UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 30(a) OF THE INVESTMENT COMPANY ACT OF
1940 AND SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
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 number 2-23772.
American Express Certificate Company (formerly IDS Certificate Company)
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(Exact name of registrant as specified in its charter)
Delaware 41-6009975
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
52 AXP Financial Center, Minneapolis, Minnesota 55474
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 671-3131
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: None Name of each exchange on which registered: None
Securities registered pursuant to Section 12(g) of the Act:
Title of class: 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 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. [X]
Aggregate market value of the voting stock held by non-affiliates of the
registrant. None
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
150,000 Common shares
CERTAIN DOCUMENTS INCORPORATED BY REFERENCE.
None
The registrant meets the conditions set forth in General Instructions I(1)(a)
and (b) of Form 10-K and is therefore filing this Form with the reduced
disclosure format.
The Exhibit Index is located on sequential pages 17-20.
Item 1. Business
American Express Certificate Company (AECC), is incorporated under the laws
of Delaware. Its principal executive offices are located at 52 AXP Financial
Center, Minneapolis, Minnesota 55474, and its telephone number is (612)
671-3131. American Express Financial Corporation, a Delaware corporation, 200
AXP Financial Center, Minneapolis, Minnesota 55474, owns 100% of the outstanding
voting securities of AECC. American Express Financial Corporation is a wholly
owned subsidiary of American Express Company (American Express), a New York
Corporation, with headquarters at American Express Tower, World Financial
Center, New York, New York.
AECC is a face-amount certificate investment company, registered under the
Investment Company Act of 1940 (1940 Act). AECC is in the business of issuing
face-amount certificates. Face-amount certificates issued by AECC entitle the
certificate owner to receive, at maturity, a stated amount of money and interest
or credits declared from time to time by AECC, in its discretion.
AECC currently offers nine certificates to the public: "American Express
Cash Reserve Certificate," "American Express Flexible Savings Certificate",
"American Express Installment Certificate," "American Express Preferred
Investors Certificate," "American Express Stock Market Certificate," "American
Express Market Strategy Certificate," "American Express Equity Indexed Savings
Certificates" (for sale through broker-dealers not affiliated with AECC),
"American Express Investors Certificate" (including a form of American Express
Investors Certificate offered to select investors who, among other things,
invest at least $50 million in the certificate), and "American Express Special
Deposits." The American Express Special Deposits is only marketed through
offices of American Express Bank Ltd. (AEB) in England and Hong Kong and is not
registered for sale in the United States. All certificates are currently sold
without a sales charge. The American Express Installment Certificate, the
American Express Flexible Savings Certificate, the American Express Stock Market
Certificate, the American Express Preferred Investors Certificate, the American
Express Market Strategy Certificate, the American Express Equity Indexed Savings
Certificate, the American Express Investors Certificate and the American Express
Special Deposits currently bear surrender charges for premature surrenders. All
of the above described certificates, except the American Express Special
Deposits, are distributed pursuant to a Distribution Agreement with American
Express Financial Advisors Inc., an affiliate of AECC. With respect to the
American Express Investors Certificate and a form of the American Express Stock
Market Certificate, American Express Financial Advisors Inc., in turn, has
Selling Agent Agreements with American Express Bank International (AEBI), a
subsidiary of American Express, and Coutts & Co. (USA) International (Coutts), a
subsidiary of National Westminster Bank PLC, for selling the certificates. With
respect to the American Express Special Deposits, AECC has a Marketing Agreement
with AEB, an indirect subsidiary of American Express, for marketing the
certificate. AECC has a Distribution Agreement with American Express Service
Corporation (AESC) under which AESC can distribute the American Express Stock
Market Certificate and potentially other certificates. As of December 31, 2001,
no certificates have been distributed through AESC. With respect to American
Express Stock
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Market Certificate, American Express Financial Advisors Inc. has a Selling Agent
Agreement effective March 10, 1999 with Securities America Inc., an affiliate of
AECC. There is no assurance that AXP certificates will be distributed by AESC or
sold by Securities America Inc.
AEBI and Coutts are Edge Act corporations organized under the
provisions of Section 25(a) of the Federal Reserve Act. American Express
Financial Advisors Inc. has entered into a consulting agreement with AEBI under
which AEBI provides consulting services related to any selling agent agreements
between American Express Financial Advisors Inc. and other Edge Act
corporations.
AECC also offers one certificate in connection with certain employee
benefit plans available to eligible American Express Financial Corporation
employees, financial advisors, retirees, and eligible employees of the American
Express funds, and to IRAs of persons retired as employees or financial advisors
with American Express Financial Corporation. This certificate is called the
Series D-1 Investment Certificate.
Except for the American Express Investors Certificate and the American
Express Special Deposits, all of the certificates are available as qualified
investments for Individual Retirement Accounts (IRAs), or 401(k) plans and other
qualified retirement plans.
The specified maturities of the certificates range from ten to twenty
years. Within that maturity period, most certificates have interest rate terms
ranging from three to thirty-six months. Interest rates change and certificate
owners can surrender their certificates without penalty at term end.
The American Express Cash Reserve Certificate is a single pay
certificate that permits additional investments and on which AECC guarantees
interest in advance for a three-month term.
The American Express Flexible Savings Certificate is a single payment
certificate that permits a limited amount of additional payments and on which
AECC guarantees interest in advance for a term of 6, 12, 18, 24, 30, or 36
months, and potentially other terms, at the buyer's option.
The American Express Installment Certificate is an installment payment
certificate that declares interest in advance for a three-month period and
offers bonuses in the second through ninth years for regular investments.
The American Express Stock Market Certificate is a single payment
certificate that offers the certificate owner the opportunity to have all or
part of his/her interest tied to 52-week stock market performance, as measured
by a broad stock market index, with return of principal guaranteed by AECC. The
owner can also choose to earn a fixed rate of interest. This certificate may be
available from time to time through AESC
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under its Distribution Agreement with AECC. This certificate is also marketed by
AEBI and Coutts, under Selling Agent Agreements with American Express Financial
Advisors Inc., to AEBI's clients and certain of Coutts' clients, respectively,
who are neither citizens nor residents of the United States.
The American Express Market Strategy Certificate is a single payment
certificate that pays interest at a fixed rate or that offers the owner the
opportunity to have all or part of his/her interest tied to 52-week stock market
performance as measured by a broad stock market index, for a series of 52- week
terms starting every month or at intervals the owner selects.
The American Express Investors Certificate is a single payment
certificate that generally permits additional payments within 15 days of term
renewal. Interest rates are guaranteed in advance by AECC for a term of 1, 2, 3,
6, 12, 24, or 36 months, at the buyer's option. This certificate is currently
sold by AEBI and Coutts, under Selling Agent Agreements with American Express
Financial Advisors Inc., only to AEBI's clients and certain of Coutts' clients,
respectively, who are neither citizens nor residents of the United States.
The American Express Preferred Investors Certificate is a single
payment certificate that combines a fixed rate of return with AECC's guarantee
of principal for investments of $250,000 to $5,000,000. Interest rates are
guaranteed in advance by AECC for a term of 1, 2, 3, 6, 12, 24 or 36 months, at
the buyer's option.
The American Express Special Deposits is a single payment certificate
that generally permits additional payments within 15 days of term renewal.
Interest rates are guaranteed in advance by AECC for a term of 1, 2, 3, 6, 12,
24, or 36 months (by the date of term renewal in the case of 1- month terms), at
the buyer's option. This certificate is currently marketed by AEB through its
London and Hong Kong offices, under a Marketing Agreement with AECC, only to
AEB's clients who are neither citizens nor residents of the United States. This
certificate is not registered for sale in the United States.
To AECC's knowledge, AECC is by far the largest issuer of face-amount
certificates in the United States. However, such certificates compete with many
other investments offered by banks, savings and loan associations, mutual funds,
broker-dealers and others, which may be viewed by potential clients as offering
a comparable or superior combination of safety and return on investment. In
particular, some of AECC's products are designed to be competitive with the
types of investment offered by banks and thrifts. Since AECC's face-amount
certificates are securities, their offer and sale are subject to regulation
under federal and state securities laws. AECC's certificates are backed by its
qualified assets on deposit and are not insured by any governmental agency or
other entity.
For all the certificates, except for the American Express Investors
Certificate, American Express Preferred Investors Certificate, and the American
Express Special Deposits, AECC's current policy is to re-evaluate the
certificate rates weekly to respond to marketplace changes. For the American
Express Investors Certificate, American Express Preferred Investors Certificate,
and the American Express Special Deposits, AECC's current policy is to
re-evaluate
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the rates on a daily basis. For each product, AECC refers to an independent
index or source to set the rates for new sales. Except for American Express
Special Deposits, AECC must set the rates for an initial purchase of the
certificate within a specified range of the rate from such index or source. For
renewals, AECC uses such rates as an indication of the competitors' rates, but
is not required to set rates within a specified range.
For the American Express Flexible Savings Certificate and the American
Express Series D-1 Investment Certificate, the published rates of the BANK RATE
MONITOR Top 25 Market Average(R) for various length bank certificates of deposit
are used as the guide in setting rates. For the American Express Installment
Certificate, the average interest rate for money market deposit accounts, as
published by the BANK RATE MONITOR Top 25 Market Average(R) (the BRM Average),
is used as a guide in setting rates. For the American Express Cash Reserve
Certificate, the published rates of the U.S. 90 day Treasury Bill are used as
the guide in setting rates. For the American Express Investors Certificate,
American Express Preferred Investors Certificate, and American Express Special
Deposits, the published average rates for comparable length dollar deposits
available on an interbank basis, referred to as the London Interbank Offered
Rates (LIBOR), are used as a guide in setting rates.
To compete with popular short-term investment vehicles such as certificates
of deposit, money market certificates and money market mutual funds that offer
comparable yields, liquidity and safety of principal, AECC offers the American
Express Cash Reserve Certificate and the American Express Flexible Savings
Certificate. The yields and features on these products are designed to be
competitive with such short-term products. The American Express Investors
Certificate, American Express Preferred Investors Certificate and American
Express Special Deposits also compete with short-term products, but use LIBOR
rates. The American Express Installment Certificate is intended to help clients
save systematically and may compete with passbook savings and NOW accounts. The
American Express Stock Market Certificate, American Express Market Strategy
Certificate and American Express Equity Indexed Savings Certificates are
designed to offer interest tied to a major stock market index and principal
guaranteed by AECC. Certain banks offer certificates of deposit that have
features similar to the American Express Stock Market Certificate, American
Express Market Strategy Certificate and American Express Equity Indexed Savings
Certificates.
AECC's gross income is derived principally from interest and dividends
generated by its investments. AECC's net income is determined by deducting from
such gross income its provision for certificate reserves, and other expenses,
including taxes, the fee paid to American Express Financial Corporation for
advisory and other services, the distribution fees paid to American Express
Financial Advisors Inc., and marketing fees paid to AEB.
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AECC may make forward-looking statements in documents such as this 10-K
Annual Report. In addition, from to time to time, AECC through its management
may make oral forward-looking statements. Forward-looking statements are subject
to uncertainties that could cause actual results to differ materially from such
statements. Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date on which they are made. AECC
undertakes no obligation to update publicly or revise any forward-looking
statements.
The following table shows AECC's certificate payments received and certificate
surrenders for the three years ended December 31, 2001:
2001 2000 1999
($ in Millions)
Single Payment Certificates
Non-Qualified
Payments through:
American Express Financial Advisors Inc. $1,044.9 $773.5 $950.2
AEBI, AEB, and Coutts 562.8 636.1 387.7
Surrenders through:
American Express Financial Advisors Inc. 865.1 710.2 854.3
AEBI, AEB, and Coutts 585.5 482.9 358.4
Qualified
Payments through:
American Express Financial Advisors Inc. 263.3 209.1 194.7
Surrenders through:
American Express Financial Advisors Inc. 167.8 151.8 160.7
Installment Payment Certificates
Through American Express Financial Advisors Inc.
Non-Qualified
Payments 41.1 48.3 62.9
Surrenders 68.7 101.8 114.5
Qualified
Payments .3 .4 .6
Surrenders .7 1.4 1.8
In 2001, approximately 30% of single payment certificate payments were
through AEBI, AEB, and Coutts, and approximately 14% of single payment
certificate payments and 1% of installment certificate payments were of
tax-qualified certificates for use in IRAs, 401(k) plans and other qualified
retirement plans.
The certificates offered by American Express Financial Advisors Inc.
are sold pursuant to a distribution agreement which is terminable on 60 days
notice and is subject to annual approval by AECC's Board of Directors, including
a majority of the directors who are not "interested
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persons" of American Express Financial Advisors Inc. or AECC as that term is
defined in the 1940 Act. The agreement provides for the payment of distribution
fees to American Express Financial Advisors Inc. for services provided
thereunder. American Express Financial Advisors Inc. is a wholly owned
subsidiary of American Express Financial Corporation. For the sale of the
American Express Investors Certificate and the American Express Stock Market
Certificate by AEBI, American Express Financial Advisors Inc., in turn, has
Selling Agent Agreements with AEBI and Coutts. For the sale of American Express
Stock Market Certificate and American Express Equity Indexed Savings
Certificates, American Express Financial Advisors Inc. also has a Selling Agent
Agreement with Securities America Inc. effective March 10, 1999. For the
distribution of the American Express Stock Market Certificate, AECC has a
distribution agreement with AESC. For marketing American Express Special
Deposits, AECC has a Marketing Agreement with AEB. These agreements are
terminable upon 60 days notice and subject to annual review by directors who are
not "interested persons" of American Express Financial Advisors Inc. or AECC
except that such annual review is not required for selling agent agreements.
AECC receives advice, statistical data and recommendations with respect
to the acquisition and disposition of securities for its portfolio from American
Express Financial Corporation, under an investment management agreement which is
subject to annual review by AECC's Board of Directors, including a majority of
the directors who are not "interested persons" of American Express Financial
Corporation or AECC.
AECC is required to maintain cash and "qualified investments" meeting
the standards of Section 28(b) of the 1940 Act, as modified by an order of the
Securities and Exchange Commission (the SEC). The amortized cost of said
investments must be at least equal to AECC's net liabilities on all outstanding
face-amount certificates plus $250,000. So long as AECC wishes to rely on the
SEC order, as a condition to the order, AECC has agreed to maintain an amount of
unappropriated retained earnings and capital equal to at least 5% of net
certificate reserves. For these purposes, net certificate reserves means
certificate reserves less outstanding certificate loans. In determining
compliance with this condition, qualified investments are valued in accordance
with the provisions of Minnesota Statutes where such provisions are applicable.
AECC's qualified assets consist of cash and cash equivalents, first mortgage
loans on real estate, U.S. government and government agency securities,
municipal bonds, corporate bonds, preferred stocks and other securities meeting
specified standards. AECC has also entered into a written informal understanding
with the State of Minnesota, Department of Commerce, that AECC will maintain
capital equal to 5% of the assets of AECC (less any loans on outstanding
certificates). When computing its capital for these purposes, AECC values its
assets on the basis of statutory accounting for insurance companies rather than
generally accepted accounting principles. AECC is subject to annual examination
and supervision by the State of Minnesota, Department of Commerce (Banking
Division).
Distribution fees on sales of certain certificates are deferred and
amortized over the estimated lives of the related certificates, which is
approximately 10 years. Upon surrender, unamortized deferred distribution fees
and any related surrender charges are recognized in
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income. Thus, these certificates must remain in effect for a period of time to
permit AECC to recover such costs.
Item 2. Properties
None.
Item 3. Legal Proceedings
Registrant has no material pending legal proceedings other than
ordinary routine litigation incidental to its business.
Item 4. Submission of Matters to a Vote of Security Holders
Item omitted pursuant to General Instructions I(2)(c) of Form 10-K.
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters
There is no market for the Registrant's common stock since it is a
wholly owned subsidiary of American Express Financial Corporation and,
indirectly, of American Express. Frequency and amount of dividends declared
during the past two years are as follows:
Dividend Payable Date
For the year ended December 31, 2001:
October 17, 2001 $166,907,522
============
Dividend Payable Date
For the year ended December 31, 2000:
January 28, 2000 $5,000,000
==========
Restriction on the Registrant's present or future ability to pay
dividends:
Certain series of installment certificates outstanding provide that
cash dividends may be paid by AECC only in calendar years for which additional
credits of at least 1/2 of 1% on such
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series of certificates have been authorized by AECC. This restriction has been
removed for 2001 and 2002 by AECC's declaration of additional credits in excess
of this requirement.
Appropriated retained earnings resulting from the predeclaration of
additional credits to AECC's certificate owners are not available for the
payment of dividends by AECC. In addition, AECC will discontinue issuance of
certificates subject to the predeclaration of additional credits and will make
no further predeclaration as to outstanding certificates if at any time the
capital and unappropriated retained earnings of AECC should be less than 5% of
net certificate reserves (certificate reserves less certificate loans). At
December 31, 2001, the capital and unappropriated retained earnings amounted to
5.2% of net certificate reserves.
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Item 6. Selected Financial Data
SUMMARY OF SELECTED FINANCIAL INFORMATION
The following selected financial information has been derived from the
auditedfinancial statements and should beread in conjunction with those
statements and the related notes to financial statements.Also see
"Management'sDiscussion and Analysis of Financial Condition and Results of
Operations" for additional comments.
Year Ended December 31, ($ thousands) 2001 2000 1999 1998 1997
Statements of Operations Data
Investment income $261,523 $266,106 $254,344 $273,135 $258,232
Investment expenses 101,228 87,523 77,235 76,811 70,137
------- ------ ------ ------ ------
Net investment income before provision
for certificate reserves and income
tax benefit (expense) 160,295 178,583 177,109 196,324 188,095
Net provision for certificate reserves 155,387 155,461 138,555 167,108 165,136
------- ------- ------- ------- -------
Net investment income before income
tax benefit (expense) 4,908 23,122 38,554 29,216 22,959
Income tax benefit (expense) 3,348 (14) (4,615) 265 3,682
----- --- ------ --- -----
Net investment income 8,256 23,108 33,939 29,481 26,641
----- ------ ------ ------ ------
Net realized (loss) gain on investments in
securities of unaffiliated issuers
before income taxes (92,375) (10,110) 1,250 5,143 980
Income tax benefit (expense) 32,331 3,539 (437) (1,800) (343)
------ ----- ---- ------ ----
Net realized (loss) gain on investments (60,044) (6,571) 813 3,343 637
Net income - wholly owned subsidiary - - 4 1,646 328
Cumulative effect of accounting change (397) - - - -
------ ----- ---- ------ ----
Net (loss) income ($52,185) $16,537 $34,756 $34,470 $27,606
-------- ------- ------- ------- -------
Cash Dividends Declared $- $5,000 $40,000 $29,500 $-
Capital Contributions 240,000 - - - -
Capital Dividends Declared 166,906 - - - -
-------- ------- ------- ------- -------
Balance Sheet Data
Total assets $4,628,353 $4,032,745 $3,761,068 $3,834,244 $4,053,648
Certificate loans 21,807 25,547 28,895 32,343 37,098
Certificate reserves 4,159,926 3,831,059 3,536,659 3,404,883 3,724,978
Stockholder's equity 263,005 166,514 141,702 222,033 239,510
------- ------- ------- ------- -------
American Express Certificate Company (AECC), is 100% owned by American Express
Financial Corporation (Parent).
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of operations
American Express Certificate Company's (AECC) earnings are derived primarily
from the after-tax yield on invested assets less investment expenses and
interest credited on certificate reserve liabilities, as well as realized
investment gains or losses. Changes in earnings' trends occur largely due to
changes in the rates of return on investments, the rates of interest credited to
certificate owner accounts, changes in the mix of fully taxable and
tax-advantaged investments in the AECC portfolio and from the realization of
investment gains or losses.
During 2001, total assets and certificate reserves increased $596 million and
$329 million, respectively. The increase in total assets resulted primarily from
capital contributions from Parent of $240 million, an increase in net unrealized
appreciation on available-for-sale securities of $125 million and certificate
payments exceeding certificate maturities and surrenders by $185 million. The
increase in certificate reserves resulted primarily from interest accruals of
$155 million and the total certificate payments being greater than the
maturities and surrenders.
During 2000, total assets and certificate reserves increased $272 million and
$294 million, respectively. The increase in total assets resulted primarily from
certificate payments exceeding certificate maturities and surrenders. The
increase in certificate reserves resulted primarily from interest accruals of
$148 million and certificate sales exceeding certificate maturities and
surrenders by $146 million.
2001 compared to 2000
Gross investment income decreased 1.7% due primarily to lower rates of return on
invested assets, and adjustments to interest income on investments in certain
structured securities.
Investment expenses increased 15.7% in 2001. The increase resulted primarily
from higher interest rate swap expense of $17.6 million partially offset by
lower index options expense.
The net provision for certificate reserves remained relatively flat to 2000
levels as lower accrual rates offset the impact from the growth in certificate
reserves during 2001.
During 2001, AECC experienced net pretax realized losses on investments of $92.4
million vs. $10.1 million of pretax losses in 2000. The losses for the year are
primarily composed of a $36.9 million loss to recognize the impact of higher
default assumptions used to determine impairment on rated structured investments
and a $57.1 million loss on high-yield securities. The write-downs of these
investments are associated with AECC's decision to reduce its holdings of
high-yield investments and rebalance the fixed maturity investment portfolio
towards higher quality, less volatile holdings.
The increase in income tax benefit resulted from lower pretax income, primarily
due to the investment losses realized during 2001.
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2000 compared to 1999
Gross investment income increased 4.6% due primarily to a higher average balance
of invested assets.
Investment expenses increased 13.3% in 2000. The increase resulted primarily
from the net of higher amortization of premiums paid for index options of $12.3
million and lower interest expense on interest rate swap and reverse repurchase
agreements of $1.1 million and $.6 million, respectively.
Net provision for certificate reserves increased 12.2% due primarily to higher
accrual rates and a higher average balance of certificate reserves during 2000.
The decrease in income tax benefit resulted primarily from less tax-advantaged
investment income.
Liquidity and cash flow
AECC's principal sources of cash are receipts from sales of face-amount
certificates and cash flows from investments. In turn, AECC's principal uses of
cash are payments to certificate owners for matured and surrendered
certificates, purchase of investments and dividend payments to its Parent.
Certificate sales continued to be strong in 2001, reflecting clients' ongoing
desire for safety of principal. Sales of certificates totaled $1.9 billion in
2001 compared to $1.5 billion in both 2000 and 1999. The higher certificate
sales in 2001 over 2000 resulted primarily from special promotions of the
seven-month term American Express Flexible Savings Certificate, which produced
sales of $388 million in 2001. Certificate sales in 2000 compared to 1999
benefited from higher sales of the American Express Market Strategy Certificate
and American Express Investors Certificate of $95 million and $118 million,
respectively.
Certificate maturities and surrenders totaled $1.7 billion during 2001, compared
to $1.5 billion in 2000 and $1.7 billion in 1999. The higher certificate
maturities and surrenders in 2001, compared to 2000, resulted primarily from
higher surrenders of American Express Flexible Savings Certificates.
AECC, as an issuer of face-amount certificates, is impacted whenever there is a
significant change in interest rates. In view of the continued uncertainty in
the investment markets and due to the short-term repricing nature of certificate
reserve liabilities, AECC continues to invest in securities that provide for
more immediate, periodic interest/principal payments, resulting in improved
liquidity. To accomplish this, AECC continues to invest much of its cash flow in
intermediate-term bonds and mortgage-backed securities. In addition, AECC enters
into interest rate swap contracts to hedge the risk of rising interest rates on
a portion of the Certificate products.
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AECC's investment program is designed to maintain an investment portfolio that
will produce the highest possible after-tax yield within acceptable risk and
liquidity parameters. The program considers investment securities as investments
acquired to meet anticipated certificate owner obligations.
At December 31, 2001, approximately 1.7% of AECC's invested assets were below
investment grade bonds, compared to 8.5% at December 31, 2000. The industry wide
default rate on below investment grade bonds in 2001 increased over 2000 levels.
As described earlier, AECC recognized approximately $57.1 million in losses on
these below investment grade bonds, largely associated with AECC's decision to
reduce its holdings of high-yield investments and rebalance the fixed maturity
investment portfolio towards higher quality, less volatile holdings. Additional
investment security losses through 2002 are possible but the amount of any such
losses is dependent on a number of factors and cannot be estimated at this
time.* AECC's management believes that there will be no adverse impact on the
certificate owners of any such losses.*
Debt securities that AECC has both the positive intent and ability to hold to
maturity are carried at amortized cost. Debt securities AECC does not have the
positive intent to hold to maturity, as well as all marketable equity
securities, are classified as available-for-sale and carried at fair value. The
available-for-sale classification does not mean that AECC expects to sell these
securities, but that these securities are available to meet possible liquidity
needs should there be significant changes in market interest rates or
certificate owner demand. See notes 1 and 3 to the financial statements for
additional information relating to investments.
Due to changes to the rules for hedging investments, as described later, the
transition provisions of SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities", as amended, permitted held-to-maturity securities to be
reclassified at the date of adoption to available-for-sale or trading. AECC
adopted SFAS No. 133 effective January 1, 2001 and reclassified all its
held-to-maturity securities to available-for-sale.
At December 31, 2001, securities classified as available-for-sale were carried
at a fair market value of $4.1 billion. The fixed maturity securities comprise
88% of AECC's total invested assets. Of these securities, approximately 98% are
of investment grade. Other than U.S Government Agency mortgage-backed
securities, no one issuer represents more than 1% of total securities. See note
3 to financial statements for additional information on ratings and
diversification.
*Statements in this discussion and analysis of AECC's financial condition and
results of operations marked with an asterisk are forward-looking statements,
which are subject to risks and uncertainties. Important factors that could cause
results to differ materially from these forward-looking statements include,
among other things, changes in the industry-wide and AECC's default rate on
below investment grade bonds over the next several months and beyond, changes in
economic conditions, such as a recession or a substantial increase in prevailing
interest rates, or other factors that could cause a slowdown in the economy, and
changes in government regulation that affects the ability of issuers to repay
their debt.
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In 2001, available-for-sale securities sold had amortized cost and fair values
of $1.8 billion and $1.7 billion, respectively.
In July 2000, the Financial Accounting Standards Board's (FASB) Emerging Issues
Task Force (EITF) issued a consensus on Issue 99-20, "Recognition of Interest
Income and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets". The Company elected to early adopt the consensus
as of January 1, 2001. Issue 99-20 prescribes new procedures for recording
interest income and measuring impairment on retained and purchased beneficial
interests. The consensus primarily affects certain structured securities.
Although there was no significant impact resulting from the adoption of Issue
99-20, the Company holds structured securities that are accounted for under
Issue 99-20.
During the fourth quarter of 2001, AECC paid a $167 million dividend to American
Express Financial Corporation (AEFC) by transferring at book value certain
Collateralized Debt Obligation (CDO) securities owned by AECC. In part, the
dividend was paid to allow AEFC to transfer the CDO securities and related
accrued interest into a securitization trust. Additionally, AECC received $240
million in total cash as capital contributions from AEFC during 2001.
Market risk and derivative financial instruments
The sensitivity analysis of two different tests of market risk discussed below
estimate the effects of hypothetical sudden and sustained changes in the
applicable market conditions on the ensuing year's earnings based on year-end
positions. The market changes, assumed to occur as of year-end, are a 100 basis
point increase in market interest rates and a 10% decline in a major stock
market index. Computation of the prospective effects of hypothetical interest
rate and major stock market index changes are based on numerous assumptions,
including relative levels of market interest rates and the major stock market
index level, as well as the levels of assets and liabilities. The hypothetical
changes and assumptions presented will be different than what actually occurs in
the future.
Furthermore, the computations do not anticipate actions that may be taken by
management if the hypothetical market changes actually occurred over time. As a
result, actual earnings effects in the future will differ from those quantified
below.
AECC primarily invests in intermediate-term and long-term fixed income
securities to provide its certificate owners with a competitive rate of return
on their certificate while managing risk. These investment securities provide
AECC with a historically dependable and targeted margin between the interest
rate earned on investments and the interest rate credited to certificate owners'
accounts. AECC does not invest in securities to generate trading profits for its
own account.
AECC's Investment Committee, which is comprised of senior business managers,
meets regularly to review models projecting various interest rate scenarios and
risk/return measures and their impact on AECC's profitability. The committee's
objectives are to structure AECC's portfolio of investment securities based upon
the type and behavior of the certificates in the certificate reserve
liabilities, to achieve targeted levels of profitability within defined risk
parameters and to meet certificate contractual obligations.
-14-
Rates credited to certificate owners' accounts are generally reset at shorter
intervals than the maturity of underlying investments. Therefore, AECC's margins
may be negatively impacted by increases in the general level of interest rates.
Part of the committee's strategy includes entering into interest rate swaps to
hedge interest rate risk. AECC's goal is to manage interest rate sensitivity by
modifying the repricing characteristics of certificate liabilities so that the
interest credited to related investment certificate owners is not adversely
affected by movements in interest rates.
On three series of certificates, interest is credited to the certificate owners'
accounts based upon the relative change in a major stock market index between
the beginning and end of the certificates' terms. To meet the obligations
related to the provisions of these certain certificates, the company purchases
and writes index call options on the major stock market index.
SFAS No. 133 establishes accounting and reporting standards for derivative
instruments and hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities on the balance sheet and measure
those instruments at fair value. Changes in the fair value of a derivative are
recorded in earnings or directly to equity, depending on the instrument's
designated use. Those derivative instruments that are designated and qualify as
hedging instruments under SFAS No. 133 are further classified as either a fair
value hedge, cash flow hedge or a hedge of a net investment in a foreign
operation, based upon the exposure being hedged. See note 9 for further
discussion of the Company's derivative and hedging activities.
The negative impact on AECC's pretax earnings of the 100 basis point increase in
interest rates, which assumes repricings and customer behavior based on the
application of proprietary models, to the book of business at December 31, 2001
and 2000, would be approximately $2.2 million and $3.4 million for 2001 and
2000, respectively. The 10% decrease in a major stock market index level would
have a minimal impact on AECC's pretax earnings as of December 31, 2001 and
2000, because the income effect is a decrease in option income and a
corresponding decrease in interest credited to the American Express Stock Market
Certificate, American Express Market Strategy Certificate and American Express
Equity Indexed Savings Certificate owners' accounts.
Ratios
The ratio of stockholder's equity, excluding accumulated other comprehensive
income (loss) net of tax, to total assets less certificate loans and net
unrealized holding gains/losses on investment securities (capital to asset
ratio) at December 31, 2001 and 2000, was 5.2% and 5.4%, respectively. Under an
informal agreement established with the Commissioner of Commerce for the State
of Minnesota, AECC has agreed to maintain at all times a minimum capital to
assets ratio of 5.0%.
-15-
Item 7A. Ouantitative and Qualitative Disclosures About Market Risk
See Item 7.
Item 8. Financial Statements and Supplementary Data
1. Financial Statements and Schedules Required under Regulation S-X
Index to Financial Statements and Schedules
Page
Financial Statements:
Responsibility for Preparation of Financial Statements 23
Report of Independent Auditors 24
Balance Sheets, December 31, 2001 and 2000 25-26
Statements of Operations, year ended December 31, 2001, 2000 and 1999 27-28
Statements of Comprehensive Income, year ended December 31, 2001,
2000 and 1999 29
Statements of Stockholder's Equity, year ended December 31, 2001,
2000 and 1999 30
Statements of Cash Flows, year ended December 31, 2001, 2000 and 1999 31-32
Notes to Financial Statements 33-49
Schedules:
I - Investments in Securities of Unaffiliated Issuers, December 31, 2001
II - Investments in and Advances to Affiliates and Income Thereon,
December 31, 2001, 2000 and 1999
III - Mortgage Loans on Real Estate and Interest earned on Mortgages,
year ended December 31, 2001
IV - Qualified Assets on Deposit, December 31, 2001
VI - Certificate Reserves, year ended December 31, 2001
VII - Valuation and Qualifying Accounts, year ended
December 31, 2001, 2000 and 1999
Schedules I, III and VI for the year ended December 31, 2000, and
Schedule VI for the year ended December 31, 1999, are included in Registrant's
Annual Reports on Form 10-K for the fiscal years ended December 31, 2000 and
December 31, 1999, respectively, Commission file 2-23772, and are incorporated
herein by reference.
All other Schedules required by Article 6 of the Regulation S-X are not
required under the related instructions or are inapplicable and therefore have
been omitted.
-16-
2. Supplementary Data
None
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None
PART III
Items omitted pursuant to General Instructions I(2)(c) of Form 10-K.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) List the following documents filed as a part of the report:
1. All financial statements. See Item 8.
2. Financial statement schedules. See Item 8.
3. Exhibits.
1. None or not applicable.
2. None or not applicable.
3(a). Certificate of Incorporation, dated December 31, 1977,
filed electronically as Exhibit 3(a) to Post-Effective
Amendment No. 10 to Registration Statement No. 2-89507, is
incorporated herein by reference.
3(b). Certificate of Amendment, dated April 2, 1984 filed
electronically as Exhibit 3(b) to Post-Effective Amendment
No. 10 to Registration Statement No. 2-89507, is
incorporated herein by reference.
3(c). Certificate of Amendment, dated September 12, 1995, filed
electronically as Exhibit 3(c) to Post-Effective Amendment
No. 44 to Registration Statement No. 2-55252, is
incorporated herein by reference.
3(d). Certificate of Amendment, dated April 30, 1999, filed
electronically as Exhibit 3(a) to Registrant's March 31,
1999 Quarterly Report on Form 10-Q is incorporated herein by
reference.
-17-
3(e). Certificate of Amendment, dated January 28, 2000, filed
electronically as exhibit 3(e) to Post-Effective Amendment
No. 47 to Registration Statement No. 2-55252, is
incorporated herein by reference.
3(f). Current By-Laws, filed electronically as Exhibit 3(e) to
Post-Effective Amendment No. 19 to Registration Statement
No. 33-26844, are incorporated herein by reference.
4-9. None or not applicable.
10(a). Investment Advisory and Services Agreement between
Registrant and American Express Financial Corporation dated
March 6, 2002, filed electronically as Exhibit 10(a) to
Registrant's Post-Effective Amendment No. 51 to Registration
Statement No. 2-55252, is incorporated herein by reference.
10(b). Distribution Agreement dated November 18, 1988, between
Registrant and IDS Financial Services Inc., filed
electronically as Exhibit 1(a) to the Registration Statement
No. 33-26844, for the American Express International
Investment Certificate (now called, the IDS Investors
Certificate) is incorporated herein by reference.
10(c). Depositary and Custodial Agreement dated September 30,
1985 between IDS Certificate Company and IDS Trust Company,
filed electronically as Exhibit 10(b) to Registrant's
Post-Effective Amendment No. 3 to Registration Statement No.
2-89507, is incorporated herein by reference.
10(d). Foreign Deposit Agreement dated November 21, 1990, between
IDS Certificate Company and IDS Bank & Trust, filed
electronically as Exhibit 10(h) to Post-Effective Amendment
No. 5 to Registration Statement No. 33-26844, is
incorporated herein by reference.
10(e). Selling Agent Agreement dated June 1, 1990, between
American Express Bank International and IDS Financial
Services Inc. for the American Express Investors and
American Express Stock Market Certificates, filed
electronically as Exhibit 1(c) to the Post-Effective
Amendment No. 5 to Registration Statement No. 33-26844, is
incorporated herein by reference.
10(f). Second amendment to Selling Agent Agreement between
American Express Financial Advisors Inc. and American
Express Bank International dated as of May 2, 1995, filed
electronically as Exhibit (1) to Registrant's June 30, 1995,
Quarterly Report on Form 10-Q, is incorporated herein by
reference.
10(g). Marketing Agreement dated October 10, 1991, between
Registrant and American Express Bank Ltd., filed
electronically as Exhibit 1(d) to Post-Effective Amendment
No. 31 to Registration Statement 2-55252, is
-18-
incorporated herein by reference.
10(h). Amendment to the Selling Agent Agreement dated December
12, 1994, between IDS Financial Services Inc. and American
Express Bank International, filed electronically as Exhibit
1(d) to Post-Effective Amendment No. 13 to Registration
Statement No. 2-95577, is incorporated herein by reference.
10(i). Selling Agent Agreement dated December 12, 1994, between
IDS Financial Services Inc. and Coutts & Co. (USA)
International, filed electronically as Exhibit 1(e) to
Post-Effective Amendment No. 13 to Registration Statement
No. 2-95577, is incorporated herein by reference.
10(j). Consulting Agreement dated December 12, 1994, between IDS
Financial Services Inc. and American Express Bank
International, filed electronically as Exhibit 16(f) to
Post-Effective Amendment No. 13 to Registration Statement
No. 2-95577 is incorporated herein by reference.
10(k). Letter amendment dated January 9, 1997 to the Marketing
Agreement dated October 10, 1991, between Registrant and
American Express Bank Ltd. filed electronically as Exhibit
10(j) to Post-Effective Amendment No. 40 to Registration
Statement No. 2-55252, is incorporated herein by reference.
10(l). Form of Letter amendment dated April 7, 1997 to the
Selling Agent Agreement dated June 1, 1990 between American
Express Financial Advisors Inc. and American Express Bank
International, filed electronically as Exhibit 10 (j) to
Post-Effective Amendment No. 14 to Registration Statement
33-26844, is incorporated herein by reference.
10(m). Letter Agreement dated July 28, 1999 amending the Selling
Agent Agreement dated June 1, 1990, or a schedule thereto,
as amended, between American Express Financial Advisors Inc.
(formerly IDS Financial Services Inc.) and American Express
Bank International, filed electronically to Registrant's
June 30, 1999 Quarterly Report on Form 10-Q, is incorporated
herein by reference.
0(n). Letter Agreement dated July 28, 1999, amending the
Marketing Agreement dated October 10, 1991, or a schedule
thereto, as amended, between IDS Certificate Company and
American Express Bank Ltd., filed electronically to
Registrant's June 30, 1999 Quarterly Report on Form 10-Q, is
incorporated herein by reference.
10(o) Selling Agent Agreement, dated March 10, 1999 between
American Express Financial Advisors Inc. and Securities
America, Inc., filed electronically as Exhibit 10 (l) to
Post-Effective Amendment No. 18 to Registration Statement
33-26844, is incorporated herein by reference.
-19-
10(p) Letter Agreement, dated April 10, 2000, amending the
Selling Agent Agreement, dated March 10, 1999, between
American Express Financial Advisors Inc. and Securities
America, Inc., filed electronically as Exhibit 10 (o) to
Post-Effective Amendment No. 20 to Registration Statement
33-26844, is incorporated herein by reference.
10(q) (1) Code of Ethics under rule 17j-1 for Registrant, filed
electronically as Exhibit 10(p)(1) to Pre-Effective
Amendment No. 1 to Registration Statement No. 333-34982, is
incorporated herein by reference.
(2) Code of Ethics under rule 17j-1 for Registrant's
investment advisor and principal underwriters, filed
electronically as Exhibit 10(p)(2) to Pre-Effective
Amendment No. 1 to Registration Statement No.
333-34982, is incorporated herein by reference.
10(r) Letter of Representations dated August 22, 2000 between
American Express Certificate Company and the Depository
Trust Company, filed electronically as Exhibit 10(r) to
Post-Effective Amendment No. 2-552527 is incorporated herein
by reference.
11-23. None or not applicable.
24(a). Officers' Power of Attorney, dated March 6, 2002, filed
electronically as exhibit 24(a) to Post-Effective Amendment
No. 51 to Registration Statement No. 2-55252, is
incorporated herein by reference.
24(b). Directors' Power of Attorney, dated March 6, 2002, filed
electronically as exhibit 24(b) to Post-Effective Amendment
No. 51 to Registration Statement No. 2-55252, is
incorporated herein by reference.
25-99. None or not applicable.
(b) Reports on Form 8-K filed during the last quarter of the period
covered by this report. None.
-20-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
REGISTRANT American Express Certificate Company
BY /s/ Paula R. Meyer
-----------------------
NAME AND TITLE Paula R. Meyer, President
DATE March 27, 2002
Pursuant to the requirements of the Securities and 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/ Paula R. Meyer ***
-----------------------
NAME AND TITLE Paula R. Meyer, President and Director
(Principal Executive Officer)
DATE March 27, 2002
BY /s/ David L. Yowan*
-----------------------
NAME AND TITLE David L. Yowan, Vice President and Treasurer
(Principal Financial Officer)
DATE March 27, 2002
BY /s/ Philip C. Wentzel *
------------------------
NAME AND TITLE Philip C. Wentzel, Vice President and Controller
(Principal Accounting Officer)
DATE March 27, 2002
BY /s/ Rodney P. Burwell **
------------------------
NAME AND TITLE Rodney P. Burwell, Director
DATE March 27, 2002
BY /s/ Kent M. Bergene**
------------------------
NAME AND TITLE Kent M. Bergene, Director
DATE March 27, 2002
BY Jean B. Keffeler**
-----------------------
NAME AND TITLE Jean B. Keffeler, Director
DATE March 27, 2002
-21-
BY /s/ Thomas R. McBurney **
-------------------------
NAME AND TITLE Thomas R. McBurney, Director
DATE March 27, 2002
BY /s/ Walter S. Berman
----------------------
NAME AND TITLE Walter S. Berman, Director
DATE March 27, 2002
* Signed pursuant to Officers' Power of Attorney dated March 6, 2002, filed
electronically as Exhibit 24(a) to Post-Effective Amendment No. 51 to
Registration Statement No. 2-55252, is incorporated herein by reference.
/s/ Paula R. Meyer
- ------------------
Paula R. Meyer
** Signed pursuant to Directors' Power of Attorney dated March 6, 2002, filed
electronically as Exhibit 24(b) to Post-Effective Amendment No. 51 to
Registration Statement No. 2-55252, is incorporated herein by reference.
/s/ Paula R. Meyer
- ------------------
Paula R. Meyer
-22-
American Express Certificate Company
Responsibility for Preparation of Financial Statements
The management of American Express Certificate Company (AECC) is responsible for
the preparation and fair presentation of its financial statements. The financial
statements have been prepared in conformity with accounting principles generally
accepted in the United States which are appropriate in the circumstances, and
include amounts based on the best judgment of management. AECC's management is
also responsible for the accuracy and consistency of other financial information
included in this Form 10-K.
In recognition of its responsibility for the integrity and objectivity of data
in the financial statements, AECC maintains a system of internal control over
financial reporting. The system is designed to provide reasonable, but not
absolute, assurance with respect to the reliability of AECC's financial
statements. The concept of reasonable assurance is based on the notion that the
cost of internal control should not exceed the benefits derived.
The internal control system is founded on an ethical climate and includes an
organizational structure with clearly defined lines of responsibility, policies
and procedures, a Code of Conduct, and the careful selection and training of
employees. Internal auditors monitor and assess the effectiveness of the
internal control system and report their findings to management throughout the
year. AECC's independent auditors are engaged to express an opinion on the
year-end financial statements and, with the coordinated support of the internal
auditors, review the financial records and related data and test internal
controls over financial reporting.
-23-
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Security Holders
American Express Certificate Company:
We have audited the accompanying balance sheets of American Express Certificate
Company, a wholly owned subsidiary of American Express Financial Corporation, as
of December 31, 2001 and 2000, and the related statements of operations,
comprehensive income, stockholder's equity, and cash flows for each of the three
years in the period ended December 31, 2001. Our audits also included the
financial statement schedules listed in the index at Item 8. These financial
statements and schedules are the responsibility of the management of American
Express Certificate Company. Our responsibility is to express an opinion on
these financial statements and schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments
owned as of December 31, 2001 and 2000 by correspondence with custodians. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Express Certificate
Company at December 31, 2001 and 2000, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States.
Also, in our opinion, the related financial statement schedules, when considered
in relation to the basic financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
Minneapolis, Minnesota
January 25, 2002
-24-
Balance Sheets, December 31,
Assets
($ thousands) 2001 2000
Qualified Assets (note 2)
Investments in unaffiliated issuers (notes 3, 4 and 10):
Cash and cash equivalents $ 72,817 $ 58,711
Held-to-maturity securities - 317,732
Available-for-sale securities 4,073,901 3,122,950
First mortgage loans on real estate 343,434 358,575
Certificate loans - secured by certificate reserves 21,807 25,547
Investments in and advances to affiliates 422 422
--- ---
Total investments 4,512,381 3,883,937
--------- ---------
Receivables:
Dividends and interest 38,298 47,901
Investment securities sold 21,500 1,070
------ -----
Total receivables 59,798 48,971
------ ------
Other (note 9) 48,393 53,015
------ ------
Total qualified assets 4,620,572 3,985,923
--------- ---------
Other Assets
Deferred federal income taxes, net (note 8) - 30,501
Due from Parent for federal income taxes - 7,016
Deferred distribution fees and other 7,781 9,305
----- -----
Total other assets 7,781 46,822
----- ------
Total assets $4,628,353 $4,032,745
---------- ----------
-25-
Balance Sheets, December 31, (continued)
Liabilities and Stockholder's Equity
($ thousands, except share amounts) 2001 2000
Liabilities
Certificate Reserves (note 5):
Installment certificates:
Reserves to mature $ 193,175 $ 215,971
Additional credits and accrued interest 5,082 7,088
Advance payments and accrued interest 645 697
Other 33 55
Fully paid certificates:
Reserves to mature 3,900,824 3,537,832
Additional credits and accrued interest 59,948 69,155
Due to unlocated certificate holders 219 261
--- ---
Total certificate reserves 4,159,926 3,831,059
--------- ---------
Accounts Payable and Accrued Liabilities:
Due to Parent (note 7) 878 771
Due to Parent for federal income taxes 1,774 -
Due to other affiliates (note 7) 587 730
Deferred federal income taxes, net (note 8) 404 -
Payable for investment securities purchased 163,507 1,946
Other (notes 9 and 10) 38,272 31,725
------ ------
Total accounts payable and accrued liabilities 205,422 35,172
------- ------
Total liabilities 4,365,348 3,866,231
--------- ---------
Commitments (note 4)
Stockholder's Equity (notes 5 and 6)
Common stock, $10 par - authorized and issued 150,000 shares 1,500 1,500
Additional paid-in capital 383,844 143,844
Retained earnings (deficit):
Appropriated for predeclared additional credits/interest 1,123 2,684
Appropriated for additional interest on advance payments 15 15
Unappropriated (146,593) 70,937
Accumulated other comprehensive income (loss) - net of tax (note 1) 23,116 (52,466)
------ -------
Total stockholder's equity 263,005 166,514
------- -------
Total liabilities and stockholder's equity $4,628,353 $4,032,745
---------- ----------
See notes to financial statements.
-26-
Statements of Operations
Year ended December 31, ($ thousands) 2001 2000 1999
Investment Income
Interest income from unaffiliated investments:
Bonds and notes $214,534 $204,923 $188,062
Mortgage loans on real estate 25,133 26,675 27,294
Certificate loans 1,293 1,471 1,662
Dividends 19,986 32,478 35,228
Other 577 559 2,098
--- --- -----
Total investment income 261,523 266,106 254,344
------- ------- -------
Investment Expenses
Parent and affiliated company fees (note 7):
Distribution 30,924 31,209 31,484
Investment advisory and services 9,248 8,779 8,692
Transfer agent 3,161 3,300 3,572
Depository 285 254 238
Options (note 9) 39,510 43,430 31,095
Repurchase agreements 52 124 677
Interest rate swap agreements (note 9) 17,616 17 1,146
Other 432 410 331
--- --- ---
Total investment expenses 101,228 87,523 77,235
------- ------ ------
Net investment income before provision for certificate
reserves and income tax benefit (expense) $160,295 $178,583 $177,109
-------- -------- --------
-27-
Statements of Operations (continued)
Year ended December 31, ($ thousands) 2001 2000 1999
Provision for Certificate Reserves (notes 5 and 9)
According to the terms of the certificates:
Provision for certificate reserves $ 10,321 $ 12,599 $ 11,493
Interest on additional credits 597 714 874
Interest on advance payments 34 33 33
Additional credits/interest authorized by AECC:
On fully paid certificates 138,020 134,633 118,371
On installment certificates 7,559 8,483 8,676
----- ----- -----
Total provision for certificate reserves
before reserve recoveries 156,531 156,462 139,447
Reserve recoveries from terminations prior to maturity (1,144) (1,001) (892)
------ ------ ----
Net provision for certificate reserves 155,387 155,461 138,555
------- ------- -------
Net investment income before income tax benefit (expense) 4,908 23,122 38,554
Income tax benefit (expense) (note 8) 3,348 (14) (4,615)
----- --- ------
Net investment income 8,256 23,108 33,939
----- ------ ------
Net realized (loss) gain on investments
Securities of unaffiliated issuers before
income tax expense (92,375) (10,110) 1,250
------- ------- -----
Income tax benefit (expense)(note 8):
Current 36,320 (537) (1,151)
Deferred (3,989) 4,076 714
------ ----- ---
Total income tax benefit (expense) 32,331 3,539 (437)
------ ----- ----
Net realized (loss) gain on investments (60,044) (6,571) 813
------- ------ ---
Cumulative effect of accounting change
(net of income tax benefit of $214) (397) - -
Net income - wholly owned subsidiary - - 4
-------- -------- --------
Net (loss) income $(52,185) $ 16,537 $ 34,756
-------- -------- --------
See notes to financial statements.
-28-
Statements of Comprehensive Income (Loss)
Year ended December 31, ($ thousands) 2001 2000 1999
Net (loss) income $ (52,185) $16,537 $ 34,756
--------- ------- ---------
Other comprehensive income (loss) net of tax (note 1)
Cumulative effect of accounting change (note 1) (2,187) - -
Unrealized gains (losses) on available-for-sale securities:
Unrealized holding gains (losses) arising during year 19,959 21,840 (112,460)
Income tax (expense) benefit (6,986) (7,644) 39,361
------ ------ ------
Net unrealized holding gains (losses) arising
during the period 12,973 14,196 (73,099)
Reclassification adjustment for losses (gains) included
in net income 101,754 (1,417) (3,058)
Income tax (benefit) expense (35,614) 496 1,070
------- --- -----
Net reclassification adjustment for losses (gains)
included in net income 66,139 (921) (1,988)
------ ---- ------
Net unrealized gains (losses) on available-for-sale securities 79,113 13,275 (75,087)
Unrealized losses on interest rate swaps:
Unrealized losses arising during the period (19,683) - -
Income tax benefit 6,889 - -
------ ---- ------
Net unrealized holding losses arising during the period (12,794) - -
------- ---- ------
Reclassification adjustment for losses
included in net income 17,616 - -
Income tax benefit (6,166) - -
------- ---- ------
Net reclassification adjustment for losses
included in net loss 11,450 - -
------- ---- ------
Net unrealized (losses) on interest rate swaps (1,344) - -
Net other comprehensive income (loss) 75,582 13,275 (75,087)
------ ------ -------
Total comprehensive income (loss) $ 23,397 $29,812 $ (40,331)
-------- ------- ---------
See notes to financial statements.
-29-
Statements of Stockholder's Equity
Year ended December 31, ($ thousands) 2001 2000 1999
Common Stock
Balance at beginning and end of year $ 1,500 $ 1,500 $ 1,500
--------- -------- --------
Additional Paid-in Capital
Balance at beginning of year $ 143,844 $143,844 $143,844
Contribution from Parent 240,000 - -
--------- -------- --------
Balance at end of year $ 383,844 $143,844 $143,844
--------- -------- --------
Retained Earnings
Appropriated for predeclared additional credits/interest (note 5)
Balance at beginning of year $ 2,684 $ 2,879 $ 3,710
Transferred to unappropriated retained earnings (1,561) (195) (831)
------ ---- ----
Balance at end of year $ 1,123 $ 2,684 $ 2,879
--------- -------- --------
Appropriated for additional interest on advance payments (note 5)
Balance at beginning of year $ 15 $ 10 $ 10
Transferred from unappropriated retained earnings - 5 -
--------- -------- --------
Balance at end of year $ 15 $ 15 $ 10
--------- -------- --------
Unappropriated (note 6)
Balance at beginning of year $ 70,937 $ 59,210 $ 63,623
Net (loss) income (52,185) 16,537 34,756
Transferred from appropriated retained earnings 1,561 190 831
Capital dividends declared (166,906) - -
Cash dividends declared - (5,000) (40,000)
--------- -------- --------
Balance at end of year $(146,593) $ 70,937 $ 59,210
--------- -------- --------
Accumulated other comprehensive (loss) income -
net of tax (note 1)
Balance at beginning of year $ (52,466) $(65,741) $ 9,346
Net other comprehensive income (loss) 75,582 13,275 (75,087)
--------- -------- --------
Balance at end of year $ 23,116 $(52,466) $(65,741)
--------- -------- --------
Total stockholder's equity $ 263,005 $166,514 $141,702
--------- -------- --------
See notes to financial statements.
-30-
Statements of Cash Flows
Year ended December. 31, ($ thousands) 2001 2000 1999
Cash Flows from Operating Activities
Net (loss) income $ (52,185) $ 16,537 $ 34,756
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Cumulative effect of accounting change, net of tax (note 1) 397 - -
Net income of wholly owned subsidiary - - (4)
Net provision for certificate reserves 155,387 155,461 138,555
Interest income added to certificate loans (820) (914) (1,037)
Amortization of premiums/discounts-net (1,483) 42,192 29,030
Provision for deferred federal income taxes (9,793) 4,940 (1,063)
Net realized loss (gain) on investments before income taxes 92,375 10,110 (1,250)
Decrease (increase) in dividends and interest receivable 9,603 (6,317) 4,995
Decrease in deferred distribution fees 1,525 2,946 3,533
Decrease (increase) in other assets 4,622 (7,016) 1,082
Increase (decrease) in other liabilities 14,001 (2,823) (18,390)
------ ------ -------
Net cash provided by operating activities 213,629 215,116 190,207
------- ------- -------
Cash Flows from Investing Activities
Maturity and redemption of investments:
Held-to-maturity securities - 138,150 134,907
Available-for-sale securities 704,877 447,643 426,257
Other investments 30,307 68,877 73,387
Sale of investments:
Held-to-maturity securities - 8,836 -
Available-for-sale securities 969,308 312,612 107,244
Certificate loan payments 3,127 3,399 4,162
Purchase of investments:
Held-to-maturity securities - (161) (6,785)
Available-for-sale securities (2,274,412) (1,250,487) (554,270)
Other investments (54,927) (49,460) (102,183)
Certificate loan fundings (2,830) (3,197) (3,680)
------ ------ ------
Net cash (used in) provided by investing activities $ (624,550) $ (323,788) $ 79,039
----------- ----------- ---------
-31-
Statements of Cash Flows (continued)
Year ended December 31, ($ thousands) 2001 2000 1999
Cash Flows from Financing Activities
Payments from certificate owners $ 1,919,769 $ 1,667,475 $ 1,596,079
Proceeds from repurchase agreements 500 - 123,500
Certificate maturities and cash surrenders (1,734,742) (1,517,178) (1,662,239)
Payments under repurchase agreements (500) (25,000) (239,500)
Capital contribution from parent 240,000 - -
Dividends paid - (5,000) (40,000)
----------- ----------- -----------
Net cash provided by (used in) financing activities 425,027 120,297 (222,160)
----------- ----------- -----------
Net increase in cash and cash equivalents 14,106 11,625 47,086
Cash and cash equivalents at beginning of year 58,711 47,086 -
----------- ----------- -----------
Cash and cash equivalents at end of year $ 72,817 $ 58,711 $ 47,086
----------- ----------- -----------
Supplemental Disclosures Including Non-cash Transactions
Cash paid for income taxes - $2,558 $9,233
Certificate maturities and surrenders through
loan reductions 4,263 4,060 4,003
See notes to financial statements.
-32-
Notes to Financial Statements
($ in thousands unless indicated otherwise)
1. NATURE OF BUSINESS AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Nature of business
American Express Certificate Company (AECC), is a wholly owned subsidiary of
American Express Financial Corporation (Parent), which is a wholly owned
subsidiary of American Express Company. AECC is registered as an investment
company under the Investment Company Act of 1940 ("the 1940 Act") and is in the
business of issuing face-amount investment certificates. The certificates issued
by AECC are not insured by any government agency. AECC's certificates are sold
primarily by American Express Financial Advisor Inc.'s (AEFA) (an affiliate)
field force operating in 50 states, the District of Columbia and Puerto Rico.
The Parent acts as investment advisor for AECC.
AECC currently offers ten types of certificates with specified maturities
ranging from 10 to 20 years. Within their specified maturity, most certificates
have interest rate terms of one- to 36-months. In addition, three types of
certificates have interest tied, in whole or in part, to any upward movement in
a broad-based stock market index. Except for two types of certificates, all of
the certificates are available as qualified investments for Individual
Retirement Accounts or 401(k) plans and other qualified retirement plans.
AECC's gross income is derived primarily from interest and dividends generated
by its investments. AECC's net income is determined by deducting from such gross
income its provision for certificate reserves, and other expenses, including
taxes, the fee paid to Parent for investment advisory and other services, and
the distribution fees paid to AEFA.
Described below are certain accounting policies that are important to an
understanding of the accompanying financial statements.
Basis of financial statement presentation
The accompanying financial statements are presented in accordance with
accounting principles generally accepted in the United States. AECC uses the
equity method of accounting for its wholly owned unconsolidated subsidiary,
which is the method prescribed by the Securities and Exchange Commission (SEC)
for non-investment company subsidiaries.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities and the reported amounts of
income and expenses during the year then ended. Actual results could differ from
those estimates.
-33-
Fair values of financial instruments
The fair values of financial instruments disclosed in the notes to financial
statements are estimates based upon current market conditions and perceived
risks, and require varying degrees of management judgment.
Preferred stock dividend income
AECC recognizes dividend income from cumulative redeemable preferred stocks with
fixed maturity amounts on an accrual basis similar to that used for recognizing
interest income on debt securities. Dividend income from perpetual preferred
stock is recognized on an ex-dividend basis.
Cash and cash equivalents
Cash equivalents are carried at amortized cost, which approximates fair value.
AECC has defined cash and cash equivalents as cash in banks and highly liquid
investments with a maturity of three months or less at acquisition and are not
interest rate sensitive.
Investment securities
Debt securities that AECC has both the positive intent and ability to hold to
maturity are carried at amortized cost. Debt securities AECC does not have the
positive intent to hold to maturity, as well as all marketable equity
securities, are classified as available for sale and carried at fair value.
Unrealized holding gains and losses on securities classified as Available for
sale are carried, net of deferred income taxes, as Accumulated other
comprehensive income (loss) in Stockholder's Equity.
The basis for determining cost in computing realized gains and losses on
securities is specific identification. When there is a decline in value that is
other than temporary, the securities are carried at fair value with the amount
of adjustment included in income.
First mortgage loans on real estate
Mortgage loans are carried at amortized cost, less reserves for losses, which is
the basis for determining any realized gains or losses. The estimated fair value
of the mortgage loans is determined by a discounted cash flow analysis using
mortgage interest rates currently offered for mortgages of similar maturities.
Impairment is measured as the excess of the loan's recorded investment over its
present value of expected principal and interest payments discounted at the
loan's effective interest rate, or the fair value of collateral. The amount of
the impairment is recorded in a reserve for mortgage loan losses.
The reserve for mortgage loan losses is maintained at a level that management
believes is adequate to absorb estimated losses in the portfolio. The level of
the reserve account is determined based on several factors, including historical
experience, expected future principal and interest payments, estimated
collateral values, and current economic and political conditions. Management
regularly evaluates the adequacy of the reserve for mortgage loan losses.
AECC generally stops accruing interest on mortgage loans for which interest
payments are delinquent more than three months. Based on management's judgment
as to the ultimate collectibility of principal, interest payments received are
either recognized as income or applied to the recorded investment in the loan.
-34-
Certificates
Investment certificates may be purchased either with a lump-sum payment or by
installment payments. Certificate owners are entitled to receive at maturity a
definite sum of money. Payments from certificate owners are credited to
investment certificate reserves. Investment certificate reserves accumulate
interest at specified percentage rates as declared by AECC. Reserves also are
maintained for advance payments made by certificate owners, accrued interest
thereon, and for additional credits in excess of minimum guaranteed rates and
accrued interest thereon. On certificates allowing for the deduction of a
surrender charge, the cash surrender values may be less than accumulated
investment certificate reserves prior to maturity dates. Cash surrender values
on certificates allowing for no surrender charge are equal to certificate
reserves. The payment distribution, reserve accumulation rates, cash surrender
values, reserve values and other matters are governed by the 1940 Act.
Deferred distribution fee expense
On certain series of certificates, distribution fees are deferred and amortized
over the estimated lives of the related certificates, which is approximately 10
years. Upon surrender prior to maturity, unamortized deferred distribution fees
are recognized in expense and any related surrender charges are recognized as a
reduction in Provision for certificate reserves.
Federal income taxes
AECC's taxable income or loss is included in the consolidated federal income tax
return of American Express Company. AECC provides for income taxes on a separate
return basis, except that, under an agreement between Parent and American
Express Company, tax benefits are recognized for losses to the extent they can
be used in the consolidated return. It is the policy of the Parent and its
subsidiaries that the Parent will reimburse a subsidiary for any tax benefits
recorded.
Accounting developments
Effective January 1, 2001, AECC adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended (SFAS No. 133), which establishes the accounting and
reporting standards for derivative instruments and hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities on the balance sheet and measure those instruments at fair value.
Changes in the fair value of a derivative are recorded in earnings or directly
to equity, depending on the instrument's designated use. Those derivative
instruments that are designated and qualify as hedging instruments are further
classified as either a cash flow hedge, a fair value hedge, or a hedge of a net
investment in a foreign operation, based upon the exposure being hedged. The
adoption of SFAS No. 133 on January 1, 2001, resulted in a cumulative after-tax
reduction of $397 and $2,187 to earnings and other comprehensive income (OCI),
respectively. See Note 9 for further discussion of the Company's derivative and
hedging activities.
In July 2000, the Financial Accounting Standards Board's (FASB) Emerging Issues
Task Force (EITF) issued a consensus on Issue 99-20, "Recognition of Interest
Income and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets." The Company elected to early adopt the consensus
as of January 1, 2001. Issue 99-20 prescribes new procedures for recording
interest income and measuring impairment on retained and purchased beneficial
interests. The consensus primarily affects certain structured securities.
Although there was no significant impact resulting from the adoption of Issue
99-20, the Company holds structured securities that are accounted for under
Issue 99-20.
-35-
2. DEPOSIT OF ASSETS AND MAINTENANCE OF
QUALIFIED ASSETS
Under the provisions of its certificates and the 1940 Act, AECC was required to
have Qualified Assets (as that term is defined in Section 28(b) of the 1940 Act)
in the amount of $4,152,437 and $3,829,659 at December 31, 2001 and 2000,
respectively. AECC had Qualified Assets of $4,413,104 at December 31, 2001 and
$4,064,694 at December 31, 2000, excluding net unrealized appreciation on
Available- for-sale securities of $43,962 at December 31 2001, and unrealized
depreciation of $80,717 at December 31, 2000, respectively, and Payable for
investment securities purchased of $163,507 and $1,946 at December 31, 2001 and
2000, respectively.
Qualified Assets are valued in accordance with such provisions of Minnesota
Statutes as are applicable to investments of life insurance companies. Qualified
assets for which no provision for valuation is made in such statutes are valued
in accordance with rules, regulations or orders prescribed by the SEC. These
values are the same as financial statement carrying values, except for debt
securities classified as available for sale and all marketable equity
securities, which are carried at fair value in the financial statements but are
valued at amortized cost for qualified asset and deposit maintenance purposes.
Pursuant to provisions of the certificates, the 1940 Act, the central depository
agreement and requirements of various states, qualified assets of AECC were
deposited as follows:
December 31, 2001
Required
Deposits deposits Excess
Deposits to meet certificate liability requirements:
States $ 361 $ 318 $ 43
Central Depository 4,547,283 4,129,056 $418,227
--------- --------- --------
Total $4,547,644 $4,129,374 $418,270
---------- ---------- --------
December 31, 2000
Required
Deposits deposits Excess
Deposits to meet certificate liability requirements:
States $ 360 $ 320 $ 40
Central Depository 4,051,611 3,800,923 250,688
--------- --------- -------
Total $4,051,971 $3,801,243 $250,728
---------- ---------- --------
-36-
The assets on deposit at December 31, 2001 and 2000 consisted of securities
having a deposit value of $3,955,748 and $3,589,196, respectively; mortgage
loans of $343,434 and $358,575, respectively; and other assets of $248,462 and
$104,200, respectively.
American Express Trust Company is the central depository for AECC. See note 7.
3. INVESTMENTS IN SECURITIES
Fair values of investments in securities represent market prices or estimated
fair values when quoted prices are not available. Estimated fair values are
determined by using established procedures, involving review of market indexes,
price levels of current offerings and comparable issues, price estimates,
discounted cash flows, and market data from independent brokers and financial
files. The procedures are reviewed annually by management and the Board of
Directors.
Because of changes to the rules for hedging investments, the transition
provisions of SFAS No. 133, as amended, permitted held-to-maturity securities
under SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," to be reclassified at the date of adoption to available-for-sale or
trading. AECC reclassified all held-to-maturity securities to available-for-sale
upon adoption.
A summary of Available-for-sale securities and Held-to-maturity securities at
December 31, is as follows:
2001
Gross Gross
Amortized unrealized unrealized Fair
cost gains losses value
Available for sale:
U.S. Government and
agencies obligations $ 361 $ 24 $ - $ 385
Mortgage-backed securities 2,136,070 23,121 10,059 2,149,132
State and municipal obligations 10,893 563 - 11,456
Corporate debt securities 1,683,198 38,660 12,992 1,708,866
Stated maturity preferred stock 168,963 4,489 150 173,302
Perpetual preferred stock 30,282 454 320 30,416
Common stock 172 172 - 344
---------- ------- ------- ----------
Total $4,029,939 $67,483 $23,521 $4,073,901
---------- ------- ------- ----------
-37-
2000
Gross Gross
Amortized unrealized unrealized Fair
cost gains losses value
Held to maturity:
U.S. Government and
agencies obligations $ 161 $ 8 $ - $ 169
Mortgage-backed securities 12,604 160 - 12,764
Corporate debt securities 35,794 713 662 35,845
Stated maturity preferred stock 269,173 5,974 3,245 271,902
------- ----- ----- -------
Total $ 317,732 $ 6,855 $ 3,907 $ 320,680
---------- ------- -------- ----------
Available for sale:
U.S. Government and
agencies obligations $ 199 $ 6 $ - $ 205
Mortgage-backed securities 1,106,998 15,747 822 1,121,923
State and municipal obligations 17,911 370 - 18,281
Corporate debt securities 1,902,799 13,715 106,327 1,810,187
Stated maturity preferred stock 66,752 565 1,183 66,134
Perpetual preferred stock 109,008 533 3,321 106,220
------- --- ----- -------
Total $3,203,667 $30,936 $111,653 $3,122,950
---------- ------- -------- ----------
The amortized cost and fair value of Available-for-sale securities, by
contractual maturity at December 31, 2001 are shown below. Cash flows may differ
from contractual maturities because issuers may have the right to call or prepay
obligations.
Amortized Fair
cost value
Due within 1 year $ 399,669 $ 405,687
Due after 1 year through 5 years 957,911 981,500
Due after 5 years through 10 years 276,864 273,693
Due after 10 years 228,971 233,129
------- -------
$1,863,415 $1,894,009
Mortgage-backed securities 2,136,070 2,149,132
Perpetual preferred stock 30,282 30,416
Common stock 172 344
--- ---
Total $4,029,939 $4,073,901
---------- ----------
During the years ended December 31, 2001 and 2000, there were no securities
classified as trading securities.
-38-
The proceeds from sales of Available-for-sale securities and the gross realized
gains and gross realized losses on those sales during the years ended December
31, were as follows:
2001 2000 1999
Proceeds $1,694,615 $312,728 $105,112
Gross realized gains 20,679 4,447 3,270
Gross realized losses 111,864 3,136 195
------- ----- ---
During the years ended December 31, 2001, 2000 and 1999, AECC recognized losses
of $81,292, $11,413, and $2,141, respectively, due to declines in the fair value
of available-for-sale securities that were other than temporary. These amounts
are reflected in Net realized loss on investments in the Statements of
Operations.
Sales of Held-to-maturity securities, due to credit concerns and acceptance of a
tender offer during the year ended December 31, 2000 was as follows:
2001 2000 1999
Amortized cost $- $9,015 $-
Gross realized gains - 94 -
Gross realized losses - 273 -
--- ------ ---
Investments in securities with fixed maturities comprised 88% and 87% of AECC's
total invested assets at December 31, 2001 and 2000, respectively. Securities
are rated by Moody's and Standard & Poors (S&P), or by Parent's internal
analysts, using criteria similar to Moody's and S&P, when a public rating does
not exist. A summary of investments in securities with fixed maturities by
rating of investment is as follows:
Rating 2001 2000
Aaa/AAA 60% 44%
Aa/AA 2 1
Aa/A 1 1
A/A 11 13
A/BBB 4 3
Baa/BBB 20 28
Below investment grade 2 10
---- ----
Total 100% 100%
---- ----
Of the securities rated Aaa/AAA, 88% and 73% at December 31, 2001 and 2000,
respectively, are U.S. Government Agency mortgage-backed securities that are not
rated by a public rating agency. At December 31, 2001 and 2000, approximately
11% and 13%, respectively, of securities with fixed maturities, other than U.S.
Government Agency mortgage-backed securities, are rated by Parent's internal
analysts.
-39-
At December 31, 2001 and 2000 no one issuer, other than U.S. Government Agency
mortgage-backed securities, is greater than 1% of AECC's total investment in
securities with fixed maturities.
AECC reserves freedom of action with respect to its acquisition of restricted
securities that offer advantageous and desirable investment opportunities. In a
private negotiation, AECC may purchase for its portfolio all or part of an issue
of restricted securities. Since AECC would intend to purchase such securities
for investment and not for distribution, it would not be "acting as a
distributor" if such securities are resold by AECC at a later date.
The fair values of restricted securities are determined by the board of
directors using the procedures and factors as described previously.
In the event AECC were to be deemed to be a distributor of the restricted
securities, it is possible that AECC would be required to bear the costs of
registering those securities under the Securities Act of 1933, although in most
cases such costs would be incurred by the issuer of the restricted securities.
AECC 's net losses for the year were primarily composed of a $36.9 million loss
to recognize the impact of higher default assumptions used to determine
impairment on rated structured investments and a $57.1 million loss on
high-yield securities. The write-downs of these investments are associated with
the company's decision to reduce the Company's holdings of high-yield
investments and rebalance the fixed maturity investment portfolio towards higher
quality, less volatile holdings.
4. INVESTMENTS IN FIRST MORTGAGE
LOANS ON REAL ESTATE
At December 31, 2001 and 2000, AECC's recorded investment in impaired mortgage
loans was $nil and $155, respectively, and the reserve for loss on those amounts
were $nil. During 2001, 2000, and 1999, the average recorded investment in
impaired mortgage loans was $nil, $195 and $267, respectively.
AECC recognized $nil, $13, and $25 of interest income related to impaired
mortgage loans for the years ended December 31, 2001, 2000, and 1999,
respectively.
The reserve for loss on mortgage loans increased to $1,935 on December 31, 2001,
from $744 at December 31, 2000 and $511 at December 31, 1999.
At December 31, 2001 and 2000, approximately 8% and 9%, respectively, of AECC's
invested assets were First mortgage loans on real estate. A summary of First
mortgage loans on real estate by region and property type at December 31, is as
follows:
Region 2001 2000
South Atlantic 20% 20%
West North Central 17 18
East North Central 15 16
Mountain 17 16
West South Central 13 12
Pacific 9 7
New England 4 6
Middle Atlantic 5 5
---- ----
Total 100% 100%
---- ----
-40-
Property Type 2001 2000
Office buildings 29% 28%
Retail/shopping centers 24 27
Apartments 17 17
Industrial buildings 14 15
Other 16 13
---- ----
Total 100% 100%
---- ----
The carrying amounts and fair values of First mortgage loans on real estate at
December 31 are below. The fair values are estimated using discounted cash flow
analyses, using market interest rates currently being offered for loans with
similar maturities.
2001 2000
Carrying Fair Carrying Fair
amount value amount value
First mortgage loans on real estate $345,369 $348,873 $359,319 $356,283
Reserve for losses (1,935) - (744) -
-------- -------- -------- --------
Net first mortgage loans on
real estate $343,434 $348,873 $358,575 $356,283
-------- -------- -------- --------
At December 31, 2001 and 2000, commitments for fundings of first mortgage loans,
at market interest rates, aggregated $7,100 and $1,200, respectively. AECC holds
the mortgage document, which gives it the right to take possession of the
property if the borrower fails to perform according to the terms of the
agreements. AECC employs policies and procedures to ensure the creditworthiness
of the borrowers and that funds will be available on the funding date. AECC's
loan fundings are restricted to 80% or less of the market value of the real
estate at the time of the loan funding. Management believes there is no fair
value for these commitments.
-41-
5. CERTIFICATE RESERVES
Reserves maintained on outstanding certificates have been computed in accordance
with the provisions of the certificates and Section 28 of the 1940 Act. The
average rates of accumulation on certificate reserves at December 31, were as
follows:
2001
Average Average
gross additional
Reserve accumulation credit
balance rate rate
Installment certificates:
Reserves to mature:
With guaranteed rates $ 14,367 3.50% .50%
Without guaranteed rates (A) 178,808 - 3.94
Additional credits and accrued interest 5,082 3.18 -
Advance payments and accrued interest (C) 645 3.26 .21
Other 33 - -
Fully paid certificates:
Reserves to mature:
With guaranteed rates 104,025 3.20 .24
Without guaranteed rates (A) and (D) 3,796,799 - 2.71
Additional credits and accrued interest 59,948 3.12 -
Due to unlocated certificate holders 219 - -
---------- ---- ---
Total $4,159,926
----------
2000
Average Average
gross additional
Reserve accumulation credit
balance rate rate
Installment certificates:
Reserves to mature:
With guaranteed rates $ 16,217 3.50% 1.65%
Without guaranteed rates (A) 199,754 - 4.13
Additional credits and accrued interest 7,088 3.17 -
Advance payments and accrued interest (C) 697 3.22 1.93
Other 55 - -
Fully paid certificates:
Reserves to mature:
With guaranteed rates 113,194 3.20 1.78
Without guaranteed rates (A) and (D) 3,424,638 - 3.06
Additional credits and accrued interest 69,155 3.12 -
Due to unlocated certificate holders 261 - -
---------- ---- ---
Total $ 3,831,059
----------
-42-
A) There is no minimum rate of accrual on these reserves. Interest is declared
periodically, quarterly or annually, in accordance with the terms of the
separate series of certificates.
B) On certain series of single payment certificates, additional interest is
predeclared for periods greater than one year. At December 31, 2001, $1,123 of
retained earnings had been appropriated for the predeclared additional interest,
which represents the difference between certificate reserves on these series,
calculated on a statutory basis, and the reserves maintained per books.
C) Certain series of installment certificates guarantee accrual of interest on
advance payments at an average of 3.26%. AECC has increased the rate of accrual
to 4.00% through April 30, 2003 An appropriation of retained earnings amounting
to $15 has been made, which represents the estimated additional accrual that
will result from the increase granted by AECC.
D) American Express Stock Market Certificate, American Express Market Strategy
Certificate and American Express Equity Indexed Savings Certificate enable the
certificate owner to participate in any relative rise in a major stock market
index without risking loss of principal. Generally the certificates have a term
of 12 months and may continue for up to 20 successive terms. The reserve balance
on these certificates at December 31, 2001 and 2000 was $1,095,531 and
$1,063,383, respectively.
E) Fair values of certificate reserves with interest rate terms of one year or
less approximated the carrying values less any applicable surrender charges.
Fair values for other certificate reserves are determined by discounted cash
flow analyses using interest rates currently offered for certificates with
similar remaining terms, less any applicable surrender charges.
The carrying amounts and fair values of certificate reserves at December 31,
consisted of the following:
2001 2000
Carrying Fair Carrying Fair
amount value amount value
Reserves with terms of one year or less $3,867,493 $3,872,897 $3,576,811 $3,575,189
Other 292,433 301,621 254,248 254,499
------- ------- ------- -------
Total certificate reserves 4,159,926 4,174,518 3,831,059 3,829,688
Unapplied certificate transactions 2,152 2,152 1,255 1,255
Certificate loans and accrued interest (22,054) (22,054) (25,843) (25,843)
------- ------- ------- -------
Total $4,140,024 $4,154,616 $3,806,471 $3,805,100
---------- ---------- ---------- ----------
6. DIVIDEND RESTRICTION
Certain series of installment certificates outstanding provide that cash
dividends may be paid by AECC only in calendar years for which additional
credits of at least one-half of 1% on such series of certificates have been
authorized by AECC. This restriction has been removed for 2002 and 2003 by
AECC's declaration of additional credits in excess of this requirement.
-43-
7. RELATED PARTY TRANSACTIONS
($ NOT IN THOUSANDS)
Investment advisory, joint facilities, technology support and treasury services
The investment advisory and services agreement with Parent provides for a
graduated scale of fees equal on an annual basis to 0.750% on the first $250
million of total book value of assets of AECC, 0.650% on the next $250 million,
0.550% on the next $250 million, 0.500% on the next $250 million and 0.107% on
the amount in excess of $1 billion. The fee is payable monthly in an amount
equal to one-twelfth of each of the percentages set forth above. Excluded from
assets for purposes of this computation are first mortgage loans, real estate
and any other asset on which AECC pays an outside service fee.
Distribution services
Fees payable to AEFA on sales of AECC's certificates are based upon terms of
agreements giving AEFA the right to distribute the certificates covered under
the agreements. The agreements provide for payment of fees over a period of
time.
From time to time, AECC may sponsor or participate in sales promotions involving
one or more of the certificates and their respective terms. These promotions may
offer a special interest rate to attract new clients or retain existing clients.
To cover the cost of these promotions, distribution fees paid to AEFA may be
lowered. For the promotion of the seven-month interest rate term American
Express Flexible Savings Certificate which occurred March 7, 2001 to May 8, 2001
and October 31, 2001 to December 11, 2001, the distribution fee was lowered to
0.030% and 0.017%, respectively. For the promotion of the seven- and 13-month
interest rate term Flexible Savings Certificate which occurred August 4, 1999 to
April 25, 2000, the distribution fee was lowered to 0.067%.
The Aggregate fees payable under the agreements per $1,000 face amount of
installment certificates and a summary of the periods over which the fees are
payable are:
Number of
certificate
years over
Aggregate fees payable which
subsequent
First Subsequent years' fees
Total year years are payable
On sales effective April 30, 1997 $25.00 $ 2.50 $22.50 9
Effective April 25, 2001 fees on the American Express Cash Reserve Certificate
are paid at a rate of 0.0625% of the purchase price at the time of issuance and
0.0625% of the reserves maintained for these certificates at the beginning of
the second and subsequent quarters from issue date. For certificates sold from
April 30, 1997 to April 24, 2001, fees on the American Express Cash Reserve
Certificate are paid at a rate of 0.20% of the purchase price at the time of
issuance and 0.20% of the reserves maintained for these certificates at the
beginning of the second and subsequent quarters from issue date.
-44-
Effective April 26, 2000, fees on the American Express Flexible Savings
Certificate are paid at a rate of 0.08% of the purchase price at the time of
issuance and 0.08% of the reserves maintained for these certificates at the
beginning of the second and subsequent quarters from issue date. For
certificates sold from April 30, 1997 to April 25, 2000, fees were paid at the
rate of 0.20% of the purchase price at time of issuance and 0.20% of the
reserves maintained for these certificates at the beginning of the second and
subsequent quarters from issue date.
Fees on the American Express Investors Certificate are paid at an annualized
rate of 1% of the reserves maintained for the certificates. Fees are paid at the
end of each term on certificates with a one-, two- or three-month term. Fees are
paid each quarter from date of issuance on certificates with a six-,12-, 24- or
36-month term.
Fees on the American Express Preferred Investors Certificate are paid at a rate
of 0.165% of the initial payment on issue date of the certificate and 0.165% of
the certificate's reserve at the beginning of the second and subsequent quarters
from issue date.
Effective April 28, 1999, fees on the American Express Stock Market, sold
through AEFA, and American Express Market Strategy Certificates are paid at a
rate of 0.90%. For certificates sold from April 30, 1997 to April 27, 1999, fees
were paid at the rate of 0.70%. Fees are paid on the purchase price on the first
day of the certificate's term and on the reserves maintained for these
certificates at the beginning of each subsequent term.
Effective April 26, 2000, fees on the American Express Stock Market
Certificates, sold through American Express Bank International, are paid at a
rate of 0.90%. For certificates sold from April 28, 1999 to April 25, 2000, fees
were paid at the rate of 1.00%. For certificates sold from April 30, 1997 to
April 27, 1999, fees were paid at a rate of 1.25%. Fees are paid on the purchase
price on the first day of the certificate's term and on the reserves maintained
for these certificates at the beginning of each subsequent term.
Fees on the American Express Equity Indexed Savings Certificate are paid at a
rate of 1.00% of the initial investment on the first day of each certificate's
term and 1.00% of the certificate's reserve at the beginning of each subsequent
term.
Depository fees
The basis for computing fees paid or payable to American Express Trust Company
for depository services is as follows:
Depository fees paid or payable to American Express Trust Company (an affiliate)
is:
Maintenance charge per account 5 cents per $1,000 of assets on deposit
Transaction charge $20 per transaction
Security loan activity:
Depositary Trust Company
receive/deliver $20 per transaction
Physical receive/deliver $25 per transaction
Exchange collateral $15 per transaction
A transaction consists of the receipt or withdrawal of securities and commercial
paper and/or a change in the security position. The charges are payable
quarterly except for maintenance, which is an annual fee.
-45-
Distribution fees
The basis for computing fees paid or payable to American Express Bank Ltd. (an
affiliate) for the distribution of the American Express Special Deposits
Certificate on an annualized basis is 1.25% of the reserves maintained for the
certificates on an amount from $100,000 to $249,999, 0.80% on an amount from
$250,000 to $499,999, 0.65% on an amount from $500,000 to $999,999 and 0.50% on
an amount $1,000,000 or more. Fees are paid at the end of each term on
certificates with a one-, two- or three-month term. Fees are paid at the end of
each quarter from date of issuance on certificates with a six-, 12-, 24- or
36-month term.
Transfer agent fees
The basis of computing Transfer agent fees paid or payable to American Express
Client Service Corporation (AECSC) (an affiliate) is under a Transfer Agency
Agreement effective January 1, 1998. AECSC maintains certificate owner accounts
and records. AECC pays AECSC a monthly fee of one-twelfth of $10.353 per
certificate owner account for this service. Prior to January 1, 1998, AEFC
provided this service to AECC under the investment advisory and services
agreement.
Dividends
The Company paid a $167 million dividend to its parent, American Express
Financial Corporation by transferring at book value certain Collateralized Debt
Obligation (CDO) securities owned by the Company. In part, the dividend was paid
to allow AEFC to transfer the CDO securities and related accrued interest into a
securitization trust.
8. INCOME TAXES
Income tax benefit (expense) as shown in the Statements of Operations for the
three years ended December 31, consists of:
2001 2000 1999
Federal:
Current $26,007 $ 8,586 $(5,978)
Deferred 9,792 (4,941) 1,063
----- ------ -----
35,799 3,645 (4,915)
State (120) (120) (137)
---- ---- ----
Total income tax benefit (expense) $35,679 $ 3,525 $(5,052)
------- ------- -------
Income tax benefit (expense) differs from that computed by using the U.S.
Statutory rate of 35%. The principal causes of the difference in each year are
shown below:
2001 2000 1999
Federal tax benefit (expense) at U.S. statutory rate $30,752 $(4,554) $(13,932)
Dividend exclusion 4,971 8,064 8,730
Tax-exempt interest 41 82 264
Other, net 35 53 23
-- -- --
Federal tax benefit (expense) $35,799 $ 3,645 $ (4,915)
------- ------- --------
-46-
Deferred income taxes result from the net tax effects of temporary differences.
Temporary differences are differences between the tax bases of assets and
liabilities and their reported amounts in the financial statements that will
result in differences between income for tax purposes and income for financial
statement purposes in future years. Principal components of AECC's Deferred tax
assets and Deferred tax liabilities as of December 31, are as follows:
Deferred tax assets 2001 2000
Investment reserves $13,723 $ 5,081
Certificate reserves 5,743 1,869
Investment unrealized losses - 28,251
Investments 546 646
Other, net 160 18
------- -------
Total deferred tax assets $20,172 $35,865
------- -------
Deferred tax liabilities
Investment unrealized gains $12,389 $ -
Deferred distribution fees 2,721 3,255
Purchased/written call options 5,227 1,523
Dividends receivable 196 543
Return of capital dividends 43 43
------- -------
Total deferred tax liabilities 20,576 5,364
------- -------
Net deferred tax (liabilities) assets $ (404) $30,501
------- -------
AECC is required to establish a valuation allowance for any portion of the
Deferred tax assets that management believes will not be realized. In the
opinion of management, it is more likely than not that AECC will realize the
benefit of the Deferred tax assets and, therefore, no such valuation allowance
has been established.
-47-
9. DERIVATIVE FINANCIAL INSTRUMENTS
AECC maintains an overall risk management strategy that incorporates the use of
derivative instruments to minimize significant unplanned fluctuations in
earnings that are caused by interest rate and equity market volatility. The
Company enters into interest rate swaps to manage interest rate sensitivity and
enters into options and futures contracts to mitigate the negative effect on
earnings that would result from an increase in the equity markets.
AECC is exposed to risk associated with fluctuating interest payments on certain
certificate products tied to the London Interbank Offered Rate (LIBOR) as the
certificate products reset at shorter intervals than the average maturity of the
investment portfolio. The Company's goal is to manage interest rate sensitivity
by modifying the repricing characteristics of certificate liabilities so that
the interest credited to related investment certificate owners is not adversely
affected by movements in interest rates. As a result of interest rate
fluctuations, the amount of interest paid on hedged liabilities will positively
or negatively impact reported earnings. Income or loss on the derivative
instruments that are linked to the hedged liabilities will generally offset the
effect of this impact. The Company views this strategy as a prudent management
of interest rate sensitivity, such that earnings are not exposed to undue risk
presented by changes in interest rates.
AECC uses interest rate swap contracts to hedge the risk of rising interest
rates on a portion of the certificate products. Interest rate swaps generally
involve the exchange of fixed and variable rate interest rate payments between
two parties, based on a common notional principal amount and maturity date. The
Company is required to pay the counterparty to the contracts a stream of fixed
interest payments, and in turn, receives a stream of LIBOR-based variable
interest payments.
The interest rate swaps qualify for and are designated as cash flow hedges. The
effective portions of changes in the fair value of the derivatives are recorded
in OCI. Amounts are reclassified from OCI to Investment expenses as interest is
credited to certificate reserves. The fair value of the interest rate swaps are
included in Accounts payable and accrued liabilities on the balance sheet.
For the year ended December 31, 2001, AECC recognized no losses on the
derivatives as a result of ineffectiveness. During 2001, $17,616 of unrealized
net losses accumulated in OCI were reclassified into earnings. An estimated
$8,000 of the unrealized losses accumulated in OCI related to derivatives
designated as cash flow hedges will be reclassified into earnings by December
31, 2002. This effect will occur at the same time as the Company realizes the
benefits of lower market rates of interest on its certificates. The longest
period of time over which the Company is hedging exposure to the variability in
future cash flows is approximately one year.
AECC offers American Express Stock Market Certificates) ("SMC") that offer a
return based upon the relative change in a major stock market index between the
beginning and end of the SMC's term. The SMC product contains an embedded
derivative, essentially the equity based return of the certificate, that must be
separated from the host contract and accounted for as a derivative instrument
per SFAS No. 133. As a result of fluctuations in equity markets, and the
corresponding changes in value of the embedded derivative, the amount of
expenses incurred by the Company related to SMC will positively or negatively
impact reported earnings. As a means of hedging its obligations under the
provisions for these certificates, the Company purchases and writes call options
on the major market index. The Company views this strategy as a prudent
management of equity market sensitivity, such that earnings are not exposed to
undue risk presented by changes in equity market levels.
-48-
On the same series of certificates, AECC also purchases futures on the major
market index to hedge its obligations. The futures are marked-to-market daily
and exchange traded, exposing the Company to no counterparty risk.
The options and futures contracts do not receive special hedge accounting under
SFAS No. 133. As such, any changes in the fair value of the contracts are taken
through earnings. The fair values of the purchased and written call options are
included in Other qualified assets and Accounts payable and accrued liabilities,
respectively, on the balance sheet. The fair value of the embedded derivatives
are included under Certificate reserves. The gains and losses on the options,
futures and embedded derivative instruments are recognized in Investment
expenses on the statement of operations.
By using derivative instruments, AECC is exposed to credit and market risk.
Credit risk is the possibility that the counterparty will not fulfill the terms
of the contract. The Company monitors credit risk related to derivative
financial instruments through established approval procedures, including setting
concentration limits by counterparty, reviewing credit ratings and requiring
collateral where appropriate.
Market risk is the possibility that the value of the derivative financial
instrument will change due to fluctuations in a factor from which the instrument
derives its value, primarily an interest rate or a major market index. AECC
manages the market risk associated with interest rate contracts by establishing
and monitoring limits as to the types and degree of risk that may be undertaken.
AECC primarily uses derivatives to manage risk and, therefore, the cash flow and
income effects of the derivatives are generally inverse to the effects of the
underlying hedged transactions.
10. FAIR VALUES OF FINANCIAL INSTRUMENTS
AECC discloses fair value information for most on- and off-balance sheet
financial instruments for which it is practicable to estimate that value. The
fair value of the financial instruments presented may not be indicative of their
future fair values. The estimated fair value of certain financial instruments
such as Cash and cash equivalents, Receivables for Dividends and interest, and
Investment securities sold, Accounts Payable Due to Parent and other affiliates,
Payable for investment securities purchased and Other accounts payable and
accrued expenses approximate the carrying amounts disclosed in the Balance
Sheets.
A summary of fair values of financial instruments as of December 31, is as
follows:
2001 2000
Carrying Fair Carrying Fair
value value value value
Financial assets:
Assets for which carrying values
approximate fair values $ 132,303 $ 132,303 $ 107,309 $ 107,309
Investment securities (note 3) 4,073,901 4,073,901 3,440,682 3,443,630
First mortgage loans on real estate (note 4) 343,434 348,873 358,575 356,283
Derivative financial instruments (note 9) 48,393 48,393 53,015 33,108
Financial liabilities:
Liabilities for which carrying values
approximate fair values 179,080 179,080 4,516 4,516
Certificate reserves (note 5) 4,140,024 4,154,616 3,806,471 3,805,100
Derivative financial instruments (note 9) 32,558 32,558 27,822 15,996
---------- ---------- ---------- ----------
-49-
IDS CERTIFICATE COMPANY
Investments of Securities of Unaffiliated Issuers
($ in thousands)
Bal Held at
12/31/01
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/01
Issuer Name and Issue Title # of Shares a & c) (Note a)
BONDS AND NOTES
United States Government-
Direct Obligations
U S TREASURY 5.625% 2006 200 199 211 (f)
US TREASURY NOTE 5.875% 2004 165 162 174 (f)
------------ ----------------- ---------------
Total U.S. Government - Direct Obligations 365 361 385
------------ ----------------- ---------------
Other Bonds and Notes
United States Government Agencies
GNMA ARM #8157 6.375% 2023 2,215 2,249 2,266 (f)
GNMA ARM #8206 6.375% 2017 577 577 591 (f)
GNMA ARM #8240 6.750% 2017 350 346 358 (f)
GNMA ARM #8251 6.750% 2017 30 30 31 (f)
GNMA ARM #8274 7.625% 2017 996 995 1,037 (f)
GNMA ARM #8283 7.625% 2017 151 151 158 (f)
GNMA ARM #8293 7.625% 2017 265 265 276 (f)
GNMA ARM #8353 6.375% 2018 449 446 459 (f)
GNMA ARM #8341 6.375% 2018 80 80 82 (f)
GNMA ARM #8365 6.375% 2018 716 716 734 (f)
GNMA ARM #8377 6.750% 2018 315 314 322 (f)
GNMA ARM #8428 7.625% 2018 147 147 153 (f)
GNMA ARM #8440 7.625% 2018 413 413 430 (f)
GNMA ARM #8638 6.375% 2025 2,701 2,725 2,763 (f)
FNMA CMO 2000-32 AL 7.000% 2025 4,009 3,992 4,037 (f)
FNMA 96-10 C CMO SEQ 6.500% 2023 3,479 3,385 3,523 (f)
FNMA 97-2C CMO 7.000% 2020 1,372 1,372 1,371 (f)
FNMA SER 97-2E 7.000% 2024 10,000 9,932 10,273 (f)
FNMA 97-17 CMO 7.000% 2022 247 247 247 (f)
FNMA 97-74 G SEQ CMO 6.500% 2024 3,320 3,310 3,398 (f)
FNMA 98-8 A SEQ CMO 6.500% 2024 3,651 3,652 3,741 (f)
FNMA 2001-22 C CMO 6.000% 2011 20,314 20,248 20,311 (f)
FNMA 2001-12 LC CMO 6.000% 2029 22,612 22,340 22,720 (f)
FNMA 2001-14 DA CMO 6.000% 2028 22,541 22,278 22,298 (f)
FN 98 50 CLASS PA 6.000% 2012 1,960 1,960 1,963 (f)
FNMA 1999-8 QD CMO 6.000% 2014 10,000 9,919 10,000 (f)
FNMA 1999-51 LJ CMO 6.500% 2021 10,343 10,227 10,810 (f)
FNMA 15 6.0 #50973 6.000% 2009 15,797 15,552 16,103 (f)
FNMA 30 YR #51617 10.000% 2017 47 48 53 (f)
FNMA 30 YR #27880 9.000% 2016 24 25 26 (f)
FNMA 30 YR #36225 9.000% 2016 88 89 95 (f)
FNMA 30 YR #040877 9.000% 2017 32 33 34 (f)
FNMA 15 YR #66458 10.000% 2004 336 337 345 (f)
FNMA ARM #70117 6.518% 2017 222 222 225 (f)
FNMA ARM #70007 6.614% 2017 616 616 635 (f)
FNMA 15 YR 70694 MEG 9.500% 2005 363 365 383 (f)
FNMA #73227 MULT-FAM 6.700% 2005 1,518 1,526 1,574 (f)
Bal Held at
12/31/01
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/01
Issuer Name and Issue Title # of Shares a & c) (Note a)
FNMA ARM#105989 3X3 7.186% 2020 741 741 748 (f)
FNMA ARM#88879 3X3 7.109% 2019 775 775 786 (f)
FNMA ARM#89125 SEMI 6.626% 2019 2,279 2,325 2,328 (f)
FNMA ARM#190726 SEMI 6.441% 2033 3,481 3,553 3,499 (f)
FNMA 7/1 HYBRID ARM 5.450% 2032 30,000 29,493 29,822 (f)
FNMA 7/1 HYBRID ARM 5.506% 2032 15,183 15,033 15,022 (f)
FNMA 7/1 HYBRID ARM 5.770% 2032 20,000 19,906 19,906 (f)
FNMA 7/1 HYBRID ARM 5.700% 2032 25,000 24,805 24,914 (f)
FNMA ARM #249907 8.250% 2024 2,877 2,921 2,975 (f)
FNMA 7.0 15YR 250670 7.000% 2011 2,244 2,260 2,334 (f)
FNMA 15YR #250671 7.500% 2011 6,562 6,579 6,895 (f)
FNMA 15 YR #A250857 7.000% 2012 6,798 6,785 7,067 (f)
FNMA 15YR #252259 5.500% 2014 22,653 22,297 22,475 (f)
FNMA 15YR 5.5 252344 5.500% 2014 20,253 19,817 20,213 (f)
FNMA 15YR #252381 5.500% 2014 19,081 18,645 18,904 (f)
FNMA 20YR #253801 6.000% 2021 43,096 42,172 42,867 (f)
FNMA 15YR #253844 5.500% 2016 9,611 9,626 9,458 (f)
FNMA 15YR #253878 5.500% 2016 24,253 24,320 23,866 (f)
FNMA 20YR #253944 6.000% 2021 10,265 10,070 10,152 (f)
FN 7YR BALL #254010 5.500% 2008 14,734 14,710 14,731 (f)
FNMA 10YR #303115 6.500% 2004 2,649 2,600 2,724 (f)
FNMA ARM #303259 6.537% 2025 2,156 2,215 2,190 (f)
FNMA 15YR #303445 5.500% 2009 9,207 8,942 9,260 (f)
FNMA 30YR #303970 6.000% 2024 17,720 17,483 17,583 (f)
FNMA 15YR #313042 7.000% 2011 5,174 5,193 5,379 (f)
FNMA 15YR #313522 7.000% 2012 13,274 13,345 13,816 (f)
FNMA 15 YR #313561 8.000% 2012 6,226 6,344 6,541 (f)
FNMA 15YR 6% #323290 6.000% 2013 18,750 18,629 18,923 (f)
FNMA 15YR #323322 6.000% 2013 36,178 35,951 36,511 (f)
FNMA 15YR #323748 6.500% 2014 17,025 16,667 17,395 (f)
FNMA 15YR #323833 6.000% 2014 8,450 8,369 8,515 (f)
FNMA 15YR #367005 7.000% 2012 4,412 4,390 4,583 (f)
FNMA 15YR #484933 6.000% 2014 14,430 14,397 14,541 (f)
FNMA 15YR #509806 6.500% 2014 7,659 7,595 7,817 (f)
FNMA 15YR #511817 5.500% 2016 23,261 23,365 22,890 (f)
FNMA 15YR #511821 5.500% 2016 46,578 46,785 45,836 (f)
FNMA 15YR #511824 5.500% 2016 21,576 21,616 21,232 (f)
FNMA 15YR #511828 5.500% 2016 14,702 14,699 14,467 (f)
FNMA 15YR #535454 6.000% 2015 26,657 26,649 26,902 (f)
FNMA 7/1 HYBRID ARM 6.002% 2031 33,886 33,777 34,341 (f)
FNMA 15YR #545249 5.500% 2016 43,848 44,027 43,149 (f)
FNMA 15YR #545300 5.500% 2016 98,416 98,906 96,847 (f)
FNMA 15YR #545303 5.000% 2016 19,744 19,443 19,034 (f)
FN HYBRID ARM 564907 5.950% 2031 18,296 18,238 18,645 (f)
FNMA 30YR 566074 ARM 5.932% 2031 11,820 11,816 12,042 (f)
FNMA 15YR #583747 5.500% 2016 17,327 17,359 17,051 (f)
FN 7/1 HYBRID 584059 5.930% 2031 30,588 30,429 30,832 (f)
FN ARM #584507 HYBD 5.962% 2031 9,192 9,154 9,268 (f)
FNMA 15YR #584829 6.000% 2016 20,006 19,863 20,068 (f)
FNMA 15YR #585743 5.500% 2016 38,501 38,699 37,887 (f)
FNMA 15YR #585830 6.000% 2016 37,042 36,469 37,158 (f)
FNMA 30Y #597087 ARM 5.950% 2031 26,054 25,945 26,246 (f)
FNMA 15YR #605933 5.500% 2016 18,204 18,282 17,914 (f)
FNMA 15YR #609060 5.500% 2016 9,256 9,267 9,108 (f)
FNMA 15YR #616220 5.000% 2016 25,000 24,510 24,102 (f)
Bal Held at
12/31/01
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/01
Issuer Name and Issue Title # of Shares a & c) (Note a)
FNMA 15YR #617270 5.000% 2017 25,000 24,682 24,102 (f)
FNMA 15YR #622462 5.500% 2016 25,000 24,688 24,602 (f)
FHLMC 7YR BAL M80699 5.500% 2008 26,491 26,484 26,461 (f)
FG 7 YR BALL #M80703 5.500% 2008 34,407 34,428 34,368 (f)
FHLMC 15YR G10364 7.000% 2010 5,951 5,926 6,204 (f)
FHLM 15 6.5 #G10369 6.500% 2010 15,129 14,991 15,607 (f)
FH15YR #G10439 GOLD 6.500% 2011 1,828 1,792 1,880 (f)
FHLMC 15YR G10665 GD 7.000% 2012 27,451 27,393 28,577 (f)
FHLMC 15YR #G10949 6.500% 2014 10,828 10,698 11,109 (f)
FHLMC 15YR #G11004 7.000% 2015 5,193 5,166 5,378 (f)
FHLMC 15YR #G11090 6.000% 2015 17,085 17,022 17,329 (f)
FHLMC 15YR G11143 6.000% 2014 17,713 17,559 17,899 (f)
FHLMC 15YR #G11177 5.500% 2011 26,667 26,707 26,702 (f)
FHLMC 15YR #G11193 5.000% 2016 18,021 17,751 17,385 (f)
FHLMC ARM #845154 6.831% 2022 1,049 1,080 1,093 (f)
FHLMC ARM #845523 6.575% 2023 994 1,024 1,028 (f)
FHLMC ARM #845654 7.296% 2024 3,143 3,185 3,201 (f)
FHLMC ARM #845730 6.708% 2024 4,054 4,189 4,190 (f)
FHLMC ARM #845733 7.171% 2024 4,146 4,217 4,209 (f)
FHLMC ARM #846072 7.139% 2022 1,621 1,660 1,640 (f)
FHLMC ARM#846107LIB 7.808% 2025 1,314 1,344 1,357 (f)
FHLMC 15YR #E76761 6.500% 2014 11,679 11,492 11,997 (f)
FHLMC 15YR #E77557 6.500% 2014 1,588 1,554 1,620 (f)
FHLMC 15YR #E80594 6.500% 2014 5,798 5,676 5,964 (f)
FHLMC 15YR #E83132 6.000% 2016 30,237 30,096 30,373 (f)
FHLMC 15YR #E83365 6.000% 2016 7,253 7,220 7,286 (f)
FHLMC 15YR #E83348 6.000% 2016 27,694 27,667 27,818 (f)
FHLMC 15YR #E83349 6.000% 2016 23,670 23,614 23,776 (f)
FHLMC 15YR #E83358 6.000% 2016 23,968 23,917 24,075 (f)
FHLMC 15YR #E83659 6.000% 2016 50,931 50,705 51,160 (f)
FHLMC ARM #350190 6.750% 2022 1,042 1,073 1,056 (f)
FHLMC GOLD E00151 7.500% 2017 1,781 1,830 1,880 (f)
FHLMC 15YR #E00383 7.000% 2010 5,749 5,741 5,986 (f)
FHLMC15YR E00388GOLD 7.000% 2010 3,696 3,650 3,858 (f)
FH GD 15YR #E00426 6.500% 2011 3,657 3,629 3,752 (f)
FHLMC GOLD E00484 6.500% 2012 3,521 3,454 3,608 (f)
FHLMC 15YR #E00975 6.000% 2016 46,604 46,528 46,814 (f)
FHLMC 7/1 HYBRID ARM 5.877% 2031 27,746 27,668 27,668 (f)
FHLMC ARM #788912 5.805% 2031 20,000 19,831 19,831 (f)
FHLMC 20YR #C90441 6.000% 2021 71,762 70,437 71,058 (f)
FHLMC 20YR #C90448 6.000% 2021 22,732 22,153 22,509 (f)
FHLMC 20YR #C90428 6.000% 2021 8,416 8,343 8,334 (f)
FHLMC 20YR #C90437 6.000% 2019 26,298 25,923 26,040 (f)
FHLMC ARM #1B0183 5.615% 2031 14,913 14,721 14,731 (f)
FHLMC 2382 DA CMO 5.500% 2030 47,765 47,123 46,471 (f)
FHLMC 2393 A CMO 5.500% 2012 50,000 49,727 49,813 (f)
FHLMC T-009 A2 HEL 6.430% 2013 36 36 36 (f)
FHLMC 2019 CLASS C 6.500% 2019 11,653 11,487 11,915 (f)
FHLMC 2184 CL TA CMO 6.500% 2026 5,389 5,324 5,549 (f)
FHLMC CMO 213 AB 7.000% 2005 9,614 9,598 9,764 (f)
FHLMC 2274-HC CMO 6.000% 2028 17,339 17,179 17,563 (f)
FHLMC 2311 A CMO 6.000% 2027 45,039 44,782 45,787 (f)
Bal Held at
12/31/01
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/01
Issuer Name and Issue Title # of Shares a & c) (Note a)
FHLMC 2318 GA CMO 6.000% 2029 22,426 22,258 22,639 (f)
FHLMC 2313 A CMO 6.000% 2030 24,198 23,927 23,889 (f)
FHLMC 15YR #380025 9.500% 2003 76 76 77 (f)
FHLMC 15 YR #200064 8.000% 2002 2 2 2 (f)
FHLMC 15 YR #219679 9.500% 2003 6 6 6 (f)
FHLMC 15 YR #219757 11.000% 2003 3 3 3 (f)
FHLMC 15 YR #502175 10.500% 2004 1 1 1 (f)
FHLMC ARM #605041 6.555% 2019 144 144 146 (f)
FHLMC ARM #605048 6.726% 2018 555 555 562 (f)
FHLMC ARM #605050 6.377% 2018 180 180 183 (f)
FHLMC ARM #630048 7.375% 2018 11 11 11 (f)
FHLMC ARM #630074 6.625% 2018 252 252 253 (f)
FHLMC ARM 840031 6.683% 2019 117 117 119 (f)
FHLMC ARM #840035 6.674% 2019 254 254 255 (f)
FHLMC ARM #840036 6.331% 2019 445 445 453 (f)
FHLMC ARM #840072 6.779% 2019 820 820 834 (f)
FHLMC ARM #405360 7.304% 2019 393 393 401 (f)
FHLMC ARM #405014 6.815% 2019 224 224 227 (f)
FHLMC ARM #405092 7.159% 2019 518 518 527 (f)
FHLMC ARM #405185 7.835% 2018 590 590 604 (f)
FHLMC ARM #405243 6.984% 2019 365 365 371 (f)
FHLMC ARM #405437 6.275% 2019 168 168 171 (f)
FHLMC ARM #405455 7.086% 2019 494 494 502 (f)
FHLMC ARM #405615 6.037% 2019 440 440 447 (f)
FHLMC ARM #405675 6.375% 2020 116 116 118 (f)
FHLMC ARM #605432 6.218% 2017 256 256 260 (f)
FHLMC ARM #605433 6.997% 2017 851 851 865 (f)
FHLMC ARM #605454 6.021% 2017 1,631 1,631 1,654 (f)
FHLMC ARM #606024 6.190% 2019 709 709 719 (f)
FHLMC ARM #606025 5.922% 2019 1,982 1,982 2,008 (f)
FHLMC ARM #635054 7.575% 2020 46 46 47 (f)
FHLMC ARM#785363 3X1 8.236% 2025 1,044 1,058 1,079 (f)
FHLMC ARM#785619 3X1 6.750% 2026 733 736 735 (f)
FHLMC ARM#785634 3X1 6.637% 2026 875 876 880 (f)
FHLMC ARM#865008 3X3 7.924% 2018 2,190 2,190 2,239 (f)
FHLMC LOANS #885005 9.500% 2002 45 45 47 (f)
FHLMC LOANS #885008 10.000% 2003 177 177 187 (f)
FHLMC 15 YR #885009 9.500% 2003 143 143 148 (f)
FHLMC ARM #606903 7.875% 2022 112 112 111 (f)
FHLMC 7/1 HYBRID ARM 5.647% 2032 9,496 9,355 9,355 (f)
------------ ----------------- ---------------
Total United States Government Agencies 2,149,189 2,136,070 2,149,132
------------ ----------------- ---------------
Municipal Bonds
California
CAL HSG FIN 1996-M 7.890% 2016 3,315 3,315 3,403 (b) (f)
Colorado
CO HLTH-POUDRE TAXAB 6.950% 2003 7,500 7,498 7,970 (b) (f)
New York
WY VALLEY PA SWR 5.125% 2007 80 80 83 (b) (f)
------------ ----------------- ---------------
Total Municipal Bonds 10,895 10,893 11,456
------------ ----------------- ---------------
Bal Held at
12/31/01
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/01
Issuer Name and Issue Title # of Shares a & c) (Note a)
Public Utility
ALABAMA POWER 7.850% 2003 7,000 6,991 7,386 (f)
AMER ELEC PWR AEP 6.125% 2006 7,500 7,480 7,413 (f)
ASHLAND OIL MTN 7.830% 2005 10,000 10,000 10,637 (f)
AVON ENERGY 6.730% 2002 4,750 4,750 4,869 (d) (f)
BAROID CORP 8.000% 2003 5,000 4,997 4,853 (f)
BARRETT RESOURCES 7.550% 2007 3,000 3,002 3,079 (f)
BELLSOUTH CORP 5.000% 2006 15,000 14,967 14,884 (f)
BRITISH TELECOM PLC 7.875% 2005 12,500 13,546 13,390 (f)
CMS ENERGY CORP 7.500% 2009 1,500 1,507 1,426 (f)
SPPC 99-1A ABS 6.400% 2011 5,800 5,798 5,981 (f)
CALPINE CORP 7.750% 2009 3,500 3,498 3,098 (f)
CENTURYTEL INC P/C 7.750% 2012 5,900 5,732 6,093 (f)
CINERGY CORP 6.125% 2004 4,000 3,997 4,029 (f)
CITIZENS COMM 144A 6.375% 2004 10,000 9,980 10,135 (d) (f)
CONOCO INC GLOBAL 5.900% 2004 7,500 7,495 7,751 (f)
CROSS TIMBERS OIL CO 8.750% 2009 1,500 1,500 1,564 (f)
CYTEC INDUSTRIES INC 6.500% 2003 10,500 10,497 10,631 (f)
DTE ENERGY CO 6.000% 2004 10,000 9,982 10,256 (f)
DOMINION RESOURCES 7.600% 2003 11,000 10,999 11,584 (f)
DYNEGY CORP 6.875% 2002 3,000 2,999 2,940 (f)
ENERGY EAST CORP 5.750% 2006 7,500 7,458 7,238 (f)
FIRSTENERGY CORP 5.500% 2006 10,000 9,989 9,836 (f)
FRANCE TELECOM 144A 7.200% 2006 8,850 9,382 9,398 (d) (f)
GEORGIA POWER 5.750% 2003 5,000 4,995 5,133 (f)
KN ENERGY INC 6.450% 2003 8,000 7,996 8,218 (f)
KANSAS CITY P& L 7.125% 2005 10,000 10,404 10,378 (f)
LIMESTONE ELCTN 144A 8.625% 2003 11,000 11,047 11,187 (d) (f)
MCN INV`T CORP MTN 6.890% 2002 9,000 9,000 9,015 (f)
MIDAMERICAN ENERGY 7.375% 2002 5,000 4,997 5,097 (f)
MIRANT AMERICAS 7.625% 2006 3,300 3,300 3,009 (f)
MITCHELL ENERGY 6.750% 2004 6,500 6,595 6,776 (f)
NRG ENERGY P/C 144A 8.700% 2005 8,000 7,634 8,124 (d) (f)
NEWFIELD EXPLORATION 7.625% 2011 1,000 1,002 973 (f)
NIAGARA MHWK PWR 7.375% 2003 3,000 3,037 3,162 (f)
NISOURCE FINANCE 7.500% 2003 5,000 4,994 5,248 (f)
PP&L CAPITAL FDG MTN 7.750% 2005 3,000 2,998 3,157 (f)
PUBLIC SERV E&G CAP 6.800% 2002 10,000 10,004 10,308 (d) (f)
PRAXAIR INC 6.750% 2003 5,000 4,944 5,203 (f)
PROGRESS ENERGY 6.550% 2004 2,500 2,500 2,607 (f)
PROGRESS ENERGY 6.750% 2006 2,100 2,098 2,183 (f)
PROGRESS ENERGY 5.850% 2008 10,000 9,996 9,751 (f)
QWEST COMMUNICATION 7.250% 2008 3,000 3,000 2,994 (f)
REPUBLIC SERVICES 6.625% 2004 5,000 4,986 5,195 (f)
RIO ALTO EXPLORATION 7.690% 2005 9,000 9,000 9,310 (d) (f)
SBC COMMUNICATIONS 5.750% 2006 10,000 10,312 10,236 (f)
SANTA FE SNYDER 8.050% 2004 2,000 1,987 2,104 (f)
S WESTERN PUB SERV 5.125% 2006 7,000 6,982 6,866 (f)
SPRINT CORP 8.125% 2002 5,000 5,022 5,128 (f)
USX CORP 7.200% 2004 10,000 10,114 10,592 (f)
USA WASTE SERVICES 6.500% 2002 10,000 9,999 10,258 (f)
VINTAGE PETROLEUM 7.875% 2011 2,000 2,003 1,960 (f)
Bal Held at
12/31/01
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/01
Issuer Name and Issue Title # of Shares a & c) (Note a)
VIRGINIA ELECTRIC 5.750% 2006 4,675 4,661 4,722 (f)
VODAFONE AIRTOUCH 7.625% 2005 10,000 10,184 10,753 (f)
WILLIAMS CO INC 6.500% 2002 12,000 11,998 12,245 (f)
WISCONSIN ENERGY 5.875% 2006 10,000 9,957 10,207 (f)
------------ ----------------- ---------------
Total Public Utility 372,375 374,292 380,570
------------ ----------------- ---------------
Finance
AMB REIT 7.200% 2005 5,000 4,994 5,205 (f)
AT&T CAPITAL CORP 6.900% 2002 15,000 15,000 15,050 (f)
AERCO LDT S-1A CL C1 3.246% 2023 13,069 12,955 12,960 (f)
O`N`E` LOAN TRUST 97 2.900% 2007 25,000 25,412 25,412 (d)
ALLIANCE CAPITAL 5.625% 2006 12,500 12,437 12,628 (f)
WASHINGTON MUTUAL 6.300% 2002 8,000 8,032 8,219 (f)
BAMS 1998-2 1A5 6.750% 2028 8,810 8,745 8,942 (f)
BALL 2001-FM A1 6.119% 2010 4,714 4,715 4,650 (d) (f)
BALL 2001-7WTC E CMO 2.750% 2031 8,213 8,213 8,213 (f)
BANK OF AMER 7.125% 2006 5,000 5,238 5,378 (f)
BANK ONE 6.500% 2006 10,000 10,123 10,455 (f)
BANK OF AMERICA GBL 6.625% 2004 5,000 4,995 5,272 (f)
BANPONCE FIN CORP 6.580% 2003 5,000 4,994 5,156 (f)
BISTRO TRST 1997-100 6.350% 2002 7,000 6,996 7,264 (d) (f)
CWHL 2000-7R A1 CMO 6.500% 2030 11,886 11,681 12,074 (f)
CAPITAL ONE BANK 6.375% 2003 5,500 5,496 5,586 (f)
CAPITAL ONE BANK 2.853% 2003 12,000 12,000 12,007 (f)
CAPSTAR HOTEL 8.750% 2007 3,000 2,997 2,513 (f)
CATERPILLER FINANCE 6.875% 2004 5,000 4,989 5,286 (f)
CXHE 2001-A A4 6.470% 2029 10,000 10,030 10,241 (f)
CCMSC 1997-2 CLSS A1 6.450% 2004 1,710 1,710 1,783 (f)
CHASE 1999-AS2A H1 6.500% 2029 7,042 7,059 7,251 (f)
CMSI 2001-6 A2 CMO 6.500% 2029 12,751 12,781 12,956 (f)
CONTI MTG HEL TRTA-6 6.690% 2016 6,424 6,424 6,589 (f)
CONTI 98-1 CLASS A5 6.430% 2016 7,350 7,350 7,447 (f)
COUNTRYWIDE 5.250% 2004 10,000 9,981 10,216 (f)
COUNTRYWIDE HOME 5.500% 2006 5,000 4,977 4,984 (f)
DLJ CMC 99-CG3 A1-A 7.120% 2008 8,769 8,802 9,299 (f)
DIME BANCORP 9.000% 2002 5,000 5,000 5,247 (f)
DUKE REALTY 7.300% 2003 7,500 7,497 7,862 (f)
ECH FUNDING 98-1 A-2 3.442% 2010 19,000 19,000 16,388 (d) (f)
EQUICREDIT 97-3 A6 6.610% 2021 3,812 3,815 3,919 (f)
ELAN PHARMACEUTICAL 8.430% 2002 10,000 10,000 10,223 (d) (f)
ELAN PHARMACEUTICAL 7.620% 2005 7,000 7,000 7,307 (d) (f)
FDIC 96-1C CLASS 1A 6.750% 2026 1,017 1,016 1,040 (f)
FMAC LLC 98-D CL A-1 6.111% 2019 2,055 2,059 2,092 (d) (f)
FBMS 93-2 CL B1 CMO 7.500% 2033 5,161 5,274 5,245 (f)
FBMS 93-M1 CL 1A CMO 6.750% 2006 6,519 6,454 6,696 (f)
FIRST UNION CORP 6.625% 2004 3,000 2,994 3,175 (f)
FULB 97-C1 A-1 MBS 7.150% 2004 3,920 3,945 4,059 (f)
FULB 97-C2 CLASS A1 6.479% 2004 2,358 2,363 2,405 (f)
FIRSTPLUS 98-A-A NIM 14.690% 2023 2,852 2,852 3,166 (d) (f)
GATX CAP CORP MTN 6.360% 2002 5,000 4,987 4,894 (f)
GECMS 99-15 A1 6.750% 2029 11,525 11,296 11,724 (f)
GMAC 96-C1 COMM MBS 6.790% 2003 198 198 198 (f)
GMAC 97-C2 A CMBS 6.451% 2004 3,645 3,651 3,751 (f)
GS-96PROTECT LIFE A1 7.020% 2027 2,782 2,817 2,868 (f)
Bal Held at
12/31/01
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/01
Issuer Name and Issue Title # of Shares a & c) (Note a)
GOLDMAN SACHS 7.625% 2005 10,000 10,539 10,745 (f)
GREENTREE EQ 96-B 7.700% 2018 7,424 7,506 7,433 (f)
GREENPOINT BANK 6.700% 2002 9,250 9,256 9,418 (f)
HELLER FINANCIAL 6.440% 2002 5,000 4,996 5,152 (f)
HELLER FIN 7.875% 2003 5,000 4,996 5,342 (f)
HELLER FINANCIAL 7.500% 2002 5,000 4,999 5,148 (f)
HOMESIDE LENDING 6.875% 2002 10,000 10,000 10,148 (f)
HOUSEHOLD FINL CORP 6.500% 2006 2,000 1,996 2,056 (f)
HOUSEHOLD FIN MTN 7.100% 2002 10,000 9,999 10,171 (f)
MSC 2000-HG C 7.562% 2005 2,500 2,500 2,664 (d) (f)
JP MORGAN GLOBAL 5.625% 2006 10,000 10,272 10,154 (f)
JPMCC 2001-CIBIC1 A1 5.288% 2033 6,588 6,588 6,728 (f)
KELLOGG UK HDLG CO 4.490% 2006 14,000 14,000 12,520 (d) (f)
LBCMT 98-C1 A-1 CMBS 6.330% 2004 2,417 2,422 2,499 (f)
LBCMT 98-C4 A1A CMBS 5.870% 2006 4,089 4,100 4,212 (f)
LIFT 2001-1 A3 ABS 2.326% 2016 4,781 4,781 4,745 (f)
LEH BROS HLDG 6.250% 2006 10,000 9,983 10,244 (f)
LONG ISL SAV BK 7.000% 2002 5,000 4,998 5,092 (f)
MBNA AMERICA 7.750% 2005 6,000 5,982 6,216 (f)
MGIC INVT CORP 7.500% 2005 7,000 6,978 7,430 (f)
ML CBO14 98-E&P-1 FL 0.000% 2010 11,000 0 0 (d) (f)
MARSHALL & ILSLEY CO 5.750% 2006 10,000 9,994 10,097 (f)
MERCANTLE SAFE BK CD 7.400% 2002 7,500 7,500 7,543 (f)
ML CBO 98 AIG-2 B-1 .646% 2010 6,500 325 325 (f)
JPMS 96-C2 CL A 6.470% 2027 1,636 1,641 1,689 (f)
JPM 98-C6 A1 CMBS 6.373% 2030 1,958 1,961 2,028 (f)
JPMC 99-C7 A1 CMBS 6.180% 2035 8,610 8,641 8,899 (f)
JPMC 2000-C9 A1 7.590% 2032 4,390 4,406 4,711 (f)
MS CAP 1996-WFI MBS 7.233% 2006 7,946 7,989 8,424 (f)
MORGAN STANLEY DEAN 6.100% 2006 5,000 4,996 5,153 (f)
MS CAP 1 1997-XL A-1 6.590% 2030 10,050 10,071 10,550 (f)
MS CAP 98-WF1 CMBS 6.250% 2007 1,815 1,820 1,889 (f)
MCF 96-MC2 CLS A1 6.758% 2004 4,231 4,240 4,401 (f)
NPF12 2000-1 A ABS 2.545% 2003 10,000 10,000 9,981 (d) (f)
NSCOR 1998-7 A2 6.750% 2028 4,415 4,378 4,470 (f)
NSCOR 99-23 A1 7.000% 2029 4,079 4,033 4,137 (f)
NSCOR 1999-14 A8 CMO 6.500% 2029 12,780 12,806 13,083 (f)
ORIX CR ALL 144A MTN 6.640% 2002 16,000 16,000 16,001 (d) (f)
PARACELSUS ESCROW 0.000% 2006 5,000 - 0
BANK POPULAR N.A. 6.625% 2002 12,000 11,999 12,306 (f)
PHMS 1993-39 A8 SUPP 6.500% 2008 3,246 3,212 3,276 (f)
QUEBECOR WLD CAP 7.200% 2006 10,000 10,000 10,174 (d) (f)
RFMSI 1998-S23 CL A1 6.000% 2028 4,602 4,609 4,645 (f)
RFMSI 98-S13 CL A23 6.750% 2028 2,164 2,149 2,190 (f)
RFMS2 2000-HI4 AI3 7.490% 2013 10,000 10,000 10,385 (f)
RASC 99-KS1 AI4 ABS 6.390% 2027 5,000 4,992 5,136 (f)
SL CMBS 97-C1 CLS A 6.875% 2004 6,239 6,263 6,509 (d) (f)
SBM7 2000-C1 A1 7.460% 2008 9,068 9,032 9,708 (f)
SALOMON SB HLDS 5.875% 2006 5,000 4,988 5,125 (f)
SAXON 95-1 BA2 ARM 7.438% 2025 519 527 524 (f)
STRATG HOTEL99-C1 C 3.550% 2004 5,000 5,000 4,955 (f)
SIMON DEBARTOLO REIT 7.125% 2007 15,000 15,376 15,163 (f)
SOVEREIGN BANCORP 10.250% 2004 1,000 1,000 1,060 (f)
SOVEREIGN BANK 144A 10.200% 2005 4,329 4,329 4,697 (d) (f)
GMPT 99-C1 D CMBS 2.946% 2004 3,000 3,000 2,967 (d) (f)
Bal Held at
12/31/01
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/01
Issuer Name and Issue Title # of Shares a & c) (Note a)
TRANS OCEAN CRP 144A 6.670% 2007 7,104 7,082 7,490 (d) (f)
TRIZEC 2001-TZH C3 6.522% 2013 5,000 5,000 4,995 (d) (f)
UCFC 97-B CL A-4 ABS 6.940% 2023 2,904 2,904 2,952 (f)
US BANCORP MTN J 7.500% 2003 10,000 10,000 10,605 (f)
WACHOVIA CORP 7.450% 2005 5,000 5,000 5,396 (f)
WACHOVIA CORPORATION 4.950% 2006 6,000 5,989 5,893 (f)
WASHINGTON MUTUAL 7.500% 2006 1,400 1,394 1,517 (f)
WAYLAND FUND 7.790% 2004 5,000 5,000 5,000 (d) (f)
ICI INVESTMENTS EMTN 6.750% 2002 10,000 10,012 10,231 (f)
------------ ----------------- ---------------
Total Finance 758,616 737,893 749,692
------------ ----------------- ---------------
Industrial
AOL TIME WARNER 6.125% 2006 8,000 7,985 8,171 (f)
ABITIBI CONSOLIDATED 8.300% 2005 3,250 3,250 3,389 (f)
ALLSTATE CORP 5.375% 2006 5,000 4,984 5,009 (f)
AM AIR ETC 6.400% 2008 2,032 2,032 1,960 (d) (f)
AM AIR ETC 6.400% 2008 1,634 1,634 1,576 (d) (f)
AM AIR ETC 6.400% 2008 1,956 1,956 1,887 (d) (f)
AM AIR ETC 6.400% 2008 395 395 381 (d) (f)
AM AIR ETC 6.400% 2008 394 394 380 (d) (f)
AM AIR ETC 91-C1 8.970% 2008 9,510 9,737 9,575 (f)
AMERICAN HOME PROD 5.875% 2004 5,000 4,995 5,190 (f)
AMERICAN HOME PROD 6.250% 2006 5,000 4,999 5,202 (f)
AMERICAN STANDARD 7.375% 2008 2,000 1,918 2,000 (f)
ANTENNA TV SA 9.000% 2007 1,800 1,777 1,566
AON CORP 6.900% 2004 3,000 2,998 3,144 (f)
BECKMAN INSTRUMENTS 7.100% 2003 3,000 3,000 3,079 (f)
A.H. BELO 6.875% 2002 17,885 17,937 18,071 (f)
BLACK & DECKER 7.500% 2003 10,000 10,097 10,411 (f)
BRITISH SKY BROAD 6.875% 2009 1,500 1,449 1,437 (f)
BURLINGTON NORTHERN 6.375% 2005 5,000 4,999 5,160 (f)
CSC HOLDINGS INC 7.875% 2007 3,500 3,359 3,624 (f)
CSX CORP 7.050% 2002 10,000 9,999 10,137 (f)
CSX CORP MTN 2.503% 2002 5,000 5,000 5,000 (f)
REYNOLDS METALS CAN 6.625% 2002 3,900 3,904 3,956 (f)
CANANDAIGUA WINE 8.625% 2006 1,000 990 1,030 (f)
CINGULAR WIRELESS 5.625% 2006 5,000 4,982 5,042 (d) (f)
CLARENT HOSPITAL 11.500% 2005 1,834 1,834 1,834 (d)
CLEAR CHANNEL COMM 2.420% 2002 5,000 5,000 5,006 (f)
CLEAR CHANNEL 7.250% 2003 5,000 4,999 5,171 (f)
COLTEC INDUSTRIES 7.500% 2008 2,000 1,998 1,966 (f)
COMCAST CABLE COMM 6.375% 2006 3,800 3,792 3,867 (f)
COMPAQ COMPUTER 7.450% 2002 5,000 4,999 5,121 (f)
CONAGRA 7.500% 2005 4,000 3,993 4,274 (f)
CONTL AIR EETC 96-1A 6.940% 2013 8,142 8,399 7,607 (f)
COTT BEVERAGES 144A 8.000% 2011 1,500 1,466 1,463 (d) (f)
COX ENTERPRISES 144A 6.625% 2002 25,000 24,990 25,429 (d) (f)
DR HORTON 8.000% 2009 2,000 1,991 1,960 (f)
DAIMLERCHRYSLER HLDG 7.125% 2003 10,000 9,995 10,340 (f)
TARGET CORP 6.400% 2003 10,000 9,994 10,380 (f)
DELHAIZE AMERICA INC 7.375% 2006 7,500 7,541 7,951 (f)
DELPHI AUTO SYSTEMS 6.550% 2006 5,000 4,994 4,966 (f)
DIAGEO CAPITAL PLC 6.625% 2004 6,000 5,997 6,364 (f)
ENTERPRISE RENT CAR 6.950% 2004 9,000 9,052 9,127 (d) (f)
Bal Held at
12/31/01
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/01
Issuer Name and Issue Title # of Shares a & c) (Note a)
EARTHGRAINS CO 8.375% 2003 5,000 4,993 5,344 (f)
EARTHGRAINS CO 8.500% 2005 4,000 3,992 4,437 (f)
ENERGIZER HOLDINGS 7.860% 2005 7,000 7,000 7,356 (d) (f)
FORD MTR CRED-GLOBAL 6.700% 2004 5,000 4,995 5,082 (f)
FORD MOTOR CREDIT CO 6.875% 2006 5,000 5,088 5,007 (f)
GE CAP CORP GLOBAL 6.700% 2002 7,500 7,498 7,745 (f)
GMAC MTN 6.380% 2004 14,000 14,000 14,420 (f)
GIANT INDUSTRIES 9.000% 2007 3,000 3,000 2,790 (f)
HARRAHS ENTERTAIN 7.875% 2005 2,000 2,068 2,075 (f)
HERTZ CORP FLT 2.546% 2004 10,000 10,000 9,629 (f)
ISPMEX 144A LIQUID 10.125% 2003 1,096 1,097 658 (d)
INGERSOLL RAND 5.800% 2004 10,000 9,993 10,188 (f)
INTL FLAVOR FRAGRAN 6.450% 2006 10,000 9,983 10,113 (f)
INTL PAPER CO 8.000% 2003 10,000 9,987 10,583 (f)
INT`L SHIPHOLDING 7.750% 2007 2,000 1,993 1,800 (f)
JONES APPAREL 7.500% 2004 3,000 2,996 3,119 (f)
JONES APPAREL 7.875% 2006 2,000 1,995 2,064 (f)
KAUFMAN & BROAD HOME 7.750% 2004 3,000 2,989 3,045 (f)
KELLOGG CO 5.500% 2003 5,000 4,998 5,131 (f)
KRAFT FOODS 4.625% 2006 15,000 14,978 14,660 (f)
KROGER CO 8.150% 2006 4,000 4,003 4,416 (f)
LAMAR MEDIA CORP 8.625% 2007 2,000 2,002 2,070 (f)
LEAR CORP B 7.960% 2005 1,500 1,504 1,516 (f)
LGETT&PLATT MTN SERD 7.185% 2002 10,000 9,992 10,134 (d) (f)
LOUISIANA PACIFIC 8.500% 2005 1,000 990 978 (f)
MEDIA GENERAL INC 6.950% 2006 5,000 4,997 5,036 (f)
MEDIAONE GROUP INC 6.850% 2002 15,500 15,500 15,517 (f)
FRED MEYERS INC 7.150% 2003 5,000 4,997 5,182 (f)
NCI BUILDING SYSTEMS 9.250% 2009 2,000 2,022 1,940 (f)
NORFOLK SOUTHERN 6.950% 2002 15,000 15,018 15,196 (f)
NORSKE SKOG 144A 8.625% 2011 1,500 1,512 1,556 (d) (f)
NWA EETC 01-1A-2 6.841% 2011 10,000 10,000 8,930 (f)
OFFSHORE LOGISTICS 7.875% 2008 2,000 2,003 1,900 (f)
PHILIP MORRIS 7.500% 2004 5,000 5,144 5,318 (f)
PINNACLE ONE PARTNRS 8.830% 2004 6,000 6,000 6,130 (d) (f)
PRINTPACK INC 9.875% 2004 2,500 2,500 2,575 (f)
PULTE CORP 9.500% 2003 13,000 13,000 13,672 (f)
QUAKER OATS 6.940% 2003 1,500 1,501 1,572 (f)
QWEST CAP FUND 7.750% 2006 3,000 3,194 3,065 (f)
S C INTERNATIONAL 9.250% 2007 2,000 2,006 1,280 (f)
SAFECO CORPORATION 7.875% 2003 7,000 6,991 7,233 (f)
SCHULER HOMES 144A 9.375% 2009 1,000 1,000 1,035 (d) (f)
SCOTTS COMPANY 8.625% 2009 2,000 1,940 2,050 (f)
STATION CASINO 8.375% 2008 1,500 1,514 1,530 (f)
SUN MICROSYSTEMS INC 7.000% 2002 4,000 4,000 4,084 (f)
TTX CO 144A 7.350% 2004 4,000 4,000 4,284 (d) (f)
TEEKAY SHIPPING CORP 8.320% 2008 1,500 1,509 1,545 (f)
TELEFONICA EUROPE 7.350% 2005 8,000 7,998 8,425 (f)
TEXTRON INC 6.375% 2004 3,000 2,992 3,073 (f)
TYCO INT`L P/C 6.250% 2003 10,000 9,868 10,256 (f)
UNILEVER NV 6.750% 2003 9,500 9,479 10,085 (f)
UNION PACIFIC CORP 3.150% 2002 12,000 12,000 12,008 (f)
UNION PACIFIC 5.840% 2004 5,000 5,000 5,135 (f)
UNION TANK CAR 6.500% 2008 3,856 3,852 4,011 (f)
UAL ETC 91-A1 9.200% 2008 3,611 3,518 3,195 (f)
Bal Held at
12/31/01
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/01
Issuer Name and Issue Title # of Shares a & c) (Note a)
UAL EETC 00-2A-1 7.032% 2010 4,500 4,500 4,279 (f)
UNITED STATIONERS 8.375% 2008 1,000 1,000 1,010 (f)
UNITED HEALTH GROUP 7.500% 2005 6,000 5,983 6,433 (f)
VIACOM INC 6.750% 2003 5,000 4,999 5,200 (f)
WALMART STORES 5.450% 2006 10,000 10,297 10,256 (f)
WESTINGHOUSE AIR 9.375% 2005 2,250 2,274 2,273 (f)
AM AIR ETC 6.400% 2008 1,053 1,053 1,016 (d) (f)
AM AIR ETC 6.400% 2008 1,053 1,053 1,016 (d) (f)
AM AIR ETC 6.400% 2008 1,053 1,053 1,016 (d) (f)
AM AIR ETC 6.400% 2008 408 408 394 (d) (f)
AM AIR ETC 6.400% 2008 410 410 395 (d) (f)
AM AIR ETC 6.400% 2008 663 663 640 (d) (f)
AM AIR ETC 6.400% 2008 663 663 640 (d) (f)
AM AIR ETC 6.400% 2008 664 664 640 (d) (f)
WORLD COLOR PRESS 8.375% 2008 3,000 3,000 3,015 (f)
------------ ----------------- ---------------
Total Industrial 570,312 571,013 578,604
------------ ----------------- ---------------
Total Other Bonds and Notes 3,861,387 3,830,161 3,869,454
------------ ----------------- ---------------
TOTAL BONDS AND NOTES 3,861,752 3,830,522 3,869,839
------------ ----------------- ---------------
PREFERRED STOCK
Public Utility
APPALACHIAN PWR $100 5.900% 2008 10 998 1,009 (f)
APPALACHIAN PWR $100 5.920% 2008 11 1,093 1,118 (f)
ATLANTIC CITY EL 100 7.800% 2006 47 4,675 4,758 (f)
BELL ATLANTIC NZ144A 7.080% 2004 25 2,543 2,718 (d) (f)
BELL ATL NZ$100 144A 5.800% 2004 100 10,000 10,584 (d) (f)
CENTRAL ILL LT $100 5.850% 2008 65 6,502 6,435 (f)
CON EDISON $100 SR J 6.125% 2002 150 15,005 15,525 (f)
DUKE ENERGY $100 V 6.400% 2002 30 3,000 3,114 (f)
INDIANA MICH POWER 6.300% 2009 52 5,223 5,287 (f)
IND MICH POWER $100 6.250% 2009 20 2,002 2,018 (f)
INDIANA MICHIGAN PWR 5.900% 2009 33 3,155 3,209 (f)
LOUISVILLE G&E PFD 5.875% 2008 12 1,198 1,264 (f)
MIDAMERICAN ENERGY 7.800% 2006 49 5,007 5,108 (f)
NIAGARA MOHAWK $50 6.905% 2004 100 5,000 5,188 (f)
NO IND PUB SERV $100 6.500% 2002 114 11,561 11,557 (f)
NORTHWEST NAT GA 100 6.950% 2002 170 17,024 17,361 (f)
OHIO POWER CO $100 5.900% 2009 36 3,551 3,594 (f)
OHI PWR CO $100 6.020% 2008 10 993 1,005 (f)
OHIO PWR CO $100 6.350% 2008 5 502 525 (f)
PECO ENERGY 6.120% 2003 32 3,208 3,244 (f)
POTOMAC ELEC PWR $50 6.800% 2007 161 7,979 8,125 (f)
ROCHESTER G&E $100 6.600% 2009 100 10,037 10,800 (f)
SAN DIEGO G&E $25 1.762% 2008 60 1,555 1,478 (f)
TXU ELECTRIC CO 6.375% 2008 54 5,411 5,532 (f)
TXU ELECTRIC CO 6.980% 2008 50 5,000 5,117 (f)
UBS PRIVATE SER H 5.040% 2002 15 15,000 15,000 (d) (f)
------------ ----------------- ---------------
Total Public Utility 1,511 147,222 150,673
------------ ----------------- ---------------
Bal Held at
12/31/01
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 12/31/01
Issuer Name and Issue Title # of Shares a & c) (Note a)
Finance
CITIGROUP FRAP 5.86% 5.86% 150 7,782 7,751 (f)
CITIBANK NA 5.84% 100 10,000 10,188 (f)
JP MORGAN CHASE FRAP 4.96% 150 7,500 7,289 (f)
------------ ----------------- ---------------
Total Finance 400 25,282 25,228
------------ ----------------- ---------------
Industrial
BHP OPERATIONS 144 6.76% 2006 50 5,000 5,245 (d) (f)
WHIRLPOOL FIN $100 B 6.550% 2008 180 18,041 18,816 (d) (f)
WHIRLPOOL FINL PFD 6.090% 2002 37 3,700 3,756 (d) (f)
------------ ----------------- ---------------
Total Industrial 267 26,741 27,817
------------ ----------------- ---------------
TOTAL PREFERRED STOCK 2,178 199,245 203,718
------------ ----------------- ---------------
COMMON STOCK
Industrial
CLARENT HOSPITAL 86 172 344 (d)
TOTAL COMMON STOCK 86 172 344
------------ ----------------- ---------------
TOTAL Investments in Securities of Unaffiliated Issuers 4,029,939 4,073,901
TOTAL Reserve for Possible Losses on Corporate Issues 0 0
----------------- ----------------
4,029,939 4,073,901
================= ================
NOTES:
a) See Notes 1 and 3 to the financial statements regarding determination of
cost and fair values
b) In the absence of market quotations, securities are valued by American
Express Certificate Company at fair value
c) Aggregate cost of investment in securities of unaffiliated issuers for
federal income tax purposes was $3,053,100
d) Securities acquired in private negotiation which may require registration
under federal securities law if they were to be publicly sold. Also see
Note 3b to financial statements
e) Non-income producing securities
f) Securities classified as available for sale and carried at fair value on the
balance sheet. Also see Notes 1 and 3 to financial statements
AMERICAN EXPRESS CERTIFICATE COMPANY
Investments in and Advances to Affiliates and Income Thereon
December 31, 2001, 2000 and 1999
($ in thousands)
Balance December 31, 2001
Interest
Dividends
Principal Carrying Credited
Amount or Cost Value to Income
Name of Issuer and Title of Issue No. of Shares (a) (b) (c)
Wholly Owned Subsidiary (b):
Real Estate Investment Company:
Investors Syndicate Development Corporation:
Capital Stock.............................. 100 $422 $422 $0
=======================
Other Controlled Companies: $0 0 0 0
=======================
Other Affiliates (as defined in Sec. 2(a)(3) of the
Investment Company Act of 1940).................. $0 0 0 0
======================= ------------- --------------- --------------------
Total affiliates............................. $422 $422 $0
============= =============== ====================
Balance December 31, 2000
Interest
Dividends
Principal Carrying Credited
Amount or Cost Value to Income
Name of Issuer and Title of Issue No. of Shares (a) (b) (c)
Wholly Owned Subsidiary (b):
Real Estate Investment Company:
Investors Syndicate Development Corporation:
Capital Stock.............................. 100 $422 $422 $0
=======================
Other Controlled Companies: $0 0 0 0
=======================
Other Affiliates (as defined in Sec. 2(a)(3) of the
Investment Company Act of 1940).................. $0 0 0 0
======================= ------------- --------------- --------------------
Total affiliates............................. $422 $422 $0
============= =============== ====================
Balance December 31, 1999
Interest
Dividends
Principal Carrying Credited
Amount or Cost Value to Income
Name of Issuer and Title of Issue No. of Shares (a) (b) (c)
Wholly Owned Subsidiary (b):
Real Estate Investment Company:
Investors Syndicate Development Corporation:
Capital Stock.............................. 100 $418 $422 $0
=======================
Other Controlled Companies: $0 0 0 0
=======================
Other Affiliates (as defined in Sec. 2(a)(3) of the
Investment Company Act of 1940).................. $0 0 0 0
======================= ------------- --------------- --------------------
Total affiliates............................. $418 $422 $0
============= =============== ====================
AMERICAN EXPRESS CERTIFICATE COMPANY
Investments in and Advances to Affiliates and Income Thereon
December 31, 2001, 2000 and 1999
($ in thousands)
NOTES:
(a) The aggregate cost for federal income tax purposes was $422 at December 31,
2001, 2000, and 1999, subject to possible adjustment in certain
circumstances under consolidated income tax return regulations.
(b) Investments in stocks of wholly owned subsidiaries are carried at cost
adjusted for equity in undistributed net income since organization or
acquisition of the subsidiaries.
(c) There were no dividends or interest earned which were not credited to
income.
AMERICAN EXPRESS CERTIFICATE COMPANY
Mortgage Loans on Real Estate and Interest
Earned on Mortgages
Year Ended December 31, 2001
($ in thousands)
Part 1 - Mortgage loans on real estate Part 2 - Interest earned
at end of period on mortgages
-------- ---------------------------------------- ------------------------
Amount of principal
unpaid at end of period
-----------------------
Average
Carrying Interest gross rate
amount Subject Amount due and of interest
of (c), to of accrued on mortgages
Number Prior mortgages delinquent mortgages at end of held at end
of liens (g),(h) interest being period of period
Description (a) loans (b) and (i) Total (d) forclosed (e) (f)
- ----------------------------- ------ ----- --------- ----- ---------- --------- --------- ------------
First mortgages:
Insured by Federal
Housing Administration -
liens on:
Residential - under $100 0 $0 $0 $0 $0 0.000%
Apartment and business - under $100 0 0 0 0 0 0.000%
---- -------- ----- ------- -------- ---------
Total 0 0 0 0 0 0.000%
---- -------- ----- ------- -------- ---------
Partially guaranteed under Serviceman's
Readjustment Act of 1944, as amended -
liens on:
Residential - under $100 0 0 0 0 0 0.000%
Apartment and business - under $100 0 0 0 0 0 0.000%
---- -------- ----- ------- -------- ---------
Total 0 0 0 0 0 0.000%
---- -------- ----- ------- -------- ---------
Other - liens on:
Residential 0 0 0 0 0 0.000%
---- -------- ----- ------- -------- ---------
Apartment and business:
Under $100 1 70 70 0 0 9.500%
$100 to $150 0 0 0 0 0 0.000%
$150 to $200 0 0 0 0 0 0.000%
$200 to $250 0 0 0 0 0 0.000%
$250 to $300 1 279 279 0 0 8.500%
$300 to $350 0 0 0 0 0 0.000%
$350 to $400 0 0 0 0 0 0.000%
$400 to $450 0 0 0 0 0 0.000%
$450 to $500 0 0 0 0 0 0.000%
Over $500:
Loan No. Mortgagor Property Location
21-47110 Village North Brooklyn Park, MN 1 1,240 1,240 0 0 8.7200%
21-47139 Treasure's Island Inc. Eagan, MN 1 1,297 1,297 0 0 8.2500%
21-47140 Harbour Run LTD Mentor-On-The-
Lake, OH 1 3,508 3,508 0 0 6.9100%
21-47142 34th Street Properties
Partnership Gainsville, FL 1 9,301 9,301 0 0 7.0500%
21-47147 T & R Hilliard, OH 1 6,740 6,740 0 0 7.9900%
21-47157 John A. Belanich Tampa, FL 1 3,064 3,064 0 0 7.6500%
21-47164 Regency Hamilton, OH 1 5,340 5,340 0 0 8.1250%
AMERICAN EXPRESS CERTIFICATE COMPANY
Mortgage Loans on Real Estate and Interest
Earned on Mortgages
Year Ended December 31, 2001
($ in thousands)
Part 1 - Mortgage loans on real estate Part 2 - Interest earned
at end of period on mortgages
-------- ---------------------------------------- ------------------------
Amount of principal
unpaid at end of period
-----------------------
Average
Carrying Interest gross rate
amount Subject Amount due and of interest
of (c), to of accrued on mortgages
Number Prior mortgages delinquent mortgages at end of held at end
of liens (g),(h) interest being period of period
Description (a) loans (b) and (i) Total (d) forclosed (e) (f)
- ----------------------------- ------ ----- --------- ----- ---------- --------- --------- ------------
21-47165 Bowling Green
Partnership Sussex, WI 1 2,438 2,438 0 0 7.2000%
21-47167 Wilder Corp of Delaware Ruskin, FL 1 6,154 6,154 0 0 7.4400%
21-47168 Wilder Corp of Delaware Riverview, FL 1 3,299 3,299 0 0 7.4400%
21-47173 Cinram Associates Fairfield, NJ 1 3,726 3,726 0 0 7.2600%
21-47184 Mcnab Commerce Center
Association Pompano Beach, FL 1 1,930 1,930 0 0 8.2500%
21-47186 Mack Edison Company Edison, NJ 1 5,776 5,776 0 0 6.8500%
21-47187 Industrial Development
Association Mebane, NC 1 2,760 2,760 0 0 7.2200%
21-47190 Bradley Oper Davenport, IA 1 3,634 3,634 0 0 7.8750%
21-47191 SSC Associates St. Clair
Ltd Ptnshp Shores, MI 1 5,441 5,441 0 0 7.0000%
21-47195 Tipotex Inc. Pharr, TX 1 1,525 1,525 0 0 7.4000%
21-47196 Tropic Star Pharr, TX 1 3,308 3,308 0 0 7.4000%
21-47197 Winter Ranch Alamo, TX 1 782 782 0 0 7.4000%
21-47204 Fort Walton Mary Esther, FL 1 2,818 2,818 0 0 7.0400%
21-47205 Kavanagh Tucson, AZ 1 3,695 3,695 0 0 7.0500%
21-47206 Artrisco Albuquerque, NM 1 5,040 5,040 0 0 8.2500%
21-47208 Newport VI Albuquerque, NM 1 897 897 0 0 8.1250%
21-47209 Fountain Lake Brandeton, FL 1 5,332 5,332 0 0 8.3200%
21-47210 Orion West Haven, CT 1 3,979 3,979 0 0 7.8750%
21-47211 Plaza 7000 Greenwood
Village, CO 1 2,309 2,309 0 0 7.6250%
21-47212 Howard Lake-Maple
Plain Howard Lake, MN 1 1,242 1,242 0 0 7.7500%
21-47214 West Health Inc. Plymouth, MN 1 10,278 10,278 0 0 7.4500%
21-47215 Invespro Urbandale, IA 1 3,220 3,220 0 0 8.3750%
21-47216 Invespro Urbandale, IA 1 2,535 2,535 0 0 8.3750%
21-47217 Airport Tempe, AZ 1 6,508 6,508 0 0 8.3750%
21-47218 D&R Northpoin Sterling, VA 1 1,796 1,796 0 0 8.5000%
21-47219 Favorite Bay Albuquerque, NM 1 2,479 2,479 0 0 7.8500%
21-47223 Westwood Plaza Houston, TX 1 4,362 4,362 0 0 8.2300%
21-47224 Custer Office Plano, TX 1 1,805 1,805 0 0 7.3200%
21-47225 Valley Mining Eagan, MN 1 1,585 1,585 0 0 7.2100%
21-47226 Jake's LP Austin, TX 1 2,630 2,630 0 0 6.9500%
21-47227 PW Holdings Falls Township, PA 1 4,408 4,408 0 0 7.8800%
21-47228 Lafayette Square Bridgeport, CT 1 4,173 4,173 0 0 7.1400%
21-47230 Wilcrest Gree Houston, TX 1 2,007 2,007 0 0 7.0800%
21-47231 Midtown Mall Hastings, MN 1 1,986 1,986 0 0 7.1400%
21-47232 DHIR Group LLC Milwaukee, WI 1 4,350 4,350 0 0 7.4000%
21-47233 Capital Plaza Jefferson City, MO 1 2,019 2,019 0 0 7.1500%
21-47234 Southwest Medical Littleton, CO 1 3,122 3,122 0 0 7.1800%
AMERICAN EXPRESS CERTIFICATE COMPANY
Mortgage Loans on Real Estate and Interest
Earned on Mortgages
Year Ended December 31, 2001
($ in thousands)
Part 1 - Mortgage loans on real estate Part 2 - Interest earned
at end of period on mortgages
-------- ---------------------------------------- ------------------------
Amount of principal
unpaid at end of period
-----------------------
Average
Carrying Interest gross rate
amount Subject Amount due and of interest
of (c), to of accrued on mortgages
Number Prior mortgages delinquent mortgages at end of held at end
of liens (g),(h) interest being period of period
Description (a) loans (b) and (i) Total (d) forclosed (e) (f)
- ----------------------------- ------ ----- --------- ----- ---------- --------- --------- ------------
21-47235 2507 & 2473 Assc Southport, CT 1 2,608 2,608 0 0 7.0200%
21-47237 Abmar Valley Roanoke, VA 1 1,633 1,633 0 0 7.1000%
21-47238 Cicero Place Cicero, IN 1 3,288 3,288 0 0 7.0000%
21-47240 Crystal Plaza Baltimore, MD 1 3,797 3,797 0 0 7.0200%
21-47241 Pal, Inc Sioux Falls, SD 1 1,122 1,122 0 0 7.0500%
21-47242 Northpoint AT San Antonio, TX 1 4,838 4,838 0 0 7.3300%
21-47243 Pam-Joy Realty Chesapeake. VA 1 2,904 2,904 0 0 6.9600%
21-47245 Tide Mill Southport, CT 1 2,369 2,369 0 0 6.9800%
21-47246 JLC, IX PF LTD Dallas, TX 1 955 955 0 0 7.0100%
21-47247 Airport Land Tempe, AZ 1 4,564 4,564 0 0 6.8900%
21-47248 HMJ Moorehead, MN 1 5,616 5,616 0 0 6.9600%
21-47249 MIDEB Ventura, CA 1 4,962 4,962 0 0 6.7500%
21-47250 Thomas Ribis Alexandria, VA 1 2,647 2,647 0 0 6.9000%
21-47251 Arcadia Villa Phoenix, AZ 1 2,705 2,705 0 0 6.8000%
21-47252 Broken Arrow Broken Arrow, OK 1 3,228 3,228 0 0 6.8000%
21-47253 Palo Verde Plaxa Phoenix, AZ 1 1,614 1,614 0 0 6.8000%
21-47254 Village S. Tulsa, OK 1 3,370 3,370 0 0 6.8000%
21-47255 Gaughan Forest Lake/
Stillwater, MN 1 5,422 5,422 0 0 6.8300%
21-47256 Fremont Apts Rapid City, SD 1 1,080 1,080 0 0 6.7500%
21-47257 American Bank Plaza Corpus Christi, TX 1 6,887 6,887 0 0 6.9000%
21-47259 Anza Plaza Santa Clarita, CA 1 1,861 1,861 0 0 6.9500%
21-47260 Eisenhower 3 Ann Arbor, MI 1 2,855 2,855 0 0 6.9800%
21-47261 KKMP Properties Bloomington, MN 1 1,103 1,103 0 0 7.0600%
21-47262 312 Third Street Fargo, ND 1 5,587 5,587 0 0 6.9000%
21-47263 G.O.L.D Columbus, OH 1 2,114 2,114 0 0 6.9500%
21-47264 Esnet Properties Orem, UT 1 1,891 1,891 0 0 6.8100%
21-47265 Eaglecreek A Lakewood, CO 1 2,179 2,179 0 0 6.7700%
21-47266 Independence Clarkston, MI 1 4,117 4,117 0 0 6.8900%
21-47267 Blairhill LLC Charlotte, NC 1 1,380 1,380 0 0 6.9100%
21-47268 Lemans Limited Seebring, FL 1 5,422 5,422 0 0 6.8500%
21-47269 Hampton Inn Spokane, WA 1 4,220 4,220 0 0 7.1500%
21-47270 Brookhollow-2 Houston, TX 1 2,705 2,705 0 0 6.8000%
21-47271 Wilsonville Wilsonville, OR 1 1,743 1,743 0 0 6.8500%
21-47272 Southeast Com Aurora, CO 1 1,906 1,906 0 0 6.4400%
21-47273 Sears Bldg Rapid City, SD 1 877 877 0 0 6.8500%
21-47274 Edison Towson, MD 1 1,140 1,140 0 0 6.8500%
21-47275 Colorado & SA Colorado
Springs, CO 1 1,913 1,913 0 0 6.5500%
AMERICAN EXPRESS CERTIFICATE COMPANY
Mortgage Loans on Real Estate and Interest
Earned on Mortgages
Year Ended December 31, 2001
($ in thousands)
Part 1 - Mortgage loans on real estate Part 2 - Interest earned
at end of period on mortgages
-------- ---------------------------------------- ------------------------
Amount of principal
unpaid at end of period
-----------------------
Average
Carrying Interest gross rate
amount Subject Amount due and of interest
of (c), to of accrued on mortgages
Number Prior mortgages delinquent mortgages at end of held at end
of liens (g),(h) interest being period of period
Description (a) loans (b) and (i) Total (d) forclosed (e) (f)
- ----------------------------- ------ ----- --------- ----- ---------- --------- --------- ------------
21-47277 Alvernon Place Tucson, AZ 1 2,177 2,177 0 0 7.0000%
21-47278 VL Grand Rdge Kennewick, WA 1 6,453 6,453 0 0 6.7500%
21-47279 Daniel G Chetek, WI 1 2,000 2,000 0 0 7.2500%
21-47281 Cleveland Shaker Heights, OH 1 2,361 2,361 0 0 7.0000%
21-47282 Cary Bldg LP Springfield, VA 1 2,140 2,140 0 0 6.8500%
21-47283 Paragon DTC P Englewood, CO 1 7,090 7,090 0 0 6.8000%
21-47284 Tarran Batavia, IL 1 3,380 3,380 0 0 7.0000%
21-47285 Equity One In Fort Meyers, FL 1 4,397 4,397 0 0 6.7500%
21-47286 Sandhill SQ Las Vegas, NV 1 2,498 2,498 0 0 7.0000%
21-47287 ML LTD Moen Rogers, MN 1 5,869 5,869 0 0 7.3000%
21-47288 Hilde Plymouth, MN 1 1,905 1,905 0 0 6.8500%
21-47289 Camp Morrison Newport News, VA 1 2,654 2,654 0 0 6.9000%
21-47290 Oakcliff Doraville, GA 1 2,603 2,603 0 0 7.0000%
21-47291 Truway Liverpool, NY 1 3,031 3,031 0 0 7.0000%
21-47292 Desert Inn Las Vegas, NV 1 6,477 6,477 0 0 7.0950%
21-47293 Julantru Corvallis, OR 1 4,284 4,284 0 0 6.7500%
21-47294 Carolace Emb. Hope Mills, NC 1 1,594 1,594 0 0 7.0000%
21-47295 Mastercraft Concord, OH 1 1,245 1,245 0 0 7.0000%
21-47296 Viviani Painesville, OH 1 1,052 1,052 0 0 7.0000%
21-47297 Viviani Concord, OH 1 1,770 1,770 0 0 7.0000%
21-47298 Shiland Hills Rock Hill, SC 1 891 891 0 0 7.2500%
21-47299 Crest Escondido, CA 1 2,200 2,200 0 0 7.0000%
21-47303 KWI 1304 Santa Monica, CA 1 5,300 5,300 0 0 3.9300%
21-47304 Memorial Six Houston, TX 1 7,190 7,190 0 0 6.4000%
107 345,369 345,369 0 0 6.978%
---- -------- ------- --------- --------- -------
Total Other
Unallocated Reserve for Losses 107 345,369 345,369 0 0 6.978%
---- -------- ------- --------- --------- -------
1,935
--------
Total First Mortgage Loans on Real Estate 107 $343,434 $345,369 $ 0 $ 0 6.978%
==== ======== ======== ========= ========= =======
Part 3 - Location of mortgaged properties
($ in thousands)
Amount of principal
unpaid at end of period
------------------------------------
Carrying Subject
amount of to Amount of
State in Number Prior mortgages delinquent mortgages
which mortgaged of liens (c), (g), interest being
property is located loans (b) (h) and (i) Total (d) foreclosed
- ---------------------------------- ----------- -------- -------------- ---------------- -------------- --------------
Arizona 6 21,264 21,264 0 0
California 4 14,324 14,324 0 0
Colorado 6 18,519 18,519 0 0
Connecticut 4 13,129 13,129 0 0
Florida 9 41,718 41,718 0 0
Georgia 1 2,604 2,604 0 0
Illinois 1 3,380 3,380 0 0
Indiana 1 3,288 3,288 0 0
Iowa 3 9,390 9,390 0 0
Maryland 2 4,938 4,938 0 0
Michigan 3 12,413 12,413 0 0
Minnesota 11 37,544 37,544 0 0
Missouri 1 2,019 2,019 0 0
Nevada 2 8,976 8,976 0 0
New Jersey 2 9,502 9,502 0 0
New Mexico 3 8,416 8,416 0 0
New York 1 3,031 3,031 0 0
North Carolina 4 6,979 6,979 0 0
North Dakota 1 5,587 5,587 0 0
Ohio 7 22,884 22,884 0 0
Oklahoma 2 6,597 6,597 0 0
Oregon 2 6,027 6,027 0 0
Pennsylvania 1 4,408 4,408 0 0
South Carolina 1 891 891 0 0
South Dakota 4 3,357 3,357 0 0
Texas 13 39,060 39,060 0 0
Utah 1 1,891 1,891 0 0
Virginia 6 13,772 13,772 0 0
Washington 2 10,673 10,673 0 0
Wisconsin 3 8,788 8,788 0 0
----------- -------------- ---------------- -------------- --------------
107 345,369 345,369 0 0
----------- -------------- ---------------- -------------- --------------
Unallocated Reserve
for Losses 1,935
--------------
Total 107 $343,434 $345,369 $0 $0
=========== ============== ================ ============== ==============
NOTES:
(a) The classification "residential" includes single dwellings only.
Residential multiple dwellings are included in "apartment and business".
(b) Real estate taxes and easements, which in the opinion of the Company are
not undue burden on the properties, have been excluded from the
determination of "prior liens".
(c) In this schedule III, carrying amount of mortgage loans represents unpaid
principal balances plus unamortized premiums less unamortized discounts and
reserve for loss.
(d) Interest in arrears for less than three months has been disregarded in
computing the total amount of principal subject to delinquent interest. The
amounts of mortgage loans being foreclosed are also included in amounts
subject to delinquent interest.
(e) Information as to interest due and accrued for the various classes within
the types of mortgage loans is not readily available and the obtaining
thereof would involve unreasonable effort and expense.
The Company does not accrue interest on loans which are over three months
delinquent.
(f) Information as to interest income by type and class of loan has been
omitted because it is not readily available and the obtaining thereof would
involve unreasonable effort and expense. In lieu thereof, the average gross
interest rates (exclusive of amortization of discounts and premiums) on
mortgage loans held at December 31, 2001 are shown by type and class of
loan.
The average gross interest rates on mortgage loans held at December 31,
2001, 2000, and 1999 are summarized as follows:
2001 2000 1999
-------- -------- --------
First mortgages:
Insured by Federal Housing Administration 0.000% 0.000% 0.000%
Partially guaranteed under Servicemen's
Readjustment Act of 1944, as amended 0.000 0.000 0.000
------- -------- --------
Other 6.978 7.276 7.274
------- -------- --------
Combined average 6.978% 7.276% 7.274%
======== ======== ========
(g) Following is a reconciliation of the carrying amount of mortgage loans for
the years ended December 31, 2001, 2000 and 1999.
2001 2000 1999
---------- ---------- ----------
Balance at beginning of period $358,575 $378,047 $334,280
New loans acquired:
Nonaffiliated companies 16,356 763 66,068
Reserve for loss reversal 0 0 100
---------- ---------- ----------
Total additions 16,356 763 66,168
---------- ---------- ----------
374,931 378,810 400,448
---------- ---------- ----------
Deductions during period:
Collections of principal 30,306 20,002 22,401
Reserve for loss 1,191 233 0
---------- ---------- ----------
Total deductions 31,497 20,235 22,401
---------- ---------- ----------
Balance at end of period $343,434 $358,575 $378,047
========== ========== ==========
(h) The aggregate cost of mortgage loans for federal income tax purposes at
December 31, 2001 was $345,369.
(i) At December 31, 2001, an unallocated reserve for loss on first mortgage
loans of $1,935 is recorded.
AMERICAN EXPRESS CERTIFICATE COMPANY
Qualified Assets on Deposit
December 31, 2001
($ thousands)
Investment Securities
-------------------------
Bonds and Mortgage
Notes Stocks Loans Other
Name of Depositary (a) (b) (c) (d) Total
- ---------------------------------------------- ----------- --------- --------- --------- -----------
Deposits with states or their depositories to
meet requirements of statutes and
agreements:
Illinois - Secretary of
State of Illinois $49 $0 $0 $0 $49
New Jersey - Commissioner
of Banking and Insurance
of New Jersey 50 0 0 0 50
Pennsylvania - Treasurer
of the State of
Pennsylvania 149 0 0 0 149
Texas - Treasurer of the
State of Texas 113 0 0 0 113
----------- --------- --------- --------- -----------
Total deposits with states or their
depositories to meet requirements of
statues and agreements 361 0 0 0 361
Central depository - American
Express Trust Company 3,755,970 199,417 343,434 248,462 4,547,283
----------- --------- --------- --------- -----------
Total $3,756,331 $199,417 $343,434 $248,462 $4,547,644
=========== ========= ========= ========= ===========
Notes:
(a) Represents amortized cost of bonds and notes.
(b) Represents average cost of individual issues of stocks.
(c) Represents unpaid principal balance of mortgage loans less unamortized
discounts and reserve for losses.
(d) Represents cost of purchased call options and accounts payable purchased.
AMERICAN EXPRESS CERTIFICATE COMPANY
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2001
($ in thousands)
Balance at beginning of period Additions
-------------------------------- ---------------------------------
Number
of Charged
Yield accounts Amount Charged Reserv to other
to maturity with of Amount to profit payments by accounts
on an annual security maturity of and loss certificate (per
Description payment basis holders value reserves or income holders part 2)
----------- -------------------- --------- --------- -------- --------- ------------ --------
Installment certificates:
Reserves to mature:
Series 15, includes extended maturities 2.40 Inst/2.50 Ext. 0 0 0 0 0 0
" 20, " " " 2.52 Inst/2.50 Ext. 1 14 9 0 0 0
" 15A, " " " 2.66 Inst/3.04 Ext. 1 7 7 0 0 0
" 22A, " " " 3.09 575 13,437 10,738 296 120 211
" I-76, " " " 3.35 393 8,879 5,465 181 151 11
" Reserve Plus Flexible Payment (note a) 149 1,361 678 0 113 18
" IC-Q-Installment (note a) 48 572 168 0 21 4
" IC-Q-Ins (note a) 1,273 14,541 6,640 0 535 114
" IC-Q-Ins Emp (note a) 9 83 57 0 4 1
" IC-I (note a) 24,693 410,501 169,125 0 31,582 6,109
" IC-I-Emp (note a) 150 2,106 1,123 0 233 47
" Inst (note a) 7,685 0 18,816 0 10,432 547
" Inst-Emp (note a) 42 0 77 0 53 3
" RP-Q-Installment (note a) 103 1,351 906 0 11 25
" RP-Q-Flexible Payment (note a) 9 109 60 0 0 2
" RP-Q-Ins (note a) 18 508 124 0 5 3
" RP-Q-Ins Emp (note a) 1 6 8 0 0 0
" RP-I (note a) 142 4,244 1,453 0 237 54
" RP-I-Emp (note a) 0 0 0 0 0 0
" Inst-R (note a) 58 9,608 183 0 79 5
" Inst-R-Emp (note a) 2 12 4 0 1 0
--------- --------- -------- -------- --------- --------
Total 35,352 467,339 215,641 477 43,577 7,154
--------- --------- -------- -------- --------- --------
Payments made in advance of certificate
year requirements and accrued interest
thereon:
Series 15, includes extended maturities 2 Not Not 0 0 0 0
" 20, " " " 2 Readily Applicable 1 0 0 0
" 15A, " " " 3 Available 1 0 0 0
" 22A, " " " 3 380 18 48 4
" I-76, " " " 3.5 315 16 23 0
-------- -------- --------- --------
Total 697 34 71 4
-------- -------- --------- --------
Additional credits and accrued interest
thereon:
Series 15, includes extended maturities 2.5 Not Not 0 0 0 0
" 20, " " " 2.5 Readily Applicable 2 0 0 0
" 15A, " " " 3 Available 0 0 0 0
" 22A, " " " 3 2,529 67 0 122
" I-76, " " " 3.5 1,265 42 0 41
Deductions Balance at close of period
---------------------------------- --------------------------------
Number
Credited of
Cash to other accounts Amount
surrenders accounts with of Amount
prior to (per security maturity of
Description Maturities maturity part 2) holders value reserves
----------- ---------- ------- ------- --------- --------- --------
Installment certificates:
Reserves to mature:
Series 15, includes extended maturities 0 0 0 0 0 0
" 20, " " " 0 0 9 0 0 0
" 15A, " " " 7 0 0 0 0 0
" 22A, " " " 145 778 1,351 461 10,874 9,091
" I-76, " " " 0 384 146 359 8,027 5,278
" Reserve Plus Flexible Payment 6 197 0 135 1,256 606
" IC-Q-Installment 4 50 0 37 460 139
" IC-Q-Ins 3,021 1,656 0 485 5,501 2,612
" IC-Q-Ins Emp 33 11 0 3 29 18
" IC-I 0 59,853 0 19,577 320,290 146,963
" IC-I-Emp 0 299 0 118 1,724 1,104
" Inst 0 5,161 0 8,097 0 24,634
" Inst-Emp 0 42 0 40 0 91
" RP-Q-Installment 1 112 0 88 1,206 829
" RP-Q-Flexible Payment 4 1 0 7 83 57
" RP-Q-Ins 49 11 0 9 310 72
" RP-Q-Ins Emp 7 0 0 0 0 1
" RP-I 0 500 0 111 2,949 1,244
" RP-I-Emp 0 0 0 1 6 0
" Inst-R 0 27 0 84 10,587 240
" Inst-R-Emp 0 0 0 2 12 5
---------- ------- ------- -------- -------- --------
Total 3,277 69,082 1,506 29,614 363,314 192,984
---------- ------- ------- -------- -------- --------
Payments made in advance of certificate
year requirements and accrued interest
thereon: 0 0 0 Not Not 0
Series 15, includes extended maturities 0 0 2 Readily Applicable (1)
" 20, " " " 0 0 0 Available 1
" 15A, " " " 2 24 116 308
" 22A, " " " 0 6 11 337
" I-76, " " " ---------- ------- ------- --------
Total 2 30 129 645
---------- ------- ------- --------
Additional credits and accrued interest
thereon:
Series 15, includes extended maturities 0 0 0 Not Not 0
" 20, " " " 0 0 2 Readily Applicable (0)
" 15A, " " " 1 0 0 Available (1)
" 22A, " " " 38 173 334 2,173
" I-76, " " " 0 89 30 1,229
AMERICAN EXPRESS CERTIFICATE COMPANY
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2001
($ in thousands)
Balance at beginning of period Additions
-------------------------------- ---------------------------------
Number
of Charged
Yield accounts Amount Charged Reserv to other
to maturity with of Amount to profit payments by accounts
on an annual security maturity of and loss certificate (per
Description payment basis holders value reserves or income holders part 2)
----------- ------------- --------- --------- -------- --------- ----------- --------
" Reserve Plus Flexible Payment (note a) 0 18 0 0
" IC-Q-Installment (note a) 0 4 0 0
" IC-Q-Ins (note a) 0 114 0 0
" IC-Q-Ins Emp (note a) 0 1 0 0
" IC-I (note a) 302 5,987 0 0
" IC-I-Emp (note a) 2 47 0 0
" Inst (note a) 24 540 0 0
" Inst-Emp (note a) 0 3 0 0
" RP-Q-Installment (note a) 0 25 0 0
" RP-Q-Flexible Payment (note a) 0 2 0 0
" RP-Q-Ins (note a) 0 3 0 0
" RP-Q-Ins Emp (note a) 0 0 0 0
" RP-I (note a) 2 52 0 0
" RP-I-Emp (note a) 0 0 0 0
" Inst-RP (note a) 0 5 0 0
" Inst-RP-Emp (note a) 0 0 0 0
-------- --------- ----------- --------
Total 4,126 6,910 0 163
-------- --------- ----------- --------
Reserve for accrued extra contribution 3rd year 3,218 587 (2,231) 0
Reserve for accrued extra contribution 6th year 0 0 0 0
Accrued interest on reserves in default I-76 3.5 1 2 0 0
Reserve for additional credits to be allowed 0 0 0 0
Installment Certificates-Special Additional Not Not 0 0 0 0
Credits I-76 Readily Applicable 0 0 0 0
Accrued for additional credits to be allowed at Available 0 0 0 0
next anniversary 74 172 0 0
Reserve for death and disability refund options 0 0 0 0
Reserve for reconversion of paid-up certificates 54 (21) 0 0
-------- --------- ----------- --------
Total installment certificates 223,811 8,161 41,417 7,321
-------- --------- ----------- --------
Fully paid certificates:
Single-Payment certificates:
SP 74 3.5 0 0 0 0 0 0
SP 75 3.5 0 0 0 0 0 0
SP 76 3.5 0 0 0 0 0 0
SP 77 3.5 0 0 0 0 0 0
SP 78 3.5 0 0 0 0 0 0
SP 79 3.5 2 15 15 0 0 0
SP 80 3.5 55 346 346 2 0 0
SP 81A 3.5 219 1,337 1,301 30 0 0
SP 82A 3.5 181 1,586 1,496 50 0 0
SP 82B 3.5 312 2,792 2,602 86 0 0
Deductions Balance at close of period
---------------------------------- --------------------------------
Number
Credited of
Cash to other accounts Amount
surrenders accounts with of Amount
prior to (per security maturity of
Description Maturities maturity part 2) holders value reserves
----------- ---------- ------- ------- --------- --------- ---------
" Reserve Plus Flexible Payment 0 0 18 (0)
" IC-Q-Installment 0 0 4 0
" IC-Q-Ins 0 0 114 0
" IC-Q-Ins Emp 0 0 1 0
" IC-I 0 0 6,116 173
" IC-I-Emp 0 0 47 2
" Inst 0 0 547 17
" Inst-Emp 0 0 3 0
" RP-Q-Installment 0 0 25 0
" RP-Q-Flexible Payment 0 0 2 0
" RP-Q-Ins 0 0 3 0
" RP-Q-Ins Emp 0 0 0 0
" RP-I 0 0 54 0
" RP-I-Emp 0 0 0 0
" Inst-RP 0 0 5 0
" Inst-RP-Emp 0 0 0 0
---------- ------- ------- ---------
Total 39 262 7,305 3,593
---------- ------- ------- ---------
Reserve for accrued extra contribution 3rd year 0 0 0 1,574
Reserve for accrued extra contribution 6th year 0 0 0 0
Accrued interest on reserves in default I-76 0 0 3 (0)
Reserve for additional credits to be allowed 0 0 0
Installment Certificates-Special Additional 0 0 0 Not Not 0
Credits I-76 0 0 0 Readily Applicable 0
Accrued for additional credits to be allowed at 0 0 0 Available 0
next anniversary 0 0 140 106
Reserve for death and disability refund options 0 0 0 0
Reserve for reconversion of paid-up certificates 0 0 0 33
---------- ------- ------- -------- -------- ---------
Total installment certificates 3,318 69,374 9,083 29,614 363,314 198,935
---------- ------- ------- -------- -------- ---------
Fully paid certificates:
Single-Payment certificates:
SP 74 0 0 0 0 0 0
SP 75 0 0 0 0 0 0
SP 76 0 0 0 0 0 0
SP 77 0 0 0 0 0 0
SP 78 0 0 0 0 0 0
SP 79 0 0 0 2 15 15
SP 80 268 24 50 1 4 6
SP 81A 676 120 179 57 359 356
SP 82A 0 181 0 161 1,398 1,365
SP 82B 0 256 0 282 2,521 2,432
AMERICAN EXPRESS CERTIFICATE COMPANY
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2001
($ in thousands)
Balance at beginning of period Additions
-------------------------------- ---------------------------------
Number
of Charged
Yield accounts Amount Charged Reserve to other
to maturity with of Amount to profit payments by accounts
on an annual security maturity of and loss certificate (per
Description payment basis holders value reserves or income holders part 2)
----------- ------------- --------- --------- -------- --------- ----------- --------
SP 83A 3.5 59 467 430 14 0 0
SP 83B 3.5 135 1,279 1,155 39 0 0
IC-2-84 3.5 460 4,454 3,891 130 0 0
IC-2-85 3.5 202 3,135 2,898 0 0 140
IC-2-86 3.5 128 1,998 1,576 0 0 72
IC-2-87 3.5 177 2,856 2,395 0 0 113
IC-2-88 3.5 315 5,034 4,030 0 0 191
Reserve Plus Single Payment (note a) 550 217,168 4,714 0 0 152
Cash Reserve Single Payment (note b) 23 145 161 0 0 5
IC-Flexible Savings (Variable Term) (note d) 61,304 453,804 518,511 0 678,057 36,147
IC-Flexible Savings Emp (VT) (note d) 863 10,666 13,509 0 673 645
IC-Preferred Investors 145 168,452 174,571 0 24,720 4,521
IC-Investors (note d) 692 1,018,167 1,089,659 1 500,939 48,871
IC-Special Deposits U.K. (note d) 58 77,515 109,695 0 11,585 4,571
IC-Special Deposits HONG KONG (note d) 7 19,585 0 0 0 0
IC-1-84 (note c) 36 290 261 0 0 13
Cash Reserve Variable Payment (note b) 302 1,498 2,034 0 285 60
Cash Reserve Variable PMT-3mo. (note e) 37,615 125,632 135,211 0 124,226 4,300
IC-Future Value (note f) 2,729 g 29,020 0 0 0
IC-Future Value Emp (note f) 57 459 458 0 0 0
IC-Stock Market (note g) 106,220 451,654 530,003 0 133,264 2,266
IC-MSC (note g) 19,903 291,598 303,638 0 82,573 2,729
Equity Indexed Savings 4 108 108 0 1,135 0
IC-AEBI Stock Market (note g) 99 26,134 26,996 0 50,272 125
-------- --------- --------- -------- --------- --------
Total 232,852 2,888,174 2,960,684 352 1,607,729 104,921
-------- --------- --------- --------- --------- --------
Additional credits and accrued interest thereon:
SP 74 3.5 0 0 0 0
SP 75 3.5 0 0 0 0
SP 76 3.5 0 0 0 0
SP 77 3.5 0 0 0 0
SP 78 3.5 0 0 0 0
SP 79 3.5 15 0 0 0
SP 80 3.5 328 2 0 8
SP 81A 3.5 962 22 0 30
SP 82A 3.5 1,116 37 0 42
SP 82B 3.5 1,816 61 0 60
SP 83A 3.5 244 8 0 10
SP 83B 3.5 614 21 0 23
IC-2-84 3.5 2,067 70 0 84
IC-2-85 3.5 46 99 0 0
IC-2-86 3.5 25 54 0 0
IC-2-87 3.5 45 81 0 0
IC-2-88 3.5 73 142 0 0
Deductions Balance at close of period
---------------------------------- --------------------------------
Number
Credited of
Cash to other accounts Amount
surrenders accounts with of Amount
prior to (per security maturity of
Description Maturities maturity part 2) holders value reserves
----------- ---------- ------- ------- --------- --------- --------
SP 83A 0 65 0 51 398 379
SP 83B 0 69 0 123 1,203 1,125
IC-2-84 0 353 0 410 4,056 3,668
IC-2-85 0 296 0 204 3,684 2,742
IC-2-86 0 148 0 116 1,864 1,500
IC-2-87 0 302 0 156 2,557 2,206
IC-2-88 0 178 0 298 4,792 4,043
Reserve Plus Single Payment 0 725 0 474 2,327 4,141
Cash Reserve Single Payment 0 5 0 21 143 161
IC-Flexible Savings (Variable Term) 0 284,062 0 72,171 871,426 948,653
IC-Flexible Savings Emp (VT) 0 2,333 0 732 9,777 12,494
IC-Preferred Investors 0 185,212 0 30 17,179 18,600
IC-Investors 0 543,050 0 637 1,020,204 1,096,420
IC-Special Deposits U.K. 0 26,576 0 53 73,684 99,275
IC-Special Deposits HONG KONG 0 0 0 4 14,585 0
IC-1-84 0 14 0 33 285 260
Cash Reserve Variable Payment 0 739 0 250 1,156 1,640
Cash Reserve Variable PMT-3mo. 0 130,751 0 35,346 124,332 132,986
IC-Future Value 7,586 2,999 0 1,680 18,435 18,435
IC-Future Value Emp 144 32 0 34 282 282
IC-Stock Market 0 175,222 0 97,475 430,142 490,311
IC-MSC 0 73,881 0 21,588 304,732 315,059
Equity Indexed Savings 0 23 0 15 1,220 1,220
IC-AEBI Stock Market 0 10,641 0 177 66,083 66,752
-------- --------- ------- --------- --------- ---------
Total 8,674 1,438,257 229 232,581 2,978,843 3,226,525
-------- --------- ------- --------- --------- ---------
Additional credits and accrued interest the
SP 74 0 0 0 0
SP 75 0 0 0 0
SP 76 0 0 0 0
SP 77 0 0 0 0
SP 78 0 0 0 0
SP 79 0 0 0 15
SP 80 262 21 50 5
SP 81A 532 98 141 243
SP 82A 0 144 0 1,051
SP 82B 0 172 0 1,765
SP 83A 0 40 0 222
SP 83B 0 40 0 618
IC-2-84 0 200 0 2,021
IC-2-85 0 4 97 44
IC-2-86 0 3 51 25
IC-2-87 0 4 81 41
IC-2-88 0 2 138 75
AMERICAN EXPRESS CERTIFICATE COMPANY
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2001
($ in thousands)
Balance at beginning of period Additions
-------------------------------- ---------------------------------
Number
of Charged
Yield accounts Amount Charged Reserve to other
to maturity with of Amount to profit payments by accounts
on an annual security maturity of and loss certificate (per
Description payment basis holders value reserves or income holders part 2)
----------- ------------- --------- --------- -------- --------- ----------- --------
Reserve Plus SP 2004-4061 (note a) 0 152 0 0
Cash Reserve SP (note b) 0 6 0 0
IC-Flexible Savings (note d) 1,195 40,698 0 0
IC-Preferred Investors (note d) 465 4,237 0 0
IC-FS-EMP (note d) 33 748 0 0
IC-Investors (note d) 2,698 52,397 0 0
IC-Special Deposits U.K. (note d) 260 4,469 0 0
IC-Special Deposits HONG KONG (note d) 0 0 0 0
IC-1-84 - 2013-4061 (note c) 5 13 0 0
Cash Reserve VP 2004-4061 (note b) 0 62 0 0
Cash Reserve Variable Payment-3mo. (note e) 233 4,438 0 0
IC-Future Value (note f) 17,479 2,770 0 0
IC-Future Value Emp (note f) 338 55 0 0
IC-Stk Mkt, 2004/16/31-4000/16 (note g) 1,624 2,158 0 0
IC-MSC (note g) 312 2,680 0 0
IC - EISC 0 1 0 0
IC-AEBI Stk Mkt 2004/31/19-4000/16 (note g) 58 316 0 0
-------- --------- --------- --------
Total 32,051 115,797 0 257
-------- --------- --------- --------
Accrued for additional credits to be allowed
at next anniversaries:
SP 78 (0) 0 0 0
SP 79 0 0 0 0
SP 80 7 1 0 0
SP 81A 15 18 0 0
SP 82A 13 29 0 0
SP 82B 30 57 0 0
SP 83A 6 5 0 0
SP 83B 10 20 0 0
IC-2-84 - 2019-4061 37 74 0 0
IC-2-85 19 30 0 0
IC-2-86 11 15 0 0
IC-2-87 17 25 0 0
IC-2-88 26 41 0 0
IC-Stock Mkt - 2019/31-4061 SEC 5 from C2785-81 120 6,194 0 0
IC-Market Strategy Certificate (SEC 5 from c2785-81) 80 3,244 0 0
IC-EISC 0 13 0 0
IC-AEBI Stock Market 9 937 0 0
-------- --------- --------- --------
Total 400 10,703 0 0
-------- --------- --------- --------
Deductions Balance at close of period
---------------------------------- --------------------------------
Number
Credited of
Cash to other accounts Amount
surrenders accounts with of Amount
prior to (per security maturity of
Description Maturities maturity part 2) holders value reserves
----------- ---------- ------- ------- --------- --------- --------
Reserve Plus SP 2004-4061 0 0 152
Cash Reserve SP 0 0 6 0
IC-Flexible Savings 0 3,962 36,173 1,758
IC-Preferred Investors 0 150 4,529 23
IC-FS-EMP 0 110 645 26
IC-Investors 0 5,143 48,871 1,081
IC-Special Deposits U.K. 0 82 4,571 76
IC-Special Deposits HONG KONG 0 0 0 0
IC-1-84 - 2013-4061 0 0 13 5
Cash Reserve VP 2004-4061 0 2 60 0
Cash Reserve Variable Payment-3mo. 0 58 4,303 310
IC-Future Value 5,324 1,867 0 13,058
IC-Future Value Emp 153 15 0 225
IC-Stk Mkt, 2004/16/31-4000/16 0 193 2,266 1,323
IC-MSC 0 21 2,728 243
IC - EISC 0 0 0 1
IC-AEBI Stk Mkt 2004/31/19-4000/16 0 7 125 242
---------- ------- ------- --------
Total 6,271 12,338 105,000 24,496
---------- ------- ------- --------
Accrued for additional credits to be allowed
at next anniversaries:
SP 78 0 0 0 (0)
SP 79 0 0 0 0
SP 80 0 0 8 (0)
SP 81A 0 0 30 3
SP 82A 0 0 42 0
SP 82B 0 0 60 27
SP 83A 0 0 10 1
SP 83B 0 0 23 7
IC-2-84 - 2019-4061 0 0 84 27
IC-2-85 0 0 43 6
IC-2-86 0 0 21 5
IC-2-87 0 0 32 10
IC-2-88 0 0 53 14
IC-Stock Mkt - 2019/31-4061 SEC 5 from C2785-81 0 0 1 6,313
IC-Market Strategy Certificate (SEC 5 from c2785-81) 0 0 2 3,322
IC-EISC 0 0 0 13
IC-AEBI Stock Market 0 0 0 946
---------- ------- ------- --------
Total 0 0 409 10,694
---------- ------- ------- --------
AMERICAN EXPRESS CERTIFICATE COMPANY
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2001
($ in thousands)
Balance at beginning of period Additions
-------------------------------- ---------------------------------
Number
of Charged
Yield accounts Amount Charged Reserve to other
to maturity with of Amount to profit payments by accounts
on an annual security maturity of and loss certificate (per
Description payment basis holders value reserves or income holders part 2)
----------- ------------- --------- --------- -------- --------- ----------- --------
R Series Single-Payment certificates:
R-76 3.5 5 24 23 0 0 1
R-77 3.5 21 371 207 0 0 10
R-78 3.5 46 404 346 0 0 16
R-79 3.5 59 766 617 0 0 29
R-80 3.5 54 497 354 0 0 17
R-81 3.5 24 315 223 0 0 11
R-82A 3.5 131 1,078 557 0 0 26
RP-Q (note a) 311 533 1,247 0 0 40
R-II 3.5 85 734 351 0 0 16
RP-2-84 3.5 248 3,201 1,278 0 0 61
RP-2-85 3.5 87 331 377 0 0 18
RP-2-86 3.5 20 77 79 0 0 4
RP-2-87 3.5 52 1,074 282 0 0 14
RP-2-88 3.5 69 513 352 0 0 17
Cash Reserve RP (note b) 5 15 31 0 0 1
IC-Flexible Savings RP (note d) 11,850 162,775 179,614 0 168,253 12,741
RP-Preferred Investors (note d) 21 12,607 13,257 0 1,013 453
Cash Reserve RP-3 mo. (note e) 1,708 16,872 17,991 0 24,564 588
IC-Flexible Savings RP Emp (note d) 284 4,242 5,243 0 151 259
RP-Future Value (note f) 2,365 40,326 40,325 0 0 0
RP-Future Value Emp (note f) 74 1,269 1,270 0 0 0
RP-Stock Market (note g) 12,306 99,687 113,985 0 43,971 447
RP-Market Strategy 2,962 85,505 88,651 0 25,163 829
D-1 (note a) 162 17,935 23,283 0 223 1,012
--------- --------- -------- --------- ---------- --------
Total 32,949 451,151 489,943 0 263,338 16,610
--------- --------- -------- --------- ---------- --------
Additional Interest on R-Series Single
Payment Reserves:
R-76 3.5 Not Not (0) 1 0 0
R-77 3.5 Applicable Applicable 3 10 0 0
R-78 3.5 10 15 0 0
R-79 3.5 13 28 0 0
R-80 3.5 12 16 0 0
R-81 3.5 6 10 0 0
R-82A 3.5 23 25 0 0
RP-Q (note a) 0 40 0 0
R-II 3.5 10 16 0 0
RP-2-84 3.5 36 58 0 0
RP-2-85 3.5 13 17 0 0
RP-2-86 3.5 2 4 0 0
RP-2-87 3.5 9 13 0 0
RP-2-88 3.5 8 15 0 0
Cash Reserve RP (note b) (0) 1 0 0
Deductions Balance at close of period
---------------------------------- --------------------------------
Number
Credited of
Cash to other accounts Amount
surrenders accounts with of Amount
prior to (per security maturity of
Description Maturities maturity part 2) holders value reserves
----------- ---------- ------- ------- --------- -------- --------
R Series Single-Payment certificates:
R-76 0 10 0 4 15 14
R-77 0 9 0 18 348 208
R-78 0 88 0 39 310 274
R-79 0 114 0 50 637 532
R-80 0 73 0 44 410 298
R-81 0 20 0 20 290 214
R-82A 0 85 0 115 800 498
RP-Q 0 200 0 270 459 1,087
R-II 0 44 0 76 644 323
RP-2-84 0 181 0 212 2,819 1,158
RP-2-85 0 61 0 72 279 334
RP-2-86 0 8 0 19 69 75
RP-2-87 0 34 0 43 673 262
RP-2-88 0 54 0 61 454 315
Cash Reserve RP 0 0 0 5 15 32
IC-Flexible Savings RP 0 64,002 0 15,438 273,256 296,606
RP-Preferred Investors 0 11,679 0 6 2,847 3,044
Cash Reserve RP-3 mo. 0 27,952 0 1,687 14,165 15,191
IC-Flexible Savings RP Emp 0 1,075 0 252 3,522 4,578
RP-Future Value 11,779 3,019 0 1,451 25,529 25,527
RP-Future Value Emp 229 221 0 53 818 820
RP-Stock Market 0 31,857 0 12,652 113,582 126,546
RP-Market Strategy 0 19,003 0 3,455 93,107 95,640
D-1 13 4,446 0 154 16,174 20,059
---------- ------- ------- --------- -------- --------
Total 12,021 164,235 0 36,196 551,222 593,635
---------- ------- ------- --------- -------- --------
Additional Interest on R-Series Single
Payment Reserves:
R-76 0 0 1 Not Not (0)
R-77 0 0 10 Applicable Applicable 3
R-78 0 2 16 7
R-79 0 2 29 10
R-80 0 1 17 10
R-81 0 0 11 5
R-82A 0 2 26 20
RP-Q 0 40 0
R-II 0 1 16 9
RP-2-84 0 3 61 30
RP-2-85 0 1 18 11
RP-2-86 0 0 4 2
RP-2-87 0 0 14 8
RP-2-88 0 0 17 6
Cash Reserve RP 0 0 1 (0)
AMERICAN EXPRESS CERTIFICATE COMPANY
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2001
($ in thousands)
Balance at beginning of period Additions
-------------------------------- ---------------------------------
Number
of Charged
Yield accounts Amount Charged Reserve to other
to maturity with of Amount to profit payments by accounts
on an annual security maturity of and loss certificate (per
Description payment basis holders value reserves or income holders part 2)
----------- ------------- --------- --------- -------- --------- ----------- --------
IC-Flexible Savings RP (note d) 423 14,030 0 0
RP-Preferred Investors (note d) 36 449 0 0
Cash Reserve RP-3 mo. (note e) 32 594 0 0
IC-Flexible Savings RP Emp (note d) 13 279 0 0
IC-Future Value (note f) 24,580 3,822 0 0
IC-Future Value Emp (note f) 911 137 0 0
RP-Stock Market (note g) 313 456 0 0
RP-Market Strategy 74 821 0 0
D-1 (note a) 3 1,093 0 0
-------- --------- ---------- --------
Total 26,530 21,950 0 0
-------- --------- ---------- --------
at next anniversaries:
RP-Stock Market 33 1,729 0 0
RP-Market Strategy 24 981 0 0
-------- --------- ---------- --------
Total single payment 3,509,665 151,511 1,871,067 121,788
-------- --------- ---------- --------
Paid-up certificates:
Series 15 and 20 3.25 7 83 76 2 0 0
" 15A and 22A 3.5 241 5,363 4,733 153 0 861
" I-76 3.5 529 2,800 2,046 68 0 179
--------- --------- -------- --------- ---------- --------
Total 777 8,246 6,855 223 0 1,040
--------- --------- -------- --------- ---------- --------
Additional credits and accrued interest thereon:
Series 15 and 20 2.5 Not Not 3 0 0 1
" 15A and 22A 3 Applicable Applicable 121 3 0 23
" I-76 3.5 178 6 0 15
-------- --------- ---------- --------
Total 302 9 0 39
-------- --------- ---------- --------
Accrued for additional credits to be allowed
at next anniversaries 24 50 0 0
--------- --------- -------- --------- ---------- --------
Total paid-up 777 8,246 7,181 282 0 1,079
--------- --------- -------- --------- ---------- --------
Optional settlement certificates:
Series 1, IST&G 3 12 3 0 0 0
Other series and conversions from Single 0 0 0
Payment certificates 2.5-3-3-3.5 5,717 78,636 2,291 0 2,119
Series R-76 thru R-82A 3 15 54 1 0 1
Series R-II & RP-2-84 thru 88 3.5 11 263 8 0 4
Reserve Plus Single-Payment (note a) 81 829 27 0 0
Reserve Plus Flex-Pay & IC-Q-Inst (note a) 14 66 2 0 0
Series R-Installment (note a) 32 187 5 0 0
Deductions Balance at close of period
---------------------------------- --------------------------------
Number
Credited of
Cash to other accounts Amount
surrenders accounts with of Amount
prior to (per security maturity of
Description Maturities maturity part 2) holders value reserves
----------- ---------- ------- ------- --------- -------- --------
IC-Flexible Savings RP 0 1,144 12,741 568
RP-Preferred Investors 0 26 453 6
Cash Reserve RP-3 mo. 0 1 588 37
IC-Flexible Savings RP Emp 0 22 260 10
IC-Future Value 8,477 1,992 0 17,933
IC-Future Value Emp 240 259 0 549
RP-Stock Market 0 35 447 287
RP-Market Strategy 0 2 830 63
D-1 0 83 1,013 (0)
Total 8,717 3,576 16,613 19,574
---------- ------- ------- --------
at next anniversaries:
RP-Stock Market 0 0 1 1,761
RP-Market Strategy 0 0 0 1,005
---------- ------- ------- --------
Total single payment 35,683 1,618,406 122,252 3,877,690
---------- ------- ------- --------
Paid-up certificates:
Series 15 and 20 15 16 0 5 50 47
" 15A and 22A 416 528 664 207 4,648 4,139
" I-76 0 411 0 502 2,489 1,882
---------- ------- ------- -------- -------- --------
Total 431 955 664 714 7,187 6,068
---------- ------- ------- -------- -------- --------
Additional credits and accrued interest thereon:
Series 15 and 20 0 1 0 Not Not 3
" 15A and 22A 17 9 14 Applicable Applicable 107
" I-76 0 27 0 172
---------- ------- ------- --------
Total 17 37 14 282
---------- ------- ------- --------
Accrued for additional credits to be allowed
at next anniversaries 0 0 38 36
---------- ------- ------- -------- -------- --------
Total paid-up 448 992 716 714 7,187 6,386
---------- ------- ------- -------- -------- --------
Optional settlement certificates:
Series 1, IST&G 1 0 0 12 2
Other series and conversions from Single 0 0 0 0 0
Payment certificates 4,310 5,623 0 5,133 73,113
Series R-76 thru R-82A 20 0 0 0 36
Series R-II & RP-2-84 thru 88 40 0 0 0 235
Reserve Plus Single-Payment 35 103 0 68 718
Reserve Plus Flex-Pay & IC-Q-Inst 4 4 0 13 60
Series R-Installment 26 24 0 26 142
AMERICAN EXPRESS CERTIFICATE COMPANY
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2001
($ in thousands)
Balance at beginning of period Additions
-------------------------------- ---------------------------------
Number
of Charged
Yield accounts Amount Charged Reserve to other
to maturity with of Amount to profit payments by accounts
on an annual security maturity of and loss certificate (per
Description payment basis holders value reserves or income holders part 2)
----------- ------------- --------- --------- -------- --------- ----------- --------
Series R-Single-Payment (note a) 17 13 (0) 0 0
Add'l credits and accrued int. thereon 2.5-3 Not Not 9,541 257 0 1,085
Add'l credits and accrued int. thereon-IST&G 2.5-3 Applicable Applicable 0 0 0 0
Accrued for additional credits to be allowed
at next anniversaries 547 1,246 0 1
Accrued for additional credits to be allowed
at next anniversaries-R-76 thru R-82A & R-II 2 3 0 0
Accrued for additional credits to be allowed
at next anniversaries-IST&G 0 0 0 0
--------- --------- ------- --------- -------
Total optional settlement 5,899 90,141 3,840 0 3,210
--------- --------- ------- --------- -------
Not Not
Due to unlocated certificate holders Applicable 261 1 Applicable 73
--------- ------- --------- -------
Total certificate reserves 3,831,060 163,795 1,912,484 133,470
========= ======= ========= =======
Income (loss) from purchased and written call options included
in provision for certificate reserves in Statement of Operations
Total adjusted certificate reserves
Provision for certificate reserves and additional
credits, per Statement of Operations 156,531
Provision for reconversion applied against reserve recoveries from
terminations prior to maturity in Statement of Operations (20)
Income (loss) from purchased and written call options included
in provision for certificate reserves in Statement of Operations 7,284
-------
163,795
=======
Deductions Balance at close of period
---------------------------------- --------------------------------
Number
Credited of
Cash to other accounts Amount
surrenders accounts with of Amount
prior to (per security maturity of
Description Maturities maturity part 2) holders value reserves
----------- ---------- ------- ------- --------- -------- --------
Series R-Single-Payment 6 0 0 13 7
Add'l credits and accrued int. thereon 833 769 306 0 8,975
Add'l credits and accrued int. thereon-IST&G 0 0 0 0 0
Accrued for additional credits to be allowed
at next anniversaries 10 0 1,090 0 694
Accrued for additional credits to be allowed
at next anniversaries-R-76 thru R-82A & R-II 1 0 5 0 (1)
Accrued for additional credits to be allowed
at next anniversaries-IST&G 0 0 0 0 (0)
---------- ------- ------- --------- --------
Total optional settlement 5,286 6,523 1,401 5,265 83,981
---------- ------- ------- --------- --------
Not Not
Due to unlocated certificate holders Applicable 32 84 Applicable 219
---------- ------- ------- --------- --------
44,735 1,695,327 133,536 4,167,210
Total certificate reserves ====== ========= ======= =========
Income (loss) from purchased and written call options included
in provision for certificate reserves in Statement of Operations 7,284
Total adjusted certificate reserves 4,159,926
=========
Provision for certificate reserves and additional
credits, per Statement of Operations
Provision for reconversion applied against reserve recoveries from
terminations prior to maturity in Statement of Operations
Income (loss) from purchased and written call options included
in provision for certificate reserves in Statement of Operations
Notes:
(a) On these series of certificates, there is no minimum rate of accrual of
interest. Interest is declared for a quarter or quarters by American
Express Certificate Company (AECC) and credited to the reserves
maintained at the end of each calendar quarter.
(b) On these series of certificates, there is no minimum rate of accrual of
interest. Interest is declared for a quarter or quarters by AECC and
credited to the reserves maintained or paid in cash at the end of each
calendar month.
(c) On these series of certificates, there is no minimum rate of accrual of
interest. Interest is declared by AECC for the first four certificate
quarters, then annually thereafter, and credited to the reserves
maintained at the end of each certificate year.
(d) On this series of certificates, there is no minimum rate of accrual of
interest. Interest is declared by AECC for the term selected and credited
to the reserves maintained or paid in cash at the end of each certificate
month.
(e) On this series of certificates, there is no minimum rate of accrual of
interest. Interest is declared by AECC for a three-month term and
credited to the reserves maintained or paid in cash at the end of each
certificate month.
(f) On this series of certificates, there is no minimum rate of accrual of
interest. Interest was declared by AECC for a four, five, six, seven,
eight, nine or ten year maturity and credited to the reserves maintained
at maturity.
(g) On this series of certificates, the certificate holder may elect to
receive minimum interest only or minimum interest plus participation
interest. Minimum interest is declared by AECC for a twelve-month term
and is credited to the the reserves maintained at the end of each
certificate term. Participation interest is determined at the end of each
certificate term by multiplying the market participation rate in effect
at the beginning of the certificate term for each certificate times any
total percentage appreciation in a broad stock market indicator subject
to specified maximums. Participation interest is credited to the reserves
maintained at the end of each certificate term.
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 2001
($ in thousands)
Additions to reserves charged to other accounts Deductions from reserves credited to other accounts
----------------------------------------------- ---------------------------------------------------
Transfers of
maturities
to extended Conversions
maturities- to optional Maturities
Reconversions charged to settlement transferred
of paid-up reserves Conversions certificates- to extended
certificate to mature, to paid-up credited maturities-
charged Charged additional certificates- to optional credited to
to paid-up to credits/ credited settlement reserves to
reserves and advance interest Transferred to paid-up reserves and mature-
reserve for payments and advance to Federal surrender surrender extended
reconversions reserve payments Withholding Total income income maturities Total
------------- -------- ----------- ----------- ----- ------------ ------------- ---------- -----
Reserves to mature installment
certificates:
Series 15, including extended
maturities 0 0 0 0 0 0 0 0 0
Series 20, including extended
maturities 0 0 0 0 0 0 9 0 9
Series 15A, including extended
maturities 0 0 0 0 0 0 0 0 0
Series 22A, including extended
maturities 91 99 21 0 211 707 623 21 1,351
Series I-76 0 11 0 0 11 146 0 0 146
Series Reserve Plus
Flexible Payment 0 0 18 0 18 0 0 0 0
Series IC-Q-Installment 0 0 4 0 4 0 0 0 0
Series IC-Q-Ins 0 0 114 0 114 0 0 0 0
Series IC-Q-Ins Emp 0 0 1 0 1 0 0 0 0
Series IC-I 0 0 6,109 0 6,109 0 0 0 0
Series IC-I-Emp 0 0 47 0 47 0 0 0 0
Series Inst 0 0 547 0 547 0 0 0 0
Series Inst-Emp 0 0 3 0 3 0 0 0 0
Series RP-Q-Installment 0 0 25 0 25 0 0 0 0
Series RP-Q-Flexible Payment 0 0 2 0 2 0 0 0 0
Series RP-Q-Ins 0 0 3 0 3 0 0 0 0
Series RP-Q-Ins Emp 0 0 0 0 0 0 0 0 0
Series RP-I 0 0 54 0 54 0 0 0 0
Series RP-I Emp 0 0 5 0 5 0 0 0 0
------ ------- --------- -------- ----- ------ -------- -------- -----
Total 91 110 6,953 0 7,154 853 632 21 1,506
======= ======= ========= ======== ===== ====== ======== ======== =====
Additions to reserves charged to other accounts Deductions from reserves credited to other accounts
----------------------------------------------- ---------------------------------------------------
Additions Maturities
Additions to reserves Applied to Conversions transferred
to advance to mature- certificates- to optional to extended
Reconversions payments- extended credited to settlement maturities- Conversions
of paid-up charged to maturities reserves to certificates- credited to to paid-up
Payments made in advance certificates- default charged to mature, credited reserves certificates-
of current certificate charged to interest reserves to loading to optional to mature- credited to
year requirements and paid-up on late mature from and settlement extended paid-up
accrued interest thereon: reserves payments maturity Total insurance reserves maturities reserves Total
-------------- ---------- ------------ ----- ------------ ------------- ------------ ------------- -----
Series 15, including extended
maturities 0 0 0 0 0 0 0 0 0
Series 20, including extended
maturities 0 0 0 0 0 2 0 0 2
Series 15A, including extended
maturities 0 0 0 0 0 0 0 0 0
Series 22A, including extended
maturities 1 0 3 4 99 13 3 1 116
Series I-76 0 0 0 0 11 0 0 0 11
Series Reserve Plus
Flexible Payment 0 0 0 0 0 0 0 0 0
Series IC-Q Installment 0 0 0 0 0 0 0 0 0
Series IC-Q Ins 0 0 0 0 0 0 0 0 0
Series IC-Q Ins Emp 0 0 0 0 0 0 0 0 0
Series IC-I 0 0 0 0 0 0 0 0 0
Series IC-I Emp 0 0 0 0 0 0 0 0 0
Series RP-Q Installment 0 0 0 0 0 0 0 0 0
Series RP-Q Flexible Payment 0 0 0 0 0 0 0 0 0
Series RP-Q Ins 0 0 0 0 0 0 0 0 0
Series RP-Q Ins Emp 0 0 0 0 0 0 0 0 0
Series RP-I 0 0 0 0 0 0 0 0 0
Series RP-I Emp 0 0 0 0 0 0 0 0 0
----- ----- ------- ------ ----- ------ ----- ------- ------
Total 1 0 3 4 110 15 3 1 129
===== ===== ======= ====== ===== ====== ===== ======= ======
Certificate Reserves
($ in thousands)
Year ended December 31, 2001
Part 2 - Descriptions of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Additional credits on installment certificates and accrued interest thereon:
Other additions represent:
Transfers from accruals for additional credits to be allowed at next anniversaries $ 140
Reconversions of paid-up certificates-charged to paid-up reserves 19
Transfers from maturities to extended maturities 4
-------------
$ 163
=============
Other deductions represent:
Transfers to reserves on a quarterly basis for Reserve Plus Flexible-
Payment, IC-Q-Installment and R-Flexible-Payment $ 6,939
Conversions to optional settlement certificates-credited to optional
settlement reserves 178
Conversions to paid-up certificates-credited to paid-up reserves 184
Transfers to extended maturities at maturity 4
-------------
$ 7,305
=============
Accrual for additional credits to be allowed on installment certificates at next
anniversaries:
Other deductions represent:
Transfers to reserves for additional credits on installment certificates $ 140
=============
Reserve for death and disability refund options: Other deductions represent:
Payments, in excess of installment reserves, made to certificate holders
who exercised the death and disability refund options. $ 0
============
Reserve for reconversions of paid-up certificates:
The amount shown as charged to profit and loss has been deducted from
reserve recoveries in the accompanying Statement of Operations $ 0
=============
Other deductions represent:
Amounts credited to installment certificate reserves to mature, on
reconversions of paid-up certificates. $ 0
=============
Paid-up certificates:
Other additions represent:
Conversions from installment certificates (charged to installment reserves
less surrender charges) $ 1,040
Transfers from accrual for additional credits to be allowed at next
anniversaries 39
-------------
$ 1,079
============
Other deductions represent:
Transfers credited to installment reserves on reconversions to installment
certificates $ 110
Transfers for accrual for additional credits and accrued interest thereon 52
Transfers to settlement options 554
-------------
$ 716
=============
Certificate Reserves
($ in thousands)
Year ended December 31, 2001
Part 2 - Descriptions of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Default interest on installment certificates:
Other additions represent:
Reconversions of paid-up certificates charged to paid-up reserves $ 0
=============
Other deductions represent:
Conversions to paid-up certificates - credited to paid-up reserves $ 0
Transfers to advance payments as late payments are credited to certificates 3
-------------
$ 3
=============
Optional settlement certificates:
Other additions represent:
Transfers from installment certificate reserves (less surrender charges),
single-payment and Series D certificate reserves upon election of
optional settlement privileges $ 1,557
Transfers from paid-up certificate reserves 568
Transfers from accruals for additional credits to be allowed at next anniversaries 1,085
-------------
$ 3,210
=============
Other deductions represent:
Transfers to reserve for additional credits and accrued interest thereon $ 1,091
Transfers to optional settlement reserves 310
-------------
$ 1,401
=============
Single-Payment certificates:
Other additions represent:
Transfers from accruals for additional credits to be allowed at next anniversaries $ 257
Transfers from accruals on a quarterly basis on: 0
Reserve Plus Single-Payment 152
Cash Reserve Single-Payment 5
Flexible Savings 36,147
Flexible Savings-Emp 645
Preferred Investors 4,521
Investors 48,871
Special Deposits 4,571
Cash Reserve 60
Cash Reserve-3mo 4,300
Future Value 0
Stock Market 2,266
Market Strategy 2,729
AEBI Stock Market 125
R82-B 40
Cash Reserve-RP 1
Cash Reserve-RP-3mo 588
Flexible Saving-RP 12,741
Flexible Savings-RP-Emp 259
Preferred Investors-RP 453
Stock Market-RP 447
Market Strategy-RP 829
Transfers from accruals at anniversaries maintained in a separate 1,780
-------------
reserve account. $ 121,787
=============
Certificate Reserves
($ in thousands)
Year ended December 31, 2001
Part 2 - Descriptions of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Single-Payment certificates continued:
Other deductions represent:
Transfers to optional settlement reserves:
Single-Payment $ 3,975
R Single-Payment 0
Transfers to reserves for additional credits and accrued interest thereon 1,780
Transfers to a separate reserve account from the accrual account 257
Transfers to reserves on a quarterly basis:
Reserve Plus Single-Payment 151
Cash Reserve Single-Payment 6
Flexible Savings 36,147
Flexible Savings-Emp 645
Preferred Investors 4,529
Investors 48,871
Special Deposits 4,571
Cash Reserve 60
Cash Reserve-3mo 4,299
Stock Market 2,266
AEBI Stock Market 125
R82-B 40
Cash Reserve-RP 1
Cash Reserve-RP-3mo 588
Flexible Saving-RP 12,741
Flexible Savings-RP-Emp 260
Preferred Investors-RP 453
Stock Market-RP 448
Transfers to Federal tax withholding 39
-------------
$ 122,252
=============
Due to unlocated certificate holders:
Other additions represent:
Amounts equivalent to payments due certificate holders who could
not be located $ 73
=============
Other deductions represent:
Payments to certificate holders credited to cash $ 84
=============
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 2001
Deductions from Reserves
------------------------
Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
- ------------------ ------- ------------------- -------------- ------------- ---------- --------
2000 2001 2000 2001 2000 2001 2001 2001
------ ------ ------ ------ ------ ------ ------ --------
20, including extended maturities 253-264 1 0 14 0 9 0 0 0
265-276 0 0 0 0 0 0 0 9
277-288 0 0 0 0 0 0 0 0
289-300 0 0 0 0 0 0 0 0
301-312 0 0 0 0 0 0 0 0
313-324 0 0 0 0 0 0 0 0
325-336 0 0 0 0 0 0 0 0
337-348 0 0 0 0 0 0 0 0
349-360 (a) 0 0 0 0 0 0 0 0
------- ------ ------ ------ ------ ------ ------ --------
Total 1 0 14 0 9 0 0 9
------- ------ ------ ------ ------ ------ ------ --------
15A, including extended maturities 229-240 (a) 0 0 0 0 0 0 0 0
241-252 1 0 7 0 7 0 0 0
------- ------ ------ ------ ------ ------ ------ --------
Total 1 0 7 0 7 0 0 0
------- ------ ------ ------ ------ ------ ------ --------
22A, including extended maturities 73-84 1 0 19 0 4 0 0 0
85-96 0 0 0 0 0 0 0 0
97-108 0 0 0 0 0 0 0 0
109-120 0 0 0 0 0 0 0 0
121-132 1 0 13 0 5 0 0 0
133-144 2 1 38 13 16 6 0 8
145-156 1 1 15 19 7 8 0 0
157-168 2 1 56 15 30 8 0 0
169-180 0 2 0 56 0 33 0 0
181-192 2 0 56 0 36 0 0 0
193-204 1 2 19 38 12 26 26 0
205-216 1 0 19 0 14 0 0 0
217-228 1 1 38 18 30 14 0 65
229-240 4 0 109 0 94 0 0 34
241-252 6 3 148 34 136 30 0 34
253-264 (a) 7 6 114 148 112 145 0 39
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 2001
Deductions from Reserves
------------------------
Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
- ------------------ ------- ------------------- -------------- ------------- ---------- --------
2000 2001 2000 2001 2000 2001 2001 2001
------ ------ ------ ------ ------ ------ ------ --------
265-276 7 2 439 36 265 22 0 20
277-288 4 5 461 276 296 177 83 0
289-300 15 3 412 331 283 224 89 27
301-312 78 14 2,075 380 1,475 276 47 135
313-324 80 67 1,991 1,702 1,500 1,277 117 94
325-336 92 71 2,244 1,718 1,797 1,366 177 92
337-348 76 85 1,669 2,027 1,402 1,711 57 46
349-360 76 69 1,500 1,569 1,325 1,389 55 128
361-372 64 65 1,250 1,270 1,163 1,180 53 12
373-384 54 63 753 1,224 736 1,198 61 556
------- ------ -------- ------- ------- ------- ------ ------
Total 575 461 13,438 10,874 10,738 9,090 765 1,290
------- ------ -------- ------- ------- ------- ------ ------
I-76 145-156 0 0 0 0 0 0 0 0
157-168 1 1 37 37 12 12 0 0
169-180 0 0 0 0 0 0 0 0
181-192 2 0 40 0 15 0 0 0
193-204 1 2 25 40 10 17 0 0
205-216 0 1 0 26 0 11 0 0
217-228 15 0 363 0 181 0 0 15
229-240 43 11 1,086 240 571 127 69 17
241-252 67 39 1,716 984 970 555 78 34
253-264 67 60 1,405 1,522 850 920 47 7
265-276 82 63 1,584 1,328 1,018 858 42 20
277-288 72 78 1,670 1,488 1,149 1,019 36 29
289-300 43 65 953 1,510 689 1,105 55 11
301-312 0 39 0 852 0 654 58 0
------- ------ -------- ------- ------- ------- ------ ------
Total 393 359 8,879 8,027 5,465 5,278 385 133
------- ------ -------- ------- ------- ------- ------ ------
Reserve Plus Flexible Payment 193-204 26 0 149 0 120 0 0 0
205-216 65 24 583 240 276 113 30 0
217-228 58 60 520 552 282 228 96 0
229-240 0 51 0 464 0 263 71 0
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 2001
Deductions from Reserves
------------------------
Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
- ------------------ ------- ------------------- -------------- ------------- ---------- -------
2000 2001 2000 2001 2000 2001 2001 2001
------ ------ ------ ------ ------ ------ ------ -------
Total 149 135 1,252 1,256 678 604 197 0
------- ------- -------- -------- -------- -------- ------- -------
IC-Q-Installment 169-180 4 0 57 0 9 0 0 0
181-192 24 3 352 51 81 5 5 0
193-204 20 17 163 277 78 59 28 0
205-216 0 17 0 132 0 74 17 0
------- ------- -------- -------- -------- -------- ------- -------
Total 48 37 572 460 168 138 50 0
------- ------- -------- -------- -------- -------- ------- -------
IC-Q-Ins 85-96 1 0 12 0 11 0 0 0
97-108 350 0 4,191 0 1,865 0 10 0
109-120 735 259 8,219 2,917 3,755 1,351 577 0
121-132 50 64 523 679 304 352 846 0
133-144 40 39 534 436 208 265 69 0
145-156 63 36 747 491 379 170 42 0
157-168 24 58 228 693 94 363 72 0
169-180 10 20 87 204 23 94 17 0
181-192 0 9 0 81 0 15 11 0
------- ------- -------- -------- -------- -------- ------- -------
Total 1,273 485 14,541 5,501 6,639 2,610 1,644 0
------- ------- -------- -------- -------- -------- ------- -------
IC-Q-Ins Emp 97-108 3 0 18 0 9 0 0 0
109-120 4 1 42 6 34 1 8 0
121-132 1 0 6 0 1 0 3 0
133-144 0 1 0 6 0 2 0 0
145-156 1 0 17 0 13 0 0 0
157-168 0 1 0 17 0 15 0 0
------- ------- -------- -------- -------- -------- ------- -------
Total 9 3 83 29 57 18 11 0
------- ------- -------- -------- -------- -------- ------- -------
IC-I 1-12 4 1 36 6 2 0 3 0
13-24 8 2 82 12 25 2 1 0
25-36 3 8 80 82 26 34 0 0
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 2001
Deductions from Reserves
------------------------
Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
- ------------------ ------- ------------------- -------------- ------------- ---------- -------
37-48 2,592 2 44,349 32 13,794 12 18 0
49-60 6,023 2,210 101,537 37,827 37,229 14,458 1,626 0
61-72 7,219 5,036 122,773 84,715 53,560 35,813 5,309 0
73-84 4,581 4,980 77,194 81,965 33,770 38,676 18,030 0
85-96 2,889 3,646 44,279 60,087 20,332 29,086 7,071 0
97-108 1,374 2,479 20,171 37,983 10,387 18,706 2,802 0
109-120 0 1,213 0 17,580 0 10,176 1,200 0
------- ------- -------- -------- -------- -------- ------- -------
Total 24,693 19,577 410,501 320,289 169,125 146,963 36,060 0
------- ------- -------- -------- -------- -------- ------- -------
IC-I-Emp 37-48 13 0 138 0 72 0 0 0
49-60 41 11 771 120 309 72 3 0
61-72 42 35 420 609 236 282 70 0
73-84 31 28 384 308 226 193 57 0
85-96 15 22 210 300 111 227 38 0
97-108 8 15 183 210 169 117 0 0
109-120 0 7 0 177 0 216 1 0
------- ------- -------- -------- -------- -------- ------- -------
Total 150 118 2,106 1,724 1,123 1,107 169 0
------- ------- -------- -------- -------- -------- ------- -------
Inst 1-12 1,859 1,733 0 0 1,672 1,742 68 0
13-24 2,003 1,439 0 0 4,065 3,127 327 0
25-36 2,328 1,690 0 0 7,243 5,420 586 0
37-48 1,495 1,971 0 0 5,836 8,139 1,040
49-60 0 1,264 0 0 6,206 6,206 795 0
------- ------- -------- -------- -------- -------- ------- -------
Total 7,685 8,097 0 0 25,022 24,634 2,816 0
------- ------- -------- -------- -------- -------- ------- -------
Inst-Emp 1-12 16 10 0 0 13 5 4 0
13-24 10 9 0 0 11 15 5 0
25-36 11 9 0 0 36 13 3 0
37-48 5 7 17 34 12 0
49-60 0 5 0 0 0 24 0 0
------- ------- -------- -------- -------- -------- ------- -------
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 2001
Deductions from Reserves
------------------------
Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
- ------------------ ------- ------------------- -------------- ------------- ---------- -------
Total 42 40 0 0 77 91 24 0
------- ------- -------- -------- -------- -------- ------- -------
R Flexible Payment 181-192 27 0 382 0 0 0 0 0
193-204 8 25 135 369 216 210 13 0
205-216 35 7 481 115 34 32 0 0
217-228 33 30 353 421 264 230 35 0
229-240 0 26 0 301 392 356 39 0
------- ------- -------- -------- -------- -------- ------- -------
Total 103 88 1,351 1,206 906 828 87 0
------- ------- -------- -------- -------- -------- ------- -------
RP-Q-Installments 169-180 7 0 91 0 48 0 0 0
181-192 2 5 0 65 12 45 1 0
193-204 0 2 18 18 0 12 0 0
------- ------- -------- -------- -------- -------- ------- -------
Total 9 7 109 83 60 57 1 0
------- ------- -------- -------- -------- -------- ------- -------
RP-Q-Ins 85-96 0 0 0 0 0 0 0 0
97-108 3 0 31 0 7 0 0 0
109-120 8 3 187 32 39 8 0 0
121-132 4 0 260 0 66 0 0 0
133-144 2 4 18 260 5 59 0 0
145-156 0 2 0 18 0 5 0 0
157-168 1 0 12 0 7 0 0 0
------- ------- -------- -------- -------- -------- ------- -------
Total 18 9 508 310 124 72 0 0
------- ------- -------- -------- -------- -------- ------- -------
RP-Q-Ins Emp 97-108 0 0 0 0 0 0 0 0
109-120 1 0 6 0 8 0 0 0
------- ------- -------- -------- -------- -------- ------- -------
Total 1 0 6 0 8 0 0 0
------- ------- -------- -------- -------- -------- ------- -------
RP-I 25-36 0 0 0 0 0 0 0 0
37-48 23 0 1,386 0 262 0 0 0
49-60 26 21 765 666 301 214 45 0
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 2001
Deductions from Reserves
------------------------
Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
- ------------------ ------- ------------------- -------------- ------------- ---------- -------
61-72 28 21 744 528 283 237 81 0
73-84 26 16 567 594 216 219 101 0
85-96 21 17 458 418 271 210 64 0
97-108 18 19 324 431 120 259 25
109-120 0 17 0 312 0 106 2 0
------- ------- -------- -------- -------- -------- ------- -------
Total 142 111 4,244 2,949 1,453 1,245 318 0
------- ------- -------- -------- -------- -------- ------- -------
Inst-R 1-12 14 36 4,823 3,820 50 50 1 0
13-24 21 9 3,819 2,106 67 33 5 0
25-36 19 19 274 3,776 56 91 2 0
37-48 4 16 689 210 10 58 14
49-60 0 4 0 675 0 10 0 0
------- ------- -------- -------- -------- -------- ------- -------
Total 58 84 9,605 10,587 183 242 22 0
------- ------- -------- -------- -------- -------- ------- -------
Inst-R-E 1-12 2 0 12 0 4 0 0 0
13-24 0 0 0 6 0 3 0 0
25-36 0 1 0 6 0 3 0 0
37-48 0 1 0 0 0 0 0 0
------- ------- -------- -------- -------- -------- ------- -------
Total 2 2 12 12 4 6 0 0
------- ------- -------- -------- -------- -------- ------- -------
Total All Series 35,352 29,613 467,228 363,307 221,846 192,983 42,549 1,432
======= ======= ======== ======== ======== ======== ======= =======
(a) Includes accounts on which all payments necessary to mature have been
made, but additional time must elapse before the certificate maturity year
is completed. Also includes accounts for which maturity election has been
made, but no further payments have been received.
Year ended December 31, 2001
Part 4 - Amounts Periodically Credited to Certificate Holders' Accounts to
Accumulate the Maturity Amount of Installment Certificates.
Information as to (1) amounts periodically credited to each class of
security holders' accounts from installment payments and (2) such other
amounts periodically credited to accumulate the maturity amount of the
certificate (on a $1,000 face-amount certificate basis for the term of
the certificate), is filed in Part 4 of Schedule IX as part of Post-
effective Amendment No. 9 to Registration Statement No. 2-17681, Post
effective Amendment No. 1 to Registration Statement No. 2-23772 and
Post-effective Amendment No. 1 to Registration Statement No. 2-258081
and is incorporated herein by reference.
AMERICAN EXPRESS CERTIFICATE COMPANY
Valuation and Qualifying Accounts
Years ended December 31, 2001, 2000, and 1999
($ thousands)
Year ended December 31, 2001
- ------------------------------------------------------------------------------------------------------------------------------
Additions
-------------------------------
Reserves Balance Charged Balance
deducted from at to costs Deductions at
assets to beginning and from end
which they apply of period expenses Other reserves of period
- ----------------------------- -------------- ------------- ------------ ------------- ------------
Writedown for losses:
Securities $13,554 $68,542 $0 $81,292 (a) $804
Allowance for losses:
Conventional first
mortgage loans 744 1,191 0 0 1,935
Year ended December 31, 2000
- ------------------------------------------------------------------------------------------------------------------------------
Additions
-------------------------------
Reserves Balance Charged Balance
deducted from at to costs Deductions at
assets to beginning and from end
which they apply of period expenses Other reserves of period
- ----------------------------- -------------- ------------- ------------ ------------- ------------
Writedown for losses:
Securities $2,141 $11,413 $0 $0 $13,554
Allowance for losses:
Conventional first
mortgage loans 511 233 0 0 744
Year ended December 31, 1999
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Additions
-------------------------------
Reserves Balance Charged Balance
deducted from at to costs Deductions at
assets to beginning and from end
which they apply of period expenses Other reserves of period
- ----------------------------- -------------- ------------- ------------ ------------- ------------
Writedown for losses:
Securities $0 $2,141 $0 $0 $2,141
Allowance for losses:
Conventional first
mortgage loans 611 0 0 100 (b) 511
a) Applicable to reversal on securities sold.
b) Applicable to adjustment of the adequacy of the reserve for mortgage loan
losses.