15 percent earnings per share growth, at least 8 percent growth
in revenues and a return on equity of 18-20 percent.
For the fourth quarter, American Express reported net income of $493 million, an
increase of 14 percent excluding the fourth-quarter 1996 gain and restructuring
charge.
Travel Related Services (TRS) reported record net income for 1997 of
$1.35 billion, up 10 percent from $1.23 billion a year ago. The 1996 results
exclude a fourth-quarter restructuring charge of $125 million ($196 million
pretax).
TRS' net revenues increased 8 percent compared with a year ago. Excluding
the 1996 restructuring charge, TRS' expenses were up 7 percent compared with
last year.
The increase in net revenues is primarily attributable to higher worldwide
billed business, growth in Cardmember loans outstanding and wider interest
margins. The growth in revenues also includes a benefit from increased
recognition of recoveries on abandoned property related to the Travelers Cheque
business, which was largely offset by higher investment spending on business
building initiatives. The improvement in billed business reflects a greater
number of cards outstanding and higher spending per basic Cardmember. The
growth in cards outstanding is largely attributable to the introduction of new
consumer and small business credit cards. Spending increased in part due to the
benefits of rewards programs and expanded merchant coverage.
Provisions for losses rose, reflecting both higher volumes and loss rates. The
increase in operating expenses resulted from the cost of Cardmember loyalty
programs, business growth and investment spending.
TRS reported record fourth quarter net income in 1997 of $328 million, compared
with $299 million in the 1996 fourth quarter, excluding the restructuring
charge.
American Express Financial Advisors (AEFA) reported record net income for
1997 of $707 million, a 19 percent increase over the $594 million reported a
year ago.
Revenue and earnings growth benefited from higher fee revenues due to an
increase in managed assets. The growth in Other Operating Expenses primarily
reflects costs related to systems technology and higher business volumes.
AEFA reported record sales of mutual funds in 1997. Sales of investment
certificates increased over last year; sales of annuities and life and other
insurance products declined.
AEFA reported record fourth quarter net income in 1997 of $183 million, compared
with $155 million in 1996.
American Express Bank (AEB) reported 1997 net income of $82 million, a 20
percent increase over the $68 million reported in 1996.
The growth in earnings reflects higher revenues, primarily due to strong
foreign exchange income. The revenue increase was partially offset by higher
operating expenses, including systems technology costs.
AEB reported fourth quarter net income of $19 million, compared with $17 million
in the 1996 fourth quarter.
Corporate and other reported 1997 net expenses of $152 million, compared with
$153 million a year ago. The 1996 figures exclude the $300 million after-tax
gain on the exchange of DECS ($480 million pre-tax) and a charge primarily
related to the early retirement of debt. Including these items, Corporate and
Other reported net income of $134 million in 1996. Both years include the
Company's share of the Travelers Inc. revenue and net income participations in
accordance with an agreement related to the 1993 sale of the Shearson Lehman
Brothers Division, which was offset by expenses related to certain business
building initiatives.
For the 1997 fourth quarter, net expenses were $37 million compared with $38
million a year ago, excluding the above gain and charge.
American Express Company (www.americanexpress.com), founded in 1850, is a
global travel, financial and network services provider.
American Express Company
Financial Summary
(Unaudited)
(Dollars in millions)
Quarter Ended
December 31 Percentage
1997 1996 Inc/(Dec)
Revenues by Industry Segment (A)
Travel Related Services $ 3,351 $ 3,103 8.0 %
American Express Financial
Advisors 1,202 1,069 12.5
American Express Bank 167 156 7.1
4,720 4,328 9.1
Corporate and Other,
including adjustments
and eliminations (46) (27) (58.1)
CONSOLIDATED REVENUES (A) $ 4,674 $ 4,301 8.7
Pretax Income by Industry Segment
Travel Related Services (B) $ 468 $ 403 16.1
American Express Financial Advisors 259 228 13.9
American Express Bank 30 26 15.6
757 657 15.3
Corporate and Other (C) (67) (78) 12.9
PRETAX OPERATING INCOME $ 690 $ 579 19.2
Operating Income by Industry Segment
Travel Related Services 328 $ 299 10.0
American Express Financial Advisors 183 155 18.1
American Express Bank 19 17 13.5
530 471 12.8
Corporate and Other (C) (37) (38) 0.2
OPERATING INCOME $ 493 $ 433 13.9
FDC Gain/(Restructuring) 0 162 -
NET INCOME $ 493 $ 595 (17.1)
Year Ended
December 31 Percentage
1997 1996 Inc/(Dec)
Revenues by Industry Segment (A)
Travel Related Services $ 12,667 $ 11,773 7.6 %
American Express Financial
Advisors 4,599 4,110 11.9
American Express Bank 637 591 7.7
17,903 16,474 8.7
Corporate and Other,
including adjustments
and eliminations (143) (94) (58.1)
CONSOLIDATED REVENUES (A) $ 17,760 $ 16,380 8.4
Pretax Income by Industry Segment
Travel Related Services (B) $ 1,905 $ 1,719 10.8
American Express Financial
Advisors 1,022 885 15.5
American Express Bank 130 105 23.0
3,057 2,709 12.8
Corporate and Other (C) (307) (309) 0.9
PRETAX OPERATING INCOME $ 2,750 $ 2,400 14.6
Operating Income by Industry Segment
Travel Related Services 1,354 $ 1,230 10.1
American Express Financial Advisors 707 594 19.1
American Express Bank 82 68 20.2
2,143 1,892 13.3
Corporate and Other (C) (152) (153) -
OPERATING INCOME $ 1,991 $ 1,739 14.5
FDC Gain/(Restructuring) 0 162 -
NET INCOME $ 1,991 $ 1,901 (4.7)
(A) Revenues are reported net of interest expense, where applicable.
(B) TRS' results for the quarter and year ended December 31, 1996 exclude a
pretax restructuring charge of $196 million ($125 million after-tax).
(C) Corporate and Other results for the quarter and year ended December 31,
1996 exclude a pretax gain of $480 million ($300 million after-tax) on the
exchange of the Company's DECS (Debt Exchangeable for Common Stock) for
shares of common stock of First Data corporation and a $20 million pretax
charge ($13 million after-tax) related to the early retirement of debt and
certain restructuring costs.
Quarter Ended Year Ended
December 31 December 31
1997 1996 1997 1996
EARNINGS PER SHARE
Primary
Operating Income Per
Common Share $ 1.04 $ 0.90 $ 4.16 $ 3.57
FDC Gain/(Restructuring) 0.00 0.33 0.00 0.33
Net Income Per Common Share $ 1.04 $ 1.23 $ 4.16 $ 3.90
Average common shares
outstanding (millions) 475.0 482.1 478.5 485.6
Basic
Operating Income Per
Common Share $ 1.07 $ 0.92 $ 4.29 $ 3.67
FDC Gain/(Restructuring) 0.00 0.35 0.00 0.35
Net Income Per Common Share $ 1.07 $ 1.27 $ 4.29 $ 4.02
Average common shares
outstanding (millions) 460.7 469.2 464.2 472.2
Diluted
Operating Income Per
Common Share $ 1.04 $ 0.89 $ 4.15 $ 3.56
FDC Gain/(Restructuring) 0.00 0.34 0.00 0.33
Net Income Per Common Share $ 1.04 $ 1.23 $ 4.15 $ 3.89
Average common shares
outstanding (millions) 475.1 483.5 479.2 488.3
Cash dividends declared per
common share $ 0.225 $ 0.225 $ 0.90 $ 0.90
Selected Statistical Information
(Unaudited)
Quarter Ended Year Ended
December 31 December 31
1997 1996 1997 1996
Return on Average Equity* 23.5% 22.8% 23.5% 22.8%
Common Shares Outstanding
(millions) 466.4 472.9 466.4 472.9
Book Value per Common Share:
Actual $ 20.53 $ 18.04 $ 20.53 $ 18.04
Pro Forma * $ 19.29 $ 17.22 $ 19.29 $ 17.22
Shareholders' Equity (billions) $ 9.6 $ 8.5 $ 9.6 $ 8.5
* Excludes the effect of SFAS no. 115 and for ROE, also excludes a fourth
quarter 1996 $300 million gain on the exchange of the Company's DECS and $138
million restructuring charge.
Financial Summary
(Unaudited)
(Dollars in millions) Quarter Ended
Dec 31 Sept 30 June 30 March 31 Dec 31
1997 1997 1997 1997 1996
Revenues by Industry Segment (A)
Travel Related
Services $ 3,351 $ 3,199 $ 3,147 $ 2,970 $ 3,103
American Express
Financial Advisors 1,202 1,169 1,143 1,084 1,069
American Express Bank 167 162 153 153 156
4,720 4,530 4,443 4,207 4,328
Corporate and Other,
including adjustments
and eliminations (46) (30) (21) (43) (27)
CONSOLIDATED REVENUES (A) 4,674 $ 4,500 $ 4,422 $ 4,164 $ 4,301
Pretax Operating Income by Industry Segment
Travel Related
Services (B) $ 468 $ 494 $ 493 $ 449 $ 403
American Express
Financial Advisors 259 261 265 236 228
American Express Bank 30 34 33 32 26
757 789 791 717 657
Corporate and Other (C) (67) (71) (89) (77) (78)
PRETAX OPERATING
INCOME $ 690 $ 718 $ 702 $ 640 $ 579
Operating Income by Industry Segment
Travel Related
Services (B) $ 328 $ 356 $ 355 $ 315 $ 299
American Express
Financial Advisors 183 184 183 157 155
American Express Bank 19 21 21 20 17
530 561 559 492 471
Corporate and Other (C) (37) (37) (39) (38) (38)
OPERATING INCOME $ 493 $ 524 $ 520 $ 454 $ 433
FDC Gain/(Restructuring) 0 0 0 0 162
NET INCOME $ 493 $ 524 $ 520 $ 454 $ 595
(A) Revenues are reported net of interest expense, where applicable.
(B) TRS' results for the quarter ended December 31, 1996 exclude a pretax
charge of $196 million ($125 million after-tax)
(C) Corporate and Other results for the quarter ended December 31, 1996 exclude
a pretax gain of $480 million ($300 million after-tax) on the exchange of
the Company's DECS (Debt Exchangeable for Common Stock) for shares of
common stock of First Data Corporation and a $20 million pretax charge ($13
million after-tax) related to the early retirement of debt and certain
restructuring costs.
Financial Summary (continued)
(Unaudited)
Quarter Ended
Dec 31, Sept 30, Jun 30, Mar 31, Dec 31,
1997 1997 1997 1997 1996
EARNINGS PER SHARE
Primary
Operating Income Per
Common Share $ 1.04 $ 1.10 $ 1.08 $ 0.94 $ 0.90
FDC Gain/
(Restructuring) 0.00 0.00 0.00 0.00 0.33
Net Income Per
Common Share $ 1.04 $ 1.10 $ 1.08 $ 0.94 $ 1.23
Average common shares
outstanding (000's) 475.0 477.2 479.5 482.1 482.1
Basic
Operating Income Per
Common Share $ 1.07 $ 1.13 $ 1.12 $ 0.97 $ 0.92
FDC Gain/
(Restructuring) 0.00 0.00 0.00 0.00 0.35
Net Income Per
Common Share $ 1.07 $ 1.13 $ 1.12 $ 0.97 $ 1.27
Average common shares
outstanding (000's) 460.7 463.0 465.1 467.9 469.2
Diluted
Operating Income Per
Common Share $ 1.04 $ 1.10 $ 1.08 $ 0.94 $ 0.89
FDC Gain/
(Restructuring) 0.00 0.00 0.00 0.00 0.34
Net Income Per
Common Share $ 1.04 $ 1.10 $ 1.08 $ 0.94 $ 1.23
Average common shares
outstanding (000's) 475.1 477.9 480.1 483.0 483.5
Cash dividends declared
per common share $ 0.225 $ 0.225 $ 0.225 $ 0.225 $ 0.225
Selected Statistical Information
(Unaudited)
Quarter Ended
Dec 31, Sept 30, Jun 30, Mar 31, Dec 31,
1997 1997 1997 1997 1996
Return on Average
Equity* 23.5% 23.3% 23.2% 23.0% 22.8%
Common Shares
Outstanding (millions) 466.4 465.8 468.9 470.9 472.9
Book Value per
Common Share:
Actual $ 20.53 $ 19.57 $ 18.82 $ 17.80 $ 18.04
Pro Forma * $ 19.29 $ 18.41 $ 17.95 $ 17.44 $ 17.22
Shareholers' Equity
(billions) $ 9.6 $ 9.1 $ 8.8 $ 8.4 $ 8.5
* Excludes the effect of SFAS No.115 and for ROE, also excludes a fourth quarter
1996 $300 million gain on the exchange of the Company's DECS and $138 million
restructuring charge.
(Preliminary) Travel Related Services
Statement of Income
(Unaudited)
(Dollars in millions)
Quarter Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Net Revenues:
Discount Revenue $ 1,530 $ 1,380 $ 5,666 $ 5,024
Net Card Fees 397 415 1,604 1,668
Travel Commissions & Fees 402 380 1,489 1,422
Interest and Dividends 136 156 561 724
Other Revenues 552 483 2,103 1,867
Lending:
Finance Charge Revenue 487 423 1,848 1,575
Interest Expense 153 134 604 507
Net Finance Charge Revenue 334 289 1,244 1,068
Total Net Revenues 3,351 3,103 12,667 11,773
Expenses:
Marketing & Promotion 315 268 1,062 998
Provision for Losses and Claims:
Charge Card 201 113 858 743
Lending 239 214 817 635
Other 22 22 88 101
Total 462 349 1,763 1,479
Interest Expense:
Charge Card 213 176 743 688
Other 41 65 177 347
Total 254 241 920 1,035
Net Discount Expense 139 174 597 554
Human Resources 826 794 3,154 2,984
Other Operating Expenses 887 874 3,266 3,004
Total Expenses 2,883 2,700 10,762 10,054
Pretax Income 468 403 1,905 1,719
Income Tax Provision 140 104 551 489
Operating Income $ 328 $ 299* $ 1,354 $ 1,230*
*Excludes restructuring charge of $125 million after-tax ($196 million pretax).
(Preliminary) Travel Related Services
Statement of Income
(Unaudited, Managed Asset Basis)
(Dollars in millions)
Quarter Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Net Revenues:
Discount Revenue $ 1,530 $ 1,380 $ 5,666 $ 5,024
Net Card Fees 398 415 1,609 1,664
Travel Commissions & Fees 402 380 1,489 1,422
Interest and Dividends 132 156 552 724
Other Revenues 499 450 1,903 1,714
Lending:
Finance Charge Revenue 574 463 2,105 1,691
Interest Expense 186 150 694 548
Net Finance Charge Revenue 388 313 1,411 1,143
Total Net Revenues 3,349 3,094 12,630 11,691
Expenses:
Marketing & Promotion 315 268 1,025 998
Provision for Losses and Claims:
Charge Card 255 199 1,105 989
Lending 269 235 937 678
Other 22 22 88 101
Total 546 456 2,130 1,768
Interest Expense:
Charge Card 266 234 973 871
Other 41 65 177 347
Total 307 299 1,150 1,218
Human Resources 826 794 3,154 2,984
Other Operating Expenses 887 874 3,266 3,004
Total Expenses 2,881 2,691 10,725 9,972
Pretax Income 468 403 1,905 1,719
Income Tax Provision 140 104 551 489
Operating Income $ 328 $ 299* $ 1,354 $ 1,230*
*Excludes restructuring charge of $125 million after-tax ($196 million pretax)
This Statement of Income is provided on a Managed Asset Basis for analytical
purposes only. It presents the income statement of TRS as if there has been no
securitization transactions.
Under Statement of Financial Accounting Standards No.125 (SFAS 125), which
prescribes the accounting for securitized loans and receivables, TRS recognized
a pretax gain of $37 million in the third quarter of 1997 ($24 million
after-tax) related to securitization of U.S. lending receiveables. This gain
was invested in additional Marketing and Promotion expenses and had no material
impact on net income or total expenses in 1997. For purposes of this
presentation such gain and a corresponding $37 million increase in Marketing and
Promotion expenses have been eliminated in the Year Ended December 31, 1997.
(Preliminary) Travel Related Services
Selected Statistical Information
(Unaudited)
(Amounts in billions, except percentages and where indicated)
Quarter Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Total Cards in Force
(millions):
United States 29.6 29.2 29.6 29.2
Outside the United States 13.1 12.3 13.1 12.3
Total 42.7 41.5 42.7 41.5
Basic Cards in Force
(millions):
United States 23.3 22.5 23.3 22.5
Outside the United States 10.0 9.6 10.0 9.6
Total 33.3 32.1 33.3 32.1
Card Billed Business:
United States $ 40.7 $ 36.2 $ 150.5 $ 131.0
Outside the United States 16.0 14.9 58.7 53.3
Total $ 56.7 $ 51.1 $ 209.2 $ 184.3
Average Discount Rate* 2.73% 2.72% 2.73% 2.75%
Average Basic Cardmember
Spending (dollars)* $ 1,731 $ 1,633 $ 6,473 $ 6,074
Average Fee per Card
(dollars)* $ 38 $ 41 $ 39 $ 42
Travel Sales $ 4.8 $ 4.3 $ 17.4 $ 15.8
Travel Commissions and
Fees/Sales** 8.4% 8.8% 8.6% 9.0%
Travelers Cheque:
Sales $ 5.2 $ 5.5 $ 25.0 $ 26.0
Ending Outstanding $ 5.6 $ 5.8 $ 5.6 $ 5.8
Average Outstanding $ 5.7 $ 6.0 $ 5.9 $ 6.0
Ending Investments $ 5.6 $ 5.6 $ 5.6 $ 5.6
Tax Equivalent Yield 9.2% 9.5% 9.2% 9.4%
Total Debt $ 26.9 $ 23.4 $ 26.9 $ 23.4
Shareholder's Equity $ 5.0 $ 4.7 $ 5.0 $ 4.7
Return on Average Equity*** 27.9% 25.6% 27.9% 25.6%
Return on Average Assets*** 3.0% 2.8% 3.0% 2.8%
* Computed excluding Cards issued by strategic alliance partners and
independent operators as well as business billed on those Cards.
** Computed from information provided herein.
*** Excluding the effect of SFAS No.115 and the fourth quarter 1996
restructuring charge of $125 million after-tax.
(Preliminary) Travel Related Services
Selected Statistical Information (continued)
(Unaudited)
(Amounts in billions, except percentages and where indicated)
Quarter Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Owned and Managed
Charge Card
Receivables:
Total Receivables $ 23.5 $ 22.5 $ 23.5 $ 22.5
90 Days Past Due as a
% of Total 3.1% 3.2% 3.1% 3.2%
Loss Reserves (millions) $ 951 $ 923 $ 951 $ 923
% of Receivables 4.0% 4.1% 4.0% 4.1%
% of 90 Days Past Due 132% 128% 132% 128%
Net Loss Ratio 0.49% 0.51% 0.50% 0.51%
Owned and Managed U.S.
Cardmember
Lending:
Total Loans $ 14.6 $ 12.7 $ 14.6 $ 12.7
Past Due Loans as a
% of Total:
30-89 Days 2.4% 2.4% 2.4% 2.4%
90+ Days 1.1% 0.9% 1.1% 0.9%
Loss Reserves (millions):
Beginning Balance $ 556 $ 427 $ 488 $ 443
Provision 247 220 867 607
Net Charge-Offs/Other (214) (159) (766) (562)
Ending Balance $ 589 $ 488 $ 589 $ 488
% of Loans 4.0% 3.8% 4.0% 3.8%
% of Past Due 116% 117% 116% 117%
Average Loans $ 13.9 $ 12.1 $ 13.3 $ 10.8
Net Write-Off Rate 6.3% 5.2% 6.0% 5.2%
Net Interest Yield 9.4% 8.6% 9.1% 8.8%
Statement of Income
(Unaudited)
(Dollars in million)
Quarter Ended
Dec 31, Sept 30, June 30, March 31, Dec 31,
1997 1997 1997 1997 1996
Net Revenues:
Discount Revenue $ 1,530 $ 1,422 $ 1,407 $ 1,306 $ 1,380
Net Card Fees 397 399 403 405 415
Travel Commissions
and Fees 402 370 381 336 380
Interest and Dividends 136 150 143 132 156
Other Revenues 552 540 509 503 483
Lending:
Finance Charge Revenue 487 472 458 431 423
Interest Expense 153 154 154 143 134
Net Finance Charge
Revenue 334 318 304 288 289
Total Net Revenues 3,351 3,199 3,147 2,970 3,103
Expenses:
Marketing and
Promotion 315 301 244 202 268
Provision for Losses
and Claims:
Charge Card 201 228 239 190 113
Lending 239 179 187 211 214
Other 22 22 21 24 22
Total 462 429 447 425 349
Interest Expense:
Charge Card 213 186 174 169 176
Other 41 50 52 35 65
Total 254 236 226 204 241
Net Discount Expense 139 142 165 151 174
Human Resources 826 796 783 749 794
Other Operating Expenses 887 801 789 790 874
Total Expenses 2,883 2,705 2,654 2,521 2,700
Pretax Income 468 494 493 449 403
Income Tax Provision 140 138 138 134 104
Operating Income $ 328 $ 356 $ 355 $ 315 $ 299*
*Excludes restructuring charge of $125 million after-tax ($196 million pretax).
(Preliminary) Travel Related Services
Statement of Income
(Unaudited, Managed Asset Basis)
(Dollars in millions)
Quarter Ended
Dec 31, Sept 30, Jun 30, Mar 31, Dec 31,
1997 1997 1997 1997 1996
Net Revenues:
Discount Revenues $ 1,530 $ 1,422 $ 1,407 $ 1,306 $ 1,380
Net Card Fees 398 403 404 405 415
Travel Commissions and Fees 402 370 381 336 380
Interest and Dividends 132 145 143 132 156
Other Revenues 499 485 466 453 450
Lending:
Finance Charge Revenue 574 548 505 478 463
Interest Expense 186 177 171 160 150
Net Finance Charge Revenue 388 371 334 318 313
Total Net Revenues 3,349 3,196 3,135 2,950 3,094
Expenses:
Marketing and Promotion 315 264 244 202 268
Provision for Losses and Claims:
Charge Card 255 284 313 252 199
Lending 269 243 203 222 235
Other 22 22 21 24 22
Total 546 549 537 498 456
Interest Expense:
Charge Card 266 242 237 227 234
Other 41 50 52 35 65
Total 307 292 289 262 299
Human Resources 826 796 783 749 794
Other Operating Expenses 887 801 789 790 874
Total Expenses 2,881 2,702 2,642 2,501 2,691
Pretax Income 468 494 493 449 403
Income Tax Provision 140 138 138 134 104
Operating Income # 328 $ 356 $ 355 $ 315 $ 299*
* Excludes restructuring charge of $125 million after-tax ($196 million pretax).
This Statement of Income is provided on a Managed Asset Basis for analytical
purposes only. It presents the income statement of TRS as if there has been no
securitization transactions.
Under Statement of Financial Accounting Standards No. 125 (SFAS 125), which
prescribes the accounting for securitized loans and receivables, TRS recognized
a pretax gain of $37 million in the third quarter of 1997 ($24 million
after-tax) related to securitization of U.S. lending receivables. This gain was
invested in additional Marketing and Promotion expenses and had no material
impact on net income or total expenses in the third quarter of 1997. For
purposes of this presentation such gain and a corresponding $37 million increase
in Marketing and Promotion expenses have been eliminated in the third quarter of
1997.
(Preliminary) Travel Related Services
Selected Statistical Information
(Unaudited)
(Amounts in billions, except percentages and where indicated)
Quarter Ended
Dec 31, Sept 30, June 30, March 31, Dec 31,
1997 1997 1997 1997 1996
Total Cards in Force (millions):
United States 29.6 29.6 29.7 29.6 29.2
Outside the United States 13.1 12.8 12.6 12.3 12.3
Total 42.7 42.4 42.3 41.9 41.5
Basic Cards in Force (millions):
United States 23.3 23.2 23.2 22.9 22.5
Outside the United States 10.0 9.8 9.7 9.6 9.6
Total 33.3 33.0 32.9 32.5 32.1
Card Billed Business:
United States $ 40.7 $ 38.0 $ 37.2 $ 34.6 $ 36.2
Outside the United States 16.0 14.7 14.7 13.3 14.9
Total $ 56.7 $ 52.7 $ 51.9 $ 47.9 $ 51.1
Average Discount Rate* 2.73% 2.72% 2.74% 2.75% 2.72%
Average Basic Cardmember
Spending (dollars)* $ 1,731 $ 1,616 $ 1,602 $ 1,498 $ 1,633
Average Fee per Card (dollars)* 38 38 39 39 41
Travel Sales 4.8 4.2 4.5 3.9 4.3
Travel Commissions and
Fees/Sales** 8.4% 8.8% 8.5% 8.6% 8.8%
Travelers Cheque:
Sales $ 5.2 $ 8.1 $ 6.6 $ 5.1 $ 5.5
Ending Outstanding $ 5.6 $ 6.1 $ 6.5 $ 5.8 $ 5.8
Average Outstanding $ 5.7 $ 6.4 $ 6.0 $ 5.8 $ 6.0
Ending Investments $ 5.6 $ 5.7 $ 6.0 $ 5.6 $ 5.6
Tax Equivalent Yield 9.2% 9.0% 9.3% 9.3% 9.5%
Total Debt $ 26.9 $ 25.2 $ 24.0 $ 22.1 $ 23.4
Shareholder's Equity $ 5.0 $ 5.3 $ 5.0 $ 4.8 $ 4.7
Return on Average Equity*** 27.9% 27.4% 27.0% 26.3% 25.6%
Return on Average Assets*** 3.0% 3.0% 3.0% 2.9% 2.8%
* Computed excluding Cards issued by strategic alliance partners and
independent operators as well as business billed on those Cards.
** Computed from information provided herein.
*** Excluding the effect of SFAS No. 115 and the fourth quarter 1996
restructuring charge of $125 million after-tax.
(Preliminary) Travel Related Services
Selected Statistical Information (continued)
(Unaudited)
(Amounts in billions, except percentages and where indicated)
Quarter Ended
Dec 31, Sept 30, Jun 30, Mar 31, Dec 31,
1997 1997 1997 1997 1996
Owned and Managed Charge Card
Receivables:
Total Receivables $ 23.5 $ 22.5 $ 22.2 $ 21.2 $ 22.5
90 Days Past Due as a
% of Total 3.1% 3.2% 3.3% 3.5% 3.2%
Loss Reserves (millions) $ 951 $ 970 $ 976 $ 921 $ 923
% of Receivables 4.0% 4.3% 4.4% 4.3% 4.1%
% of 90 Days Past Due 132% 133% 134% 124% 128%
Net Loss Ratio 0.49% 0.52% 0.50% 0.50% 0.51%
Owned and Managed U.S. Cardmember
Lending:
Total Loans $ 14.6 $ 13.5 $ 13.2 $ 12.9 $ 12.7
Past Due Loans as a % of Total:
30-89 Days 2.4% 2.5% 2.5% 2.6% 2.4%
90+ Days 1.1% 1.1% 1.1% 1.0% 0.9%
Loss Reserves (millions):
Beginning Balance $ 556 $ 534 $ 533 $ 488 $ 427
Provision 247 220 198 201 220
Net Charge-Offs/Other (214) (198) (197) (156) (159)
Ending Balance $ 589 $ 556 $ 534 $ 533 $ 488
% of Loans 4.0% 4.1% 4.1% 4.1% 3.8%
% of Past Due 116% 115% 113% 115% 117%
Average Loans $ 13.9 $ 13.4 $ 13.2 $ 12.8 $ 12.1
Net Write-Off Rate 6.3% 6.5% 6.0% 5.1% 5.2%
Net Interest Yield 9.4% 9.4% 8.7% 8.7% 8.6%
American Express Financial Advisors
Statement of Income
(Unaudited)
(Dollars in million)
Quarter Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Revenues:
Investment Income $ 595 $ 576 $ 2,339 $ 2,267
Management and
Distribution Fees 404 327 1,486 1,205
Other Revenues 203 166 774 638
Total Revenues 1,202 1,069 4,599 4,110
Expenses:
Provision for Losses
and Benefits:
Annuities 298 309 1,214 1,208
Insurance 121 108 452 420
Investment Certificates 53 51 200 197
Total 472 468 1,866 1,825
Human Resources 321 277 1,229 1,034
Other Operating Expenses 150 96 482 366
Total Expenses 943 841 3,577 3,225
Pretax Income 259 228 1,022 885
Income Tax Provision 76 73 315 291
Net Income $ 183 $ 155 $ 707 $ 594
Selected Statitical Information
(Unaudited)
(Dollars in millions, except where indicated)
Quarter Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Revenues, Net of
Provisions $ 731 $ 601 $ 2,732 $ 2,285
Investments
(billions) $ 30.7 $ 28.6 $ 30.7 $ 28.6
Client Contract
Reserves (billions) $ 30.2 $ 28.9 $ 30.2 $ 28.9
Shareholder's Equity
(billions) $ 3.7 $ 3.2 $ 3.7 $ 3.2
Return on Average
Equity* 21.8% 20.4% 21.8% 20.4%
Life Insurance in
Force (billions) $ 74.5 $ 67.3 $ 74.5 $ 67.3
Assets Owned and/or
Managed (billions):
Assets managed for
institutions $ 40.8 $ 37.3 $ 40.8 $ 37.3
Assets owned and
managed for
individuals:
Owned Assets:
Separate Account
Assets 23.2 18.5 23.2 18.5
Other Owned Assets 36.6 34.2 36.6 34.2
Total Owned Assets 59.8 52.7 59.8 52.7
Managed Assets 72.8 59.4 72.8 59.4
Total $ 173.4 $ 149.4 $ 173.4 $ 149.4
Market Appreciation
(Depreciation) During
the Period:
Owned Assets:
Separate Account
Assets $ (389) $ 735 $ 3,170 $ 1,937
Other Owned Assets $ 46 $ 126 $ 262 $ (232)
Total Managed Assets $ (415) $ 3,264 $11,735 $ 9,063
Sales of Selected
Products:
Mutual Funds $ 4,563 $ 3,686 $17,179 $ 14,331
Annunities $ 795 $ 1,085 $ 3,473 $ 4,311
Investment
Certificates $ 423 $ 233 $ 1,194 $ 736
Life and Other
Insurance Products $ 115 $ 131 $ 421 $ 449
Number of Financial
Advisors 8,776 8,340 8,776 8,340
Fees From Financial
Plans (thousands) $ 16,708 $ 13,205 $60,809 $ 48,072
Product Sales Generated
from Financial Plans as
a Percentage of Total
Sales 65.3% 64.9% 65.7% 64.0%
* Excluding the effect of SFAS No. 115.
Statement of Income
(Unaudited)
(Dollars in millions)
Quarter Ended
Dec 31, Sept 30, June 30, March 31, Dec 31,
1997 1997 1997 1997 1996
Revenues:
Investment Income $ 595 $ 587 $ 586 $ 570 $ 576
Management and
Distribution Fees 404 391 360 331 327
Other Revenues 203 191 197 183 166
Total Revenues 1,202 1,169 1,143 1,084 1,069
Expenses:
Provision for Losses
and Benefits:
Annuities 298 307 304 305 309
Insurance 121 114 113 104 108
Investment Certificates 53 48 58 42 51
Total 472 469 475 451 468
Human Resources 321 313 294 300 277
Other Operating Expenses 150 126 109 97 96
Total Expenses 943 908 878 848 841
Pretax Income 259 261 265 236 228
Income Tax Provision 76 77 82 79 73
Net Income $ 183 $ 184 $ 183 $ 157 $ 155
Selected Statistical Information
(Unaudited)
(Dollars in millions, except where indicated)
Quarter Ended
Dec 31, Sept 30, June 30, March 31, Dec 31,
1997 1997 1997 1997 1997
Revenues, Net of
Provisions $ 731 $ 701 $ 668 $ 633 $ 601
Investments
(billions) $ 30.7 $ 29.9 $ 29.3 $ 28.9 $ 28.6
Client Contract
Reserves (billions) $ 30.2 $ 29.8 $ 29.4 $ 29.1 $ 28.9
Shareholder's Equity
(billions) $ 3.7 $ 3.26 $ 3.4 $ 3.1 $ 3.2
Return on Average
Equity* 21.8% 21.6% 21.2% 20.8% 20.4%
Life Insurance in
Force (billions) $ 74.5 $ 72.8 $ 71.0 $ 69.2 $ 67.3
Assets Owned and/or
Managed (billions):
Assets managed for
institutions $ 40.8 $ 41.0 $ 39.3 $ 36.4 $ 37.3
Assets owned and
managed for
individuals:
Owned Assets:
Separate Account
Assets 23.2 23.2 21.1 18.4 18.5
Other Owned Assets 36.6 36.0 35.2 34.9 34.2
Total Owned Assets 59.8 59.2 56.3 53.3 52.7
Managed Assets 72.8 71.5 66.7 60.0 59.4
Total $ 173.4 $ 171.7 $ 162.3 $ 149.7 $ 149.4
Market Appreciation
(Depreciation) During
the Period:
Owned Assets:
Separate Account
Assets $ (389) $ 1,843 $ 2,260 $ (544) $ 735
Other Owned Assets $ 46 $ 195 $ 265 $ (244) $ 126
Total Managed Assets $ (415) $ 5,368 $ 8,406 $(1,624) $ 3,264
Sales of Selected
Products:
Mutual Funds $ 4,563 $ 4,496 $ 4,091 $ 4,029 $ 3,686
Annunities $ 795 $ 861 $ 947 $ 870 $ 1,085
Investment
Certificates $ 423 $ 295 $ 285 $ 190 $ 233
Life and Other
Insurance Products $ 115 $ 103 $ 100 $ 103 $ 131
Number of Financial
Advisors 8,776 8,592 8,476 8,426 8,340
Fees From Financial
Plans (thousands) $ 16,708 $15,538 $ 15,227 $ 13,336 $13,205
Product Sales Generated
from Financial Plans as
a Percentage of Total
Sales 65.3% 66.5% 66.3% 64.6% 64.9%
* Excluding the effect of SFAS No. 115.
(Preliminary) American Express Bank
Statement of Income
(Unaudited)
(Dollars in millions)
Quarter Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Net Revenues:
Interest Income $ 223 $ 223 $ 897 $ 842
Interest Expense 148 140 579 536
Net Interest Income 75 83 318 306
Commissions, Fees and Other Revenues 54 57 218 213
Foreign Exchange Income 38 16 101 72
Total Net Revenues 167 156 637 591
Provision for Credit Losses 10 10 20 23
Expenses:
Human Resources 64 56 242 224
Other Operating Expenses 63 64 245 239
Total Expenses 127 120 487 463
Pretax Income 30 26 130 105
Income Tax Provision 11 9 48 37
Net Income $ 19 $ 17 $ 82 $ 68
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