American Express Revenues and Earnings
Rise on Strong Growth in Cardmember Spending
(Dollars in millions, except per share amounts)
Quarters Percentage Nine Months Percentage
Ended Inc/ Ended Inc/
September 30, (Dec) September 30, (Dec)
2005 2004 2005 2004
Revenues $6,068 $5,476 10.8% $17,830 $16,061 11.0%
Income From Continuing
Operations Before
Accounting Change $865 $702 23.2% $2,470 $2,017 22.5%
Income From
Discontinued
Operations $165 $177 (6.8%) $519 $603 (13.9%)
Net Income $1,030 $879 17.1% $2,989 $2,549* 17.3%
Earnings Per Common
Share - Basic:
Income From
Continuing
Operations Before
Accounting Change $0.70 $0.56 25.0% $2.00 $1.60 25.0%
Income From
Discontinued
Operations $0.14 $0.14 - $0.42 $0.47 (10.6%)
Net Income $0.84 $0.70 20.0% $2.42 $2.02* 19.8%
Earnings Per Common
Share - Diluted:
Income From
Continuing Operations
Before Accounting
Change $0.69 $0.55 25.5% $1.96 $1.56 25.6%
Income From
Discontinued
Operations $0.13 $0.14 (7.1%) $0.42 $0.47 (10.6%)
Net Income $0.82 $0.69 18.8% $2.38 $1.98* 20.2%
Average Common Shares
Outstanding
Basic 1,229 1,251 (1.8%) 1,233 1,264 (2.4%)
Diluted 1,254 1,275 (1.7%) 1,257 1,289 (2.5%)
Return on Average
Total Shareholders'
Equity** 24.2% 21.5% - 24.2% 21.5% -
* Reflects a $109 million non-cash pre-tax charge ($71 million
after-tax), or $0.05 on both a basic and diluted per share basis,
associated with discontinued operations, relating to the January 1,
2004 adoption of Statement of Position 03-1, "Accounting and Reporting
by Insurance Enterprises for Certain Nontraditional Long-Duration
Contracts and for Separate Accounts" (SOP 03-1).
** Computed on a trailing 12-month basis using Net Income and Total
Shareholders' Equity (including discontinued operations prior to
disposal) as included in the Consolidated Financial Statements prepared
in accordance with U.S. generally accepted accounting principles
(GAAP).
NEW YORK, Oct. 25 -- American Express Company today reported third quarter
income from continuing operations of $865 million, up 23 percent from $702
million a year ago. Diluted earnings per share from continuing operations rose
to $0.69, up 25 percent from $0.55 a year ago.
During the quarter the Company completed the spin-off of Ameriprise
Financial, Inc. (formerly known as American Express Financial Corporation) and
the sale of its Tax and Business Services unit (TBS). Net income for the
quarter, which includes those businesses as discontinued operations, totaled
$1.0 billion, up 17 percent from $879 million a year ago. Earnings per share
on a diluted basis rose to $0.82, up 19 percent from $0.69.
The company's reported return on equity (ROE) was 24.2 percent, up from
21.5 percent a year ago. This ratio is determined on a trailing 12-month
basis using net income and total average shareholders' equity (including
discontinued operations prior to disposal). Pro forma ROE, which is
determined using trailing four quarters income from continuing operations
(which excludes discontinued operations and the cumulative effect of
accounting changes) over reported shareholders' equity at September 30, 2005
was 31.7 percent. (For further information about pro forma ROE, see the "Pro
Forma ROE" section below.)
Consolidated revenues rose 11 percent to $6.1 billion, up from
$5.5 billion a year ago.
Consolidated expenses totaled $5.0 billion, up 12 percent from
$4.5 billion a year ago.
"This quarter's performance underscores the strength and momentum of an
American Express that is now focused on the global payments business," said
Kenneth I. Chenault, chairman and chief executive. "We exceeded our long-term
targets for earnings and revenue growth and, on a pro forma basis, the return
on equity targets set for the new American Express.
"Total spending on American Express cards grew 18 percent, reflecting a
double digit rise in average cardmember spending and the addition of 5.7
million cards during the last year. We continued to outpace our major
competitors with strong spending increases among our consumer, small business
and corporate cardmembers globally. The quarter also reflected a deepening of
our relationships with bank partners issuing American Express cards in the
U.S. and around the world. In addition, overall credit quality and our reserve
levels remained strong."
The quarter's income from continuing operations included three significant
items. A tax benefit of $105 million related to the resolution of a prior year
tax item enabled the Company to accelerate various reengineering initiatives,
primarily in business travel, finance and technology functions, and
international operations. These initiatives resulted in $86 million ($56
million after-tax) in reengineering costs. The quarter also included a
provision for losses and benefits of $49 million to cover costs associated
with Hurricane Katrina.
Third quarter revenues and expenses
The increase in quarterly revenues reflected sharply higher discount
revenue, up 16 percent as a result of an 18 percent increase in cardmember
spending. Average cardmember spending rose 12 percent and total cards-in-force
were up 9 percent. The benefits of overall higher cardmember spending were
partially offset by a slightly lower average discount rate that continued to
reflect, in part, the change in the mix of business towards the retail and
everyday spending categories. Net finance charge revenue increased 16 percent,
driven by growth in average cardmember loan balances and a higher yield.
Similarly, securitization income rose 20 percent, primarily reflecting a
higher level of securitized loans.
Third quarter expenses reflected higher costs related to human resources,
as well as for marketing, promotion, rewards and cardmember services. Human
resources expenses rose 9 percent, driven by severance costs associated with
restructuring activities and higher management incentives which included the
impact of an additional year of incremental stock-based compensation expenses,
merit increases and increased employee benefits costs.
Marketing, promotion, rewards and cardmember services expenses rose 16
percent, primarily reflecting increased brand-related advertising, strong
acquisition activities and higher rewards-related costs.
The provision for losses and benefits rose 33 percent, principally
reflecting strong charge and lending growth, a higher provision rate, and the
previously mentioned $49 million of costs associated with Hurricane Katrina.
The year-ago provision included a charge of $115 million related to a
securitization reconciliation, partially offset by the reduction of
$60 million in certain merchant-related reserves.
Discontinued operations
Income from discontinued operations primarily includes results from
Ameriprise and TBS, which are no longer part of American Express. Included in
this item are also $71 million after-tax of total spin-off related costs - at
both Ameriprise and American Express - and a net gain of $63 million after-tax
from certain dispositions, including the sale of TBS.
Segment results
Starting this quarter, American Express will provide financial reports and
selected statistical data for new segments. They are: U.S. Card Services,
International Card & Global Commercial Services, Global Network & Merchant
Services, and Corporate & Other. The Company manages its overall business to
achieve - on average and over time - financial targets that include earnings
per share growth of 12-15 percent, revenue growth of at least 8 percent and a
return on shareholders' equity of 28-30 percent. Segment level results may
vary significantly from period to period based on specific decisions to
allocate investment dollars and marketing resources to capitalize on
competitive opportunities.
The following discussion of third quarter results presents U.S. Card
Services segment results on a "managed basis," as if there had been no
cardmember lending securitization transactions and to reflect certain
tax-exempt investment income as if it had been earned on a taxable basis.
In addition, International Card & Global Commercial Services reflects a
reclassification of certain foreign exchange services, as revenues on a
managed basis. For these business segments, this is the basis used by
management to evaluate operations. For further information about managed
basis and reconciliation of GAAP and managed information, see the "Managed
Basis" section below. The Global Network & Merchant Services, and Corporate &
Other segment results below are presented on a GAAP basis.
U.S. Card Services reported third quarter net income of $446 million, up
25 percent from $356 million a year ago.
Total revenues for the third quarter increased 14 percent over the
year-ago period to $3.3 billion, reflecting continued strong growth in
spending and borrowing on U.S. consumer and small business cards.
Total expenses increased 12 percent. Marketing, promotion, rewards and
cardmember services expenses increased 18 percent, reflecting both higher
marketing and promotion expenses and greater rewards costs. Year-ago expenses
included the securitization-related charges mentioned earlier.
International Card & Global Commercial Services reported third quarter net
income of $254 million, up 14 percent from $224 million a year ago.
Total revenues for the third quarter increased 8 percent over the year-ago
period to $2.3 billion, reflecting continued strong growth in spending on
corporate cards and international consumer cards.
Total expenses increased 9 percent. Marketing, promotion, rewards and
cardmember services expenses increased 9 percent, reflecting both higher
marketing and promotion expenses, and greater rewards costs. The provision
for losses and benefits rose 55 percent due to strong charge and lending
volume growth, and higher provision rates.
Global Network & Merchant Services reported third quarter net income of
$141 million, down 19 percent from $173 million a year ago.
Total revenues for the third quarter increased 9 percent over the year-ago
period to $716 million, reflecting continued strong growth in merchant charge
volume. The year-ago period included revenues from the Company's ATM
business, which was sold in 2004. Spending on cards issued by the Company's
network partners increased more than 35% from a year ago.
Total expenses increased 30 percent. The total provision for losses
increased significantly from year ago levels, primarily reflecting last year's
reduction of merchant-related reserves that was mentioned earlier. Marketing
and promotion increased 55 percent, primarily reflecting higher company-wide
brand-related advertising.
Corporate & Other reported third quarter net income of $24 million,
compared with net expenses of $51 million a year ago. The results reflect the
$105 million tax benefit mentioned earlier.
Managed Basis
For U.S. Card Services, managed basis means the presentation assumes there
have been no securitization transactions, i.e. all securitized cardmember
loans and related income effects are reflected as if they were in the
Company's balance sheet and income statements, respectively. The Company
presents U.S. Card Services information on a managed basis because that is the
way the Company's management views and manages the business. Management
believes that a full picture of trends in the Company's cardmember lending
business can only be derived by evaluating the performance of both securitized
and non-securitized cardmember loans. Asset securitization is just one of
several ways for the Company to fund cardmember loans. Use of a managed basis
presentation, including non-securitized and securitized cardmember loans,
presents a more accurate picture of the key dynamics of the cardmember lending
business, avoiding distortions due to the mix of funding sources at any
particular point in time. The Company does not currently securitize
international loans.
Irrespective of the funding mix, it is important for management and
investors to see metrics, such as changes in delinquencies and write-off
rates, for the entire cardmember lending portfolio because they are more
representative of the economics of the aggregate cardmember relationships and
ongoing business performance and trends over time. It is also important for
investors to see the overall growth of cardmember loans and related revenue in
order to evaluate market share. These metrics are significant in evaluating
the Company's performance and can only be properly assessed when all non-
securitized and securitized cardmember loans are viewed together on a managed
basis.
The managed basis presentation for U.S. Card Services also reflects an
increase to interest income recorded to enable management to evaluate tax
exempt investments on a basis consistent with taxable investment securities.
On a GAAP basis interest income associated with tax exempt investments is
recorded based on amounts earned. Accordingly, information presented on a
managed basis assumes that tax exempt securities earned income at rates as if
the securities produced taxable income with a corresponding increase in the
provision for income taxes.
The managed basis presentation for International Card & Global Commercial
Services reflects a foreign exchange services reclassification for revenue
earned related to the sale and purchase of foreign currencies as part of the
foreign exchange business. On a GAAP basis, these revenues are included with
other foreign exchange items that are reflected in other operating expenses.
Accordingly, information presented on a managed basis assumes that the amounts
earned are included in other revenue with a corresponding increase in other
operating expenses.
The following table reconciles the GAAP-basis U.S. Card Services and
International Card & Global Commercial Services income statements to the
managed-basis information.
U.S. Card Services
Selected Financial Information
(preliminary, millions) GAAP Basis
--------------------------------
%
Inc/
Quarters Ended September 30, 2005 2004 (Dec)
-------- -------- ----------
Revenues:
Discount revenue, net card
fees and other $ 2,224 $ 1,982 12.2%
Cardmember lending:
Finance charge revenue 614 445 38.1
Interest expense 156 104 50.9
-------- --------
Net finance charge revenue 458 341 34.2
Securitization income, net 353 295 19.8
-------- --------
Total revenues 3,035 2,618 15.9
-------- --------
Expenses:
Marketing, promotion, rewards
and cardmember services 1,003 854 17.5
Provision for losses 458 438 4.4
Human resources and
other operating
expenses 936 824 13.5
-------- --------
Total expenses 2,397 2,116 13.2
-------- --------
Pretax segment income 638 502 27.5
Income tax provision 192 146 33.3
-------- --------
Segment income $ 446 $ 356 25.1
======== ========
U.S. Card Services
Selected Financial Information
Tax
Securitization Equivalent Managed
(preliminary, millions) Effect Effect Basis
-------------- ----------- ---------------
%
Quarters Ended Inc/
September 30, 2005 2004 2005 2004 2005 2004 (Dec)
------ ------ ------ ------ ------ ------ -----
Revenues:
Discount revenue,
net card fees
and other $53 $53 $56 $57 $2,333 $2,092 11.6%
Cardmember lending:
Finance charge
revenue 721 573 1,335 1,018 31.1
Interest expense 209 108 365 212 71.9
------- ------- ------- -------
Net finance
charge revenue 512 465 970 806 20.4
Securitization
income, net (353) (295) - - -
----- ----- ------- ------- ------ ------
Total
revenues 212 223 56 57 3,303 2,898 14.0
----- ----- ------ ----- ------ ------
Expenses:
Marketing,
promotion, rewards
and cardmember
services (2) (6) 1,001 848 18.1
Provision for losses 215 232 673 670 0.4
Human resources and
other operating
expenses (1) (3) 935 821 13.8
----- ------- ------ -------
Total expenses $212 $223 2,609 2,339 11.5
------ ------ ------ ----- ------- ------
Pretax segment
income 56 57 694 559 24.6
Income tax
provision $56 $57 $248 $203 23.5
----- ----- ----- ------
International Card & Global Commercial Services
Selected Financial Information
(preliminary, millions) GAAP Basis
--------------------------------
%
Inc/
Quarters Ended September 30, 2005 2004 (Dec)
------- ------- --------
Revenues:
Discount revenue, net card
fees and other $ 2,067 $ 1,902 8.6%
Cardmember lending:
Finance charge revenue 259 222 16.3
Interest expense 88 65 34.9
-------- --------
Net finance charge revenue 171 157 8.6
-------- --------
Total revenues 2,238 2,059 8.6
-------- --------
Expenses:
Marketing, promotion, rewards
and cardmember services 310 285 8.6
Provision for losses
and benefits 270 174 54.5
Human resources and
other operating
expenses 1,333 1,286 3.8
-------- --------
Total expenses 1,913 1,745 9.7
-------- --------
Pretax segment income 325 314 3.2
Income tax provision 71 90 (22.7)
-------- --------
Segment income $ 254 $ 224 13.7
======== ========
International Card & Global Commercial Services
Selected Financial Information
Foreign Exchange
Services
(preliminary, millions) Reclassification Managed Basis
---------------- ------------------------
%
Quarters Ended Inc/
September 30, 2005 2004 2005 2004 (Dec)
-------- ------ ------- ------- -------
Revenues:
Discount revenue, net card
fees and other $ 36 $ 47 $ 2,103 $ 1,949 7.9%
Cardmember lending:
Finance charge revenue
Interest expense
Net finance charge revenue
------- ------- -------- --------
Total revenues 36 47 2,274 2,106 7.9
------- ------- -------- --------
Expenses:
Marketing, promotion, rewards
and cardmember services
Provision for losses
and benefits
Human resources and
other operating
expenses 36 47 1,369 1,333 2.8
------- ------- -------- --------
Total expenses $ 36 $ 47 $ 1,949 $ 1,792 8.7
------- ------- -------- --------
Pro Forma ROE
The Company's consolidated return on equity (ROE) is calculated on a
trailing 12-month basis using reported net income over average total
shareholder's equity (including discontinued operations). The Company also
reports pro forma ROE, which is determined using trailing four quarters income
from continuing operations (which excludes discontinued operations and the
cumulative effect of accounting changes) over reported shareholders' equity at
period end. Management believes pro forma ROE is an important measure because
it reflects performance of the Company's continuing businesses by excluding
the impact of Ameriprise Financial, Inc. and American Express Tax and Business
Services, Inc., which were disposed of as of September 30, 2005.
ROE Pro Forma ROE
Trailing 12-months net income: Trailing four quarters income from
$3.9 billion continuing operations: $3.1 billion
Trailing 12-months average Total shareholders' equity at
total shareholders' equity: September 30, 2005:
$16.0 billion $9.9 billion
ROE: 24.2% Pro forma ROE: 31.7%
American Express Company (www.americanexpress.com) is a leading global
payments, network, travel, and banking company founded in 1850.
Note: The 2005 Third Quarter Earnings Supplement, as well as CFO Gary
Crittenden's presentation from the investor conference call referred to below,
will be available today on the American Express web site at
http://ir.americanexpress.com. An investor conference call to discuss third
quarter earnings results, operating performance and other topics that may be
raised during the discussion will be held at 5:00 p.m. (EST) today. Live
audio of the conference call will be accessible to the general public on the
American Express web site at http://ir.americanexpress.com. A replay of the
conference call also will be available today at the same web site address.
This release includes forward-looking statements, which are subject to
risks and uncertainties. The words "believe," "expect," "anticipate,"
"optimistic," "intend," "plan," "aim," "will," "may," "should," "could,"
"would," "likely," and similar expressions are intended to identify forward-
looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date on which
they are made. The Company undertakes no obligation to update or revise any
forward-looking statements. Factors that could cause actual results to differ
materially from these forward-looking statements include, but are not limited
to, the following: the Company's ability to grow its business and meet or
exceed its return on shareholders' equity target by reinvesting approximately
35% of annually-generated capital, and returning approximately 65% of such
capital to shareholders, over time, which will depend on the Company's ability
to manage its capital needs and the effect of business mix, acquisitions and
rating agency requirements; consumer and business spending on the Company's
credit and charge card products and Travelers Cheques and other prepaid
products and growth in card lending balances, which depend in part on the
ability to issue new and enhanced card and prepaid products, services and
rewards programs, and increase revenues from such products, attract new
cardmembers, reduce cardmember attrition, capture a greater share of existing
cardmembers' spending, sustain premium discount rates on its card products in
light of regulatory and market pressures, increase merchant coverage, retain
cardmembers after low introductory lending rates have expired, and expand the
Global Network & Merchant Services business; the Company's ability to
introduce new products, reward program enhancements and service enhancements
on a timely basis during the latter half of 2005 and the first half of 2006;
the success of the Global Network & Merchant Services business in partnering
with banks in the United States, which will depend in part on the extent to
which such business further enhances the Company's brand, allows the Company
to leverage its significant processing scale, expands merchant coverage of the
network, provides Global Network & Merchant Services' bank partners in the
United States the benefits of greater cardmember loyalty and higher spend per
customer, and merchant benefits such as greater transaction volume and
additional higher spending customers; the continuation of favorable trends,
including increased travel and entertainment spending, and the overall level
of consumer confidence; successfully cross-selling financial, travel, card and
other products and services to the Company's customer base, both in the United
States and abroad; the Company's ability to generate sufficient revenues for
expanded investment spending, and the ability to capitalize on such
investments to improve business metrics; the costs and integration of
acquisitions; the success, timeliness and financial impact (including costs,
cost savings and other benefits including increased revenues), and beneficial
effect on the Company's operating expense to revenue ratio, both in the short-
term and over time, 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, and planned staff reductions
relating to certain of such reengineering actions; the ability to control and
manage operating, infrastructure, advertising and promotion expenses as
business expands or changes, including the ability to accurately estimate the
provision for the cost of the Membership Rewards program; the Company's
ability to manage credit risk related to consumer debt, business loans,
merchant bankruptcies and other 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; bankruptcies, restructurings
or similar events affecting the airline or any other industry representing a
significant portion of the Company's billed business, including any potential
negative effect on particular card products and services and billed business
generally that could result from the actual or perceived weakness of key
business partners in such industries; the triggering of obligations to make
payments to certain co-brand partners, merchants, vendors and customers under
contractual arrangements with such parties under certain circumstances; 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;
risks associated with the Company's agreements with Delta Air Lines to prepay
$350 million for the future purchases of Delta SkyMiles rewards points;
fluctuations in foreign currency exchange rates; fluctuations in interest
rates, which impact the Company's borrowing costs, return on lending products
and spreads in the insurance, annuity and investment certificate products;
accuracy of estimates for the fair value of the assets in the Company's
investment portfolio and, in particular, those investments that are not
readily marketable, including the valuation of the interest-only strip
relating to the Company's lending securitizations; the potential negative
effect on the Company's businesses and infrastructure, including information
technology, of terrorist attacks, disasters or other catastrophic events in
the future; political or economic instability in certain regions or countries,
which could affect lending and other commercial activities, among other
businesses, or restrictions on convertibility of certain currencies; changes
in laws or government regulations, including changes in tax laws or
regulations that could result in the elimination of certain tax benefits;
outcomes and costs associated with litigation and compliance and regulatory
matters; deficiencies and inadequacies in the Company's internal control over
financial reporting, which could result in inaccurate or incomplete financial
reporting; and competitive pressures in all of the Company's major businesses.
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,
2004, and its other reports filed with the SEC.
All information in the following tables is presented on a basis prepared
in accordance with U.S. generally accepted accounting principles (GAAP),
unless otherwise indicated. The information presented herein reflects
discontinued operations presentation for the spin-off of Ameriprise effective
as of September 30, 2005 and certain dispositions, and is revised from
previously reported results.
(Preliminary)
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Millions)
Quarters Ended
September 30,
------------------ Percentage
2005 2004 Inc/(Dec)
------ ------ ----------
Revenues
Discount revenue $ 2,945 $ 2,535 16.2 %
Cardmember lending net
finance charge revenue 648 562 15.6
Net card fees 511 474 7.9
Travel commissions and fees 421 426 (1.0)
Other commissions and fees 628 574 7.7
Securitization income, net 353 295 19.7
Other investment and
interest income 246 248 (1.0)
Other 316 362 (10.9)
------ ------
Total 6,068 5,476 10.8
------ ------
Expenses
Human resources 1,197 1,098 8.9
Marketing, promotion, rewards
and cardmember services 1,492 1,286 16.0
Provision for losses and benefits
Charge card 299 206 45.3
Cardmember lending 364 233 56.0
Investment certificates
and other 76 117 (35.0)
------ ------
Total 739 556 32.9
Professional services 563 534 5.5
Occupancy and equipment 346 328 5.6
Interest 238 201 18.3
Communications 112 114 (1.9)
Other 301 345 (12.7)
------ ------
Total 4,988 4,462 11.8
------ ------
Pretax income from continuing
operations 1,080 1,014 6.5
Income tax provision 215 312 (30.9)
------ ------
Income from continuing operations 865 702 23.2
Income from discontinued operations,
net of tax 165 177 (6.8)
------ ------
Net income $ 1,030 $ 879 17.1
====== ======
(Preliminary)
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Millions)
Nine Months Ended
September 30,
------------------ Percentage
2005 2004 Inc/(Dec)
------ ------ ----------
Revenues
Discount revenue $ 8,558 $ 7,432 15.1 %
Cardmember lending net
finance charge revenue 1,877 1,664 12.9
Net card fees 1,515 1,418 6.9
Travel commissions and fees 1,345 1,311 2.7
Other commissions and fees 1,816 1,668 8.4
Securitization income, net 965 807 19.6
Other investment and
interest income 776 736 5.5
Other 978 1,025 (4.2)
------ ------
Total 17,830 16,061 11.0
------ ------
Expenses
Human resources 3,652 3,306 10.4
Marketing, promotion, rewards
and cardmember services 4,260 3,545 20.2
Provision for losses and benefits
Charge card 748 593 26.1
Cardmember lending 934 834 12.0
Investment certificates
and other 278 230 20.4
------ ------
Total 1,960 1,657 18.2
Professional services 1,594 1,494 6.8
Occupancy and equipment 1,038 974 6.6
Interest 671 592 13.3
Communications 342 354 (3.2)
Other 1,024 1,228 (16.7)
------ ------
Total 14,541 13,150 10.6
------ ------
Pretax income from continuing
operations before accounting
change 3,289 2,911 13.0
Income tax provision 819 894 (8.4)
------ ------
Income from continuing operations
before accounting change 2,470 2,017 22.5
Income from discontinued operations,
net of tax 519 603 (13.9)
------ ------
Income before cumulative effect
of accounting change 2,989 2,620 14.1
Cumulative effect of accounting
change - (71) (A) #
------ ------
Net income $ 2,989 $ 2,549 17.3
====== ======
# Denotes a variance of more than 100%
(A) Reflects a $109 million non-cash pretax charge ($71 million
after-tax) associated with discontinued operations related
to the January 1, 2004 adoption of SOP 03-1.
(Preliminary)
AMERICAN EXPRESS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Billions)
September 30, December 31,
2005 2004
------------ ------------
Assets
Cash and cash equivalents $ 8 $ 8
Accounts receivable 33 32
Investments 22 22
Loans 37 34
Other assets 9 11
Assets of discontinued operations - 87
------------ ------------
Total assets $ 109 $ 194
============ ============
Liabilities and Shareholders' Equity
Short-term debt $ 15 $ 14
Long-term debt 29 33
Other liabilities 55 50
Liabilities of discontinued
operations - 81
------------ ------------
Total liabilities 99 178
------------ ------------
Shareholders' Equity* 10 16
------------ ------------
Total liabilities and
shareholders' equity $ 109 $ 194
============ ============
* Total Shareholders' Equity at December 31, 2004
includes discontinued operations reflected in the
Company's historical consolidated Financial Statements.
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY
(Millions)
Quarters Ended
September 30,
------------------ Percentage
2005 2004 Inc/(Dec)
------ ------ ----------
REVENUES
U.S. Card Services $ 3,035 $ 2,618 15.9 %
International Card & Global
Commercial Services 2,238 2,059 8.6
Global Network & Merchant Services 716 659 8.9
------ ------
5,989 5,336 12.3
Corporate & Other,
including adjustments
and eliminations 79 140 (43.6)
------ ------
CONSOLIDATED REVENUES $ 6,068 $ 5,476 10.8
====== ======
PRETAX INCOME (LOSS) FROM
CONTINUING OPERATIONS
U.S. Card Services $ 638 $ 502 27.5 %
International Card & Global
Commercial Services 325 314 3.2
Global Network & Merchant Services 214 272 (20.8)
------ ------
1,177 1,088 8.2
Corporate & Other (97) (74) 32.2
------ ------
PRETAX INCOME FROM CONTINUING
OPERATIONS $ 1,080 $ 1,014 6.5
====== ======
NET INCOME (LOSS)
U.S. Card Services $ 446 $ 356 25.1 %
International Card & Global
Commercial Services 254 224 13.7
Global Network & Merchant Services 141 173 (18.6)
------ ------
841 753 11.7
Corporate & Other 24 (51) #
------ ------
Income from continuing operations 865 702 23.2
Income from discontinued operations,
net of tax 165 177 (6.8)
------ ------
NET INCOME $ 1,030 $ 879 17.1
====== ======
# Denotes a variance of more than 100%.
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY (CONTINUED)
(Millions)
Nine Months Ended
September 30,
------------------ Percentage
2005 2004 Inc/(Dec)
------ ------ ----------
REVENUES
U.S. Card Services $ 8,772 $ 7,584 15.7 %
International Card & Global
Commercial Services 6,698 6,164 8.7
Global Network & Merchant Services 2,097 1,936 8.4
------ ------
17,567 15,684 12.0
Corporate & Other,
including adjustments
and eliminations 263 377 (31.4)
------ ------
CONSOLIDATED REVENUES $17,830 $16,061 11.0
====== ======
PRETAX INCOME (LOSS) FROM CONTINUING
OPERATIONS
U.S. Card Services $ 2,066 $ 1,641 25.9 %
International Card & Global
Commercial Services 846 880 (3.6)
Global Network & Merchant Services 628 693 (9.4)
------ ------
3,540 3,214 10.2
Corporate & Other (251) (303) (16.6)
------ ------
PRETAX INCOME FROM CONTINUING
OPERATIONS BEFORE ACCOUNTING
CHANGE $ 3,289 $ 2,911 13.0
====== ======
NET INCOME (LOSS)
U.S. Card Services $ 1,423 $ 1,155 23.2 %
International Card & Global
Commercial Services 693 597 16.3
Global Network & Merchant Services 405 440 (8.1)
------ ------
2,521 2,192 15.0
Corporate & Other (51) (175) (71.2)
------ ------
Income from continuing operations
before accounting change 2,470 2,017 22.5
Income from discontinued operations,
net of tax 519 603 (13.9)
Cumulative effect of accounting
change - (71) (A) #
------ ------
NET INCOME $ 2,989 $ 2,549 17.3
====== ======
# Denotes a variance of more than 100%.
(A) Reflects a $109 million non-cash pretax charge ($71 million
after-tax) associated with discontinued operations related to
the January 1, 2004 adoption of SOP 03-1.
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY (CONTINUED)
Quarters Ended
September 30,
---------------- Percentage
2005 2004 Inc/(Dec)
------ ------ ----------
EARNINGS PER COMMON SHARE
BASIC
Income from continuing operations $ 0.70 $ 0.56 25.0 %
Income from discontinued operations 0.14 0.14 - %
------ ------
Net income $ 0.84 $ 0.70 20.0 %
====== ======
Average common shares outstanding
(millions) 1,229 1,251 (1.8)%
====== ======
DILUTED
Income from continuing operations $ 0.69 $ 0.55 25.5 %
Income from discontinued operations 0.13 0.14 (7.1)%
------ ------
Net income $ 0.82 $ 0.69 18.8 %
====== ======
Average common shares outstanding
(millions) 1,254 1,275 (1.7)%
====== ======
Cash dividends declared
per common share $ 0.12 $ 0.12 - %
====== ======
SELECTED STATISTICAL INFORMATION
Quarters Ended
September 30,
---------------- Percentage
2005 2004 Inc/(Dec)
------ ------ ----------
Return on average total shareholders'
equity (A) 24.2% 21.5%
Common shares outstanding (millions) 1,239 1,255 (1.3)%
Book value per common share* $ 7.99 $ 12.62 (36.7)%
Shareholders' equity (billions)* $ 9.9 $ 15.8 (37.3)%
(A) Computed on a trailing 12-month basis using net income and
total shareholders' equity (including discontinued operations)
as included in the Consolidated Financial Statements prepared
in accordance with GAAP.
* Total Shareholders' Equity and book value per common share
amounts prior to September 30, 2005 include discontinued
operations reflected in the Company's historical Consolidated
Financial Statements.
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY (CONTINUED)
Nine Months Ended
September 30,
---------------- Percentage
2005 2004 Inc/(Dec)
------ ------ ----------
EARNINGS PER COMMON SHARE
BASIC
Income from continuing operations $ 2.00 $ 1.60 25.0 %
Income from discontinued operations 0.42 0.47 (10.6)%
Cumulative effect of accounting
change - (0.05) (A) #
------ ------
Net income $ 2.42 $ 2.02 19.8 %
====== ======
Average common shares outstanding
(millions) 1,233 1,264 (2.4)%
====== ======
DILUTED
Income from continuing operations $ 1.96 $ 1.56 25.6 %
Income from discontinued operations 0.42 0.47 (10.6)%
Cumulative effect of accounting
change - (0.05) (A) #
------ ------
Net income $ 2.38 $ 1.98 20.2 %
====== ======
Average common shares outstanding
(millions) 1,257 1,289 (2.5)%
====== ======
Cash dividends declared
per common share $ 0.36 $ 0.32 12.5 %
====== ======
SELECTED STATISTICAL INFORMATION
Nine Months Ended
September 30,
---------------- Percentage
2005 2004 Inc/(Dec)
------ ------ ----------
Return on average total shareholders'
equity (B) 24.2% 21.5%
Common shares outstanding (millions) 1,239 1,255 (1.3)%
Book value per common share* $ 7.99 $ 12.62 (36.7)%
Shareholders' equity (billions)* $ 9.9 $ 15.8 (37.3)%
# Denotes a variance of more than 100%.
(A) Reflects a $109 million non-cash pretax charge ($71 million
after-tax), or $0.05 on a basic and diluted per share basis,
associated with discontinued operations related to the
January 1, 2004 adoption of SOP 03-1.
(B) Computed on a trailing 12-month basis using net income and
total shareholders' equity (including discontinued operations)
as included in the historical Consolidated Financial
Statements prepared in accordance with GAAP.
* Total Shareholders' Equity and book value per common share
amounts prior to September 30, 2005 include discontinued
operations reflected in the Company's historical Consolidated
Financial Statements.
To view additional business segment financials go to:
http://ir.americanexpress.com
SOURCE American Express Company
-0- 10/25/2005
/CONTACT: Robert Glick, +1-212-640-1041, robert.a.glick@aexp.com, or
Michael J. O'Neill, +1-212-640-5951, mike.o'neill@aexp.com/
/FCMN Contact: alexandra.a.martinez@aexp.com /
/Web site: http://ir.americanexpress.com /
(AXP)
END
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