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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
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/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 1-7657
AMERICAN EXPRESS COMPANY
(Exact name of registrant as specified in its charter)
New York 13-4922250
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
World Financial Center
200 Vesey Street
New York, New York 10285
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 640-2000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Shares (par value $.60 per Share) New York Stock Exchange
Boston Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
6 1/4% Exchangeable Notes Due October 15, 1996 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K / /.
Common shares of the registrant outstanding at March 4, 1996 were 479,695,263.
The aggregate market value, as of March 4, 1996, of such common shares held by
non-affiliates of the registrant was approximately $22.4 billion. (Aggregate
market value estimated solely for the purposes of this report. This shall not
be construed as an admission for the purposes of determining affiliate status.)
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV: Portions of Registrant's 1995 Annual Report to
Shareholders.
Part III: Portions of Registrant's Proxy Statement dated March 11, 1996.
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TABLE OF CONTENTS
Form 10-K
Item Number
Part I Page
1. Business
Travel Related Services . . . . . . . . . . . . . . . 1
American Express Financial Advisors. . . . . . . . . . 8
American Express Bank. . . . . . . . . . . . . . . . 13
Corporate. . . . . . . . . . . . . . . . . . . . . . 20
Foreign Operations . . . . . . . . . . . . . . . . . 20
Industry Segment Information and
Classes of Similar Services. . . . . . . . . . . . 21
Executive Officers of the Registrant . . . . . . . . 21
Employees. . . . . . . . . . . . . . . . . . . . . . 25
2. Properties. . . . . . . . . . . . . . . . . . . . . . . 25
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . 25
4. Submission of Matters to a Vote of Security Holders . . 26
Part II
5. Market for Registrant's Common Equity and
Related Stockholder Matters . . . . . . . . . . . . . 26
6. Selected Financial Data . . . . . . . . . . . . . . . . 27
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 27
8. Financial Statements and Supplementary Data . . . . . . 27
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . 27
Part III
10. Directors and Executive Officers of the Registrant. . . 27
11. Executive Compensation. . . . . . . . . . . . . . . . . 27
12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . . . 27
13. Certain Relationships and Related Transactions. . . . . 27
Part IV
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . . . . 28
Signatures. . . . . . . . . . . . . . . . . . . . . . . 29
Index to Financial Statements . . . . . . . . . . . . . F-1
Consent of Independent Auditors . . . . . . . . . . . . F-2
Exhibit Index . . . . . . . . . . . . . . . . . . . . . E-1
i
PART I
ITEM 1. BUSINESS
American Express Company (the "registrant") was founded in 1850 as a joint
stock association and was incorporated under the laws of the State of New York
in 1965. The registrant and its subsidiaries are primarily engaged in the
business of providing travel related services, financial advisory services and
international banking services throughout the world.
TRAVEL RELATED SERVICES
American Express Travel Related Services Company, Inc. (including its
subsidiaries, where appropriate, "TRS") provides a variety of products and
services, including the American Express-R Card (the "Card"), consumer lending,
the American Express-R Travelers Cheque (the "Travelers Cheque" or the
"Cheque") and other stored value products, corporate and consumer travel
products and services, magazine publishing, database marketing and management
and Card-related insurance products. TRS offers products and services in over
160 countries. In certain countries, partly owned affiliates and independent
operators offer some of these products and services under licenses from TRS.
TRS' business as a whole has not experienced significant seasonal
fluctuation, although Travelers Cheque sales and Travelers Cheques outstanding
tend to be greatest each year in the summer months, peaking in the third
quarter, and Card billed business tends to be moderately higher in the fourth
quarter than in other calendar quarters.
TRS places significant importance on its trademarks and service marks.
TRS diligently protects its intellectual property rights around the world.
CONSUMER CARD SERVICES GROUP
TRS offers various Card products to individual consumers, including charge
cards such as the American Express Personal Card, the American Express-R Gold
Card and the Platinum Card-R; and the Optima-R Card, a revolving credit card.
Cards are currently issued in 35 currencies and permit Cardmembers to charge
purchases of goods and services in the U.S. and in most countries around the
world at establishments that have agreed to accept the Card.
The Card issuer accepts from each participating establishment the charges
arising from Cardmember purchases at a discount that varies with the type of
participating establishment, the charge volume, the timing and method of
payment to the establishment, the method of submission of charges and, in
certain instances, the average charge amount and the amount of information
provided.
Charge Cards are primarily designed for use as a method of payment and not
as a means of financing purchases of goods and services and carry no pre-set
spending limit. Charges are approved based on a Cardmember's past spending
and payment patterns, credit history and personal resources. Except in the
case of extended payment plans (such as Sign & Travel-R accounts), charge Cards
require payment by the Cardmember of the full amount billed each month, and no
finance charges are assessed; Card accounts that are past due by a given
number of days are subject, in most cases, to a delinquency assessment and, if
not brought to current status, subject to cancellation.
-1-
The Optima Card comprises a family of revolving credit cards marketed to
individuals in the U.S. and several other countries. The Optima Card was
initially issued only to existing Cardmembers. In 1994, the Optima True
Grace-SM Card was issued in the U.S. on a stand-alone basis. Since then, a
variety of other Optima Cards with different payment terms, grace periods and
rate structures have been made available to customers. American Express
revolving credit cards which do not carry the Optima brand are also issued
outside the U.S.
American Express Centurion Bank ("Centurion Bank") issues the Optima Card
in the U.S. and owns substantially all receivables arising from the use of
Optima Cards issued in the U.S. In addition, Centurion Bank extends lines of
credit in association with certain American Express Cards and offers unsecured
loans to Cardmembers in connection with their Sign & Travel accounts. The
Sign & Travel account allows qualified U.S. Cardmembers the option of extended
payments for airline, cruise and certain prepaid travel charges that are
purchased with the charge Card. Outside the U.S., consumer lending activities
are engaged in by other subsidiaries of the registrant where local regulations
permit.
Cardmembers generally are charged an annual fee, which varies based on the
type of Card, the number of Cards for each account, the currency in which the
Card is denominated and the country of residence of the Cardmember. Certain
Optima Cards are offered with no annual fee.
Cardmembers generally have access to a variety of special services,
depending on the type of Card, including: the Membership Rewards-SM Program,
Global Assist-R Hotline, Buyer's Assurance-SM Protection Plan, Car Rental Loss
and Damage Insurance Plan, Travel Accident Insurance Plan and Purchase
Protection-SM Plan. A Cardmember participating in the Gold Card program in the
U.S. has access to certain additional services, including a Year End Summary
of Charges Report; in many instances, the ability to draw on a line of credit;
and a lowest price guarantee on most retail purchases. The Platinum Card,
offered to certain Cardmembers in the U.S. and certain other countries,
provides access to additional and enhanced travel, financial, insurance,
personal assistance and other services. Under the Express Cash program,
enrolled Cardmembers can obtain cash or American Express Travelers Cheques 24
hours a day from automated teller machines of participating financial
institutions worldwide.
American Express Credit Corporation ("Credco") purchases most Cardmember
receivables arising from the use of Cards (other than Optima Cards) issued in
the U.S. and Cardmember receivables in designated currencies arising from the
use of Cards outside the U.S. Credco finances the purchase of receivables
principally through the issuance of commercial paper and the sale of medium-
and long-term notes. TRS also funds Cardmember receivables through an asset
securitization program. The cost of funding Cardmember receivables is a major
expense of Card operations.
In 1995, TRS introduced a number of new revolving credit and charge Card
products and features pursuant to its strategy of developing a larger
selection of products targeted to the needs of specific customer segments and
of growing loans outstanding in its consumer lending portfolio. During the
year, TRS announced two co-branded Optima Card products, the Hilton-R Optima
Card and the Delta-R SkyMiles-TM Credit Card from American Express, which offer
-2-
rewards provided by the co-branded partners. TRS also introduced other Card
products such as the Gold Optima Card and Optima Card for students. TRS plans
to continue its strategy and offer additional co-branded and other Card
products in the future, and is making a significant investment in a new card
processing system to allow the introduction of products in a much shorter time
frame.
The American Express Card and consumer lending businesses are subject to
extensive regulation in the U.S. under a number of federal laws and
regulations, including the Equal Credit Opportunity Act, which generally
prohibits discrimination in the granting and handling of credit; the Fair
Credit Reporting Act, which, among other things, regulates credit prescreening
practices and requires certain disclosures when an application for credit is
rejected; the Truth in Lending Act, which, among other things, requires
extensive disclosure of the terms upon which credit is granted; the Fair
Credit Billing Act, which, among other things, regulates the manner in which
billing inquiries are handled and specifies certain billing requirements; and
the Fair Credit and Charge Card Disclosure Act, which mandates certain
disclosures on credit and charge card applications. Federal legislation also
regulates abusive debt collection practices. In addition, a number of states
and foreign countries have similar consumer credit protection and disclosure
laws. These laws and regulations have not had, and are not expected to have,
a material adverse effect on the Card and consumer lending businesses either
in the U.S. or on a worldwide basis.
Centurion Bank is a member of the Federal Deposit Insurance Corporation
("FDIC") and is regulated, supervised and regularly examined by the Delaware
State Banking Commissioner and the FDIC. Another subsidiary of TRS, American
Express Deposit Corporation ("AEDC"), is a Utah-chartered, FDIC-insured
industrial loan corporation. In the second quarter of 1996, TRS expects to
merge Centurion Bank into AEDC. AEDC would thereafter be the issuer of the
Optima Card in the U.S. and conduct the activities currently being performed
by Centurion Bank.
TRS encounters substantial and increasingly intense competition worldwide
with respect to the Card and consumer lending businesses from general purpose
cards issued under revolving credit plans, particularly VISA-R cards issued by
members of VISA International Service Association, Inc. or VISA USA, Inc.
(collectively, "VISA"), and MasterCard-R cards issued by members of MasterCard
International, Incorporated ("MasterCard"), including cards sponsored by AT&T,
General Electric Company, General Motors Corporation and Ford Motor Company.
This competition exists among issuers of general purpose charge and credit
cards (intrasystem competition) as well as among card systems like VISA,
MasterCard and to a lesser extent, Diners Club-R, Dean Witter's NOVUS-SM
Network and JCB (intersystem competition). TRS also encounters competition,
to a much lesser extent, from businesses that issue their own cards or
otherwise extend credit to their customers, such as retailers and airline
associations. These products are not generally substitutes for TRS' Card
products due to their limited acceptance. Many U.S. banks issuing credit cards
under revolving credit plans charge annual fees in addition to interest charges
where permitted by state law. The issuer of the Discover Card, as well as some
issuers of VISA cards and MasterCard cards, charge no annual fees. Certain
competing issuers offer premium cards with enhanced services or lines of credit.
Certain issuers also offer mileage credit to card holders under airline
frequent flyer programs or other types of reward programs or rebates. In
1995, TRS expanded its Membership Miles-R travel rewards program in the U.S. to
-3-
include retail merchandise and gourmet gifts and renamed the program
Membership Rewards. The program is also offered outside the U.S. Membership
Rewards is an important part of TRS' strategy to increase Cardmember spending
and loyalty. More than five million Cardmembers in 27 countries participate
in the Membership Rewards program. Due to the success of the program,
enrollees now represent a significant portion of Cardmember spending.
TRS generally charges higher discount rates to service establishments than
its competitors. As a result, TRS has encountered complaints from some
establishments, as well as suppression of the Card's use. TRS has adjusted
its discount structure in certain industries and locations. TRS has also
focused on understanding and addressing key factors that influence service
establishment satisfaction and has expanded its efforts in successfully
handling and resolving suppression problems. TRS' objective is to achieve
merchant coverage that is at virtual parity with bankcard networks. TRS has
expanded its efforts to increase the number of merchants accepting the Card by
utilizing independent sales agents in addition to its own sales force.
In 1995, TRS expanded the on-line services it provides to Cardmembers, and
plans to add more services in the future. Through ExpressNet-SM, Cardmembers
may now access account information, pay their American Express Card bills and
apply for Cards directly from their computers through America Online, among
other available services. TRS also anticipates further developments in payment
products and systems. Such changes may include increasing use of debit cards,
Card acceptance and other payment vehicles on the Internet, stored value cards,
"smart cards" or other card-based or electronic forms of payment.
The principal competitive factors that affect the Card business are (i)
the quality of the service and services, including rewards programs provided
to Cardmembers and participating establishments; (ii) the number and spending
characteristics of Cardmembers; (iii) the quantity and quality of the
establishments that will accept a Card; (iv) the cost of Cards to Cardmembers
and of Card acceptance to participating establishments; (v) the terms of
payment available to Cardmembers and participating establishments; (vi) the
nature and quality of expense management data capture and reporting
capability; (vii) the number and quality of other payment instruments
available to Cardmembers and participating establishments; and (viii) the
success of marketing and promotion campaigns.
STORED VALUE GROUP
In light of changing technologies and customer needs, in 1995 the
Travelers Cheque Group expanded its product offerings to other "stored value"
products and was renamed the Stored Value Group. The mission of the Stored
Value Group is to replace cash with safe, convenient stored value payment
systems that satisfy specific customer needs. To support that mission, in
1995 TRS acquired Special Teams, Inc., a company that specializes in
delivering stored value university card systems that centralize numerous
administrative and financial functions. TRS is also testing the FirstClass-SM
PhoneCard, a prepaid telephone card, with the U.S. Postal Service.
-4-
The core of the Stored Value Group's business, however, continues to be
Travelers Cheques. American Express Travelers Cheques are sold as a safe and
convenient alternative to currency. The Cheque, a negotiable instrument, has
no expiration date and is payable by the issuer in the currency of issuance
when presented for the purchase of goods and services or for redemption. The
success of the Travelers Cheque operation is in large part related to the
worldwide acceptability of the Cheque as a means of payment for goods and
services and the worldwide refundability of Cheques that are lost or stolen.
American Express Travelers Cheques are issued directly by TRS in U.S. dollars,
Canadian dollars, Dutch guilders, Australian dollars, German marks and
Japanese yen. French franc and British pound Cheques are primarily issued by
joint venture companies in which TRS holds an equity interest and for which
TRS provides sales, operations, marketing and refund servicing arrangements.
Swiss franc cheques are being issued by a Swiss partnership in which TRS has a
partnership interest. In 1995, Spanish Peseta Travelers Cheques, issued by
Banco Central Hispano ("BCH"), were made available to American Express
Travelers Cheque customers under a joint promotional agreement between TRS and
BCH.
American Express Travelers Cheques are sold through a broad network of
outlets worldwide, including offices of TRS, its affiliates and
representatives, travel agents, commercial banks, savings banks, savings and
loan associations, credit unions and other financial, travel and commercial
businesses. TRS generally pays compensation to selling agents for their sale
of Travelers Cheques.
The proceeds from sales of Cheques issued by TRS are remitted to TRS and
are invested predominantly in highly-rated debt securities consisting
primarily of intermediate- and long-term state and municipal obligations. The
investment of these proceeds is regulated by various state laws.
TRS also issues the Corporate Travelers Cheque, a cash access product for
business travelers, Cheques for Two-R, a Cheque product with two signature
lines designed for people who are traveling together, and the American
Express-R Gift Cheque. All of these Cheque products operate with the same
signature-counter- signature negotiation procedure as Travelers Cheques and
are refundable to the purchaser in the event of loss or theft.
Although the registrant believes that TRS is the leading issuer of
travelers checks, consumers have a choice of many forms of payment instruments,
including other brands of travelers checks, charge and debit cards and national
and international automated teller machine networks. TRS expects increasing
developments in stored value cards, smart cards and other electronic forms of
payment, and plans to offer a range of new stored value and other products in
the future to compete in this area. The principal competitive factors affecting
the travelers check industry are (i) the acceptability of the checks throughout
the world as an alternative to currency; (ii) the ability to service
satisfactorily the check purchaser if the checks are lost or stolen; (iii) the
compensation paid to, and frequency of settlement by, selling agents; (iv) the
availability to the consumer of other forms of payment; (v) the accessibility
of travelers check sales and refunds; (vi) the success of marketing and
promotion campaigns; and (vii) the amount of the fee charged to the consumer.
-5-
CORPORATE CARD AND TRAVEL BUSINESSES
The American Express Corporate Card is a charge card issued to individuals
through a corporate account established by their employer for business
purposes. TRS, through its Corporate Card program, is the leading provider to
large and small businesses of travel and expense management systems, and
services such as the Business Travel Accident Insurance Plan offered to large
businesses and the Accident Disability Plan provided to small businesses. In
1995, TRS enhanced its expense management system for large Corporate accounts
and expanded the range of products for small businesses with the launch of the
Corporate Platinum Card. TRS achieved substantial growth in the Corporate
Card businesses in 1995.
TRS also provides American Express Government Card charge card services to
federal employees who travel on official government business. In addition,
the American Express Corporate Card is the business expense management system
used by 36 of the 50 states.
In recent years, there has been increased focus by competitors on the
Corporate Card business. For a discussion of competition relating to the Card
business, see pages 3 and 4 above.
In 1994, TRS launched the American Express Corporate Purchasing Card.
This charge Card is intended to provide an efficient, low-cost system for
managing purchases of supplies, equipment and services by companies.
Employees of the company to whom Corporate Purchasing Cards are issued can use
the Cards to order directly from suppliers, rather than using the traditional
system of requisitions, purchase orders and invoices and retail store
purchasing. TRS pays the suppliers and submits a single monthly billing
statement to the company. Due to the needs of companies in implementing the
Purchasing Card, growth in this product has been much slower than originally
planned.
TRS provides a wide variety of travel services to customers traveling for
business and personal purposes and is the leading business travel provider
worldwide. Travel services include trip planning, reservations, ticketing,
and other incidental services. In addition, for business travel accounts, TRS
provides corporate travel policy consultation and management information
systems and group and incentive travel services. TRS receives commissions and
fees for travel bookings and arrangements from airlines, hotels, car rental
companies and other travel suppliers. In 1995, TRS introduced a new structure
of service fees for certain transactions such as re-ticketing, courier
services and complex itineraries. TRS also receives management fees from
certain business travel accounts.
To meet the competition for the business traveler and to provide client
companies with a customized approach to managing their travel and
entertainment needs, the Travel Management Services unit ("TMS") integrates
the Corporate Card and business travel services in the U.S. and certain
foreign countries. TMS offers to its client companies services to manage
their travel and entertainment budgets. In addition, this service provides
clients with an information package to plan, account for and control travel
and entertainment expenses. TMS provides a state-of-the-art expense
management system, which captures and reconciles expense report data with
Corporate Card charge data. New software was introduced during 1995 for large
Corporate accounts which allows Corporate cardholders to access current
account data via E-mail to create their own expense reports in a short period
of time.
-6-
Vigorous competition is encountered in the travel business from more than
30,000 travel agents and direct sales by airlines and travel suppliers in the
U.S. and abroad. This competition is mainly based on service, convenience and
proximity to the customer and has increased due to several factors in recent
years, including the fact that a number of independent agencies have been
acquired by larger travel companies. Travel agency groups also have increased
in size, enabling independent agencies to be more competitive in providing
travel services to regional and national business travel clients and in other
activities. In addition, many companies have established in-house business
travel departments.
More recently, changes in the travel agent compensation structure (i.e.,
the limits on airfare commissions) have been imposed by airlines in an
environment of heightened competition, which has caused some independent
agencies to go out of business. It is also possible that customers may
increasingly seek alternative channels to make travel arrangements, such as
on-line vendors or in some cases "ticketless" airline services that require
booking directly with the airlines. It is anticipated that travel agents will
continue to provide value by making available fare and ticketing information
for competing airlines on a timely basis. It is also expected that travel
agencies will continue to look for expense reduction opportunities.
Consolidation of travel agencies is likely to continue as agencies seek to
better serve national and multinational business travel clients and negotiate
more effectively with the airlines with respect to computer reservation
systems and compensation and pricing arrangements.
In 1995, TRS launched Express Reservations on ExpressNet, which allows
customers to make airline reservations and order tickets on-line. TRS plans
to offer other new services in the future in response to changes in the
traditional travel agent distribution channel.
TRS INTERNATIONAL
In 1995, TRS took several steps to enhance its international businesses in
recognition of the importance of markets outside the U.S. to the registrant's
long-term growth strategy.
In the past, TRS generally has issued its own Cards and processed service
establishment charges internally. However, in selected countries outside the
U.S. where TRS has not established operations or issued Cards denominated in
local currencies (including Croatia, South Africa and Venezeula), TRS has,
since the early 1970's, appointed banks or other third parties to be
Independent Operators handling the domestic aspects of all Card service
functions in such countries, including issuing the Card. In 1995, TRS signed
Independent Operator Agreements with Banco Commercial Portugues in Portugal,
Bank Hapoalim in Israel, Alpha Credit Bank in Greece and Tong Yang Group in
Korea, establishing such parties as charge Card issuers in their respective
markets. TRS expects to establish additional types of arrangements with banks
outside the U.S. in selected markets where it believes that such arrangements
will enhance Card distribution and expand the merchant base. In January 1996,
TRS filed a complaint with the European Commission against the contemplated
adoption by Visa International Service Association, Inc. of a by-law that
would result in the automatic termination of Association membership of any
member bank issuing the Card.
-7-
In 1995, TRS also launched a credit card in the United Kingdom, its first
stand-alone revolving credit card issued outside the U.S. Similar revolving
credit cards are now also being tested in other countries. In addition,
during 1995, TRS expanded programs outside the U.S., such as Membership
Rewards and Relationship Statementing, which links rewards directly to
Cardmembers' spending patterns.
TRS also continued to implement its strategy of acquiring business travel
agencies on a worldwide basis to meet the needs of its multinational business
travel and Corporate Card customers. In 1995, TRS' French travel subsidiary
and Havas Voyages, the largest French travel agency, agreed to combine their
business travel operations in France in a jointly owned company. TRS also
acquired Bel Air Viagens, the largest business travel agency in Brazil.
OTHER PRODUCTS AND SERVICES
TRS publishes Travel & Leisure-R, Food & Wine-R, Departures-TM and Your
Company-TM magazines.
American Express Relationship Services ("AERS") was created in 1994 to
deliver nontraditional American Express products and services which address
the information, access, security and telecommunications needs of new and
existing customers. AERS includes TRS' existing Merchandise Services and Fee
Services units as well as new telecommunications and business development
units. Through AERS, TRS offers merchandise directly to Cardmembers, who
may elect to pay for the products they purchase in installments with no
finance charges. Products can now also be purchased through computer via
America Online.
TRS also provides through its subsidiary, Epsilon Data Management, Inc.,
proprietary database marketing and management.
In 1995, TRS sold AMEX Life Assurance Company ("Amex Life") to General
Electric Capital Corporation ("GE Capital"). GE Capital acquired Amex Life's
long-term care insurance business, as well as its long-term disability,
corporate owned life insurance and other group insurance (primarily accidental
death insurance) businesses. The transaction did not include American Express
Card- related insurance products, including Automatic Air Flight insurance and
a deferred annuity marketed under the name Privileged AssetsR. These products
are marketed to Cardmembers through direct response methods.
AMERICAN EXPRESS FINANCIAL ADVISORS
American Express Financial Corporation ("AEFC") is engaged in providing a
variety of financial products and services to help individuals, businesses and
institutions establish and achieve their financial goals. AEFC's products and
services include financial planning and advice, insurance and annuities, a
variety of investment products, including investment certificates, mutual
funds and limited partnerships, investment advisory services, trust and
employee plan administration services, tax preparation and bookkeeping
services, personal auto and homeowner's insurance and retail securities
brokerage services. At December 31, 1995, American Express Financial Advisors
Inc. ("AXP Advisors"), AEFC's principal marketing subsidiary, maintained a
nationwide financial planning field force of 7,945 persons. AEFC's marketing
system consists primarily of AXP Advisors field force operating in 50 states,
the District of Columbia and Puerto Rico, organized in five regions and 45
market areas.
-8-
DISTRIBUTION OF PRODUCTS AND SERVICES
AXP Advisors offers financial planning and investment advisory services to
individuals for which it charges a fee. AXP Advisors financial planning
services provide financial analyses addressing six basic areas of financial
planning: financial position, protection, investment, income tax, retirement
and estate planning, as well as asset allocation. To complete their financial
plans, AXP Advisors' financial advisors provide clients with recommendations
of products from the more than 100 products distributed by subsidiaries and
affiliates of AEFC as well as products of approved third parties.
First-year financial advisors are compensated primarily by salary, while
veteran financial advisors receive compensation based largely on sales. AXP
Advisors' field force compensation is structured to encourage advisor
retention and product persistency, while adding stability to the financial
advisor's income. In attracting and retaining members of the field force, AXP
Advisors competes with financial planning firms, insurance companies,
securities broker-dealers and other financial institutions. AXP Advisors has
undertaken a major initiative called "IDS 1994" to make changes in its business
processes, field organization and compensation arrangements to improve advisor
retention and client satisfaction. Pursuant to this initiative, in 1995, AEFA
tested certain computer-based tools for advisors, including a new desktop
financial planning system, and plans to commence implementation of such tools
nationwide in 1996. AEFA also implemented new training programs in 1995 to
help advisors enhance client service and increase productivity.
Although the use of a dedicated field force may entail higher initial
costs than other forms of marketing, such as direct-response marketing or
independent agency distribution, AXP Advisors believes that its ability to
provide broad-based integrated services on a relationship basis is a
competitive advantage.
In addition to marketing through a dedicated sales force, AXP Advisors is
actively pursuing alternative approaches for the distribution of its financial
planning services, and investment, insurance and annuity products, including
networking arrangements with community banks, credit unions and lending
entities in the Farm Credit System. AXP Advisors believes that it is
important to provide these alternatives to enhance its competitiveness in the
marketplace.
AXP Advisors does business as a broker-dealer and investment advisor in
all 50 states, the District of Columbia and Puerto Rico. AEFC and AXP
Advisors are registered as broker-dealers and investment advisors regulated by
the Securities and Exchange Commission ("SEC"), and are members of the
National Association of Securities Dealers, Inc. ("NASD"). AXP Advisors'
financial advisors must obtain state and NASD licenses required for the
businesses.
AXP Advisors anticipates regulatory oversight of the securities and
commodities industries to increase at all levels. The SEC, self-regulatory
organizations and state securities commissions may conduct administrative
proceedings, which may result in censure, fine, the issuance of
cease-and-desist orders or suspension or expulsion of a broker-dealer or an
investment advisor and its officers or employees.
The financial services industry responds to consumer needs for money
management, risk management and investments. Industry competition focuses
primarily on cost, investment performance, yield, convenience, service,
-9-
reliability, safety and distribution system. Competition in the financial
services market is very intense and AEFC competes with a variety of financial
institutions such as banks, securities brokers, mutual funds and insurance
companies, whose products and services increasingly cross over the traditional
lines that previously differentiated one type of institution from another.
Competition has also extended to individuals working in the financial services
industry and certain financial institutions have recently shown increased
interest in seeking to hire AXP Advisors' financial advisors.
AEFC's business does not as a whole experience significant seasonal
fluctuations.
INSURANCE AND ANNUITIES
AEFC's insurance business is carried on primarily by IDS Life Insurance
Company ("IDS Life"), a stock life insurance company organized under the laws
of the State of Minnesota. IDS Life is a wholly-owned subsidiary of AEFC and
serves all states except New York. IDS Life Insurance Company of New York is
a wholly-owned subsidiary of IDS Life and serves New York State residents.
IDS Life also owns American Enterprise Life Insurance Company ("American
Enterprise Life"), which issues fixed and variable dollar annuity contracts to
banks, thrift institutions and stock brokerages. American Centurion Life
Assurance Company ("American Centurion Life") is another IDS Life subsidiary
that offers fixed and variable annuities to American Express Cardmembers in
New York, as well as fixed and variable annuities to banks, thrift
institutions and stock brokerages in New York. IDS Life also owns American
Partners Life Insurance Company ("American Partners Life"), which offers fixed
and variable annuity contracts to American Express Cardmembers who reside in
states other than New York.
IDS Life's products include whole life, universal life (fixed and
variable), single premium life and term products (including waiver of premium
and accidental death benefits). IDS Life also offers disability income and
long-term care insurance. IDS Life is one of the nation's largest issuers of
single premium and flexible premium deferred annuities on both a fixed and
variable dollar basis. Immediate annuities are offered as well. IDS Life
markets variable annuity contracts designed for retirement plans.
IDS Life's principal annuity products are fixed deferred annuities. These
annuities guarantee a relatively low annual interest rate during the
accumulation period (the time before annuity payments begin) although the
company may pay a higher rate reflective of current market rates. IDS Life
also offers a fixed/variable annuity, or "Flexible Annuity," in which the
purchaser may choose between mutual funds, with portfolios of common stocks,
bonds, managed assets and/or short-term securities, and IDS Life's "general
account" as the underlying investment vehicle.
IDS Life, American Enterprise Life and American Partners Life are subject
to comprehensive regulation by the Minnesota Department of Commerce (Insurance
Division), the Indiana Department of Insurance, and the Arizona Department of
Insurance, respectively. American Centurion Life and IDS Life Insurance
Company of New York are regulated by the New York Department of Insurance.
The laws of the other states in which these companies do business also
regulate such matters as the licensing of sales personnel and, in some cases,
the contents of insurance policies. The purpose of such regulation and
supervision is primarily to protect the interests of policyholders. Virtually
-10-
all states also mandate participation in insurance guaranty associations,
which assess insurance companies in order to fund claims of policyholders of
insolvent insurance companies. On the federal level, there is periodic
interest in enacting new regulations relating to various aspects of the
insurance industry including taxation and accounting procedures, as well as
the treatment of persons differently because of sex, with respect to terms,
conditions, rates or benefits of an insurance contract. New federal
regulation in any of these areas could potentially have an adverse effect upon
AEFC's insurance subsidiaries.
As a distributor of variable annuity and life insurance contracts, IDS
Life is registered as a broker-dealer and is a member of the NASD. As
investment manager of various investment companies, IDS Life is registered as
an investment advisor under applicable federal requirements.
IDS Property Casualty Insurance Company ("IDS Property Casualty") provides
personal auto and homeowner's coverage to clients in 19 states. This
insurance is underwritten to some extent by AMEX Assurance Company, a
subsidiary of the registrant, in 17 of these states and reinsured by IDS
Property Casualty. IDS Property Casualty is regulated by the Commissioner of
Insurance for Wisconsin. AMEX Assurance Company, which also provides certain
American Express Card related insurance products, is regulated by the
Commissioner of Insurance for Illinois.
The insurance and annuity business is highly competitive, and IDS Life's
competitors consist of both stock and mutual insurance companies. Competitive
factors applicable to the insurance business include the interest rates
credited to its products, the charges deducted from the cash values of such
products, the financial strength of the organization and the services provided
to policyholders.
INVESTMENT CERTIFICATES
IDS Certificate Company ("IDSC"), a wholly-owned subsidiary of AEFC,
issues face-amount investment certificates. IDSC is registered as an
investment company under the Investment Company Act of 1940. Owners of IDSC
certificates are entitled to receive, at maturity, a stated amount of money
equal to the aggregate investments in the certificate plus interest at rates
declared from time to time by IDSC. In addition, persons owning one type of
certificate may have their interest calculated in whole or in part based on
any upward movement in a broad-based stock market index. The certificates
issued by IDSC are not insured by any government agency. AEFC acts as
investment manager for IDSC. IDSC's certificates are sold primarily by AXP
Advisors' field force. Certificates are also marketed by American Express
Bank Ltd. to its foreign customers.
IDSC currently offers eight types of face-amount certificates. The
specified maturities of the certificates range from four to twenty years.
Within their specified maturity, most certificates have interest rate periods
ranging from one to thirty-six months. Certificate owners can withdraw their
certificate investments at the end of an interest rate period.
IDSC is the largest issuer of face-amount certificates in the U.S. Such
certificates compete, however, with many other investments offered by banks,
savings and loan associations, credit unions, mutual funds, insurance
companies and similar financial institutions, which may be viewed by potential
customers as offering a comparable or superior combination of safety and
return on investment.
-11-
MUTUAL FUNDS
AXP Advisors offers a variety of mutual funds, for which it acts as
principal underwriter (distributor of shares). AEFC acts as investment
manager and performs various administrative services. The "IDS MUTUAL FUND
GROUP" consists of 32 publicly-offered mutual funds, with varied investment
objectives, and includes, for example, money market, tax-exempt, bond and
stock funds. AEFC believes that the IDS MUTUAL FUND GROUP, with combined net
assets at December 31, 1995 of $48.1 billion, was the eleventh largest mutual
fund organization in the U.S. and, excluding money market funds, was the
seventh largest. AXP Advisors, as principal underwriter, maintains a
continuous public offering of shares of each fund. For most funds, shares are
sold in three classes. Class A shares are sold at net asset value plus any
applicable sales charge. The maximum sales charge is five percent of the
offering price with reduced sales charges for larger purchases. Class B
shares are sold with a rear load. The maximum sales charge is five percent
declining to no charge for shares held over six years. Class Y shares are
sold to institutional clients with no load.
The competitive factors affecting the sale of mutual funds include sales
charges ("loads") paid, administrative expenses, services received, investment
performance, the variety of products and services offered and the convenience
to the investor. The funds compete with other investment products, including
funds that have no sales charge (known as "no load" funds), and with funds
distributed through independent brokerage firms, as well as with those
distributed by other "exclusive" sales forces.
OTHER PRODUCTS AND SERVICES
IDS Advisory Group Inc. ("IDSA"), a subsidiary of AEFC, provides
investment management services for pension, profit sharing, employee savings
and endowment funds of large- and medium-sized businesses and other
institutions ("institutional clients"). At December 31, 1995, IDSA managed
securities portfolios totaling $12.1 billion for 187 accounts. International
or global investment management is offered to U.S.-based institutional clients
by IDS International, Inc., a U.S. company with offices in London, and to
non-U.S. based institutional clients by IDS Fund Management Ltd., an English
company, with offices in Hong Kong, Singapore and London. At December 31,
1995, IDS International, Inc. managed securities portfolios totaling $5.1
billion for 32 accounts; and IDS Fund Management Ltd. managed securities
portfolios totaling $1.2 billion for 22 accounts. IDS International, Inc.
and IDS Fund Management Ltd. are wholly-owned subsidiaries of AEFC.
AXP Advisors also offers investment management services for wealthy
individuals and small institutions. IDS Wealth Management Service offers a
wrap program marketed to wealthy individuals through AXP Advisors' financial
advisors and marketing employees and third-party referrals. American Express
Strategic Portfolio Services offers a mutual fund wrap program to wealthy
individuals. Portfolio Management Group ("PMG") offers discretionary
investment management services to the above types of clients with account
sizes between $1 million and $10 million. As of December 31, 1995, PMG
managed securities portfolios totaling $700 million for 132 accounts. IDS
Wealth Management Service, American Express Strategic Portfolio Services and
PMG are operating divisions of AXP Advisors.
-12-
American Express Trust Company ("AETC") provides trustee, custodial,
recordkeeping and investment management services for pension, profit sharing,
401(k) and other qualified and non-qualified employee benefit plans. AETC,
through its personal trust division, offers trust services to individuals and
organizations. AETC is trustee of over 800 benefit plans which represent
approximately $11 billion in assets and 550,000 participants. AETC has assets
under custody in excess of $71 billion and provides non-trusteed, investment
management of assets in excess of $5 billion. AETC is regulated by the
Minnesota Department of Commerce (Banking Division).
AXP Advisors distributes a variety of real estate limited partnership
investments issued by other companies. AXP Advisors also distributes from
time to time managed futures limited partnerships in which an AEFC subsidiary
is a co- general partner.
American Express Tax and Business Services Inc., a subsidiary of AEFC,
offers tax planning, tax preparation and small business consulting services to
clients in 55 locations in 20 states, and expects to expand this business
through acquisitions in the future.
In 1995, AEFC continued to expand its securities brokerage services.
American Express Securities Services, a division of AXP Advisors, holds $2.3
billion in assets for clients. American Enterprise Investment Services Inc.,
a wholly-owned subsidiary of AEFC, provides securities execution and clearance
services for 80,000 retail and institutional clients of American Express
Securities Services. American Enterprise Investment Services Inc. is
registered as a broker-dealer with the SEC, is a member of the NASD and the
Chicago Stock Exchange and is registered with appropriate states.
The registrant and AXP Advisors are continuing to develop a separate
distribution system which is complementary to the existing system of AXP
Advisors operating under the name American Express Financial Services Direct.
It will include not only products from AXP Advisors, but also from other
businesses of the registrant and selected outside vendors. Payment, credit,
insurance and investment products will be offered. American Express Financial
Services Direct intends to use direct marketing, financial consultants and
on-line services to help prospects and clients select appropriate products and
services.
In 1995, the registrant and AXP Advisors also developed a number of
strategies to pursue several different opportunities to provide financial
products and services to employees at their places of work. These
opportunities include expanding a number of existing businesses, including
401(k) retirement and other benefits services, tax and business services,
securities brokerage and financial education services.
AMERICAN EXPRESS BANK
The registrant's wholly-owned subsidiary, American Express Bank Ltd.
(together with its subsidiaries, where appropriate, "AEB"), offers products
that meet the financial service needs of three client groups: wealthy
entrepreneurs and their companies, financial institutions and retail
customers. AEB does not directly or indirectly do business in the U.S. except
as an incident to its activities outside the U.S. Accordingly, the following
discussion relating to AEB generally does not distinguish between U.S. and
non-U.S. based activities.
-13-
Historically managed on a geographic basis, AEB is implementing a global
line-of-business organizational structure begun in 1995. AEB's four business
lines are correspondent, commercial and private banking, and consumer
financial services. Correspondent banking serves leading local banks
primarily in emerging markets and includes transaction payments and a wide
range of trade finance products such as letters of credit and payment
guarantees, collections, check clearing and bankers acceptances. Commercial
banking is provided to businesses, most of which are owned by wealthy
entrepreneurs, and includes trade finance, working capital loans and equipment
finance. Private banking focuses on wealthy entrepreneurs by providing such
customers with investment management, trust and estate planning, deposit
instruments and secured lending. Consumer financial services is primarily a
direct response business. Products include interest- bearing deposits,
unsecured lines of credit, installment loans and money market funds. AEB also
provides treasury services to all segments of its customer base which include
spot and forward foreign exchange, interest rate and currency swaps and
various other derivative instruments.
In certain countries outside the U.S. and Canada, in some cases by
arrangement with TRS, AEB provides travel related services consisting of Card,
travel and Travelers Cheque products. In the future, AEB expects to more
fully integrate its business with other parts of the registrant, including
serving a greater role as an international platform to support TRS' business
globally.
AEB has a global network with offices in 36 countries. Its international
headquarters is located in New York City. It maintains international banking
agencies in New York City and Miami, Florida. Its wholly-owned Edge Act
subsidiary, American Express Bank International ("AEBI"), is also
headquartered in New York City and has branches in New York City and Miami.
In part because of a structure that lacks scale in many markets, AEB
continues to focus on initiatives to reduce and control its expense base
worldwide. In 1994, AEB entered into a 10-year contract with Electronic Data
Systems Corporation for the outsourcing of AEB's global systems support and
development and data processing functions.
SELECTED FINANCIAL INFORMATION
AEB's prior years' financial information has been restated to reflect the
transfer in 1994 of certain international consumer financial services
businesses from TRS.
AEB provides banking services to the registrant and its subsidiaries. AEB
is only one of many international and local banks used by the registrant and
its other subsidiaries, which constitute only a few of AEB's many customers.
AEB's total assets were $12.3 billion at December 31, 1995, compared with
$13.3 billion at December 31, 1994. Liquid assets, consisting of cash and
deposits with banks, trading account assets and investments, were $4.5 billion
at December 31, 1995, compared with $5.6 billion at December 31, 1994.
-14-
The following table sets forth a summary of financial data for AEB at and
for each of the three years in the period ended December 31, 1995 (dollars in
millions):
1995 1994 1993
---- ---- ----
Net financial revenues $643 $652 $677
Noninterest expenses 521 525 499
Net income 77 80 92
- -----------------------------------------------------------------------------
Cash and deposits with banks 1,992 2,605 2,668
Investments 2,537 2,765 2,819
Loans, net 5,317 4,881 5,488
Total assets 12,324 13,291 14,137
- ----------------------------------------------------------------------------
Customers' deposits and credit
balances 8,480 9,103 10,178
Shareholder's equity (a) 837 758 755
- -----------------------------------------------------------------------------
Return on average assets 0.59% 0.54% 0.65%
Return on average common equity (b) 9.99% 10.89% 13.67%
- -----------------------------------------------------------------------------
Total loans/deposits and credit
balances from customers 64.00% 54.81% 55.16%
Average common equity/average
assets (b) 5.57% 4.71% 4.57%
Risk-based capital ratios:
Tier 1 8.9% 7.5% 6.3%
Total 13.0% 14.7% 10.2%
Leverage ratio 5.8% 4.8% 4.4%
- -----------------------------------------------------------------------------
Average interest rates earned: (c)
Loans (d) 8.68% 7.58% 7.06%
Investments (e) 8.71% 9.54% 9.21%
Deposits with banks 6.65% 5.73% 5.67%
- -----------------------------------------------------------------------------
Total interest-earning assets (e) 8.15% 7.62% 7.17%
- -----------------------------------------------------------------------------
Average interest rates paid: (c)
Deposits and credit balances from
customers 6.10% 5.41% 5.73%
Borrowed funds, including long-term
debt 5.55% 4.99% 4.18%
- -----------------------------------------------------------------------------
Total interest-bearing liabilities 6.00% 5.35% 5.46%
- -----------------------------------------------------------------------------
Net interest income/total average
interest-earning assets (e) 2.88% 2.85% 2.92%
- ----------------------------------------------------------------------------
(a) AEB declared and paid a special dividend of $75 million to the
registrant on January 31, 1996.
(b) ROE is calculated excluding the effect of SFAS No. 115 in 1995 and 1994.
(c) Based upon average balances and related interest income and expense,
including the effect in 1995 and 1994 of interest rate products where
appropriate and transactions with related parties.
(d) Interest rates have been calculated based upon average total loans,
including those on nonperforming status.
(e) On a tax equivalent basis.
-15-
The following tables set forth the composition of AEB's loan portfolio at
year end for each of the five years in the period ended December 31, 1995
(millions):
By Geographical Region (a) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------
Asia/Pacific $2,151 $2,144 $2,186 $1,792 $1,891
Europe 876 903 1,091 1,177 1,498
Indian Subcontinent 970 721 850 908 624
Latin America 617 589 749 675 546
North America 76 81 283 382 468
Middle East 614 345 368 357 365
Africa 124 207 87 65 61
- ------------------------------------------------------------------------------
Total $5,428 $4,990 $5,614 $5,356 $5,453
==============================================================================
1995
---------------------------------
Due After
1 Year
Due Through Due
By Type Within 5 After 5
and Maturity 1 Year Years(b)Years(b) 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------
Loans to $2,344 $258 $12 $2,614 $2,328 $2,652 $2,628 $2,355
businesses(c)
Real estate
loans 342 153 6 501 592 708 665 751
Loans to banks and
other financial
institutions 1,207 32 1 1,240 915 1,083 666 731
Equipment
financing(d) 15 27 1 43 79 105 386 501
Consumer loans 829 84 4 917 941 912 850 945
Loans to governments
and official 56 - 4 60 81 89 96 96
institutions
All other loans 53 - - 53 54 65 65 74
- -------------------------------------------------------------------------------
Total $4,846 $554 $28 $5,428 $4,990 $5,614 $5,356 $5,453
===============================================================================
(a) Based primarily on the domicile of the borrower.
(b) Loans due after 1 year at fixed (predetermined) interest rates totaled
$131 million, while those at floating (adjustable) interest rates totaled
$451 million.
(c) Business loans, which accounted for approximately 48 percent of the
portfolio as of December 31, 1995, were distributed over 26 commercial and
industrial categories.
(d) The decrease from December 31, 1992 to December 31, 1993 reflects $163
million of equipment finance (aircraft) loans transferred to other
performing assets upon foreclosure (as aircraft assets leased to others).
The total value of aircraft assets leased to others at December 31, 1995
was approximately $361 million. In January of 1996, AEB transferred to
the registrant its aircraft assets leased to others which consisted of
aircraft on operating leases as well as loans secured by commercial
aircraft. The transfer price of $286 million, which is net of assumed
liabilities, was partially financed through a $120 million, three-year
note. The remainder was paid in cash.
-16-
The following table sets forth AEB's nonperforming loans at year end for
each of the five years in the period ended December 31, 1995 (millions):
1995 1994 1993 1992 1991
------------------------------------------------------------------------
Loans to businesses $ 20 $ 12 $ 24 $ 22 $ 21
Real estate loans 1 4 19 69 5
Equipment financing 1 3 - 6 5
Loans to banks and other
financial institutions 8 - - 4 4
Loans to governments
and official institutions 1 1 - 1 3
Consumer loans 3 - - - -
------------------------------------------------------------------------
Total (a) (b) $ 34 $ 20 $ 43 $102 $ 38
========================================================================
(a) AEB's real estate owned totaled $44 million at December 31, 1995,
$56 million at December 31, 1994 and $89 million at December 31,
1993, and represent balances transferred from nonperforming loans
as a result of foreclosures. The 1995 decrease as well as the
decrease from 1993 to 1994 primarily reflected the sale of
foreclosed properties.
(b) Reduced rate loans were immaterial in amount.
-17-
The following table sets forth a summary of the credit loss experience of
AEB at and for each of the five years in the period ended December 31, 1995
(dollars in millions):
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Total loans at year end $5,428 $4,990 $5,614 $5,356 $5,453
====== ====== ====== ====== ======
Reserve for credit losses-
January 1, $ 109 $ 126 $ 153 $ 116 $ 326
Provision for credit losses 7 8 44 121 44
Translation and other (a) - - (21) (1) 3
------- ---------------------------
Subtotal 116 134 176 236 373
------- ---------------------------
Write-offs:
Real estate loans - 1 16 30 7
Loans to businesses 3 21 19 21 88
Loans to banks and other
financial institutions 1 3 - 4 18
Equipment financing 1 - - - -
Loans to governments and
official institutions 1 - - 2 149
Consumer loans 19 19 20 40 4
All other loans - - 6 1 -
Recoveries:
Loans to businesses (5) (4) (4) (8) (6)
Loans to banks and other
financial institutions (3) (3) (1) (1) (1)
Real estate loans - - - - (1)
Equipment financing (1) (2) - - -
Consumer loans (11) (10) (6) (5) (1)
All other loans - - - (1) -
------ ------------------- ------
Net write-offs 5 25 50 83 257
------ ------ ------------ ------
Reserve for credit losses-
December 31, $ 111 $ 109 $ 126$ 153 $ 116
============= ============ ======
Reserve for credit losses/
total loans 2.04% 2.19% 2.24% 2.85% 2.13%
====== ====== ============ ======
(a) The decline in 1993 was primarily due to the transfer of reserves relating
to loans reclassified to other performing assets upon foreclosure.
- --------------------------
Interest income is recognized on the accrual basis. Loans, other than
certain consumer loans, are placed on nonperforming status when payments of
principal or interest are 90 days past due, or if in the opinion of management
the borrower is unlikely to meet its contractual commitments. When loans are
placed on nonperforming status, all previously accrued interest not yet
received is reversed against current interest income. Cash receipts of
-18-
interest on nonperforming loans are recognized either as income or as a
reduction of principal, based upon management's judgment as to the ultimate
collectibility of principal. Consumer loans principally consist of lines of
credit. These loans are written off against the reserve for credit losses
generally on a formula basis upon reaching specified contractual delinquency
stages or earlier if the loan is otherwise deemed uncollectible. Interest
income assessed on customers generally accrues until such time a loan is
written off.
A reserve for credit losses is maintained to absorb losses inherent in the
loan portfolio and in other credit-related on- and off- balance sheet
financial instruments. The reserve is established by charging a provision for
credit losses against income. The amount charged to income is based upon
several factors, which include the historical credit loss experience in
relation to outstanding credits, a continuous determination as to the
collectibility of each credit, and management's evaluation of exposures in
each applicable country as related to current and anticipated economic and
political conditions. Management's assessment of the adequacy of the reserve
is inherently subjective, as significant estimates are required. Loans
determined to be uncollectible, as well as other credit losses, are charged
against the reserve, with any subsequent recoveries credited to the reserve.
RISKS
The global nature of AEB's business activities are such that
concentrations of credit to particular industries and geographic regions are
not unusual. At December 31, 1995, AEB had significant investments in certain
on- and off- balance sheet financial instruments, which were primarily
represented by deposits with banks, securities, loans, contractual amounts of
letters of credit (standby and commercial) and guarantees. The counterparties
to these financial instruments were primarily unrelated to AEB, and
principally consisted of banks and other financial institutions and various
commercial and industrial enterprises operating geographically within the
Asia/Pacific region, the Indian Subcontinent, Europe and North America. AEB
continuously monitors its credit concentrations and actively manages to reduce
the associated risk. AEB does not anticipate any material losses as a result
of these concentrations.
AEB's earnings are sensitive to fluctuations in interest rates, as it is
not always possible to match precisely the maturities of interest-related
assets and liabilities. However, strict limits have been established for both
country and total bank mismatching. On occasion, AEB may decide to mismatch
in anticipation of a change in future interest rates in accordance with these
guidelines. Term loans extended by AEB include both floating interest rate
and fixed interest rate loans.
For a discussion relating to AEB's use of derivative financial
instruments, see pages 27 and 28 under the caption "Risk Management," and Note
11 on pages 42 through 45, of the registrant's 1995 Annual Report to
Shareholders, which portions of such report are incorporated herein by
reference.
-19-
COMPETITION
The banking services of AEB are subject to vigorous competition in all
markets in which AEB operates. Competitors include local and international
banks whose assets often exceed those of AEB, other financial institutions
(including certain other subsidiaries of the registrant) and, in certain
cases, governmental agencies. In some countries, AEB may be one of the more
substantial financial institutions offering banking services; in no country,
however, has AEB been a major factor.
REGULATION
AEB's branches, representative offices and subsidiaries are licensed and
regulated in the jurisdictions in which they do business and are subject to
the same local requirements as other competitors. AEB's New York Agency is
supervised and regularly examined by the Superintendent of Banks of the State
of New York. At the request of management, the New York State Banking
Department has extended its supervision and examination of the New York Agency
to cover AEB's global network of branches and subsidiaries. The Florida
Department of Banking and Finance supervises and examines the Miami Agency.
In addition, the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") regulates, supervises and examines AEBI. AEBI is
subject to a 1993 agreement with the Federal Reserve Board pursuant to which
AEBI agreed to correct two alleged violations of regulations of the Federal
Reserve Board and amend certain internal policies and procedures.
Since AEB does not do business in the U.S. except as an incident to its
activities outside the U.S., the registrant's affiliation with AEB neither
causes the registrant to be subject to the provisions of the Bank Holding
Company Act of 1956, nor requires it to register as a bank holding company
under the Federal Reserve Board's Regulation Y. AEB is not a member of the
Federal Reserve System, is not subject to supervision by the FDIC, and is not
subject to any of the restrictions imposed on grandfathered nonbank banks by
the Competitive Equality Banking Act of 1987 other than anti-tie-in rules
with respect to transactions involving products and services of certain of its
affiliates.
As a matter of policy, AEB actively monitors compliance with regulatory
capital requirements. These requirements are essentially represented by the
Federal Reserve Board's risk-based capital guidelines and complementary
leverage constraint. Pursuant to the Federal Deposit Insurance Corporation
Improvement Act of 1991, the Federal Reserve Board, among other federal
banking agencies, adopted regulations defining levels of capital adequacy.
Under these regulations, a bank is deemed to be well capitalized if it
maintains a Tier 1 risk-based capital ratio of at least 6.0 percent, a total
risk-based capital ratio of at least 10.0 percent, and a leverage ratio of at
least 5.0 percent. Based on AEB's total risk-based capital and leverage
ratios, which are set forth on page 15, AEB is considered to be well
capitalized at December 31, 1995.
-20-
CORPORATE
The Balcor Company Holdings, Inc. and its subsidiaries (collectively,
"Balcor"), formerly operating as a diversified real estate investment and
management company, discontinued new commercial real estate activities in
1990 and began to liquidate its portfolio of real estate loans and properties.
The liquidation is expected to be substantially completed in 1996. In 1994,
Balcor sold its property management business. At December 31, 1995, Balcor's
assets, excluding cash and cash equivalents, totaled $382 million with related
reserves of $109 million. Balcor's assets at December 31, 1995 included
investments in real estate, interests in partnerships, real estate loans and
advances to limited partnerships originated by Balcor.
FOREIGN OPERATIONS
TRS derives a significant portion of its revenues from the use of the
Card, Travelers Cheques and travel services in countries outside the U.S. and
continues to broaden the use of these products and services outside the U.S.
Political and economic conditions in these countries, including the
availability of foreign exchange for the payment by the local Card issuer of
obligations arising out of local Cardmembers' spending outside such country,
for the payment of Card bills by Cardmembers who are billed in other than
their local currency and for the remittance of the proceeds of Travelers
Cheque sales, can have an effect on TRS' revenues. Substantial and sudden
devaluation of local Cardmembers' currency can also affect their ability to
make payments to the local issuer of the Card on account of spending outside
the local country.
The major portion of AEB's banking revenues is from business conducted in
countries outside the U.S. Some of the risks attendant to those operations
include currency fluctuations and changes in political, economic and legal
environments in each such country.
As a result of its foreign operations, the registrant is exposed to the
possibility that, because of foreign exchange rate fluctuations, assets and
liabilities denominated in currencies other than the U.S. dollar may be
realized in amounts greater or lesser than the U.S. dollar amounts at which
they are currently recorded in the registrant's Consolidated Financial
Statements. Examples of transactions in which this may occur include the
purchase by Cardmembers of goods and services in a currency other than the
currency in which they are billed; the sale in one currency of a Travelers
Cheque denominated in a second currency; foreign exchange positions held by
AEB as a consequence of its client-related foreign exchange trading
operations; and, in most instances, investments in foreign operations. These
risks, unless properly monitored and managed, could have an adverse effect on
the registrant's operations.
The registrant's policy in this area is generally to monitor closely all
foreign exchange positions and to minimize foreign exchange gains and losses,
for example, by offsetting foreign currency assets with foreign currency
liabilities, as in the case of foreign currency loans and receivables, which
are financed in the same currency. An additional technique used to manage
exposures is the spot and forward purchase or sale of foreign currencies as a
hedge of net exposures in those currencies as, for example, in the case of the
Cardmember and Travelers Cheque transactions described above. Additionally,
Cardmembers may be charged in U.S. dollars for their spending outside their
local country. The registrant's investments in foreign operations are hedged
by forward exchange contracts or by identifiable transactions, where
appropriate.
-21-
INDUSTRY SEGMENT INFORMATION AND CLASSES OF SIMILAR SERVICES
Information with respect to the registrant's industry segments,
geographical operations and classes of similar services is set forth in Note
15 to the Consolidated Financial Statements of the registrant, which appears
on pages 48 through 50 of the registrant's 1995 Annual Report to Shareholders,
which note is incorporated herein by reference.
EXECUTIVE OFFICERS OF THE REGISTRANT
All of the executive officers of the registrant as of March 29, 1996, none
of whom has any family relationship with any other and none of whom became an
officer pursuant to any arrangement or understanding with any other person,
are listed below. Each of such officers was elected to serve until the next
annual election of officers or until his or her successor is elected and
qualified. Each officer's age is indicated by the number in parentheses next
to his or her name.
HARVEY GOLUB - Chairman and Chief Executive Officer; Chairman and
Chief Executive Officer, TRS
Mr. Golub (57) has been Chief Executive Officer of the registrant since
February 1993, Chairman of the registrant since August 1993 and Chairman and
Chief Executive Officer of TRS since November 1991. Prior to August 1993, he
had been President of the registrant since July 1991. Prior to January 1992,
he was also Chairman of American Express Financial Corporation. Prior to July
1991, he had been Vice Chairman of the registrant and Chairman and Chief
Executive Officer of American Express Financial Corporation.
KENNETH I. CHENAULT - Vice Chairman
Mr. Chenault (44) has been Vice Chairman of the registrant since January
1995. Prior to May 1995, he had also been President, U.S.A. of TRS since
August 1993. Prior thereto, he had been President, Consumer Card Group, TRS.
GEORGE L. FARR - Vice Chairman
Mr. Farr (56) has been Vice Chairman of the registrant since May 1995.
Prior thereto, he had been a director of McKinsey & Company.
JONATHAN S. LINEN - Vice Chairman
Mr. Linen (52) has been Vice Chairman of the registrant since August 1993.
Prior thereto, he had been President and Chief Operating Officer of TRS since
March 1992. Prior thereto, he had been President and Chief Executive Officer
of the Shearson Lehman Brothers Division of Shearson Lehman Brothers Inc.
STEVEN W. ALESIO - President, Travel Services Group, TRS
Mr. Alesio (41) has been President, Travel Services Group, TRS since
February 1996. Prior thereto, he had been Executive Vice President, Travel
Services Group, TRS since June 1995. Prior thereto, he had been Executive
Vice President, Corporate Card, TRS since November 1993. Prior thereto, he
had been Senior Vice President of the Consumer Travel Network, TRS.
-22-
ANNE M. BUSQUET - President, American Express Relationship Services,
TRS
Mrs. Busquet (45) has been President, American Express Relationship
Services, TRS since October 1995. Prior thereto, she had been Executive Vice
President, Consumer Card Group since November 1993. Prior thereto, she had
been Senior Vice President and General Manager, Merchandise Services.
EDWARD P. GILLIGAN - President, Corporate Services, TRS
Mr. Gilligan (36) has been President, Corporate Services, TRS since
February 1996. Prior thereto, he had been Executive Vice President, Travel
Management Services, TRS since June 1995. Prior thereto, he had been Senior
Vice President and General Manager Eastern Region of Travel Management
Services, TRS since June 1992. Prior thereto, he had been Vice President,
Corporate Client Services, TRS.
JOHN D. HAYES - Executive Vice President, Global Advertising
Mr. Hayes (41) has been Executive Vice President, Global Advertising since
May 1995. Prior thereto, he had been President of Lowe & Partners/SMS since
January 1991. Prior thereto, he had been President and Chief Executive
Officer of Greer Du Bois.
WILLIAM J. HERON, JR. - President, American Express Financial Services
Direct
Mr. Heron (54) has been President of American Express Financial Services
Direct since July 1995. Prior thereto, he had been Chief Executive Officer of
The Swig Investment Company since April 1993. Prior thereto, he had been
Group Executive, U.S. Consumer Business, Citicorp and Division Executive, New
York Business, Citibank.
DAVID C. HOUSE - President, Establishment Services Worldwide, TRS
Mr. House (46) has been President, Establishment Services Worldwide, TRS
since October 1995. Prior thereto, he had been Senior Vice President of Sales
and Field Marketing for the U.S. Establishment Services Group since January
1993. Prior thereto, he had been Senior Vice President of Reebok
International, Inc.
DAVID R. HUBERS - President and Chief Executive Officer, American
Express Financial Corporation
Mr. Hubers (53) has been President and Chief Executive Officer of American
Express Financial Corporation since August 1993. Prior thereto, he had been a
Senior Vice President of American Express Financial Corporation.
-23-
JOSEPH W. KEILTY - Executive Vice President, Quality & Human
Resources, Chief Quality Officer
Mr. Keilty (58) has been Executive Vice President since November 1991.
Prior thereto, he had been Managing Director of Keilty, Goldsmith & Company, a
consulting company.
CARL B. LEHMANN, III - President, Stored Value Group, TRS
Mr. Lehmann (42) has been President, Stored Value Group, TRS since October
1993. Prior thereto, he had been Senior Vice President, Cheque Products, TRS.
ALLAN Z. LOREN - Executive Vice President and Chief Information
Officer
Mr. Loren (57) has been Executive Vice President and Chief Information
Officer since May 1994. Prior thereto, he had been President and Chief
Executive Officer of Galileo International since January 1991. Prior thereto,
he had been President of Apple U.S.A., a division of Apple Computer Corp.
MICHAEL P. MONACO - Executive Vice President and Chief Financial
Officer
Mr. Monaco (48) has been Executive Vice President and Chief Financial
Officer since September 1990. Prior to July 1995, he had also been Treasurer
since April 1992.
LOUISE M. PARENT - Executive Vice President and General Counsel
Ms. Parent (45) has been Executive Vice President and General Counsel of
the registrant since May 1993. Prior thereto, she had been Deputy General
Counsel of the registrant since January 1992. Prior thereto, she had been
General Counsel of First Data Corporation.
PHILLIP J. RIESE - President, Consumer Card Services Group, TRS;
Chairman of the Board of American Express
Centurion Bank
Mr. Riese (46) has been President, Consumer Card Services Group, TRS since
September 1995. Prior thereto, he had been President, Cardmember Financial
Services Group, TRS since September 1993. He has been Chairman of the Board
of American Express Centurion Bank since August 1993. Prior to September
1993, he had been Executive Vice President and General Manager of the Charge
Card Group.
THOMAS O. RYDER - President, TRS International
Mr. Ryder (51) has been President, TRS International since October 1995.
Prior thereto, he had been President, Establishment Services Worldwide, TRS
since 1993. Prior thereto, he had been Executive Vice President and General
Manager of the Establishment Services Division, TRS.
-24-
THOMAS SCHICK - Executive Vice President, Corporate Affairs and
Communications
Mr. Schick (49) has been Executive Vice President since March 1993. Prior
thereto, he had been Executive Vice President of TRS since October 1992.
Prior thereto, he had been Senior Executive Vice President of Shearson Lehman
Brothers Inc.
JOHN A. WARD, III - Chairman and Chief Executive Officer, American
Express Bank Ltd.
Mr. Ward (49) has been Chairman and Chief Executive Officer, American
Express Bank Ltd. since January 1996. Prior thereto, he had been Executive
Vice President of Chase Manhattan Bank since September 1993 and Chief
Executive Officer of Chase BankCard Services since July 1993. Prior thereto,
he had been President of Chase Personal Financial Services.
EMPLOYEES
The registrant had 70,347 employees on December 31, 1995.
ITEM 2. PROPERTIES
The registrant's headquarters are in a 51-story, 2.2 million square foot
building located in lower Manhattan, known as American Express Tower, which
also serves as the headquarters for TRS and AEB. This building, which is on
land leased from the Battery Park City Authority for a term expiring in 2069,
is one of four office buildings in a complex known as the World Financial
Center. Lehman Brothers Holdings Inc. ("Lehman") is also headquartered at the
building and is a co-owner.
Other principal locations of TRS include: the American Express Service
Centers in Fort Lauderdale, Florida, Phoenix, Arizona, Greensboro, North
Carolina and Salt Lake City, Utah, and American Express Canada, Inc.
headquarters, Markham, Ontario, Canada, all of which are owned by the
registrant or its subsidiaries.
AEFC's principal locations are its headquarters, the IDS Tower, a portion
of which the company leases until 2002, and its Operations Center, which the
company owns; both are in Minneapolis, Minnesota. AEFC also owns Oak Ridge
Conference Center, a training facility and conference center, in Chaska,
Minnesota.
Generally, the registrant and its subsidiaries lease the premises they
occupy in other locations. Facilities owned or occupied by the registrant and
its subsidiaries are believed to be adequate for the purposes for which they
are used and are well maintained.
-25-
ITEM 3. LEGAL PROCEEDINGS
The registrant and its subsidiaries are involved in a number of legal and
arbitration proceedings concerning matters arising in connection with the
conduct of their respective business activities. The registrant believes it
has meritorious defenses to each of these actions and intends to defend them
vigorously. The registrant believes that it is not a party to, nor are any of
its properties the subject of, any pending legal proceedings which would have
a material adverse effect on the registrant's consolidated financial
condition.
SAFRA-RELATED ACTIONS
Two purported shareholder derivative actions, now consolidated, were
brought in October 1990 in New York State Supreme Court and three purported
derivative actions, also consolidated, were brought in early 1991 in the U.S.
District Court for the Southern District of New York against all of the then
current directors, certain former directors and certain former officers and
employees of the registrant. The consolidated state court complaint alleges
that defendants breached their duty of care in managing the registrant,
purportedly resulting in losses and in the registrant's payment of $8 million
in July 1989 to certain charities agreed to by the registrant and Edmond J.
Safra. The federal complaints also alleged breach of duty in connection with
a severance arrangement of a former executive officer of the registrant and
that certain proxy statements of the registrant were misleading in failing to
disclose such alleged breaches. Plaintiffs in the state court action seek a
declaratory judgment, unspecified money damages and an accounting. The
federal actions were dismissed in December 1993, and the dismissal was upheld
by the Second Circuit Court of Appeals in November 1994. One of the
plaintiffs in the federal action subsequently commenced another state court
action raising the same allegations as the consolidated state court complaint.
FCH-RELATED ACTION
A purported shareholder derivative action was brought in June 1991 in the
U.S. District Court for the Eastern District of New York against the then
current directors of the registrant. In January 1992, this action was
transferred to the United State District Court for the Central District of
California for coordinated or consolidated proceedings with all other federal
actions related to First Capital Holdings Corp. ("FCH"). The complaint
alleges that the Board of Directors should have required Lehman to divest its
investment in FCH and to write down its investment sooner. In addition, the
complaint alleges that the failure to act constituted a waste of corporate
assets and caused damage to the registrant's reputation. The complaint seeks
a judgment declaring that the directors named as defendants breached their
fiduciary duties and duties of loyalty and requiring the defendants to pay
money damages to the registrant and remit their compensation for the periods
in which the duties were breached, attorneys' fees and costs and other relief.
Lehman has agreed to indemnify the registrant for any losses incurred in
connection with this and other actions that arose related to FCH.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the registrant's security holders
during the last quarter of its fiscal year ended December 31, 1995.
-26-
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The principal market for the registrant's Common Shares is The New York
Stock Exchange. Its Common Shares are also listed on the Boston, Chicago,
Pacific, London, Zurich, Geneva, Basle, Dusseldorf, Frankfurt, Paris, Amsterdam
and Brussels Stock Exchanges. The registrant had 57,010 common shareholders of
record at December 31, 1995. For price and dividend information with respect
to such Common Shares, see Note 18 to the Consolidated Financial Statements on
page 51 of the registrant's 1995 Annual Report to Shareholders, which note is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The "Consolidated Five-Year Summary of Selected Financial Data" appearing
on page 53 of the registrant's 1995 Annual Report to Shareholders is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth under the heading "Financial Review" appearing
on pages 21 through 28 of the registrant's 1995 Annual Report to Shareholders
is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The "Consolidated Financial Statements", the "Notes to Consolidated
Financial Statements" and the "Report of Ernst & Young LLP Independent
Auditors" appearing on pages 29 through 52 of the registrant's 1995 Annual
Report to Shareholders are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEMS 10, 11, 12 and 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT; EXECUTIVE COMPENSATION; SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT; CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
The registrant filed with the SEC, within 120 days after the close of its
last fiscal year, a definitive proxy statement dated March 11, 1996 pursuant
to Regulation 14A, which involves the election of directors. The following
portions of such proxy statement are incorporated herein by reference: pages
3 and 4 under the heading "The Shares Voting," pages 5 through 7 under the
headings "Security Ownership of Directors and Executive Officers," and
"Security Ownership of Named Executives," pages 10 through 12 under the
heading "Directors' Fees and Other Compensation," pages 12, beginning at
"Election of Directors" through 34, ending at "Selection of Auditors"
(excluding the portions under the headings, "Board Compensation Committee
-27-
Report on Executive Compensation" appearing on pages 15 through 20 and
"Performance Graph" appearing on pages 26 and 27), and page 44 under the
heading "Certain Filings." In addition, the registrant has provided, under
the caption "Executive Officers of the Registrant" at pages 22 through 25
above, the information regarding executive officers called for by Item 401(b)
of Regulation S-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements:
See Index to Financial Statements on page F-1 hereof.
2. Financial Statement Schedules:
See Index to Financial Statements on page F-1 hereof.
3. Exhibits:
See Exhibit Index on pages E-1 through E-5 hereof.
(b) Reports on Form 8-K:
1. Form 8-K, dated October 16, 1995, Item 5, announcing the end
of discussions of a possible sale of American Express Bank.
2. Form 8-K, dated October 23, 1995, Item 5, reporting the
registrants's earnings for the quarter ended September 30,
1995.
3. Form 8-K, dated January 9, 1996, Item 5, reporting the
appointment of John A. Ward as Chairman and Chief Executive
Officer of American Express Bank.
4. Form 8-K, dated January 22, 1996, Item 5, reporting the
registrant's earnings for the quarter and year ended
December 31, 1995.
-28-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
AMERICAN EXPRESS COMPANY
March 29, 1996 By /s/ Michael P. Monaco
Michael P. Monaco
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By /s/ Harvey Golub By /s/ Beverly Sills Greenough
Harvey Golub Beverly Sills Greenough
Chairman, Chief Executive Director
Officer and Director
By /s/ Michael P. Monaco By /s/ F. Ross Johnson
Michael P. Monaco F. Ross Johnson
Executive Vice President and Director
Chief Financial Officer
By /s/ Daniel T. Henry By /s/ Vernon E. Jordan Jr.
Daniel T. Henry Vernon E. Jordan Jr.
Senior Vice President Director
and Comptroller
By /s/ Daniel F. Akerson By/s/ Henry A. Kissinger
Daniel F. Akerson Henry A. Kissinger
Director Director
By /s/ Anne L. Armstrong By /s/ Drew Lewis
Anne L. Armstrong Drew Lewis
Director Director
By /s/ Edwin L. Artzt By /s/ Aldo Papone
Edwin L. Artzt Aldo Papone
Director Director
By /s/ William G. Bowen By/s/ Frank P. Popoff
William G. Bowen Frank P. Popoff
Director Director
-29-
By /s/ David M. Culver
David M. Culver
Director
By /s/ Charles W. Duncan Jr.
Charles W. Duncan Jr.
Director
March 29, 1996
-30-
AMERICAN EXPRESS COMPANY
INDEX TO FINANCIAL STATEMENTS
COVERED BY REPORT OF INDEPENDENT AUDITORS
(Item 14(a))
Annual
Report to
Shareholders
Form 10-K (Page)
--------- ------------
American Express Company and Subsidiaries:
Data incorporated by reference from attached
1995 Annual Report to Shareholders:
Report of independent auditors .......... 52
Consolidated statement of income for the
three years ended December 31, 1995 ..... 29
Consolidated balance sheet at December 31,
1995 and 1994 ........................... 30
Consolidated statement of cash flows for
the three years ended December 31, 1995 . 31
Consolidated statement of shareholders' equity
for the three years ended December 31, 1995 32
Notes to consolidated financial statements 33-51
Consent of independent auditors .............. F-2
Schedules:
I--Condensed financial information of F-3-6
registrant
II--Valuation and qualifying accounts for the
three years ended December 31, 1995 F-7
All other schedules for American Express Company and subsidiaries have been
omitted since the required information is not present or not present in
amounts sufficient to require submission of the schedule, or because the
information required is included in the respective financial statements or
notes thereto.
The consolidated financial statements of American Express Company (including
the report of independent auditors) listed in the above index, which are
included in the Annual Report for the year ended December 31, 1995, are
hereby incorporated by reference. With the exception of the pages listed in
the above index, unless otherwise incorporated by reference elsewhere in this
Annual Report on Form 10-K, the 1995 Annual Report is not to be deemed filed
as part of this report.
F-1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual
Report on Form 10-K of American Express Company of our report dated
February 8, 1996 (hereinafter referred to as our Report), included
in the 1995 Annual Report to Shareholders of American Express
Company.
Our audits included the financial statement schedules of
American Express Company listed in Item 14(a). These schedules are
the responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits. In our opinion, the
financial statement schedules referred to above, when considered in
relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth
therein.
We also consent to the incorporation by reference in
Registration Statements (Form S-8 No. 2-46918, No. 2-59230, No.
2-64285, No. 2-73954, No. 2-89680, No. 33-01771, No. 33-02980, No.
33-28721, No. 33-33552, No. 33-36422, No. 33-38777, No. 33-48629,
No. 33-62124, No. 33-65008 and No. 33-53801; Form S-3 No. 2-89469,
No. 33-17706, No. 33-43268, No. 33-66654 and No. 33-50997) and in the
related Prospecti of our Report with respect to the consolidated
financial statements and schedules of American Express Company included
and incorporated by reference in this Annual Report on Form 10-K for the
year ended December 31, 1995.
/s/ Ernst & Young LLP
New York, New York
March 29, 1996
F-2
AMERICAN EXPRESS COMPANY AND CONSOLIDATED SUBSIDIARIES
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENT OF INCOME
(Parent Company Only)
(millions)
Years Ended
December 31,
---------------------------
1995 1994 1993
---- ---- ----
Revenues $ 254 $ 187 $ 123
----- ----- -----
Expenses:
Interest 245 216 181
Human resources 85 84 82
Other (A) 218 164 (659)
----- ----- -----
Total 548 464 (396)
----- ----- -----
Pretax (loss) income from continuing operations (294) (277) 519
Income tax provision (benefit) (132) (110) 271
----- ----- -----
Net (loss) income before equity in net income
of subsidiaries and affiliates (162) (167) 248
Equity in net income of subsidiaries
and affiliates 1,726 1,547 1,357
----- ----- -----
Income from continuing operations 1,564 1,380 1,605
Equity in income (loss) of discontinued
operations - 33 (127)
----- ----- -----
Net income $1,564 $1,413 $1,478
===== ===== =====
(A) Includes pretax gain on the sale of First Data Corporation of $779
million ($433 million after-tax) in 1993.
See Notes to Condensed Financial Information of Registrant
F-3
AMERICAN EXPRESS COMPANY AND CONSOLIDATED SUBSIDIARIES
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEET
(Parent Company Only)
(millions, except share amounts)
ASSETS
------
December 31,
---------------
1995 1994
----- -----
Cash and cash equivalents $ 19 $ 164
Investments 661 246
Securities purchased under agreement to resell 319 -
Equity in net assets of subsidiaries and affiliates 9,451 7,415
Accounts receivable and accrued interest, less reserves 44 13
Land, buildings and equipment--at cost, less
accumulated depreciation: 1995, $69; 1994, $64 74 91
Due from subsidiaries (net) 988 1,863
Other assets 418 630
------ ------
Total assets $ 11,974 $ 10,422
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Accounts payable and other liabilities $ 1,314 $ 1,116
Long-term debt 2,340 2,773
Short-term debt 100 100
------ ------
Total liabilities 3,754 3,989
Shareholders' equity:
Preferred shares, $1.66 2/3 par value, authorized
20 million shares
Convertible Exchangeable Preferred shares, issued and
outstanding 4 million shares, stated
at liquidation value 200 200
Common shares, $.60 par value, authorized
1.2 billion shares; issued and outstanding
483.1 million shares in 1995 and 495.9 million
shares in 1994 290 298
Capital surplus 3,781 3,651
Net unrealized securities gains (losses) 875 (389)
Foreign currency translation adjustment (85) (77)
Retained earnings 3,159 2,750
------ ------
Total shareholders' equity 8,220 6,433
------ ------
Total liabilities and shareholders' equity $ 11,974 $ 10,422
====== ======
See Notes to Condensed Financial Information of Registrant
F-4
AMERICAN EXPRESS COMPANY AND CONSOLIDATED SUBSIDIARIES
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF CASH FLOWS
(Parent Company Only)
(millions)
Years Ended December 31,
-------------------------
1995 1994 1993
---- ---- ----
Cash flows from operating activities:
Net income $ 1,564 $ 1,413 $ 1,478
Adjustments to reconcile net income to cash
provided by operating activities:
Equity in net income of subsidiaries
and affiliates (1,726) (1,547) (1,357)
Equity in (income) loss of discontinued
operations - (33) 127
Dividends received from subsidiaries
and affiliates 941 877 868
Gain on sale of First Data Corporation - - (779)
----- ----- -----
Net cash provided by operating activities 779 710 337
----- ----- -----
Net cash (used) provided by investing
activities (32) 1,536 (655)
----- ----- -----
Cash flows from financing activities:
Issuance of American Express common shares 286 179 259
Repurchase of American Express common shares (891) (555) -
Dividends paid (458) (504) (526)
Cash infusion to Lehman Brothers - (904) -
Net (decrease) increase in debt (864) (331) 524
Other (primarily Due from subsidiaries) 1,035 25 42
----- ----- -----
Net cash (used) provided by financing
activities (892) (2,090) 299
----- ----- -----
Net (decrease) increase in cash and cash
equivalents (145) 156 (19)
----- ----- -----
Cash and cash equivalents at beginning
of year 164 8 27
----- ----- -----
Cash and cash equivalents at end of year $ 19 $ 164 $ 8
===== ===== =====
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest (net of amounts capitalized) in 1995, 1994, and 1993
was $190 million, $169 million and $105 million, respectively. Net cash
received for income taxes was $127 and $185 for 1995 and 1994 respectively;
net cash paid for income taxes was $256 for 1993.
F-5
AMERICAN EXPRESS COMPANY AND CONSOLIDATED SUBSIDIARIES
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT
1. Principles of Consolidation
The accompanying financial statements include the accounts of American
Express Company and on an equity basis its subsidiaries and affiliates.
Lehman Brothers is reported as a discontinued operation in 1994 and 1993.
These financial statements should be read in conjunction with the
consolidated financial statements of the Company. Certain prior year's
amounts have been reclassified to conform to the current year's
presentation.
2. Long-term debt consists of (millions):
December 31,
-------------
1995 1994
---- ----
6 1/4% DECS due October 15, 1996 1,294 868
8 1/2% Notes due August 15, 2001 298 298
Floating Medium-Term Note due December 31, 2000 208 945
8 3/4% Notes due June 15, 1996 200 200
8 5/8% Senior Debentures due 2022 198 198
Senior Floating Rate Note due September 30, 1996 55 -
Employee Stock Ownership Plan - 63
11.95% Private Placement Notes due 1995 - 102
WFC Series C 12 1/5% Guaranteed Notes due December 12, 1997 - 15
WFC Series D 11 5/8% Guaranteed Notes due December 12, 2000 22 22
WFC Series Z Zero Coupon Notes due December 12, 2000 37 33
WFC $60 million 8.15% Japanese Yen PPN due July 1996 9 9
WFC $80 million 7.86% Japanese Yen PPN due August 1996 11 11
7 1/2% Debentures due February 27, 1999 3 4
12 3/4% Industrial Revenue Bonds due October 31, 2001 5 5
----- -----
$2,340 $2,773
===== =====
Aggregate annual maturities of long-term debt for the five years ending
December 31, 2000 are as follows (millions): 1996, $1,626; 1997, $0; 1998,
$25; 1999, $31, 2000, $184.
F-6
AMERICAN EXPRESS COMPANY AND CONSOLIDATED SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1995
(millions)
Reserve for credit losses, Reserve for doubtful
loans and discounts accounts receivable
-------------------------- -----------------------
1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ----
Balance at beginning
of period $ 545 $ 655 $ 911 $ 807 $ 796 $1,124
Additions:
Charges to income 529 362 535 1,327(a) 1,104(a) 1,020(a)
Recoveries of amounts
previously written-
off 134 150 26 - - -
Other - (19) (85) - - -
Deductions:
Charges for which
reserves were
provided (606) (603) (732) (1,305) (1,093) (1,348)
----- ----- ----- ----- ----- -----
Balance at end of
period $ 602 $ 545 $ 655 $ 829 $ 807 $ 796
===== ===== ===== ===== ===== =====
(a) Before recoveries on accounts previously written-off, which are credited
to income: 1995--$333, 1994--$332 and 1993--$333.
F-7
EXHIBIT INDEX
The following exhibits are filed as part of this Annual Report or, where
indicated, were heretofore filed and are hereby incorporated by reference (*
indicates exhibits electronically filed herewith.) Exhibits numbered 10.1
through 10.21 and 10.31 through 10.42 are management contracts or compensatory
plans or arrangements.
3.1 Registrant's Restated Certificate of Incorporation (incorporated by
reference to Exhibit 4.1 of the registrant's Registration Statement on
Form S-8, dated October 31, 1991 (File No. 33-43671)).
3.2 Registrant's By-Laws, as amended (incorporated by reference to Exhibit
3.2 of the registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1994.)
4 The instruments defining the rights of holders of long-term debt
securities of the registrant and its subsidiaries are omitted pursuant
to Section (b)(4)(iii)(A) of Item 601 of Regulation S-K. The
registrant hereby agrees to furnish copies of these instruments to the
SEC upon request.
10.1 American Express Company 1979 Long-Term Incentive Plan, as amended
(incorporated by reference to Exhibit 10.2 of the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1987).
10.2 American Express Company 1989 Long-Term Incentive Plan, as amended
(incorporated by reference to Exhibit 28.1 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1993).
10.3 American Express Company Deferred Compensation Plan for Directors, as
amended (incorporated by reference to Exhibit 10.3 of the registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1992).
10.4 American Express Company Executives' Incentive Compensation Plan
(incorporated by reference to Exhibit 10.4 of the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1988).
10.5 Description of American Express Pay for Performance Deferral Program
(incorporated by reference to Exhibit 10.5 of the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994).
10.6 American Express Company Supplementary Pension Plan, as amended
(incorporated by reference to Exhibit 10.6 of the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1988).
10.7 American Express Company 1983 Stock Purchase Assistance Plan, as
amended (incorporated by reference to Exhibit 10.6 of the registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1988).
10.8 Consulting Agreement dated March 3, 1994 between the registrant and
Aldo Papone Consulting (incorporated by reference to Exhibit 10.8 of
the registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993).
E-1
10.9 Written description of consulting agreement between the registrant and
Kissinger Associates, Inc. (incorporated by reference to Exhibit 10.20
of the registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1984).
10.10 American Express Company Retirement Plan for Non-Employee Directors, as
amended (incorporated by reference to Exhibit 10.12 of the registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1988).
*10.11 Certificate of Amendment of the American Express Company Retirement
Plan for Non-Employee Directors dated March 21, 1996.
10.12 American Express Company Directors' Stock Option Plan (incorporated by
reference to Exhibit 10.16 of the registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1987).
10.13 American Express Key Executive Life Insurance Plan, as amended
(incorporated by reference to Exhibit 10.12 of the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1991).
10.14 American Express Key Employee Charitable Award Program for Education
(incorporated by reference to Exhibit 10.13 of the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1990).
10.15 American Express Directors' Charitable Award Program (incorporated by
reference to Exhibit 10.14 of the registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1990).
10.16 Description of separate pension arrangement and loan agreement between
the registrant and Harvey Golub (incorporated by reference to Exhibit
10.17 of registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988).
10.17 Shearson Lehman Brothers Capital Partners I Amended and Restated
Agreement of Limited Partnership (incorporated by reference to Exhibit
10.18 of registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988).
10.18 Shearson Lehman Hutton Capital Partners II, L.P. Amended and Restated
Agreement of Limited Partnership (incorporated by reference to Exhibit
10.19 of registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988).
10.19 American Express Company Salary/Bonus Deferral Plan (incorporated by
reference to Exhibit 10.20 of registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1988).
10.20 Written description of certain pension arrangements with Jonathan S.
Linen (incorporated by reference to Exhibit 10.14 of the registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1991).
10.21 Consulting Agreement dated March 3, 1994 between American Express
Travel Related Services Company, Inc. and Aldo Papone Consulting
(incorporated by reference to Exhibit 10.23 of the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993).
E-2
10.22 Restated and Amended Agreement of Tenants-In-Common, dated May 27,
1994, by and among the registrant, American Express Bank Ltd., American
Express Travel Related Services Company, Inc., Lehman Brothers Inc.,
Lehman Government Securities, Inc. and Lehman Commercial Paper
Incorporated (incorporated by reference to Exhibit 10.1 of Lehman
Brothers Holdings Inc.'s Transition Report on Form 10-K for the
transition period from January 1, 1994 to November 30, 1994 (File No.
1-9466)).
10.23 Tax Allocation Agreement, dated May 27, 1994, between Lehman Brothers
Holdings Inc. and the registrant (incorporated by reference to Exhibit
10.2 of Lehman Brothers Holdings Inc.'s Transition Report on Form 10-K
for the transition period from January 1, 1994 to November 30, 1994
(File No. 1-9466)).
10.24 Intercompany Agreement, dated May 27, 1994, between the registrant and
Lehman Brothers Holdings Inc. (incorporated by reference to Exhibit
10.3 of Lehman Brothers Holdings Inc.'s Transition Report on Form 10-K
for the transition period from January 1, 1994 to November 30, 1994
(File No. 1-9466)).
10.25 Purchase and Exchange Agreement, dated April 28, 1994, between Lehman
Brothers Holdings Inc. and the registrant (incorporated by reference to
Exhibit 10.29 of Lehman Brothers Holdings Inc.'s Transition Report on
Form 10-K for the transition period from January 1, 1994 to November
30, 1994 (File No. 1-9466)).
10.26 Registration Rights Agreement, dated as of May 27, 1994, between the
registrant and Lehman Brothers Holdings Inc. (incorporated by reference
to Exhibit 10.30 of Lehman Brothers Holdings Inc.'s Transition Report
on Form 10-K for the transition period from January 1, 1994 to November
30, 1994 (File No. 1-9466)).
10.27 Option Agreement, dated May 27, 1994, by and among the registrant,
American Express Bank Ltd., American Express Travel Related Services
Company, Inc., Lehman Brothers Holdings Inc., Lehman Brothers Inc.,
Lehman Government Securities, Inc. and Lehman Commercial Paper
Incorporated (incorporated by reference to Exhibit 10.31 of Lehman
Brothers Holdings Inc.'s Transition Report on Form 10-K for the
transition period from January 1, 1994 to November 30, 1994 (File No.
1-9466)).
10.28 1994 Agreement, dated April 28, 1994, between the registrant, Lehman
Brothers Holdings Inc. and Nippon Life Insurance Company (incorporated
by reference to Exhibit 10.32 of Lehman Brothers Holdings Inc.'s
Transition Report on Form 10-K for the transition period from January
1, 1994 to November 30, 1994 (File No. 1-9466)).
10.29 1990 Agreement, dated as of June 12, 1990, by and between the
registrant and Nippon Life Insurance Company (incorporated by reference
to Exhibit 10.25 of Shearson Lehman Brothers Holdings Inc.'s Annual
Report on Form 10-K for the fiscal year ended December 31, 1990).
10.30 Asset Purchase Agreement dated as of March 12, 1993 between Smith
Barney, Harris Upham & Co. Incorporated, Primerica Corporation and
Shearson Lehman Brothers Inc. (incorporated by reference to Exhibit
10.16 of Shearson Lehman Brothers Holdings Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 1992).
E-3
*10.31 Advisor Agreement between the registrant and Dr. Henry Kissinger dated
February 2, 1996.
10.32 American Express Company 1993 Directors' Stock Option Plan
(incorporated by reference to Exhibit 28.2 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1993).
*10.33 Description of separate pension arrangement between the registrant and
George L. Farr.
10.34 American Express Senior Executive Severance Plan (incorporated by
reference to Exhibit 10.1 of the registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1994).
10.35 Amendment of American Express Senior Executive Severance Plan.
(incorporated by reference to Exhibit 10.1 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
10.36 Amendment of American Express Company Executives' Incentive
Compensation Plan (incorporated by reference to Exhibit 10.2 of the
registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994).
10.37 Amendment of American Express Company Key Executive Life Insurance Plan
(incorporated by reference to Exhibit 10.3 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
10.38 Amendment of American Express Company Salary/Bonus Deferral Plan
(incorporated by reference to Exhibit 10.4 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
10.39 Amendment of American Express Company Supplementary Pension Plan
(incorporated by reference to Exhibit 10.5 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
10.40 Amendment of Long-Term Incentive Awards under the American Express
Company 1979 and 1989 Long-Term Incentive Plans (incorporated by
reference to Exhibit 10.6 of the registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1994).
10.41 IDS Current Service Deferred Compensation Plan (incorporated by
reference to Exhibit 10.42 of the registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994).
10.42 Amended and Restated American Express Supplemental Retirement Plan
(incorporated by reference to Exhibit 10.1 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995).
10.43 Agreement dated February 27, 1995 between the registrant and Berkshire
Hathaway Inc. (incorporated by reference to Exhibit 10.43 of the
registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994).
E-4
10.44 Agreement dated July 20, 1995 between the registrant and Berkshire
Hathaway Inc. and its subsidiaries (incorporated by reference to
Exhibit 10.1 of the registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995).
*11 Computation of Earnings Per Share.
*12.1 Computation in Support of Ratio of Earnings to Fixed Charges.
*12.2 Computation in Support of Ratio of Earnings to Fixed Charges and
Preferred Share Dividends.
*13 Portions of the registrant's 1995 Annual Report to Shareholders that
are incorporated herein by reference.
*21 Subsidiaries of the registrant.
*23 Consent of Ernst & Young LLP (contained on page F-2 of this Annual
Report on Form 10-K).
*27 Financial Data Schedule
E-5
===========================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995 Commission File No. 1-7657
-------------------------------------
American Express Company
(Exact name of registrant as specified in charter)
E X H I B I T S
===========================================================================
EXHIBIT INDEX
The following exhibits are filed as part of this Annual Report or, where
indicated, were heretofore filed and are hereby incorporated by reference (*
indicates exhibits electronically filed herewith.) Exhibits numbered 10.1
through 10.21 and 10.31 through 10.42 are management contracts or compensatory
plans or arrangements.
3.1 Registrant's Restated Certificate of Incorporation (incorporated by
reference to Exhibit 4.1 of the registrant's Registration Statement on
Form S-8, dated October 31, 1991 (File No. 33-43671)).
3.2 Registrant's By-Laws, as amended (incorporated by reference to Exhibit
3.2 of the registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1994.)
4 The instruments defining the rights of holders of long-term debt
securities of the registrant and its subsidiaries are omitted pursuant
to Section (b)(4)(iii)(A) of Item 601 of Regulation S-K. The
registrant hereby agrees to furnish copies of these instruments to the
SEC upon request.
10.1 American Express Company 1979 Long-Term Incentive Plan, as amended
(incorporated by reference to Exhibit 10.2 of the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1987).
10.2 American Express Company 1989 Long-Term Incentive Plan, as amended
(incorporated by reference to Exhibit 28.1 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1993).
10.3 American Express Company Deferred Compensation Plan for Directors, as
amended (incorporated by reference to Exhibit 10.3 of the registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1992).
10.4 American Express Company Executives' Incentive Compensation Plan
(incorporated by reference to Exhibit 10.4 of the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1988).
10.5 Description of American Express Pay for Performance Deferral Program
(incorporated by reference to Exhibit 10.5 of the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994).
10.6 American Express Company Supplementary Pension Plan, as amended
(incorporated by reference to Exhibit 10.6 of the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1988).
10.7 American Express Company 1983 Stock Purchase Assistance Plan, as
amended (incorporated by reference to Exhibit 10.6 of the registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1988).
10.8 Consulting Agreement dated March 3, 1994 between the registrant and
Aldo Papone Consulting (incorporated by reference to Exhibit 10.8 of
the registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993).
E-1
10.9 Written description of consulting agreement between the registrant and
Kissinger Associates, Inc. (incorporated by reference to Exhibit 10.20
of the registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1984).
10.10 American Express Company Retirement Plan for Non-Employee Directors, as
amended (incorporated by reference to Exhibit 10.12 of the registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1988).
*10.11 Certificate of Amendment of the American Express Company Retirement
Plan for Non-Employee Directors dated March 21, 1996.
10.12 American Express Company Directors' Stock Option Plan (incorporated by
reference to Exhibit 10.16 of the registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1987).
10.13 American Express Key Executive Life Insurance Plan, as amended
(incorporated by reference to Exhibit 10.12 of the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1991).
10.14 American Express Key Employee Charitable Award Program for Education
(incorporated by reference to Exhibit 10.13 of the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1990).
10.15 American Express Directors' Charitable Award Program (incorporated by
reference to Exhibit 10.14 of the registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1990).
10.16 Description of separate pension arrangement and loan agreement between
the registrant and Harvey Golub (incorporated by reference to Exhibit
10.17 of registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988).
10.17 Shearson Lehman Brothers Capital Partners I Amended and Restated
Agreement of Limited Partnership (incorporated by reference to Exhibit
10.18 of registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988).
10.18 Shearson Lehman Hutton Capital Partners II, L.P. Amended and Restated
Agreement of Limited Partnership (incorporated by reference to Exhibit
10.19 of registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988).
10.19 American Express Company Salary/Bonus Deferral Plan (incorporated by
reference to Exhibit 10.20 of registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1988).
10.20 Written description of certain pension arrangements with Jonathan S.
Linen (incorporated by reference to Exhibit 10.14 of the registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1991).
10.21 Consulting Agreement dated March 3, 1994 between American Express
Travel Related Services Company, Inc. and Aldo Papone Consulting
(incorporated by reference to Exhibit 10.23 of the registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993).
E-2
10.22 Restated and Amended Agreement of Tenants-In-Common, dated May 27,
1994, by and among the registrant, American Express Bank Ltd., American
Express Travel Related Services Company, Inc., Lehman Brothers Inc.,
Lehman Government Securities, Inc. and Lehman Commercial Paper
Incorporated (incorporated by reference to Exhibit 10.1 of Lehman
Brothers Holdings Inc.'s Transition Report on Form 10-K for the
transition period from January 1, 1994 to November 30, 1994 (File No.
1-9466)).
10.23 Tax Allocation Agreement, dated May 27, 1994, between Lehman Brothers
Holdings Inc. and the registrant (incorporated by reference to Exhibit
10.2 of Lehman Brothers Holdings Inc.'s Transition Report on Form 10-K
for the transition period from January 1, 1994 to November 30, 1994
(File No. 1-9466)).
10.24 Intercompany Agreement, dated May 27, 1994, between the registrant and
Lehman Brothers Holdings Inc. (incorporated by reference to Exhibit
10.3 of Lehman Brothers Holdings Inc.'s Transition Report on Form 10-K
for the transition period from January 1, 1994 to November 30, 1994
(File No. 1-9466)).
10.25 Purchase and Exchange Agreement, dated April 28, 1994, between Lehman
Brothers Holdings Inc. and the registrant (incorporated by reference to
Exhibit 10.29 of Lehman Brothers Holdings Inc.'s Transition Report on
Form 10-K for the transition period from January 1, 1994 to November
30, 1994 (File No. 1-9466)).
10.26 Registration Rights Agreement, dated as of May 27, 1994, between the
registrant and Lehman Brothers Holdings Inc. (incorporated by reference
to Exhibit 10.30 of Lehman Brothers Holdings Inc.'s Transition Report
on Form 10-K for the transition period from January 1, 1994 to November
30, 1994 (File No. 1-9466)).
10.27 Option Agreement, dated May 27, 1994, by and among the registrant,
American Express Bank Ltd., American Express Travel Related Services
Company, Inc., Lehman Brothers Holdings Inc., Lehman Brothers Inc.,
Lehman Government Securities, Inc. and Lehman Commercial Paper
Incorporated (incorporated by reference to Exhibit 10.31 of Lehman
Brothers Holdings Inc.'s Transition Report on Form 10-K for the
transition period from January 1, 1994 to November 30, 1994 (File No.
1-9466)).
10.28 1994 Agreement, dated April 28, 1994, between the registrant, Lehman
Brothers Holdings Inc. and Nippon Life Insurance Company (incorporated
by reference to Exhibit 10.32 of Lehman Brothers Holdings Inc.'s
Transition Report on Form 10-K for the transition period from January
1, 1994 to November 30, 1994 (File No. 1-9466)).
10.29 1990 Agreement, dated as of June 12, 1990, by and between the
registrant and Nippon Life Insurance Company (incorporated by reference
to Exhibit 10.25 of Shearson Lehman Brothers Holdings Inc.'s Annual
Report on Form 10-K for the fiscal year ended December 31, 1990).
10.30 Asset Purchase Agreement dated as of March 12, 1993 between Smith
Barney, Harris Upham & Co. Incorporated, Primerica Corporation and
Shearson Lehman Brothers Inc. (incorporated by reference to Exhibit
10.16 of Shearson Lehman Brothers Holdings Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 1992).
E-3
*10.31 Advisor Agreement between the registrant and Dr. Henry Kissinger dated
February 2, 1996.
10.32 American Express Company 1993 Directors' Stock Option Plan
(incorporated by reference to Exhibit 28.2 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1993).
*10.33 Description of separate pension arrangement between the registrant and
George L. Farr.
10.34 American Express Senior Executive Severance Plan (incorporated by
reference to Exhibit 10.1 of the registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1994).
10.35 Amendment of American Express Senior Executive Severance Plan.
(incorporated by reference to Exhibit 10.1 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
10.36 Amendment of American Express Company Executives' Incentive
Compensation Plan (incorporated by reference to Exhibit 10.2 of the
registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994).
10.37 Amendment of American Express Company Key Executive Life Insurance Plan
(incorporated by reference to Exhibit 10.3 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
10.38 Amendment of American Express Company Salary/Bonus Deferral Plan
(incorporated by reference to Exhibit 10.4 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
10.39 Amendment of American Express Company Supplementary Pension Plan
(incorporated by reference to Exhibit 10.5 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1994).
10.40 Amendment of Long-Term Incentive Awards under the American Express
Company 1979 and 1989 Long-Term Incentive Plans (incorporated by
reference to Exhibit 10.6 of the registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1994).
10.41 IDS Current Service Deferred Compensation Plan (incorporated by
reference to Exhibit 10.42 of the registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1994).
10.42 Amended and Restated American Express Supplemental Retirement Plan
(incorporated by reference to Exhibit 10.1 of the registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995).
10.43 Agreement dated February 27, 1995 between the registrant and Berkshire
Hathaway Inc. (incorporated by reference to Exhibit 10.43 of the
registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994).
E-4
10.44 Agreement dated July 20, 1995 between the registrant and Berkshire
Hathaway Inc. and its subsidiaries (incorporated by reference to
Exhibit 10.1 of the registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995).
*11 Computation of Earnings Per Share.
*12.1 Computation in Support of Ratio of Earnings to Fixed Charges.
*12.2 Computation in Support of Ratio of Earnings to Fixed Charges and
Preferred Share Dividends.
*13 Portions of the registrant's 1995 Annual Report to Shareholders that
are incorporated herein by reference.
*21 Subsidiaries of the registrant.
*23 Consent of Ernst & Young LLP (contained on page F-2 of this Annual
Report on Form 10-K).
*27 Financial Data Schedule
E-5