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=09 AXP 29.17 -0.15 American Express Company Reports Third Quarter=
Net Income of $298 Million=1D(millions, except per share amounts) Quarter =
Percentage Nine Percentage Ended Inc/ Months Inc/ September 30 (Dec) Ended =
(Dec) September 30 2001 2000 2001 2000 Net Income* $298 $737 (60%) $1,014 $=
2,133 (52%) Net Revenues** $5,478 $5,554 (1%) $15,770 $16,371 (4%) Per Shar=
e Net Income Basic $0 23 $0.56 (59%) $0.77 $1.61 (52%) Diluted $0.22 $0.54=
(59%) $0.76 $1.57 (52%) Average Common Shares Outstanding Basic 1,324 1,32=
6 -- 1,323 1,328 -- Diluted 1,335 1,361 (2%) 1,338 1,361 (2%) Return on Ave=
rage Equity 14.2% 25.5% -- 14.2% 25.5% -- NEW YORK, Oct 22, 2001 /PRNewsw=
ire via COMTEX/ -- American Express Company (NYSE: AXP) today reported thir=
d quarter net income of $298 million, down 60 percent from $737 million in =
the same period a year ago. Diluted earnings per share were $.22, down 59 p=
ercent from a year ago. Net revenues on a managed basis totaled $5.5 billio=
n, down one percent from $5.6 billion a year ago. The company's return on e=
quity was 14.2 percent. Results for the third quarter were negatively aff=
ected by two significant items: a previously announced restructuring charge=
of $352 million pre-tax ($232 million after-tax) and the impacts from the =
September 11th terrorist attacks. The September 11th events resulted in c=
ertain one-time costs and business interruption losses, including: provisio=
ns related to credit exposures to travel industry service establishments, i=
nsurance claims, and waived finance charges and late fees. The combination =
of these items totaled approximately $98 million pre-tax ($65 million after=
-tax). The company also incurred costs of approximately $42 million since=
September 11th, which are expected to be covered by insurance. Consequentl=
y, these costs did not impact the quarterly results. These include the cost=
of duplicate facilities and equipment associated with the relocation of th=
e company's offices in lower Manhattan and certain other business recovery =
expenses. Costs associated with the damage to the company's offices, extra =
operating expenses and business interruption losses are still being evaluat=
ed. The company expects that a substantial portion ofgh its Ists and losses=
will be covered by insurance. The third quarter restructuring charge inc=
ludes severance costs for the elimination of approximately 6,100 jobs and a=
sset impairment and other costs, all relating to the consolidation and reor=
ganization of certain business units, the scale back of corporate lending i=
n certain regions, the migration of certain processes to lower cost locatio=
ns, the outsourcing of certain activities, and the transition of certain pr=
ocessing and service functions to the Internet. These initiatives are expec=
ted to produce expense savings of approximately $325 million in 2002. A por=
tion of these savings is expected to flow through to earnings in the form o=
f improved operating expense margins and the rest is expected to be reinves=
ted back into high-growth areas of the business. In addition to the activ=
ities related to the restructuring charge, the company made strong progress=
on its global reengineering efforts initiated in the first half of the yea=
r and, as of September 30, had realized savings in excess of $700 million. =
Net income for the third quarter, adjusted for the restructuring and one-=
time costs related to September 11th, was approximately $595 million, down =
19 percent. On a similar basis, earnings per share were $.45, down 17 perce=
nt. The company's adjusted return on equity was 16.7 percent. "While we w=
ere on target to meet prior consensus for third quarter earnings, the terro=
rist attacks obviously had a significant impact on the overall economy and =
we saw clear evidence of that as consumer spending, business travel and inv=
estment activity slowed after September 11th," said Kenneth I. Chenault, ch=
airman and chief executive officer, American Express Company. "In light of =
the weak economy and financial markets, we are moving aggressively to lower=
our operating expenses. The progress we are making on our reengineering in=
itiatives has freed up substantial resources for investment in our business=
es with the strongest growth potential. This, along with the anticipated be=
nefit of lower interest rates and the strategies in place to grow our franc=
hise, positions us well to benefit when we see even a modest improvement in=
the economy." Travel Related Services (TRS) reported quarterly net incom=
e of $248 million, down 51 percent from $507 million in the third quarter a=
year ago. Included in third quarter results are $195 million pre-tax ($127=
million after-tax) of the restructuring charge noted earlier. Also include=
d in the results are $87 million pre-tax ($57 million after-tax) of one-tim=
e costs and waived fees directly related to the September 11th terrorist at=
tacks. Excluding these costs and the restructuring charge, TRS' net income =
would have been $432 million, down 15 percent from the third quarter last y=
ear. TRS' net revenues rose two percent, as growth in loans and fee reven=
ues were partly offset by a three percent decline in billed business and a =
28 percent fall in travel sales. These declines reflect a substantial decre=
ase in corporate travel and entertainment spending and consumer travel sinc=
e September 11th. Prior to September, billed business growth for the quarte=
r was about two percent as higher consumer and small business spending offs=
et a decline in corporate travel and entertainment spending. Net finance ch=
arge revenues were higher, due to balance growth and wider net interest yie=
lds. This increase reflects a smaller percentage of loan balances on introd=
uctory rates and the benefit of declining interest rates during the quarter=
. The provision for losses on the lending portfolios grew as a result of =
higher volumes and an increase in U.S. lending write-off rates and delinque=
ncies. Marketing and promotion expenses were lower as TRS scaled back certa=
in marketing efforts in light of the weaker business environment. Operating=
expenses rose, reflecting increased Cardmember loyalty programs and busine=
ss volumes. These expenses were partly offset by the benefits of reengineer=
ing and cost-control efforts. The above discussion presents TRS results "=
on a managed basis" as if there had been no securitization transactions, wh=
ich conforms to industry practice. The attached financials present TRS resu=
lts on both a managed and reported basis. Net income is the same in both fo=
rmats. On a reported basis, TRS' results included securitization gains of=
$29 million pre-tax ($19 million after-tax) and $26 million pre-tax ($17 m=
illion after-tax) in the third quarters of 2001 and 2000, respectively. The=
se gains were offset by expenses related to card acquisition activities and=
therefore had no material impact on net income or total expenses. Americ=
an Express Financial Advisors (AEFA) reported quarterly net income of $145 =
million, down 46 percent from $269 million in the third quarter a year ago.=
Net revenues decreased 14 percent. Included in third quarter results are $=
62 million pre-tax ($41 million after-tax) of the restructuring charge note=
d earlier and $11 million pre-tax ($8 million after-tax) of insurance claim=
s directly related to September 11th. Excluding these items, AEFA's net inc=
ome would have been $194 million, down 28 percent from last year. AEFA re=
sults reflect continued weakness in equity markets and narrower spreads on =
the investment portfolio. The weakened equity markets led to significantly =
lower asset levels and lower sales of investment products. As a result, man=
agement and distribution fees fell 15 percent. Operating expenses, exclud=
ing the above-mentioned charges, decreased four percent from a year ago due=
primarily to lower sales commissions and continued reengineering and cost-=
control initiatives. As of September 30th, approximately 4 percent of the=
company's $33 billion investment portfolio consisted of high-yield securit=
ies, down from 12 percent a year ago and 8 percent last quarter. The reduct=
ion reflects the activities to date to lower the risk profile of the portfo=
lio and concentrate on stronger credits. American Express Bank (AEB) repo=
rted a quarterly net loss of $43 million, compared with $7 million of net i=
ncome a year ago. Included in third quarter results are $84 million pre-tax=
($57 million after-tax) of the restructuring charge noted earlier. Excludi=
ng these charges, AEB's net income would have been $15 million, approximate=
ly double the earnings recorded in the same period last year. While AEB s=
ustained damage to its premises due to the September 11th terrorist attacks=
, the costs are expected to be covered by insurance. Consequently, these co=
sts did not impact AEB's quarterly results. AEB's business results reflec=
t strong performance in Personal Financial Services and Private Banking. Re=
sults also benefited from lower funding costs and lower operating expenses =
as a result of AEB's reengineering efforts. These were offset in part by hi=
gher provisions for losses due to higher Personal Financial Services loan b=
alances, and lower revenue from Corporate Banking as the company continues =
to shift its focus to Personal Financial Services and Private Banking. Co=
rporate and Other reported net expenses of $52 million, compared with $46 m=
illion a year ago. Included in third quarter 2001 results are $11 million p=
re-tax ($7 million after-tax) of the restructuring charge noted earlier. =
American Express Company (http://www.americanexpress.com ), founded in 1850=
, is a global travel, financial and network services provider. Note: The =
2001 Third Quarter Earnings Supplement will be available today on the Ameri=
can Express web site at http://ir.americanexpress.com . In addition, an inv=
estor conference call to discuss third quarter earnings results, operating =
performance and other topics that may be raised during the discussion will =
be held at 5:00 p.m. (ET) today. Live audio of the conference call will be =
accessible to the general public on the American Express web site at http:/=
/ir.americanexpress.com . A replay of the conference call also will be avai=
lable today at the same web site address. This document contains forward-=
looking statements that are subject to risks and uncertainties. The words "=
believe", "expect", "anticipate", "intend", "aim", "will", "should", and si=
milar expressions are intended to identify these forward-looking statements=
. The Company undertakes no obligation to update or revise any forward-look=
ing statements. Factors that could cause actual results to differ materiall=
y from these forward-looking statements include, but are not limited to, th=
e following: Fluctuation in the equity markets, which can affect the amou=
nt and types of investment products sold by AEFA, the market value of its m=
anaged assets, and management and distribution fees received based on those=
assets; potential deterioration in the high-yield sector and other investm=
ent areas, which could result in further losses in AEFA's investment portfo=
lio; the ability of AEFA to sell certain high- yield investments at expecte=
d values and within anticipated time frames and to maintain its high-yield =
portfolio at certain levels in the future; developments relating to AEFA's =
new platform structure for financial advisors, including the ability to inc=
rease advisor productivity, moderate the growth of new advisors and create =
efficiencies in the infrastructure; AEFA's ability to effectively manage th=
e economics in selling a growing volume of non-proprietary products to clie=
nts; investment performance in AEFA's businesses; the success, timeliness a=
nd financial impact, including costs, cost savings and other benefits, of r=
eengineering initiatives being implemented or considered by the Company, in=
cluding cost management, structural and strategic measures such as vendor, =
process, facilities and operations consolidation, outsourcing, relocating c=
ertain functions to lower cost overseas locations, moving internal and exte=
rnal functions to the Internet to save costs, the scale back of corporate l=
ending 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 Company's ability to recover under its insurance policies fo=
r losses resulting from the September 11th terrorist attacks; consumer and =
business spending on the Company's travel related services products, partic=
ularly credit and charge cards and growth in card lending balances, which d=
epend in part on the ability to issue new and enhanced card products and in=
crease revenues from such products, attract new cardholders, capture a grea=
ter share of existing cardholders' spending, sustain premium discount rates=
, increase merchant coverage, retain Cardmembers after low introductory len=
ding rates have expired, and expand the global network services business; s=
uccessfully expanding the Company's on-line and off-line distribution chann=
els and cross-selling financial, travel, card and other products and servic=
es to its customer base, both in the U.S. and abroad; effectively leveragin=
g the Company's assets, such as its brand, customers and international pres=
ence, in the Internet environment; investing in and competing at the leadin=
g edge of technology across all businesses; increasing competition in all o=
f the Company's major businesses; fluctuations in interest rates, which imp=
acts the Company's borrowing costs, return on lending products and spreads =
in the investment and insurance businesses; credit trends and the rate of b=
ankruptcies, which can affect spending on card products, debt payments by i=
ndividual and corporate customers and returns on the Company's investment p=
ortfolios; foreign currency exchange rates; political or economic instabili=
ty in certain regions or countries, which could affect commercial lending a=
ctivities, 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 risks and uncertainties ca=
n be found in the Company's 10-K Annual Report for the fiscal year ending D=
ecember 31, 2000 and other reports filed with the SEC. * Included i=
n 2001 net income are two significant third quarter items: a restruct=
uring charge of $352 million pre-tax ($232 million after-tax) and one=
-time costs (including waived fees) of $98 million pre-tax ($65 milli=
on after-tax) resulting from the September 11, 2001 terrorist attacks=
. ** Net revenues are presented on a managed basis. (Preliminary) =
AMERICAN EXPRESS COMPANY =
FINANCIAL SUMMARY (Unaudited) =
(Dollars in millions) Quarter=
s Ended September 30, =
Percentage =
2001 2000 Inc/(Dec) NE=
T REVENUES (MANAGED BASIS)(A) Travel Related Services $ 4,466 =
$ 4,400 2% American Express Financial Adviso=
rs 908 1,052 (14) American Express B=
ank 165 146 13 =
5,539 5,598 (1) Corporate and Other, =
including adjustments and eliminations (61) =
(44) (37) CONSOLIDATED NET REVENUES (MANAGED BASIS)=
(A) $ 5,478 $ 5,554 (1) PRETAX INCOME (LO=
SS)(B) Travel Related Services $316 $721 =
(56) American Express Financial Advisors 194 =
387 (50) American Express Bank (62) =
8 -- 448 =
1,116 (60) Corporate and Other (94) =
(87) (9) PRETAX INCOME(B) $354 =
$ 1,029 (66) NET INCOME (LOSS)(B) Travel Related Servi=
ces $248 $507 (51) American Express =
Financial Advisors 145 269 (46) =
American Express Bank (43) 7 -- =
350 783 (55) Cor=
porate and Other (52) (46) (13) NET =
INCOME(B) $298 $737 (60) (A) =
Managed net revenues are reported net of interest expense, where a=
pplicable, and American Express Financial Advisors' provision for =
losses and benefits, and exclude the effect of TRS' securitization =
activities. (B) Included in 2001 income are two significant third qua=
rter items, a restructuring charge of $352 million ($232 million a=
fter-tax), and one-time costs (including waived fees) of $98 milli=
on ($65 million after-tax) resulting from the September 11, 2001 t=
errorist attack on New York City. (Preliminary) =
AMERICAN EXPRESS COMPANY FIN=
ANCIAL SUMMARY (Unaudited) (Dollars =
in millions) Nine Months Ended =
September 30, =
Percentage =
2001 2000 Inc/(Dec) NET REVENUES (MANA=
GED BASIS)(A) Travel Related Services $ 13,575 $ 12,898 =
5% American Express Financial Advisors 1=
,876 3,153 (40) American Express Bank =
481 447 8 15,9=
32 16,498 (3) Corporate and Other, including adj=
ustments and eliminations (162) (127) =
(28) CONSOLIDATED NET REVENUES (MANAGED BASIS)(A) $ =
15,770 $ 16,371 (4) PRETAX INCOME (LOSS)(B) Trav=
el Related Services $1,783 $2,073 (14) Ameri=
can Express Financial Advisors (243) 1,138 =
-- American Express Bank (30) 26 =
-- 1,510 3,237 =
(53) Corporate and Other (262) (242) =
(9) PRETAX INCOME(B) $1,248 $ 2,995 =
(58) NET INCOME (LOSS)(B) Travel Related Services $1,289=
$1,460 (12) American Express Financial Advi=
sors (110) 790 -- American Express=
Bank (22) 22 -- =
1,157 2,272 (49) Corporate and Other =
(143) (139) (2) NET INCOME(B) =
$1,014 $2,133 (52) (A) Managed net revenues are r=
eported net of interest expense, where applicable, and American Ex=
press Financial Advisors' provision for losses and benefits, and e=
xclude the effect of TRS' securitization activities. (B) Inclu=
ded in 2001 income are two significant third quarter items, a rest=
ructuring charge of $352 million ($232 million after-tax), and one=
-time costs (including waived fees) of $98 million ($65 million af=
ter-tax) resulting from the September 11, 2001 terrorist attack on =
New York City. (Preliminary) AMERICAN EXP=
RESS COMPANY FINANCIAL SUMMARY (CONTINUED) =
(Unaudited) =
Quarters Ended September 30=
, Percenta=
ge 2001 2000 Inc/(D=
ec) EARNINGS PER SHARE BASIC Earnings Per Common Share $=
0.23 $ 0.56 (59)% Average common shares outstand=
ing (millions) 1,324 1,326 -- DILUTED =
Earnings Per Common Share $ 0.22 $ 0.54 (59) =
Average common shares outstanding (millions) 1,335 =
1,361 (2) Cash dividends declared per common share =
$ 0.08 $ 0.08 -- SEL=
ECTED STATISTICAL INFORMATION (Unaudited=
) Quarters Ended =
September 30, =
Percentage =
2001 2000 Inc/(Dec) Return on Average Equity* =
14.2% 25.5% -- Common Shares Outstanding =
(millions) 1,336 1,329 -- Book Value per=
Common Share: Actual $ 9.16 $ 8.44 =
9% Pro Forma* $ 8.92 $ 8.68 =
3% Shareholders' Equity (billions) $ 12.2 $ 11.2 =
9% * Excludes the effect on Shareholders' Equity of SFAS No. 1=
15 and SFAS No. 133. The Company adopted SFAS No. 133 on Januar=
y 1, 2001. (Preliminary) AMERICAN EXPRESS =
COMPANY FINANCIAL SUMMARY (CONTINUED) =
(Unaudited) =
Nine Months Ended September 30, =
Percentag=
e 2001 2000 Inc/(D=
ec) EARNINGS PER SHARE BASIC Earnings Per Common Share $=
0.77 $ 1.61 (52)% Average common shares outstan=
ding (millions) 1,323 1,328 -- DILUTED =
Earnings Per Common Share $ 0.76 $ 1.57 (52) =
Average common shares outstanding (millions) 1,338 =
1,361 (2) Cash dividends declared per common share =
$ 0.24 $ 0.24 -- S=
ELECTED STATISTICAL INFORMATION (Unaudit=
ed) Nine Months Ended =
September 30, =
Percentage =
2001 2000 Inc/(Dec) Return on Average Equity*=
14.2 % 25.5 % -- Common Shares Outstanding =
(millions) 1,336 1,329 -- =
Book Value per Common Share: Actual $ 9.16=
$ 8.44 9% Pro Forma* $ 8.92 =
$ 8.68 3% Shareholders' Equity (billions) $ 12.2 =
$ 11.2 9% * Excludes the effect on Shareholders' Equ=
ity of SFAS No. 115 and SFAS No. 133. The Company adopted SFAS =
No. 133 on January 1, 2001. To view additional business segment finan=
cials go to: http://ir.americanexpress.com SOU=
RCE American Express Company CONTACT: Molly Faust, +1-201-209-=
5595, molly.faust@aexp.com, or Michael J. O'Neill, +1-201=
-209-5583, mike.o'neill@aexp.com, both of American Express URL: =
http://www.americanexpress.com http://www.prnewswire.com =09
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