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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-K
__________________
|X| ANNUAL REPORT PURSUANT TO SECTION 30 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, 2003
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to ________
Commission File No. 2-23772
American Express Certificate Company
(Exact name of registrant as specified in its charter)
Delaware 41-6009975
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
52 AXP Financial Center
Minneapolis, Minnesota 55474
(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:
Name of each exchange
Title of each class on which registered
------------------------- ------------------------
None None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of 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. __
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes _____ No __X__
As of December 31, 2003, there were no voting shares held by non-affiliates
of the registrant. Common shares of the registrant outstanding at March 29, 2004
were 150,000.
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.
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TABLE OF CONTENTS
Form 10-K
Item Number
Page
PART I
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - 6
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 6
4. Submission of Matters to a Vote of Security Holders. . . . . . 7
PART II
5. Market for the Registrant's Common Stock and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . . . . . 7
6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . 7
7. Management's Discussion and Analysis of Financial Condition and
Results of Operation . . . . . . . . . . . . . . . . . . . . . 8 - 13
7A. Quantitative and Qualitative Disclosures About Market Risk . . 14
8. Financial Statements and Supplementary Data. . . . . . . . . . 14
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . . . . . . . . . . 14
9A. Controls and Procedures. . . . . . . . . . . . . . . . . . . . 14
PART IV
15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 15
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 16 - 17
Index to Financial Statements. . . . . . . . . . . . . . . . . F-1
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . . E-1 - E-4
PART I
ITEM 1. BUSINESS
American Express Certificate Company (AECC) is incorporated under the laws of
Delaware. AECC's 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 (AEFC), a Delaware corporation
located at 200 AXP Financial Center, Minneapolis, Minnesota 55474, owns 100
percent of the outstanding voting securities of AECC. AEFC is a wholly-owned
subsidiary of American Express Company (American Express), a New York
Corporation, with headquarters at World Financial Center, 200 Vesey Street, New
York, New York 10285.
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. 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, at its discretion. The certificates issued
by AECC are not insured by any government agency. AECC's certificates are sold
primarily by American Express Financial Advisors Inc. (AEFAI), and American
Express Bank Ltd. (AEB), both affiliates of AECC. AEFAI is registered as a
broker-dealer in all 50 states, the District of Columbia and Puerto Rico. AEFC
acts as investment advisor for AECC.
As of the date of this report, AECC offered nine different certificate products
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", "American Express Investors
Certificate" (including a form of American Express Investors Certificate offered
to select investors who, among other things, invest at least $100,000 in the
certificate), and "American Express Special Deposits". The American Express
Special Deposits is marketed only through offices of AEB, an indirect
wholly-owned subsidiary of American Express in England, and is not registered
for sale in the United States. All certificates are currently sold without a
sales charge. The American Express Flexible Savings Certificate, the American
Express Installment Certificate, the American Express Preferred Investors
Certificate, the American Express Stock Market Certificate, the American Express
Market Strategy Certificate, the American Express Equity Indexed Savings
Certificates, 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
AEFAI. With respect to the American Express Investors Certificate and a form of
the American Express Stock Market Certificate, AEFAI, in turn, has Selling Agent
Agreements with American Express Bank International (AEBI), a direct subsidiary
of AEB, and Coutts & Co. (USA) International (Coutts), a subsidiary of National
Westminster Bank PLC. With respect to the American Express Special Deposits,
AECC has a Marketing Agreement with AEB. With respect to American Express Stock
Market Certificate, AEFAI has a Selling Agent Agreement effective March 10, 1999
with Securities America Inc., an affiliate of AECC. With respect to American
Express Equity Indexed Savings
-1-
Certificates, AEFAI has a Selling Dealer Agreement effective July 31, 2000 with
Securities America, Inc. There is no assurance that AECC's certificates will be
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. AEFAI has entered into a consulting
agreement with AEBI under which AEBI provides consulting services related to any
selling agent agreements between AEFAI and other Edge Act corporations.
Except for the American Express Investors Certificate, the American Express
Stock Market Certificate sold through AEBI, and the American Express Special
Deposits, all of AECC's certificate products are available as qualified
investments for IRAs, 401(k) plans, and other qualified retirement plans. The
specified maturities of AECC's certificate products range from ten to twenty
years. Within that maturity period, most certificates have interest crediting
rate terms ranging from one to thirty-six months. Interest crediting rates are
subject to change and certificate product owners can surrender their
certificates without penalty at term end.
The American Express Cash Reserve Certificate is a single payment certificate
that permits additional investments. AECC guarantees interest in advance for a
three-month term on these certificates.
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 six, twelve, eighteen,
twenty-four, thirty or thirty-six months, and potentially other terms, at the
certificate product owner'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 for up to four certificate years for regular investments.
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 ranging from $250,000 to $5 million. Interest
crediting rates are guaranteed in advance by AECC for a term of one, two, three,
six, twelve, twenty-four or thirty-six months, at the certificate product
owner's option.
The American Express Stock Market Certificate is a single payment certificate
that offers the certificate product owner the opportunity to have all or part of
the certificate product returns tied to fifty-two 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 is also marketed by AEBI and Coutts, under Selling Agent Agreements
with AEFAI, 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 flexible payment
certificate that pays interest at a fixed rate or that offers the certificate
product owner the opportunity to have all or part of the certificate product
returns tied to fifty-two week stock market performance as
-2-
measured by a broad stock market index, for a series of fifty-two week terms
starting every month or at intervals the certificate product owner selects.
The American Express Equity Indexed Savings Certificates is a single payment
certificate that offers the certificate product owner the opportunity to have
all or part of the certificate product returns tied to a fifty two week stock
market performance, as measured by a broad stock market index, with return of
principal guaranteed by AECC. The certificate is sold by Securities America,
Inc. under a selling agreement with AEFAI.
The American Express Investors Certificate is a single payment certificate that
generally permits additional payments within fifteen days of term renewal.
Interest crediting rates are guaranteed in advance by AECC for a term of one,
two, three, six, twelve, twenty-four, or thirty-six months, at the certificate
product owner's option. AEBI and Coutts, under Selling Agent Agreements with
AEFAI, currently sell this certificate only to AEBI's clients and certain of
Coutts' clients, respectively, who are neither citizens nor residents of the
United States.
The American Express Special Deposits is a single payment certificate that
generally permits additional payments within fifteen days of term renewal.
Interest crediting rates are guaranteed in advance by AECC for a term of one,
two, three, six, twelve, twenty-four, or thirty-six months, at the certificate
product owner's option. This certificate is currently marketed by AEB through
its London office, 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.
AECC also offers the Series D-1 Investment Certificate in connection with
certain employee benefit plans available to eligible AEFC employees, financial
advisors, retirees, and eligible employees of the American Express funds, and to
Individual Retirement Accounts (IRAs) of persons retired as employees or
financial advisors with AEFC.
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 Preferred Investors
Certificate, the American Express Investors Certificate, and the American
Express Special Deposits products, AECC's current policy is to re-evaluate the
certificate product interest crediting rates weekly to respond to marketplace
changes. For the American Express Preferred Investors Certificate, the American
Express Investors Certificate, and the American Express Special Deposits
products, AECC's current policy is to re-evaluate such 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 the American Express Special Deposits product, AECC
must set the rates for an initial purchase of the
-3-
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 Cash Reserve Certificate product, the published rates
of the U.S. ninety day treasury bill are used as a guide in setting rates. For
the American Express Flexible Savings Certificate and the American Express
Series D-1 Investment Certificate products, the published rates of the BANK RATE
MONITOR Top 25 Market Average(R) (the BRM Average(R)) for various length bank
certificates of deposit are used as the guide in setting rates. For the American
Express Installment Certificate product, the average interest rate for money
market deposit accounts, as published by the BRM Average(R), is used as a guide
in setting rates. For the American Express Investors Certificate, American
Express Preferred Investors Certificate, and American Express Special Deposits
products, the published average rates for comparable length dollar deposits
available on an interbank basis, referred to as the London Interbank Offering
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 certificate 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 products also compete with short-term products, and use
LIBOR rates. The American Express Installment Certificate product 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
products are designed to offer returns 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 products.
AECC's net investment income is derived principally from interest and, to a
lesser extent, dividends generated by its investments. AECC's net income is
determined by deducting from net investment income provision expenses for
certificate reserves, and other expenses, including taxes, fees paid to AEFC for
investment advisory and other services, distribution fees paid to AEFAI, and
marketing fees paid to AEB.
-4-
AECC's certificate product payments received and certificate surrenders paid for
each of the three years ended December 31, 2003 were (in millions of US
dollars):
2003 2002 2001
Single Payment Certificates
Non-Qualified
Payments through:
AEFAI $1,124.2 $1,116.1 $1,044.9
AEBI, AEB, and Coutts $1,095.4 $ 512.6 $ 562.8
Surrenders through:
AEFAI $1,039.2 $ 865.1 $ 865.1
AEBI, AEB, and Coutts $ 999.6 $ 601.5 $ 585.5
Qualified
Payments through:
AEFAI $ 312.4 $ 361.6 $ 263.3
Surrenders through:
AEFAI $ 292.6 $ 224.1 $ 167.8
Installment Payment Certificates
Through AEFAI
Non-Qualified
Payments $ 38.6 $ 40.8 $ 41.1
Surrenders $ 47.9 $ 57.2 $ 68.7
Qualified
Payments $ .6 $ .3 $ .3
Surrenders $ .7 $ .5 $ .7
For the year ended December 31, 2003, 43.3 percent of single payment certificate
products payments were through AEBI, AEB, and Coutts; and 12.3 percent of
payments received by AECC on single payment certificate products and 1.5 percent
of payments received by AECC on installment certificate products were from
tax-qualified certificate products for use in IRAs, 401(k) plans, and other
qualified retirement plans.
The certificates offered by AEFAI are sold pursuant to a distribution agreement
which is terminable on sixty days' notice and is subject to annual approval by
AECC's Board of Directors, including a majority of the directors who are not
"interested persons" of AEFAI or AECC as that term is defined in the 1940 Act.
The distribution agreement provides for the payment of distribution fees to
AEFAI for services provided. For the sale of the American Express Investors
Certificate and the American Express Stock Market Certificate by AEBI, AEFAI, in
turn, has Selling Agent Agreements with AEBI and Coutts. For the sale of
American Express Stock Market Certificate, AEFAI has a Selling Agent Agreement
with Securities America Inc. effective March 10, 1999. For the sale of American
Express Equity Indexed Savings Certificates, AEFAI has a Selling Dealer
Agreement with Securities America Inc., effective July 31, 2000. For marketing
American Express Special Deposits, AECC has a Marketing Agreement with AEB.
These agreements are terminable upon sixty days' notice and subject to annual
review by
-5-
directors who are not "interested persons" of AEFAI 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 in its investment portfolio from AEFC,
under an investment management agreement, which is subject to annual review and
approval by AECC's Board of Directors, including a majority of the directors who
are not "interested persons" of AEFC 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 such
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 percent 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 and other loans, 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 percent 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 series of certificate products are
deferred and amortized over the estimated lives of the related certificates,
which is approximately one year and can be up to 10 years. Upon surrender prior
to maturity, unamortized deferred distribution fees are reflected in expenses
and any related surrender charges are reflected as a reduction to the provision
expense for certificate reserves. Products are designed to recover such costs
within the surrender charge period.
ITEM 2. PROPERTIES
None.
ITEM 3. LEGAL PROCEEDINGS
AECC is a party to litigation and arbitration proceedings in the ordinary course
of its business. The outcome of any litigation or threatened litigation cannot
be predicted with any certainty. However, in the aggregate, AECC does not
consider any lawsuits in which it is named as a defendant to have a material
impact on AECC's financial position or operating results.
-6-
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 AECC's common stock since it is a wholly-owned subsidiary
of AEFC and, indirectly, of American Express Company. Frequency and amount of
return of capital amounts paid to AEFC during the past two years were (in
millions of dollars):
For the year ended December 31, 2003:
August 8, 2003 $30
December 15, 2003 20
---
Total $50
===
For the year ended December 31, 2002:
December 30, 2002 $10
===
Restriction on AECC's present or future ability to make return of capital
payments or to pay dividends to AEFC:
Certain series of installment certificate products 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 percent on such series of certificates have been
authorized by AECC. This restriction was removed for 2003 and 2002 by AECC's
declaration of additional credits in excess of this requirement.
Appropriated retained earnings resulting from the pre-declaration of additional
credits to AECC's certificate product owners are not available for the payment
of dividends by AECC. In addition, AECC will discontinue issuance of
certificates subject to the pre-declaration of additional credits and will make
no further pre-declaration as to outstanding certificates if at any time the
capital and unappropriated retained earnings of AECC should be less than 5
percent of net certificate reserves (certificate reserves less certificate
loans). At December 31, 2003, the capital and unappropriated retained earnings
amounted to 5.8 percent of net certificate reserves.
ITEM 6. SELECTED FINANCIAL DATA
Item omitted pursuant to General Instructions I (2)(a) of Form 10-K.
-7-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
American Express Certificate Company's (AECC's) net income is derived primarily
from the after-tax yield on investments and realized investment gains (losses),
less investment expenses and interest credited on certificate reserve
liabilities. Changes in net income trends occur largely due to changes in
investment returns, interest crediting rates to certificate products, the mix of
fully taxable and tax-advantaged investments in AECC's portfolio and from
realization of investment gains (losses). AECC follows accounting principles
generally accepted in the United States (GAAP).
Net income increased $6.8 million, or 14.8 percent, reflecting increased
investment income, increased gross realized gains and decreased gross realized
losses on sale of investments, partially offset by slightly higher investment
expenses and a higher provision expense for certificate reserves. In 2002, the
net income was significantly higher than 2001. The 2001 results included net
pre-tax realized losses on investments of ($92.4 million), primarily due to 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.
Investment income increased $43.1 million, or 19.5 percent, reflecting a $66.0
million increase in net pre-tax gains on equity index options, partially offset
by lower investment portfolio yields. The increase in net pre-tax gains on
equity index options was due to the effect of appreciation in the S&P 500 on the
value of options economically hedging stock market certificate products.
Investment income for 2002 was $16.8 million or 8.2 percent higher than 2001 as
a result of higher levels of invested assets and lower losses on interest rate
swap agreements in 2002.
The favorable impact on investment income from the equity index options was
largely offset by the increase in provision expenses for certificate reserves.
Provision for certificate reserves increased $41.2 million or 41.1 percent
reflecting the effect on stock market certificates of appreciation in the S&P
500 this year versus depreciation last year, partially offset by lower interest
crediting rates on the interest rate sensitive portion of AECC's certificate
product portfolio. The 2002 provision for certificate reserves was significantly
lower than 2001 as a result of lower client interest crediting rates, partially
offset by an increase in certificate reserves during 2002.
AECC's gross realized gains on sales of securities classified as
Available-for-Sale, using the specific identification method, were $47.1 million
and $23.4 million for the years ended December 31, 2003 and 2002, respectively.
Gross realized losses on sales were ($2.8 million) and ($15.7 million) for the
same periods. AECC also recognized losses of ($36.0 million) and ($15.8 million)
in other-than-temporary impairments on Available-for-Sale securities for the
years ended December 31, 2003 and 2002, respectively. In 2001, gross realized
gains on sales of securities classified as Available-for-Sale were $20.7 million
while gross realized losses on sales of securities classified as
Available-for-Sale were ($83.9 million). AECC also recognized
other-than-temporary impairment losses on Available-for-Sale securities of
($27.9 million) in 2001.
-8-
Certain Critical Accounting Policies
AECC's significant accounting policies are described in Note 1 to the Financial
Statements. The following provides a critical accounting policy on investment
securities valuation that is important to the Financial Statements.
Investment securities valuation
Generally, investment securities are carried at fair value on the balance sheet
with unrealized gains (losses) recorded in other comprehensive income (loss)
within equity, net of income tax provisions (benefits). At December 31, 2003,
AECC had net unrealized pretax gains on Available-for-Sale securities of $74.0
million. Gains and losses are recognized in results of operations upon
disposition of the securities. In addition, losses are recognized when
management determines that a decline in value is other-than-temporary, which
requires judgment regarding the amount and timing of recovery. Indicators of
other-than-temporary impairment for debt securities include issuer downgrade,
default or bankruptcy. AECC also considers the extent to which cost exceeds fair
value, the duration and size of that gap, and management's judgment about the
issuer's current and prospective financial condition. Fair value is generally
based on quoted market prices. As of December 31, 2003, there were $19 million
in gross unrealized losses that related to $1.5 billion of securities based on
fair values, of which only $30 million has been in a continuous unrealized loss
position for twelve months or more. AECC does not believe that the unrealized
loss on any individual security at December 31, 2003 represents an
other-than-temporary impairment, and AECC has the ability and intent to hold
these securities for a time sufficient to recover its amortized cost.
Liquidity and Capital Resources
AECC's principal sources of cash are receipts from sales of face-amount
certificate products and cash flows from investments. AECC's principal uses of
cash are payments to certificate product owners for matured and surrendered
certificates, purchases of investments, and return of capital or dividend
payments to AEFC.
Cash received from sales of certificates totaled $2.6 billion for the year ended
December 31, 2003 compared to $2.0 billion for the year ended December 31, 2002.
Certificate maturities and cash surrenders totaled $2.4 billion for the year
ended December 31, 2003, compared to $1.8 billion and $1.7 billion for the years
ended December 31, 2002 and 2001, respectively.
AECC, as an issuer of face-amount certificates, is impacted by significant
changes in interest rates as interest crediting rates on certificate products
generally reset at shorter intervals than the change in the yield on AECC's
investment portfolio. In view of the continued uncertainty in the investment
markets, AECC continues to invest in securities that provide for more immediate,
periodic interest and principal payments, resulting in improved liquidity. To
accomplish this, AECC continues to invest much of its cash flow in mortgage and
asset-backed securities, and to a lesser extent, intermediate term corporate
debt securities. In addition, AECC enters into interest rate swap contracts that
effectively lengthen the interest crediting rate reset interval on certificate
products. Also, on three series of AECC's certificates, interest is credited to
certificate products 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 equity market sensitive
certificates, AECC purchases and writes index call options on a major stock
market index and, from time to time, enters into futures contracts.
-9-
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 product owner obligations.
Debt securities and marketable equity securities are classified as
Available-for-Sale and are carried at fair value. The Available-for-Sale
classification does not mean AECC expects to sell these securities, but rather
these securities are available to meet possible liquidity needs should there be
significant changes in market interest rates or certificate owner redemptions.
At December 31, 2003, securities classified as Available-for-Sale were carried,
in the aggregate, at a fair market value of $4.5 billion. Based on amortized
costs, fixed maturity securities comprise 90 percent of AECC's total investment
portfolio. Of these securities, 96 percent are investment grade. Investments
primarily include mortgage and asset-backed securities, and to a lesser extent,
corporate debt securities. AECC's corporate debt securities are a diverse
portfolio with concentrations in the following industries: banking and finance,
utilities, communications and media, and transportation. Other than U.S.
Government Agency mortgage-backed securities, no one issuer represents more than
1 percent of AECC's total investment portfolio.
AECC paid AEFC return of capital amounts of $50 million and $10 million during
2003 and 2002, respectively. During the fourth quarter of 2001, AECC paid a $167
million capital dividend to 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, and during 2001,
AECC received $240 million in cash as capital contributions from AEFC.
Cash used in investing activities was $448.7 million and $265.5 million in 2003
and 2002, respectively. This change was primarily due to decreased amounts due
to brokers in 2003, while in 2002, amounts due to brokers increased, and an
increase in purchases of Available-for-Sale securities and other investments,
partially offset by an increase in sales and maturities of such securities.
Cash provided by financing activities was $246.8 million and $332.7 million in
2003 and 2002, respectively. This decrease primarily resulted from a decrease in
net certificate inflows of $45.8 million together with an increase of $40
million of combined return of capital payments to AEFC.
Impact of Recent Market-Volatility on Results of Operations
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 percent 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
-10-
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 occur 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 maturity
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 short-term trading
profits for its own account.
AECC's goal is to manage interest rate sensitivity by modifying the length of
the interest crediting rate reset interval on certificate products so that
movements in interest rates do not adversely affect the interest credited to
such certificate products. AEFC holds regularly scheduled investment committee
meetings, which is comprised of senior business managers, to review models
projecting various interest rate scenarios and risk/return measures and their
effect on the profitability of AECC. 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. Part of the committee's strategy includes entering into
interest rate swaps to hedge interest rate risk.
AECC is exposed to risk associated with fluctuating interest payments from
certain certificate products tied to the London Interbank Offering Rate (LIBOR).
As such, certificate product interest crediting rates reset at shorter intervals
than the changes in the investment portfolio yield related to new investments
and reinvestments. Therefore, AECC's spreads may be negatively impacted by
increases in the general level of interest rates. AECC hedges the risk of rising
interest rates by entering into pay-fixed, receive-variable (LIBOR-based)
interest rate swaps that convert fluctuating crediting rate payments to fixed
payments, effectively protecting AECC from unfavorable interest rate movements.
The interest rate swaps are treated as cash flow hedges per Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities". At December 31, 2003, AECC had $900 million
notional of interest rate swaps expiring at various dates from January 2004
through February 2005.
AECC is also exposed to risk associated with fluctuations in the equity market
from three series of its certificate products. Such amounts credited to
certificate product owners' accounts are tied to the relative change in a major
stock market index between the beginning and end of the certificates' terms.
AECC purchases and writes equity index call options on a major stock market
index in order to meet such obligations. The recent appreciation in the S&P 500
caused a relatively substantial increase in AECC's provision expense for
certificate reserves, which was effectively offset by an increase in net pre-tax
gains on equity index options.
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
-11
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 fair value hedges, cash flow hedges or hedges of a net
investment in a foreign operation, based upon the exposure being hedged. See
Note 9 to the Financial Statements for further discussion of AECC's derivative
and hedging activities.
The negative impact on AECC's annual pretax income of a 100 basis point increase
in interest rates, which assumes certificate product interest crediting rate
reset intervals and customer behavior based on the application of proprietary
models, to the book of business at December 31, 2003 and 2002, would be $11.8
million and $0.6 million for 2003 and 2002, respectively. A 10 percent decrease
in the level of a major stock market index would have a minimal impact on AECC's
annual pretax income related as of December 31, 2003 and 2002, because the
income effect is a decrease in option related 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 Certificates product owners' accounts.
The ratio of shareholder's equity, excluding accumulated other comprehensive
income (loss) net of tax, to total assets less certificate loans and net
unrealized gains (losses) on securities classified as Available-for-Sale (the
Capital-to-Assets Ratio) at December 31, 2003 and 2002, was 5.4 percent and 5.5
percent, respectively. In accordance with 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 percent.
Other Reporting Matters
In January 2003, the Financial Accounting Standards Board issued Interpretation
No. 46, "Consolidation of Variable Interest Entities" (FIN 46), which addresses
consolidation by business enterprises of variable interest entities (VIEs) and
was subsequently revised in December 2003. An entity is subject to consolidation
according to the provisions of FIN 46, if, by design, either (i) the total
equity investment at risk is not sufficient to permit the entity to finance its
activities without additional subordinated financial support from other parties,
or, (ii) as a group, the holders of the equity investment at risk lack: (a)
direct or indirect ability to make decisions about an entity's activities; (b)
the obligation to absorb the expected losses of the entity if they occur; or (c)
the right to receive the expected residual returns of the entity if they occur.
In general, FIN 46 requires a VIE to be consolidated when an enterprise has a
variable interest for which it is deemed to be the primary beneficiary which
means that it will absorb a majority of the VIE's expected losses or receive a
majority of the VIE's expected residual return.
FIN 46 did not impact the accounting for $27 million in a minority-owned secured
loan trust (SLT) or $6 million in a collateralized debt obligation traunche
(solely supported by a portfolio of high yield bonds), both of which are managed
by third parties, as AECC is not the primary beneficiary. AECC has a 33 percent
ownership interest in the SLT, which provides returns to investors primarily
based on the performance of an underlying portfolio of high yield loans. The
aggregate fair value of the loans related to AECC's pro rata share of this
structure approximates $92.5 million. AECC's maximum exposure to loss as a
result of its investment in this SLT is represented by the carrying value, which
was $27 million at December 31, 2003.
-12-
In April 2003, the FASB issued Statement of Financial Accounting Standards Board
(SFAS) No. 149, "Amendment of Statement 133 on Derivative Instruments and
Hedging Activities" (SFAS No. 149). SFAS No. 149 amends and clarifies accounting
for derivative instruments embedded in other contracts, and for hedging
activities under SFAS No. 133. SFAS No. 149 is effective for contracts entered
into or modified and hedging relationships designated after June 30, 2003, and
to certain preexisting contracts. SFAS No. 149 did not have a material impact on
AECC's financial statements.
Forward-Looking Statements
Certain statements in Item 7. of this Form 10-K Annual Report contain
forward-looking statements, which are subject to risks and uncertainties. The
words "believe," "expect," "anticipate," "optimistic," "intend," "plan," "aim,"
"will," "should," "could," "likely," and similar expressions are intended to
identify forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date on
which they are made. AECC undertakes no obligation to update or revise any
forward-looking statements. Factors that could cause actual results to differ
materially from these forward-looking statements include, but are not limited
to: AECC's ability to successfully implement a business model that allows for
significant net income growth based on revenue growth that is lower than
historical levels, including the ability to improve its operating expense to
revenue ratio both in the short-term and over time, which will depend in part on
the effectiveness of reengineering and other cost control initiatives, as well
as factors impacting AECC's revenues; AECC's ability to grow its business, over
time, which will depend on AECC's ability to manage its capital needs and the
effect of business mix; the ability to increase investment spending, which will
depend in part on the equity markets and other factors affecting revenues, and
the ability to capitalize on such investments to improve business metrics; the
accuracy of certain critical accounting estimates, including the fair value of
the assets in AECC's investment portfolio (including those investments that are
not readily marketable), fluctuation in the equity and fixed income markets,
which can affect the amount and types of certificate products sold by AECC,
potential deterioration in AECC's high-yield and other investments, which could
result in further losses in AECC's investment portfolio; the ability of AECC to
sell certain high-yield investments at expected values and within anticipated
timeframes and to maintain its high-yield portfolio at certain levels in the
future; and spreads in the certificate businesses; credit trends and the rate of
bankruptcies, which can affect returns on AECC's investment portfolios;
fluctuations in foreign currency exchange rates, which could affect commercial
activities, among other businesses, or restrictions on convertibility of certain
currencies; changes in laws or government regulations, including tax laws
affecting AECC's businesses or that may affect the sales of the products and
services that it offers, and regulatory activity in the areas of customer
privacy, consumer protection, business continuity and data protection; the
adoption of recently issued accounting rules related to the consolidation of
variable interest entities, including those involving collateralized debt
obligations and secured loan trusts, that AECC invests in, which could affect
both AECC's balance sheet and results of operations; and outcomes and costs
associated with litigation and compliance and regulatory matters. A further
description of these and other risks and uncertainties can be found in AECC's
other reports filed with the SEC.
-13-
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Items required under this section are included in the Management's Discussion
and Analysis of Financial Condition and Results of Operations under the section
titled Impact of Recent Market-Volatility on Results of Operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements at page F-1 hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
ITEM 9A. CONTROLS AND PROCEDURES
AECC's management, with the participation of the AECC's Chief Executive Officer
and Chief Financial Officer, has evaluated the effectiveness of the Company's
disclosure controls and procedures (as such term is defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) as of the end of the period covered by this report. Based on
such evaluation, AECC's Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of such period, the Company's disclosure controls
and procedures are effective. There have not been any changes in the Company's
internal control over financial reporting (as such term is defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) during the Company's fourth
fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.
PART III
Items omitted pursuant to General Instructions I (2)(c) of Form 10-K.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 10-K
(a) 1. Financial Statements:
See Index to Financial Statements on page F-1 hereof.
2. Financial Statement Schedules:
See Index to Financial Statements on page F-1 hereof.
3. Exhibits:
See Exhibit Index on pages E-1 through E-4 hereof.
-14-
(b) Reports on Form 8-K:
For 8-K, filed November 15, 2003, Item 5, reporting that, on November
15, 2003, AECC appointed Brian J. McGrane as Chief Financial Officer.
He succeeds John T. Sweeney, who was recently appointed Vice President,
Brokerage and Banking at AEFC.
-15-
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 29, 2004
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 29, 2004
BY /s/ Brian J. McGrane
--------------------
NAME AND TITLE Brian J. McGrane, Vice President and
Chief Financial Officer
(Principal Financial Officer)
DATE March 29, 2004
BY /s/ Jeryl A. Millner
--------------------
NAME AND TITLE Jeryl A. Millner, Vice President and
Controller
(Principal Accounting Officer)
DATE March 29, 2004
BY /s/ Rodney P. Burwell **
------------------------
NAME AND TITLE Rodney P. Burwell, Director
DATE March 29, 2004
BY /s/ Kent M. Bergene **
----------------------
NAME AND TITLE Kent M. Bergene, Director
DATE March 29, 2004
BY /s/
------------------------
NAME AND TITLE Jean B. Keffeler, Director
DATE March 29, 2004
-16-
BY /s/ Thomas R. McBurney **
-------------------------
NAME AND TITLE Thomas R. McBurney, Director
DATE March 29, 2004
BY /s/ Walter S. Berman * **
-------------------------
NAME AND TITLE Walter S. Berman, Director and Treasurer
DATE March 29, 2004
BY /s/ Karen M. Bohn **
--------------------
NAME AND TITLE Karen M. Bohn, Director
DATE March 29, 2004
* Signed pursuant to Officers' Power of Attorney dated March 3, 2004, filed
electronically herewith as Exhibit 24(a).
** Signed pursuant to Directors' Power of Attorney dated March 3, 2004, filed
electronically herewith as Exhibit 24(b).
/s/ Paula R. Meyer
- ---------------------
Paula R. Meyer
-17-
Index to Financial Statements and Schedules
Financial Statements:
Part I. Financial Information:
Item 1. Financial Statements
Responsibility of Management F-2
Report of Ernst & Young LLP Independent Auditors F-3
Balance Sheets - December 31, 2003 and 2002 F-4 - F-5
Statements of Operations - Years ended December
31, 2003, 2002 and 2001 F-6 - F-7
Statements of Cash Flows - Years ended December
31, 2003, 2002 and 2001 F-8
Statements of Comprehensive Income -Years ended
December 31, 2003, 2002 and 2001 F-9
Statements of Shareholder's Equity - Years ended
December 31, 2003, 2002 and 2001 F-10
Notes to Financial Statements F-11 - F-31
Schedule No.:
Financial Schedules:
I Investments in Securities of Unaffiliated Issuers,
December 31, 2003 F-32 - F-44
II Investments in and Advances to Affiliates and Income
thereon, December 31, 2003, 2002 and 2001 F-45 - F-46
III Mortgage Loans on Real Estate and Interest earned on
Mortgages, year ended December 31, 2003 F-47 - F-50
V Qualified Assets on Deposit, December 31, 2003 F-51
VI Certificate Reserves, year ended December 31, 2003 F-52 - F-82
VII Valuation and Qualifying Accounts, years ended December
31, 2003, 2002 and 2001 F-83
Schedules I, III and VI for the year ended December 31, 2002, and Schedule VI
for the year ended December 31, 2001, are included in Registrant's Annual
Reports on Form 10-K for the fiscal years ended December 31, 2002 and December
31, 2001, 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.
F-1
American Express Certificate Company
Responsibility of Management
The management of American Express Certificate Company (AECC) is responsible for
the preparation and fair presentation of its Financial Statements, which have
been prepared in conformity with accounting principles generally accepted in the
United States; 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 filing.
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 which 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: (i)
an organizational structure with clearly defined lines of responsibility,
policies and procedures; (ii) a Code of Conduct; and (iii) a careful selection
and training of employees. Internal auditors monitor and assess the
effectiveness of internal control and report their findings to management and
the Board of Directors 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 control system over financial reporting to the
extent they believed necessary to support their report.
F-2
Report of Ernst & Young LLP 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, 2003 and 2002, and the related statements of operations,
comprehensive income, shareholder's equity and cash flows for each of the three
years in the period ended December 31, 2003. Our audits also include 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, 2003
and 2002, 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, 2003 and 2002, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2003, 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.
ERNST & YOUNG LLP
Minneapolis, Minnesota
January 26, 2004
F-3
Balance Sheets
AMERICAN EXPRESS CERTIFICATE COMPANY
December 31, (Thousands, except share amount) 2003 2002
- ----------------------------------------------------------------------------------------------------------------------------
Assets
Qualified Assets (Note 2)
- ----------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated issuers (Note 3):
Cash and cash equivalents $ 25,099 $ 240,323
Available-for-Sale securities 4,509,726 4,389,396
First mortgage loans on real estate and other loans 469,309 452,243
Certificate loans - secured by certificate reserves 15,606 18,614
- ----------------------------------------------------------------------------------------------------------------------------
Total investments 5,019,740 5,100,576
- ----------------------------------------------------------------------------------------------------------------------------
Receivables:
Dividends and interest 36,007 34,114
Investment securities sold 7,946 24,170
- ----------------------------------------------------------------------------------------------------------------------------
Total receivables 43,953 58,284
- ----------------------------------------------------------------------------------------------------------------------------
Equity index options (Note 9) 153,162 34,403
- ----------------------------------------------------------------------------------------------------------------------------
Total qualified assets 5,216,855 5,193,263
- ----------------------------------------------------------------------------------------------------------------------------
Other Assets
- ----------------------------------------------------------------------------------------------------------------------------
Due from AEFC for federal income taxes 22,963 -
Deferred taxes, net (Note 8) 9,321 -
Deferred distribution fees and other 6,453 6,506
- ----------------------------------------------------------------------------------------------------------------------------
Total other assets 38,737 6,506
- ----------------------------------------------------------------------------------------------------------------------------
Total assets $5,255,592 $5,199,769
- ----------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements
F-4
Balance Sheets (continued)
AMERICAN EXPRESS CERTIFICATE COMPANY
December 31, (Thousands, except share amount) 2003 2002
- ----------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholder's Equity
Liabilities
- ----------------------------------------------------------------------------------------------------------------------------
Certificate Reserves (Note 5):
Installment certificates:
Reserves to mature $ 146,052 $ 168,957
Additional credits and accrued interest 3,514 3,988
Advance payments and accrued interest 499 564
Other 32 34
Fully paid certificates:
Reserves to mature 4,573,514 4,277,348
Additional credits and accrued interest 64,114 42,311
Due to unlocated certificate holders 92 170
- ----------------------------------------------------------------------------------------------------------------------------
Total certificate reserves 4,787,817 4,493,372
- ----------------------------------------------------------------------------------------------------------------------------
Accounts Payable and Accrued Liabilities:
Due to AEFC (Note 7) 880 887
Due to AEFC for federal income taxes - 3,908
Due to other affiliates (Note 7) 560 690
Deferred taxes, net (Note 8) - 29,556
Payable for investment securities purchased 9,173 263,658
Equity index options and other liabilities (Note 9) 133,949 48,309
- ----------------------------------------------------------------------------------------------------------------------------
Total accounts payable and accrued liabilities 144,562 347,008
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities 4,932,379 4,840,380
- ----------------------------------------------------------------------------------------------------------------------------
Commitments (Note 4)
- ----------------------------------------------------------------------------------------------------------------------------
Shareholder's Equity (Note 6)
- ----------------------------------------------------------------------------------------------------------------------------
Common stock, $10 par - authorized and issued 150,000 shares 1,500 1,500
Additional paid-in capital 323,844 373,844
Retained earnings (accumulated deficits):
Appropriated for pre-declared additional credits and interest 184 811
Appropriated for additional interest on advance payments 15 15
Unappropriated (46,556) (100,142)
Accumulated other comprehensive income - net of tax (Note 1) 44,226 83,361
- ----------------------------------------------------------------------------------------------------------------------------
Total shareholder's equity 323,213 359,389
- ----------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity $5,255,592 $5,199,769
- ----------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements
F-5
Statements of Operations
AMERICAN EXPRESS CERTIFICATE COMPANY
Years ended December 31, (Thousands) 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------
Investment Income
Interest income from unaffiliated investments:
Available-for-Sale securities $204,932 $227,609 $214,534
Mortgage loans on real estate and other loans 27,093 27,719 25,133
Certificate loans 933 1,095 1,293
Dividends 5,074 9,949 19,986
Equity index options (Note 9) 29,538 (36,421) (39,510)
Interest rate swap agreements (Note 9) (5,301) (9,780) (17,616)
Other 1,969 980 525
- ----------------------------------------------------------------------------------------------------------------------------
Total investment income 264,238 221,151 204,345
- ----------------------------------------------------------------------------------------------------------------------------
Investment Expenses
AEFC and affiliated company fees (Note 7):
Distribution 29,731 29,762 30,924
Investment advisory and services 10,436 9,980 9,248
Transfer agent 3,378 3,203 3,161
Depository 349 321 285
Other 523 360 432
- ----------------------------------------------------------------------------------------------------------------------------
Total investment expenses 44,417 43,626 44,050
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income before provision for certificate
reserves and income tax (expense) benefit $219,821 $177,525 $160,295
See Notes to Financial Statements
F-6
Statements of Operations (continued)
AMERICAN EXPRESS CERTIFICATE COMPANY
Years ended December 31, (Thousands) 2003 2002 2001
- -----------------------------------------------------------------------------------------------------------------------------
Provision for Certificate Reserves (Note 5)
According to the terms of the certificates:
Provision for certificate reserves $ 6,043 $ 7,888 $ 10,321
Interest on additional credits 425 543 597
Interest on advance payments 17 19 34
Additional credits/interest authorized by AECC:
On fully paid certificates 132,975 88,201 138,020
On installment certificates 3,379 4,757 7,559
- -----------------------------------------------------------------------------------------------------------------------------
Total provision for certificate reserves before reserve recoveries 142,839 101,408 156,531
Reserve recoveries from terminations prior to maturity (1,356) (1,156) (1,144)
- -----------------------------------------------------------------------------------------------------------------------------
Net provision for certificate reserves 141,483 100,252 155,387
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income before income tax (expense) benefit 78,338 77,273 4,908
Income tax (expense) benefit (Note 8) (27,296) (24,866) 3,348
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income 51,042 52,407 8,256
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments
Securities of unaffiliated issuers before income tax (expense) benefit 2,944 (9,899) (92,375)
Income tax (expense) benefit (Note 8) (1,031) 3,631 32,331
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 1,913 (6,268) (60,044)
- -----------------------------------------------------------------------------------------------------------------------------
Cumulative effect of accounting change (net of income tax benefit of $214) - - (397)
- -----------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 52,955 $ 46,139 $(52,185)
- -----------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements
F-7
Statements of Cash Flows
AMERICAN EXPRESS CERTIFICATE COMPANY
Years Ended December 31, (Thousands) 2003 2002 2001
- -----------------------------------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net income (loss) $ 52,955 $ 46,139 $ (52,185)
Adjustments to reconcile net income (loss) to net
cash (used in) provided by operating activities:
Cumulative effect of accounting change, net of tax (Note 1) - - 397
Interest income added to certificate loans (630) (738) (820)
Amortization of premiums/discounts-net 14,907 (2,426) (1,483)
Provision for deferred federal income taxes (38,877) (3,288) (9,793)
Net deferred distribution fees (amortized) (479) 1,802 1,525
Net realized (gain) loss on equity index options (29,538) 36,421 39,510
Net realized (gain) loss on investments (2,944) 9,899 92,375
(Increase) decrease in dividends and interest receivable (1,893) 4,184 9,603
Other assets and liabilities, net (6,856) (6,004) (17,564)
- -----------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by operating activities (13,355) 85,989 61,565
- -----------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Available-for-Sale investments:
Sales 1,132,131 887,194 989,738
Maturities and redemptions 1,305,953 1,111,493 704,877
Purchases (2,626,239) (2,228,071) (2,435,973)
Other investments:
Sales 81,736 11,166 -
Maturities and redemptions 77,022 88,437 30,307
Purchases (182,293) (234,070) (54,927)
Certificate loans:
Payments 2,805 2,919 3,127
Fundings (1,553) (2,085) (2,830)
Changes in amounts due to and from brokers, net (238,262) 97,482 141,131
- -----------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (448,700) (265,535) (624,550)
- -----------------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Payments from certificate owners 2,571,209 2,031,414 1,919,769
Net provision for certificate reserves 141,483 100,252 155,387
Certificate maturities and cash surrenders (2,415,861) (1,788,995) (1,734,742)
Proceeds from repurchase agreements 337,600 - 500
Payments under repurchase agreements (337,600) - (500)
(Return of capital to) contribution from AEFC (50,000) (10,000) 240,000
- -----------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 246,831 332,671 580,414
- -----------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (215,224) 153,125 17,429
Cash and cash equivalents at beginning of year 240,323 87,198 69,769
- -----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 25,099 $ 240,323 $ 87,198
- -----------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements
F-8
Statements of Comprehensive Income
AMERICAN EXPRESS CERTIFICATE COMPANY
Years Ended December 31, (Thousands) 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 52,955 $ 46,139 $(52,185)
- ----------------------------------------------------------------------------------------------------------------------------------
Other comprehensive (loss) income net of tax (Note 1)
Cumulative effect of accounting change (Note 1) - - (2,187)
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized (losses) gains on Available-for-Sale securities:
Unrealized holding (losses) gains arising during period (52,669) 82,904 19,959
Income tax benefit (provision) 18,434 (29,016) (6,986)
- ----------------------------------------------------------------------------------------------------------------------------------
Net unrealized holding (losses) gains arising during the period (34,235) 53,888 12,973
- ----------------------------------------------------------------------------------------------------------------------------------
Reclassification adjustment for (gains) losses included in net income (loss) (8,260) 8,142 101,754
Income tax provision (benefit) 2,891 (2,850) (35,614)
- ----------------------------------------------------------------------------------------------------------------------------------
Net reclassification adjustment for (gains) losses included in net income (loss) (5,369) 5,292 66,140
- ----------------------------------------------------------------------------------------------------------------------------------
Net unrealized (losses) gains on Available-for-Sale securities (39,604) 59,180 79,113
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized losses on interest rate swaps:
Unrealized losses arising during the period (4,579) (8,141) (19,683)
Income tax benefit 1,603 2,849 6,889
- ----------------------------------------------------------------------------------------------------------------------------------
Net unrealized holding losses arising during the period (2,976) (5,292) (12,794)
- ----------------------------------------------------------------------------------------------------------------------------------
Reclassification adjustment for losses included in net income (loss) 5,300 9,780 17,616
Income tax benefit (1,855) (3,423) (6,166)
- ----------------------------------------------------------------------------------------------------------------------------------
Net reclassification adjustment for losses included in net income (loss) 3,445 6,357 11,450
- ----------------------------------------------------------------------------------------------------------------------------------
Net unrealized gains (losses) on interest rate swaps 469 1,065 (1,344)
- ----------------------------------------------------------------------------------------------------------------------------------
Net other comprehensive (loss) income (39,135) 60,245 75,582
- ----------------------------------------------------------------------------------------------------------------------------------
Total comprehensive income $ 13,820 $106,384 $ 23,397
- ----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements
F-9
Statements of Shareholder's Equity
AMERICAN EXPRESS CERTIFICATE COMPANY
Years Ended December 31, (Thousands) 2003 2002 2001
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock $ 1,500 $ 1,500 $ 1,500
- ----------------------------------------------------------------------------------------------------------------------------
Additional Paid-in Capital
Balance at beginning of year $ 373,844 $ 383,844 $ 143,844
(Return of capital to) contribution from Parent (50,000) (10,000) 240,000
- ----------------------------------------------------------------------------------------------------------------------------
Balance at end of year $ 323,844 $ 373,844 $ 383,844
- ----------------------------------------------------------------------------------------------------------------------------
Retained Earnings
Appropriated for pre-declared additional credits/interest (Note 5)
Balance at beginning of year $ 811 $ 1,123 $ 2,684
Transferred to unappropriated retained earnings (627) (312) (1,561)
- ----------------------------------------------------------------------------------------------------------------------------
Balance at end of year $ 184 $ 811 $ 1,123
- ----------------------------------------------------------------------------------------------------------------------------
Appropriated for additional interest on advance payments $ 15 $ 15 $ 15
- ----------------------------------------------------------------------------------------------------------------------------
Unappropriated (Note 6)
Balance at beginning of year $(100,142) $(146,593) $ 70,937
Net income (loss) 52,955 46,139 (52,185)
Transferred from appropriated retained earnings 627 312 1,561
Other 4 - -
Capital dividends declared - - (166,906)
- ----------------------------------------------------------------------------------------------------------------------------
Balance at end of year $ (46,556) $(100,142) $(146,593)
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated other comprehensive income - net of tax (Note 1)
Balance at beginning of year $ 83,361 $ 23,116 $ (52,466)
Net other comprehensive (loss) income (39,135) 60,245 75,582
- ----------------------------------------------------------------------------------------------------------------------------
Balance at end of year $ 44,226 $ 83,361 $ 23,116
- ----------------------------------------------------------------------------------------------------------------------------
Total shareholder's equity $ 323,213 $ 359,389 $ 263,005
- ----------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements
F-10
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
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 (AEFC), 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. 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, at its discretion. The certificates issued by AECC are not insured by any
government agency. AECC's certificates are sold primarily by American Express
Financial Advisor Inc. (AEFAI) and American Express Bank Ltd. (AEB), both
affiliates of AECC. AEFAI is registered as a broker dealer in all 50 states, the
District of Columbia and Puerto Rico. AEFC acts as investment advisor for AECC.
As of December 31, 2003, AECC offered nine different certificate products to the
public with specified maturities ranging from ten to twenty years. Within their
specified maturity, most certificates have interest rate terms of one to
thirty-six months. In addition, three types of certificates have interest tied,
in whole or in part, to 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, 401(k) plans and other qualified retirement
plans.
AECC's net investment income is derived primarily from interest and dividends
generated by its investments. AECC's net income is determined by deducting from
net investment income provision expenses for certificate reserves, and other
expenses, including taxes, fees paid to AEFC for investment advisory and other
services, distribution fees paid to AEFAI, and marketing fees paid to AEB, a
wholly-owned indirect subsidiary of American Express Company.
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,
Investors Syndicate Development Corporation, as prescribed by the Securities and
Exchange Commission (SEC) for non-investment company subsidiaries. Certain
reclassifications of prior period amounts have been made to conform to the
current presentation.
Accounting estimates are an integral part of the Financial Statements. In part,
they are based upon assumptions concerning future events. Among the more
significant is investment securities valuation as discussed in detail below.
These accounting estimates reflect the best judgment of management and actual
results could differ.
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.
F-11
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
Interest income
Interest income is accrued as earned using the effective interest method, which
makes an adjustment for security premiums and discounts, so that the related
security recognizes a constant rate of return on the outstanding balance
throughout its term.
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 original maturities of ninety days or less.
Available-for-Sale investments
Debt securities and marketable equity securities are classified as
Available-for-Sale and carried at fair value. Unrealized gains (losses) on
securities classified as Available-for-Sale are reflected, net of taxes, in
other comprehensive (loss) income as part of Shareholder's Equity.
The basis for determining cost in computing realized gains (losses) on
securities is specific identification. Gains (losses) are recognized in the
results of operations upon disposition of the securities. In addition, losses
are also recognized when management determines that a decline in value is
other-than-temporary, which requires judgment regarding the amount and timing of
recovery. Indicators of other-than-temporary impairment for debt securities
include issuer downgrade, default or bankruptcy. AECC also considers the extent
to which cost exceeds fair value, the duration of time of that decline and
management's judgment as to the issuer's current and prospective financial
condition. The charges are reflected in net realized gain (loss) on investments
in the statements of operations.
Fair value is generally based on quoted market prices. However, AECC's
investment portfolio also contains structured investments of various asset
quality, which are not readily marketable. As a result, the carrying values of
these structured investments are based on future cash flow projections that
require a significant degree of management judgment as to the amount and timing
of cash payments, defaults and recovery rates of the underlying investments and
as such, are subject to change.
First mortgage loans on real estate and other loans
First mortgage loans on real estate reflect principal amounts outstanding less
reserves for losses, which is the basis for determining realized gains (losses).
Estimated fair values of mortgage loans on real estate are determined by a
discounted cash flow analysis using mortgage interest rates currently offered
for mortgages of similar maturities. Other loans reflect amortized cost less
reserve for losses. Fair values of other loans represent estimated fair values
when quoted prices are not available.
F-12
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
The reserve for loan losses 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. Additionally, the level of the reserve account is determined based
on several factors, including historical experience and current economic and
political conditions. Management regularly evaluates the adequacy of the reserve
for loan losses, and believes it is adequate to absorb estimated losses in the
portfolio.
AECC generally stops accruing interest on mortgage loans on real estate 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.
Certificate Reserves
Investment certificates may be purchased either with a lump-sum payment or by
installment payments. Certificate product 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
Distribution fees on sales of certain series of certificate products are
deferred and amortized over the estimated lives of the related certificates,
which is approximately one year and can be up to 10 years. Upon surrender prior
to maturity, unamortized deferred distribution fees are reflected in expenses
and any related surrender charges are reflected as a reduction to the provision
expense for certificate reserves. Products are designed to recover such costs
within the surrender charge period.
Federal income taxes
AECC's taxable income (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 AEFC 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 AEFC and its subsidiaries that
AEFC will reimburse its subsidiaries for any tax benefits recorded.
Recently Issued Accounting Standards
In January 2003, the Financial Accounting Standards Board issued Interpretation
No. 46, "Consolidation of Variable Interest Entities" (FIN 46), which addresses
consolidation by business enterprises of variable interest entities (VIEs) and
was subsequently revised in December 2003. An entity is subject to consolidation
according to the provisions of FIN 46, if,
F-13
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
by design, either (i) the total equity investment at risk is not sufficient to
permit the entity to finance its activities without additional subordinated
financial support from other parties, or, (ii) as a group, the holders of the
equity investment at risk lack: (a) direct or indirect ability to make decisions
about an entity's activities; (b) the obligation to absorb the expected losses
of the entity if they occur; or (c) the right to receive the expected residual
returns of the entity if they occur. In general, FIN 46 requires a VIE to be
consolidated when an enterprise has a variable interest for which it is deemed
to be the primary beneficiary which means that it will absorb a majority of the
VIE's expected losses or receive a majority of the VIE's expected residual
return.
FIN 46 did not impact the accounting for $27 million in a minority-owned secured
loan trust (SLT) or $6 million in a collateralized debt obligation traunche
(solely supported by a portfolio of high yield bonds), both of which are managed
by third parties, as AECC is not the primary beneficiary. AECC has a 33 percent
ownership interest in the SLT, which provides returns to investors primarily
based on the performance of an underlying portfolio of high yield loans. The
aggregate fair value of the loans related to AECC's pro rata share of this
structure approximates $92.5 million. AECC's maximum exposure to loss as a
result of its investment in this SLT is represented by the carrying value, which
is $27 million at December 31, 2003.
In April 2003, the FASB issued Statement of Financial Accounting Standards Board
(SFAS) No. 149, "Amendment of Statement 133 on Derivative Instruments and
Hedging Activities" (SFAS No. 149). SFAS No. 149 amends and clarifies accounting
for derivative instruments embedded in other contracts, and for hedging
activities under SFAS No. 133. SFAS No. 149 is effective for contracts entered
into or modified and hedging relationships designated after June 30, 2003, and
to certain preexisting contracts. SFAS No. 149 did not have a material impact on
AECC's financial statements.
In November 2003, the FASB ratified a consensus on the disclosure provisions of
Emerging Issues Task Force (EITF) Issue 03-1, "The Meaning of
Other-Than-Temporary Impairment and its Application to Certain Investments". The
disclosure provisions of this rule, which are addressed in Note 3, require
tabular presentation of certain information regarding investment securities with
gross unrealized losses.
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 $4.8 billion and $4.5 billion at December 31, 2003 and 2002,
respectively. AECC reported Qualified Assets of $5.1 billion and $4.8 billion at
December 31, 2003 and 2002, respectively, excluding net unrealized pretax
appreciation on Available-for-Sale securities of $74 million and $135 million at
December 31, 2003 and 2002, respectively, and unsettled investment purchases of
$9 million and $264 million at December 31, 2003 and 2002, respectively.
Qualified Assets are valued in accordance with such provisions of Minnesota
Statutes as are applicable to investments of life insurance companies. These
values are the same as financial statement carrying values, except for debt
securities classified as Available-for-Sale and all
F-14
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
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 (accounted for on
a trade date basis) of AECC were deposited as follows:
December 31, 2003
--------------------------------------------------------
Required
(Thousands) Deposits Deposits Excess
- ----------------------------------------------------------------------------------------------------------------------------
Deposits to meet certificate liability requirements:
Pennsylvania (at market value) $ 162 $ 100 $ 62
Texas, Illinois, New Jersey (at par value) $ 215 $ 185 $ 30
Central Depository (at amortized cost) $5,004,553 $ 4,742,572 $ 261,981
- ----------------------------------------------------------------------------------------------------------------------------
December 31, 2002
--------------------------------------------------------
Required
(Thousands) Deposits Deposits Excess
- ----------------------------------------------------------------------------------------------------------------------------
Deposits to meet certificate liability requirements:
Pennsylvania (at market value) $ 166 $ 100 $ 66
Texas, Illinois, New Jersey (at par value) $ 215 $ 185 $ 30
Central Depository (at amortized cost) $5,020,340 $ 4,472,886 $ 547,454
- ----------------------------------------------------------------------------------------------------------------------------
The assets on deposit with the central depository at December 31, 2003 and 2002
consisted of securities and other loans having a deposit value of $4.6 billion
at both balance sheet dates, mortgage loans on real estate of $331 million and
$339 million, respectively, and other investments of $74 million and $73
million, respectively. Additionally, these assets on deposit include unsettled
purchases of investments in the amount of $9 million and $264 million at
December 31, 2003 and 2002, respectively.
American Express Trust Company is the central depository for AECC. See Note 7.
3. INVESTMENTS IN UNAFFILIATED ISSUERS
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, among other things, review
of market indexes, price levels of current offerings and comparable issues,
price estimates, estimated future cash flows, and market data from independent
brokers.
F-15
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
Investments classified as Available-for-Sale securities at December 31 are
distributed by type as presented below:
2003
-----------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(Thousands) Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------------------------
Mortgage and asset-backed securities $ 2,605,686 $ 35,954 $ (10,975) $ 2,630,665
Corporate debt securities 1,710,353 53,497 (7,762) 1,756,088
Stated maturity preferred stock 44,340 1,178 (34) 45,484
Structured Investments 32,592 1,788 - 34,380
Perpetual preferred stock 17,782 270 - 18,052
U.S. Government & agency obligations 15,355 350 - 15,705
State and municipal obligations 9,539 6 (214) 9,331
Common Stock - 21 - 21
- ---------------------------------------------------------------------------------------------------------------------
Total $ 4,435,647 $ 93,064 $ (18,985) $ 4,509,726
- ---------------------------------------------------------------------------------------------------------------------
2002
-----------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(Thousands) Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------------------------
Mortgage and asset-backed securities $ 2,938,348 $ 94,528 $ (1,728) $ 3,031,148
Corporate debt securities 1,172,446 53,394 (15,540) 1,210,300
Stated maturity preferred stock 82,554 1,876 (383) 84,047
Structured Investments 33,470 2,175 - 35,645
Perpetual preferred stock 17,782 266 - 18,048
State and municipal obligations 9,424 385 - 9,809
U.S. Government & agency obligations 362 37 - 399
- ---------------------------------------------------------------------------------------------------------------------
Total $ 4,254,386 $ 152,661 $ (17,651) $ 4,389,396
- ---------------------------------------------------------------------------------------------------------------------
F-16
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
The following table provides information about Available-for-Sale securities
with gross unrealized losses and the length of time that individual securities
have been in a continuous unrealized loss position as of December 31, 2003:
(Thousands) Less than 12 months 12 months or more Total
- ------------------------------------------------------------------------------------------------------------------------
Description of Securities Fair Value Unrealized Fair Value Unrealized Fair Value Unrealized
Losses Losses Losses
- ------------------------------------------------------------------------------------------------------------------------
Corporate debt securities $ 444,318 $ (7,147) $ 15,789 $ (615) $ 460,107 $ (7,762)
Mortgage and other
asset-backed securities
1,006,572 (9,513) 13,742 (1,462) 1,020,314 (10,975)
State and
municipal
obligations 8,790 (214) - - 8,790 (214)
Other - - 454 (34) 454 (34)
- ------------------------------------------------------------------------------------------------------------------------
Total $ 1,459,680 $ (16,874) $ 29,985 $ (2,111) $ 1,489,665 $ (18,985)
========================================================================================================================
Approximately 114 investment positions were in an unrealized loss position as of
December 31, 2003. The gross unrealized losses on these securities are
attributable to a number of factors including changes in interest rates and
credit spreads, and specific credit events associated with individual issuers.
As part of its ongoing monitoring process, management has concluded that none of
these securities are other-than-temporarily impaired at December 31, 2003. AECC
has the ability and intent to hold these securities for a time sufficient to
recover its amortized cost. See the Available-for-Sale Investments section of
Note 1 for information regarding AECC's policy for determining when an
investment's decline in value is other-than-temporary.
F-17
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
The amortized cost and fair value of Available-for-Sale securities, by
contractual maturity at December 31, 2003 are shown below. Cash flows may differ
from contractual maturities because issuers may call or prepay obligations.
Amortized Fair
(Thousands) Cost Value
- --------------------------------------------------------------------------------
Due within one year $ 136,654 $ 138,877
Due from one to five years 1,302,466 1,343,323
Due from five to ten years 370,043 374,833
Due in more than ten years 3,016 3,955
- --------------------------------------------------------------------------------
$ 1,812,179 $ 1,860,988
Mortgage and asset-backed securities 2,605,686 2,630,665
Perpetual preferred stock 17,782 18,052
Common Stock - 21
- --------------------------------------------------------------------------------
Total $ 4,435,647 $ 4,509,726
- --------------------------------------------------------------------------------
Mortgage and other asset-backed securities primarily reflect GNMA, FNMA, and
FHLMC securities at December 31, 2003 and 2002.
Gross realized gains on sales of securities classified as Available-for-Sale,
using the specific identification method, were $47.1 million, $23.4 million and
$20.7 million for the years ended December 31, 2003, 2002 and 2001,
respectively. Gross realized losses on sales were ($2.8 million), ($15.7
million) and ($83.9 million) for the same periods. AECC also recognized losses
of ($36 million), ($15.8 million) and ($27.9 million) in other-than-temporary
impairments on Available-for-Sale securities for the years ended December 31,
2003, 2002 and 2001, respectively.
AECC's net losses in 2001 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 were associated with AECC'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.
F-18
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
Investments in securities with fixed maturities comprised 90 percent and 85
percent of AECC's total investments at December 31, 2003 and 2002, respectively.
Securities are rated by Moody's and Standard & Poors (S&P), or by AEFC's
internal analysts, using criteria similar to Moody's and S&P, when a public
rating does not exist. Ratings are presented using S&P's convention and if the
two agency's ratings differ, the lower rating is used. A summary of investments
in securities with fixed maturities, at amortized cost, by rating of investment
is as follows:
Rating 2003 2002
- --------------------------------------------------------------------------------
AAA 60% 69%
AA 2 1
A 16 11
BBB 18 16
Below investment grade 4 3
- --------------------------------------------------------------------------------
Total 100% 100%
- --------------------------------------------------------------------------------
Of the securities rated AAA, 94 percent at December 31, 2003 and 2002, are U.S.
Government Agency mortgage-backed securities that are rated by a public rating
agency. At December 31, 2003 and 2002, approximately 6 percent and 9 percent,
respectively, of securities with fixed maturities, other than U.S. Government
Agency mortgage-backed securities, are rated by AEFC's internal analysts.
At December 31, 2003 and 2002 no one issuer, other than U.S. Government Agency
mortgage-backed securities, is greater than 1 percent 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. AECC's board
of directors, using the aforementioned procedures and factors, determine fair
values of such restricted securities.
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.
F-19
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
4. INVESTMENTS IN FIRST MORTGAGE LOANS ON REAL ESTATE AND OTHER LOANS
The carrying amounts and fair values of first mortgage loans on real estate and
other loans at December 31 are below
2003 2002
--------------------------------------------------------------------------
Carrying Fair Carrying Fair
(Thousands) Amount Value Amount Value
- ------------------------------------------------------------------------------------------------------------------
First mortgage loans on real estate $ 337,489 $ 355,442 $ 342,147 $ 366,198
Other loans 141,356 138,356 114,319 113,319
Reserve for losses (9,536) - (4,223) -
- ------------------------------------------------------------------------------------------------------------------
Net first mortgage and other loans $ 469,309 $ 493,798 $ 452,243 $ 479,517
- ------------------------------------------------------------------------------------------------------------------
During the year ended December 31, 2003, AECC held investments in impaired
mortgage or other loans totaling $9.9 million. AECC recognized $0.4 million of
interest income related to such investments for the year ended December 31,
2003. AECC did not hold any investments in impaired mortgage loans or other
loans during 2002 and 2001.
The reserve for loss on mortgage loans and other loans increased to $9.5 million
on December 31, 2003, from $4.2 million at December 31, 2002 and $1.9 million at
December 31, 2001.
F-20
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
At December 31, 2003 and 2002, approximately 7 percent, 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 of the United States of America 2003 2002
- --------------------------------------------------------------------------------
South Atlantic 18% 18%
West North Central 15 15
East North Central 12 13
Mountain 10 13
West South Central 17 17
Pacific 16 12
New England 7 6
Middle Atlantic 5 6
- --------------------------------------------------------------------------------
Total 100% 100%
- --------------------------------------------------------------------------------
Property Type 2003 2002
- --------------------------------------------------------------------------------
Office buildings 42% 41%
Retail/shopping centers 23 20
Apartments 10 14
Industrial buildings 14 15
Other 11 10
- --------------------------------------------------------------------------------
Total 100% 100%
- --------------------------------------------------------------------------------
At December 31, 2003 and 2002, commitments for funding of first mortgage loans
on real estate, at market interest rates, aggregated $9.8 million and $13.4
million, 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 first mortgage loans on real estate is restricted to
80 percent or less of the market value of the real estate at the time of the
loan funding. Fair values for these commitments were not substantial at December
31, 2003 and 2002.
F-21
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
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:
2003
-----------------------------------------------------
Average Average
Gross Additional
Reserve Accumulation Credit
(Dollars in Thousands) Balance Rates Rates
- -----------------------------------------------------------------------------------------------------------------------
Installment certificates:
Reserves to mature:
With guaranteed rates $ 11,153 4.00% .50%
Without guaranteed rates (a) 134,899 - .80%
Additional credits and accrued interest 3,514 3.22% -
Advance payments and accrued interest (b) 499 3.35% -
Other 32 - .32%
Fully paid certificates:
Reserves to mature:
With guaranteed rates 90,149 3.21% .01%
Without guaranteed rates (a) and (c) 4,483,365 - .53%
Additional credits and accrued interest 64,114 3.05% -
Due to unlocated certificate holders 92
- --------------------------------------------------------------------------------
Total $ 4,787,817
- --------------------------------------------------------------------------------
F-22
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
2002
-----------------------------------------------------
Average Average
Gross Additional
Reserve Accumulation Credit
(Dollars in Thousands) Balance Rates Rates
- -----------------------------------------------------------------------------------------------------------------------
Installment certificates:
Reserves to mature:
With guaranteed rates $ 12,663 3.50% .50%
Without guaranteed rates (a) 156,294 - 1.04%
Additional credits and accrued interest 3,988 3.20% -
Advance payments and accrued interest (b) 564 3.30% -
Other 34 - .18%
Fully paid certificates:
Reserves to mature:
With guaranteed rates 95,941 3.20% .01%
Without guaranteed rates (a) and (c) 4,181,407 - .73%
Additional credits and accrued interest 42,311 3.08% -
Due to unlocated certificate holders 170 - -
- --------------------------------------------------------------------------------
Total $ 4,493,372
- --------------------------------------------------------------------------------
(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) Certain series of installment certificates guarantee accrual of interest on
advance payments at an average of 3.26 percent. AECC's rate of accrual is
currently set at 4 percent, which is in effect through April 30, 2004.
(c) American Express Stock Market Certificate, American Express Market Strategy
Certificate and American Express Equity Indexed Savings Certificates 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 52 weeks and may continue for up to 20 successive terms. The
reserve balance on these certificates at December 31, 2003 and 2002 was
$1.3 million and $1 million, respectively.
Certificate maturities and surrenders through loan reductions during the years
ended December 31, 2003 and 2002 were $2.4 million and $3.1 million,
respectively.
On certain series of single payment certificates, additional interest is
pre-declared for periods greater than one year. The retained earnings
appropriated for the pre-declared additional interest at December 31, 2003 and
2002 was $184 thousand and $811 thousand, respectively, which reflects the
difference between certificate reserves on these series, calculated on a
statutory basis, and the reserves maintained per books.
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.
F-23
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
The carrying amounts and fair values of certificate reserves at December 31,
consisted of the following:
2003 2002
---------------------------------------------------------------------
Carrying Fair Carrying Fair
(Thousands) Amount Value Amount Value
- ------------------------------------------------------------------------------------------------------------------------
Reserves with terms of one year or less $ 4,322,321 $ 4,320,182 $ 4,007,664 $ 4,005,622
Other 465,496 471,427 485,708 497,689
- ------------------------------------------------------------------------------------------------------------------------
Total certificate reserves $ 4,787,817 $ 4,791,609 $ 4,493,372 $ 4,503,311
Unapplied certificate transactions 3,499 3,499 801 801
Certificate loans and accrued interest (15,798) (15,798) (18,824) (18,824)
- ------------------------------------------------------------------------------------------------------------------------
Total $ 4,775,518 $ 4,779,310 $ 4,475,349 $ 4,485,288
- ------------------------------------------------------------------------------------------------------------------------
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 one percent on such series of certificates have
been authorized by AECC. This restriction has been removed for 2003 and 2004 by
AECC's declaration of additional credits in excess of this requirement.
7. RELATED PARTY TRANSACTIONS
Investment advisory, joint facilities, technology support, and treasury services
The investment advisory and services agreement with AEFC provides for a
graduated scale of fees equal on an annual basis to 0.750 percent on the first
$250 million of total book value of assets of AECC, 0.650 percent on the next
$250 million, 0.550 percent on the next $250 million, 0.500 percent on the next
$250 million and 0.107 percent 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 and other loans, real estate and any other asset on which AECC pays an
outside advisory or service fee. The fee paid to AEFC for managing and servicing
bank loans is 0.35 percent.
Distribution services
Fees payable to AEFAI on sales of AECC's certificates are based upon terms of
agreements giving AEFAI 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 AEFAI may be
lowered. There were no changes to the distribution fees
F-24
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
for the promotion of the American Express Flexible Savings Certificate, which
occurred March 26, 2003 to May 13, 2003.
The aggregate fees payable under the agreements is $25 per $1,000 face amount of
installment certificates sold on or after April 30, 1997. The aggregate fees
payable for the first year is $2.50 and the remaining $22.50 aggregate fees is
payable over nine subsequent years.
Fees on the American Express Investors Certificate are paid at an annualized
rate of 1 percent 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,
twelve, twenty-four or thirty-six month term.
Fees on the American Express Preferred Investors Certificate are paid at a rate
of 0.165 percent of the initial payment on issue date of the certificate and
0.165 percent of the certificate's reserve at the beginning of the second and
subsequent quarters from issue date.
Effective April 26, 2000, fees on the American Express Flexible Savings
Certificate are paid at a rate of 0.08 percent of the purchase price at the time
of issuance and 0.08 percent 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 percent of the purchase price at time of issuance and 0.20 percent
of the reserves maintained for these certificates at the beginning of the second
and subsequent quarters from issue date.
Effective April 25, 2001 fees on the American Express Cash Reserve Certificate
are paid at a rate of 0.0625 percent of the purchase price at the time of
issuance and 0.0625 percent 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 percent of the
purchase price at the time of issuance and 0.20 percent of the reserves
maintained for these certificates 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 AEFAI, and American Express Market Strategy Certificates are paid at a
rate of 0.90 percent. For certificates sold from April 30, 1997 to April 27,
1999, fees were paid at the rate of 0.70 percent. 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 percent. For certificates sold from April 28, 1999 to April 25,
2000, fees were paid at the rate of 1.00 percent. For certificates sold from
April 30, 1997 to April 27, 1999, fees were paid at a rate of 1.25 percent. 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.
F-25
Fees on the American Express Equity Indexed Savings Certificates are paid at a
rate of 1.00 percent of the initial investment on the first day of each
certificate's term and 1.00 percent 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
Maintenance charge for assets held 50 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.
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 on an
annualized basis is 1.25 percent of the reserves maintained for the certificates
on an amount from $100,000 to $249,999, 0.80 percent on an amount from $250,000
to $499,999, 0.65 percent on an amount from $500,000 to $999,999 and 0.50
percent 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 six, twelve,
twenty-four, or thirty-six month terms.
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.
F-26
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
Dividends
In 2001, AECC effectively paid a $167 million dividend to AEFC by transferring
at book value certain CDOs. In part, the dividend was paid to allow AEFC to
transfer the CDOs and related accrued interest into a securitization trust.
8. INCOME TAXES
Income tax (expense) benefit as shown in the Statements of Operations for the
three years ended December 31 consists of:
(Thousands) 2003 2002 2001
- -----------------------------------------------------------------------------------------------------------------
Federal:
Current $(44,777) $(24,367) $ 26,007
Deferred 17,804 3,288 9,792
- -----------------------------------------------------------------------------------------------------------------
(26,973) (21,079) 35,799
State (1,354) (156) (120)
- -----------------------------------------------------------------------------------------------------------------
Total income tax (expense) benefit $(28,327) $(21,235) $ 35,679
- -----------------------------------------------------------------------------------------------------------------
Income tax (expense) benefit differs from that computed by using the federal
statutory rate of 35%. The principal causes of the difference in each year are
shown below:
(Thousands) 2003 2002 2001
- -----------------------------------------------------------------------------------------------------------------
Federal tax (expense) benefit at federal statutory
rate $(28,449) $(23,581) $ 30,752
Dividend exclusion 998 2,462 4,971
Other, net 478 40 76
- -----------------------------------------------------------------------------------------------------------------
Federal tax (expense) benefit $(26,973) $(21,079) $ 35,799
- -----------------------------------------------------------------------------------------------------------------
F-27
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
Deferred income taxes result from the net tax effects of temporary 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, were:
(Thousands) 2003 2002
- ------------------------------------------------------------------------------------------------------------
Deferred tax assets
Certificate reserves $ 18,454 $ 1,793
Investments 34,425 14,649
Purchased/written call options - 689
Other, net 140 245
- ------------------------------------------------------------------------------------------------------------
Total deferred tax assets $ 53,019 $ 17,376
- ------------------------------------------------------------------------------------------------------------
Deferred tax liabilities
Investment unrealized gains, net $ 23,814 $ 44,720
Deferred distribution fees 2,259 2,091
Purchased/written call options 17,501 -
Other, net 124 121
- ------------------------------------------------------------------------------------------------------------
Total deferred tax liabilities 43,698 46,932
- ------------------------------------------------------------------------------------------------------------
Net deferred tax assets (liabilities) $ 9,321 $(29,556)
- ------------------------------------------------------------------------------------------------------------
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.
Net income taxes paid during the years ended December 31, 2003 and 2002 were
$71.6 million and $22.2 million, respectively.
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. AECC
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 Offering Rate (LIBOR) as the
certificate products reset at shorter intervals than the average maturity of the
investment portfolio. AECC's goal is to manage
F-28
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
interest rate sensitivity by modifying the length of the interest crediting rate
reset interval on certificate products so that movements in interest rates do
not adversely affect the interest credited to such certificate products. 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 interest rate
fluctuations 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 counterparties 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 other comprehensive income. Amounts are reclassified from other comprehensive
income to investment income 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 years ended December 31, 2003 and 2002, AECC recognized no losses on the
derivatives as a result of ineffectiveness. AECC reclassified into earnings
pretax losses of ($5.3 million) and ($9.8 million) during 2003 and 2002,
respectively. An estimated ($6 million) of the unrealized losses accumulated in
other comprehensive income related to derivatives designated as cash flow hedges
will be reclassified into earnings by December 31, 2004. 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 14 months.
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. The
adoption of SFAS No. 133 on January 1, 2001, resulted in a cumulative after-tax
reduction of $0.4 million and $2.2 million to net income and other comprehensive
income, respectively.
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
F-29
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
equity market sensitivity, such that earnings are not exposed to undue risk
presented by changes in equity market levels.
On the same series of certificates, AECC also purchases futures on the major
market index to economically 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
is reflected in certificate reserves. Gains (losses) on options and futures are
reflected in investment income on the statements of operations. Changes in fair
values of embedded derivative instruments are reflected in provision expense for
certificate product reserves.
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. AECC 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, cash flow and
income effects of such derivatives generally offset effects of the underlying
certificate product reserves.
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.
F-30
Notes to Financial Statements
AMERICAN EXPRESS CERTIFICATE COMPANY
A summary of fair values of financial instruments as of December 31, is as
follows:
2003 2002
----------------------------------------------------------------
Carrying Fair Carrying Fair
(Thousands) Value Value Value Value
- ----------------------------------------------------------------------------------------------------------------------
Financial assets:
Assets for which carrying values
approximate fair values $ 101,105 $ 101,105 $ 298,870 $ 298,870
Investment securities (Note 3) $ 4,509,726 $ 4,509,726 $ 4,389,396 $ 4,389,396
First mortgage loans on real estate and
Other loans (Note 4) $ 469,309 $ 493,798 $ 452,243 $ 479,517
Derivative financial instruments (Note 9) $ 153,162 $ 153,162 $ 34,403 $ 34,403
Financial liabilities:
Liabilities for which carrying values
approximate fair values $ 24,444 $ 24,444 $ 315,961 $ 315,961
Net certificate reserves (Note 5) $ 4,775,518 $ 4,779,310 $ 4,475,349 $ 4,485,288
Derivative financial instruments (Note 9) $ 116,680 $ 116,680 $ 29,579 $ 29,579
- ----------------------------------------------------------------------------------------------------------------------
F-31
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE I
Investments of Securities in Unaffiliated Issuers
At December 31, 2003
(Thousands)
Bal Held at 12/31/03 Principal Value at
Amt of Bonds & Notes or # of Cost 12/31/03
Issuer Name and Issuer Title Shares (Notes a & c) (Note a)
- ------------------------------------------ ------------------------------- --------------------- --------------
BONDS AND NOTES
U.S. Government
U.S. Government-Direct Obligations
FANNIE MAE 2008 4.000% 15,000 14,992 15,317
US TREASURY 2004 5.875% 165 164 172
US TREASURY 2006 5.625% 200 199 216
---------------------------------------------------------------
Total - U.S. Government-Direct
Obligations 15,365 15,355 15,705
---------------------------------------------------------------
Total - U.S. Government 15,365 15,355 15,705
---------------------------------------------------------------
Mortgage Backed Securities
AERCO LIMITED - ABS 2023 2.513% 12,585 1,888 1,951 (b)
ARG FUNDING CORP 2007 1.599% 3,500 3,500 3,499 (d)
BANC AMERICA LARGE LOAN 2016 6.119% 3,978 3,978 4,295 (d)
BANC AMERICA LARGE LOAN 2011 1.960% 8,213 8,213 7,096
BANK ONE CORPORATION 2011 3.860% 13,400 13,397 13,540
BEAR STEARNS SECURED INVSTRS 2040 4.000% 8,652 8,698 8,639
CAPITAL ONE AUTO FINANCE TRUST 2009 3.320% 10,000 10,195 10,184
CDC COMMERCIAL MORTGAGE TRUST 2019 5.252% 9,401 9,444 9,885
CENTEX HOME EQUITY 2029 6.470% 10,000 10,026 10,432
CENTEX HOME EQUITY 2031 3.750% 14,000 13,675 13,573
CHASE COMMERCIAL MORT SEC 2029 6.450% 197 196 199
CHASE MORTGAGE FINANCE CORP 2029 6.500% 1,606 1,602 1,640
CMC SECURITIES CORP - ABS 2031 6.490% 10,000 11,367 11,125
DLJ COMMERCIAL MORTGAGE CORP 2032 7.120% 7,341 7,356 7,960
FANNIE MAE 2011 6.000% 17,125 17,059 17,704
FANNIE MAE 2014 6.000% 9,534 9,473 10,023
FANNIE MAE 2028 5.625% 11,505 11,482 11,762
FANNIE MAE 2030 6.000% 1,706 1,704 1,731
FANNIE MAE 2042 5.000% 12,500 12,562 13,006
FANNIE MAE 2042 5.000% 15,000 15,021 15,601
FANNIE MAE 2022 5.000% 14,868 15,111 15,416
FANNIE MAE 2013 4.055% 8,315 8,315 8,351
FANNIE MAE 2033 4.550% 14,947 14,733 14,878
FANNIE MAE 105989 2020 6.353% 442 464 457
FANNIE MAE 190726 2033 4.825% 1,816 1,857 1,869
FANNIE MAE 249907 2024 4.250% 1,565 1,587 1,588
FANNIE MAE 250670 2011 7.000% 642 645 689
FANNIE MAE 250671 2011 7.500% 2,146 2,148 2,307
FANNIE MAE 250857 2012 7.000% 1,915 1,910 2,056
FANNIE MAE 252259 2014 5.500% 125 123 130
FANNIE MAE 252344 2014 5.500% 8,931 8,721 9,351
FANNIE MAE 252381 2014 5.500% 8,656 8,440 9,003
FANNIE MAE 254010 2008 5.500% 3,309 3,303 3,393
FANNIE MAE 254195 2017 5.500% 12,764 12,731 13,243
FANNIE MAE 254508 2012 5.000% 23,475 24,004 24,268
FANNIE MAE 254584 2012 5.000% 35,864 36,491 37,074
FANNIE MAE 254586 2013 5.000% 54,800 56,194 56,650
FANNIE MAE 254590 2018 5.000% 38,904 39,232 39,725
F-32
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE I
Investments of Securities in Unaffiliated Issuers
At December 31, 2003
(Thousands)
Bal Held at 12/31/03 Principal Value at
Amt of Bonds & Notes or # of Cost 12/31/03
Issuer Name and Issuer Title Shares (Notes a & c) (Note a)
- ------------------------------------------ ------------------------------- --------------------- --------------
FANNIE MAE 254591 2018 5.500% 23,605 24,450 24,487
FANNIE MAE 254663 2013 5.000% 7,669 7,797 7,928
FANNIE MAE 254719 2018 4.500% 132,046 133,276 132,294
FANNIE MAE 254720 2018 4.500% 101,016 101,551 101,206
FANNIE MAE 303115 2004 6.500% 149 148 151
FANNIE MAE 303259 2025 3.498% 1,289 1,325 1,303
FANNIE MAE 303445 2009 5.500% 4,063 3,947 4,230
FANNIE MAE 303970 2024 6.000% 6,199 6,116 6,448
FANNIE MAE 313042 2011 7.000% 1,592 1,596 1,709
FANNIE MAE 313522 2012 7.000% 3,740 3,756 3,996
FANNIE MAE 313561 2012 8.000% 2,249 2,284 2,411
FANNIE MAE 323290 2013 6.000% 344 342 362
FANNIE MAE 323748 2014 6.500% 5,518 5,403 5,853
FANNIE MAE 323833 2014 6.000% 2,886 2,859 3,033
FANNIE MAE 36225 2016 9.000% 13 13 15
FANNIE MAE 367005 2012 7.000% 1,349 1,341 1,441
FANNIE MAE 40877 2017 9.000% 24 24 26
FANNIE MAE 50973 2009 6.000% 6,255 6,157 6,586
FANNIE MAE 509806 2014 6.500% 2,229 2,207 2,364
FANNIE MAE 51617 2017 10.000% 13 13 14
FANNIE MAE 545249 2016 5.500% 17,025 17,094 17,664
FANNIE MAE 545303 2016 5.000% 14,715 14,500 15,028
FANNIE MAE 545400 2017 5.500% 21,639 21,531 22,451
FANNIE MAE 545492 2022 5.500% 5,656 5,598 5,788
FANNIE MAE 545679 2022 5.500% 12,594 12,258 12,889
FANNIE MAE 545786 2032 5.697% 4,363 4,383 4,476
FANNIE MAE 555366 2018 4.500% 158,653 160,128 159,009
FANNIE MAE 555724 2018 4.500% 14,609 14,537 14,653
FANNIE MAE 566074 2031 5.723% 3,398 3,396 3,487
FANNIE MAE 584507 2031 5.900% 3,366 3,351 3,493
FANNIE MAE 584829 2016 6.000% 5,998 5,953 6,298
FANNIE MAE 585743 2016 5.500% 15,452 15,530 16,032
FANNIE MAE 616220 2016 5.000% 13,140 12,887 13,419
FANNIE MAE 617270 2017 5.000% 14,225 14,048 14,526
FANNIE MAE 620293 2032 5.484% 7,661 7,589 7,921
FANNIE MAE 622462 2016 5.500% 11,364 11,223 11,790
FANNIE MAE 623866 2017 5.000% 14,185 14,146 14,486
FANNIE MAE 625943 2017 5.000% 20,107 20,053 20,532
FANNIE MAE 626925 2018 4.500% 5,966 6,021 5,979
FANNIE MAE 651629 2032 5.338% 8,491 8,507 8,666
FANNIE MAE 653342 2032 5.365% 4,061 4,078 4,171
FANNIE MAE 654158 2032 5.014% 6,799 6,814 7,000
FANNIE MAE 654195 2032 4.937% 5,708 5,713 5,820
FANNIE MAE 655646 2032 5.747% 5,024 5,032 5,149
FANNIE MAE 655798 2032 5.262% 10,290 10,270 10,476
FANNIE MAE 661349 2032 5.445% 6,013 6,029 6,112
FANNIE MAE 661501 2032 5.206% 4,973 4,997 5,071
FANNIE MAE 661744 2032 5.379% 8,618 8,658 8,756
FANNIE MAE 664521 2032 5.124% 7,439 7,475 7,593
FANNIE MAE 664750 2032 4.989% 6,428 6,445 6,584
FANNIE MAE 670731 2032 5.307% 8,048 8,081 8,292
FANNIE MAE 670779 2032 5.191% 8,468 8,527 8,600
F-33
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE I
Investments of Securities in Unaffiliated Issuers
At December 31, 2003
(Thousands)
Bal Held at 12/31/03 Principal Value at
Amt of Bonds & Notes or # of Cost 12/31/03
Issuer Name and Issuer Title Shares (Notes a & c) (Note a)
- ------------------------------------------ ------------------------------- --------------------- --------------
FANNIE MAE 670890 2032 4.744% 11,192 11,241 11,433
FANNIE MAE 670912 2032 5.072% 8,371 8,401 8,620
FANNIE MAE 670947 2032 4.706% 12,070 12,136 12,329
FANNIE MAE 677680 2018 4.500% 43,219 43,624 43,316
FANNIE MAE 685479 2018 4.500% 33,206 33,446 33,282
FANNIE MAE 694852 2033 5.041% 10,896 11,092 11,075
FANNIE MAE 70007 2017 3.417% 297 301 302
FANNIE MAE 701161 2018 4.500% 26,609 26,801 26,670
FANNIE MAE 70117 2017 3.168% 116 117 118
FANNIE MAE 701269 2018 4.500% 26,765 26,959 26,826
FANNIE MAE 703991 2018 4.500% 26,980 27,172 27,042
FANNIE MAE 704592 2018 5.000% 17,020 17,611 17,381
FANNIE MAE 70694 2005 9.500% 90 90 95
FANNIE MAE 708635 2018 5.000% 12,133 12,551 12,390
FANNIE MAE 708646 2018 4.500% 15,992 16,042 16,029
FANNIE MAE 722779 2033 4.412% 14,877 14,911 15,042
FANNIE MAE 730652 2018 4.500% 24,087 24,474 24,143
FANNIE MAE 73227 2005 6.700% 782 782 835
FANNIE MAE 733525 2033 3.936% 18,403 17,634 17,887
FANNIE MAE 739194 2033 5.110% 9,644 9,673 9,773
FANNIE MAE 743856 2033 4.751% 4,988 4,995 4,969
FANNIE MAE 758873 2033 4.500% 10,000 9,884 9,930
FANNIE MAE 88879 2019 6.563% 435 440 437
FANNIE MAE 89125 2019 2.626% 1,423 1,454 1,446
FREDDIE MAC 2030 5.500% 13,233 13,140 13,685
FREDDIE MAC 2030 5.500% 12,770 12,731 13,069
FREDDIE MAC 2030 5.500% 8,730 8,704 8,892
FREDDIE MAC 2021 5.250% 19,435 19,418 19,857
FREDDIE MAC 2022 5.500% 22,498 23,046 22,501
FREDDIE MAC 2022 5.500% 20,588 20,928 21,421
FREDDIE MAC 2022 5.500% 58,667 59,691 60,295
FREDDIE MAC 2022 5.500% 16,141 16,437 16,797
FREDDIE MAC 2022 5.500% 72,912 74,431 75,117
FREDDIE MAC 2022 5.000% 15,278 15,547 15,694
FREDDIE MAC 2023 5.500% 21,345 21,895 22,206
FREDDIE MAC 2022 5.500% 60,000 61,529 61,313
FREDDIE MAC 2022 5.500% 144,438 147,977 149,187
FREDDIE MAC 2022 5.500% 54,912 56,380 56,985
FREDDIE MAC 2022 5.000% 25,000 25,602 25,353
FREDDIE MAC 1B0183 2031 5.497% 5,471 5,402 5,574
FREDDIE MAC 350190 2022 3.375% 631 656 637
FREDDIE MAC 405014 2019 3.512% 147 148 148
FREDDIE MAC 405092 2019 3.675% 361 358 364
FREDDIE MAC 405185 2018 3.915% 469 467 474
FREDDIE MAC 405243 2019 3.510% 164 165 166
FREDDIE MAC 405360 2019 3.410% 218 221 220
FREDDIE MAC 405437 2019 3.275% 156 155 157
FREDDIE MAC 405455 2019 3.700% 226 229 228
FREDDIE MAC 405615 2019 2.966% 287 291 289
FREDDIE MAC 502175 2004 10.500% 0 0 0
FREDDIE MAC 605041 2019 3.267% 28 28 28
FREDDIE MAC 605048 2018 3.255% 161 161 162
F-34
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE I
Investments of Securities in Unaffiliated Issuers
At December 31, 2003
(Thousands)
Bal Held at 12/31/03 Principal Value at
Amt of Bonds & Notes or # of Cost 12/31/03
Issuer Name and Issuer Title Shares (Notes a & c) (Note a)
- ------------------------------------------ ------------------------------- --------------------- --------------
FREDDIE MAC 605432 2017 3.213% 161 161 162
FREDDIE MAC 605433 2017 3.294% 320 321 323
FREDDIE MAC 605454 2017 3.061% 897 893 904
FREDDIE MAC 606024 2019 2.914% 471 466 474
FREDDIE MAC 606025 2019 2.770% 1,349 1,353 1,359
FREDDIE MAC 630074 2018 4.625% 110 109 112
FREDDIE MAC 780514 2033 5.042% 22,869 23,486 23,068
FREDDIE MAC 780845 2033 4.557% 9,801 9,519 9,779
FREDDIE MAC 780903 2033 4.581% 10,018 9,923 9,975
FREDDIE MAC 785363 2025 4.290% 650 658 669
FREDDIE MAC 785619 2026 3.625% 319 321 332
FREDDIE MAC 785634 2026 3.419% 396 396 408
FREDDIE MAC 788941 2031 5.624% 2,736 2,694 2,808
FREDDIE MAC 840031 2019 3.536% 37 37 38
FREDDIE MAC 840035 2019 3.453% 147 146 150
FREDDIE MAC 840036 2019 3.286% 328 330 337
FREDDIE MAC 840072 2019 3.444% 464 463 471
FREDDIE MAC 845154 2022 3.452% 537 557 555
FREDDIE MAC 845523 2023 3.405% 496 511 509
FREDDIE MAC 845654 2024 3.952% 1,183 1,201 1,207
FREDDIE MAC 845730 2023 3.513% 1,980 2,051 2,030
FREDDIE MAC 845733 2024 3.651% 2,047 2,084 2,103
FREDDIE MAC 846072 2029 3.594% 758 777 779
FREDDIE MAC 846107 2025 3.875% 787 801 831
FREDDIE MAC 865008 2018 5.938% 1,050 1,071 1,087
FREDDIE MAC C90581 2022 5.500% 7,182 7,127 7,344
FREDDIE MAC C90582 2022 5.500% 4,673 4,639 4,779
FREDDIE MAC E00151 2007 7.500% 561 568 595
FREDDIE MAC E00383 2010 7.000% 1,884 1,880 2,010
FREDDIE MAC E00388 2010 7.000% 1,132 1,120 1,208
FREDDIE MAC E00426 2011 6.500% 1,174 1,164 1,244
FREDDIE MAC E00484 2012 6.500% 949 929 1,005
FREDDIE MAC E01140 2017 6.000% 21,518 22,272 22,581
FREDDIE MAC E76761 2014 6.500% 4,257 4,192 4,531
FREDDIE MAC E77557 2014 6.500% 390 382 413
FREDDIE MAC E80594 2014 6.500% 360 352 383
FREDDIE MAC E90153 2017 6.000% 5,790 6,026 6,076
FREDDIE MAC E90154 2017 6.000% 14,608 15,205 15,329
FREDDIE MAC E91041 2017 5.000% 14,363 14,388 14,642
FREDDIE MAC E91491 2012 5.000% 8,511 8,709 8,769
FREDDIE MAC E93341 2012 5.000% 25,916 26,800 26,565
FREDDIE MAC E95403 2018 5.000% 10,792 11,190 11,001
FREDDIE MAC E95556 2013 4.500% 8,712 9,011 8,752
FREDDIE MAC E95562 2013 4.500% 14,550 15,043 14,616
FREDDIE MAC E95671 2018 5.000% 15,969 16,509 16,288
FREDDIE MAC E96172 2013 4.500% 45,584 47,233 46,315
FREDDIE MAC G10364 2010 7.000% 2,182 2,172 2,329
FREDDIE MAC G10369 2010 6.500% 5,643 5,587 5,988
FREDDIE MAC G10439 2011 6.500% 593 582 629
FREDDIE MAC G10665 2012 7.000% 7,532 7,514 8,032
FREDDIE MAC G10949 2014 6.500% 2,922 2,883 3,110
FREDDIE MAC G11004 2015 7.000% 1,027 1,022 1,100
F-35
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE I
Investments of Securities in Unaffiliated Issuers
At December 31, 2003
(Thousands)
Bal Held at 12/31/03 Principal Value at
Amt of Bonds & Notes or # of Cost 12/31/03
Issuer Name and Issuer Title Shares (Notes a & c) (Note a)
- ------------------------------------------ ------------------------------- --------------------- --------------
FREDDIE MAC G11193 2016 5.000% 11,016 10,855 11,234
FREDDIE MAC G11298 2017 5.000% 14,973 15,003 15,263
FREDDIE MAC G30227 2023 5.500% 14,651 15,249 14,982
GMAC MORTGAGE SECURITIES INC 2029 6.451% 1,570 1,568 1,601
GOVERNMENT NATIONAL MORTGAGE A 2018 2.578% 9,690 9,625 9,602
GOVERNMENT NATIONAL MORTGAGE A 2025 3.815% 15,152 15,052 15,177
GOVERNMENT NATIONAL MORTGAGE A 2030 5.750% 5,859 5,845 5,982
GOVERNMENT NATIONAL MORTGAGE A 8157 2023 4.375% 1,030 1,049 1,050
GOVERNMENT NATIONAL MORTGAGE A 8206 2017 4.375% 376 371 384
GOVERNMENT NATIONAL MORTGAGE A 8240 2017 4.750% 184 176 187
GOVERNMENT NATIONAL MORTGAGE A 8251 2017 4.750% 15 14 15
GOVERNMENT NATIONAL MORTGAGE A 8274 2017 5.625% 544 534 553
GOVERNMENT NATIONAL MORTGAGE A 8283 2017 5.625% 75 73 76
GOVERNMENT NATIONAL MORTGAGE A 8293 2017 5.625% 144 141 147
GOVERNMENT NATIONAL MORTGAGE A 8341 2018 4.375% 46 45 47
GOVERNMENT NATIONAL MORTGAGE A 8353 2018 4.375% 269 263 275
GOVERNMENT NATIONAL MORTGAGE A 8365 2018 4.375% 389 375 397
GOVERNMENT NATIONAL MORTGAGE A 8377 2018 4.750% 144 139 146
GOVERNMENT NATIONAL MORTGAGE A 8428 2018 5.625% 65 64 66
GOVERNMENT NATIONAL MORTGAGE A 8440 2018 5.625% 220 217 224
GOVERNMENT NATIONAL MORTGAGE A 8638 2025 4.375% 1,144 1,154 1,166
GREEN TREE ACCEPTANCE - ABS 2018 7.700% 3,709 3,505 3,071
GREENWICH CAPITAL DERIVATIVES 2013 3.357% 4,520 4,519 4,568
JP MORGAN CHASE COMM MORT SEC 2033 5.288% 3,725 3,721 3,854
KSL RECREATION GROUP INC 2013 2.220% 7,000 7,000 7,000
LEHMAN BROTHERS - ABS 2035 5.870% 2,909 2,910 3,036
LEHMAN BROTHERS - ABS 2026 5.969% 7,500 7,525 8,182
LEHMAN BROTHERS - ABS 2026 4.904% 7,500 7,528 7,899
LEHMAN BROTHERS - ABS 2026 4.023% 5,500 5,522 5,599
LEHMAN BROTHERS - ABS 2027 3.636% 14,892 14,965 15,099
LIFT - LEASE INVESTMENT FLIGHT 2016 1.593% 3,942 3,942 3,642
MERRILL LYNCH MORTGAGE INVSTRS 2033 4.086% 10,000 9,981 10,233
MORGAN - J.P. COMM MTGE FIN CO 2030 6.373% 78 78 78
MORGAN - J.P. COMM MTGE FIN CO 2035 6.180% 5,528 5,536 5,941
MORGAN STANLEY 2039 5.380% 5,762 5,818 6,125
MORGAN STANLEY 2035 4.090% 3,928 3,927 4,038
MORGAN STANLEY 2035 5.160% 2,500 2,509 2,651
MORGAN STANLEY MORTGAGE TRUST 2030 6.590% 4,757 4,759 4,830
MORGAN STANLEY MORTGAGE TRUST 2030 6.250% 475 474 487
MORGAN STANLEY MORTGAGE TRUST 2040 3.270% 9,736 9,782 9,403
MORGAN STANLEY MTG TRUST - CMO 2005 7.562% 2,500 2,499 2,738 (d)
NPF XII INC - ABS 2003 1.539% 10,000 1,700 1,700 (b)(d)(e)
RESIDENTIAL ASSET SECURITIES 2027 6.390% 735 732 736
SHEARSON LEHMAN PASS-THROUGH 2004 6.875% 249 248 251 (d)
TRIZEC PROPERTIES INC 2013 6.522% 5,000 4,998 5,331 (d)
WASHINGTON MUTUAL INC 2033 3.930% 10,000 10,000 10,078
WASHINGTON MUTUAL INC 2033 3.990% 7,500 7,499 7,414
WASHINGTON MUTUAL INC 2034 3.961% 12,500 12,499 12,441
WESTERN FINANCIAL SV 2008 2.250% 5,000 5,000 5,013
---------------------------------------------------------------
Total - Mortgage Backed Securities 2,597,992 2,605,686 2,630,666
---------------------------------------------------------------
F-36
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE I
Investments of Securities in Unaffiliated Issuers
At December 31, 2003
(Thousands)
Bal Held at 12/31/03 Principal Value at
Amt of Bonds & Notes or # of Cost 12/31/03
Issuer Name and Issuer Title Shares (Notes a & c) (Note a)
- ------------------------------------------ ------------------------------- --------------------- --------------
Municipal Bonds
California
CALIFORNIA HSG FIN AGY SGL FAM 2016 7.890% 475 475 477
---------------------------------------------------------------
Total - California 475 475 477
---------------------------------------------------------------
New Jersey
NEW JERSEY STATE TRNPK AUTH 2009 3.140% 4,000 4,000 3,931
---------------------------------------------------------------
Total - New Jersey 4,000 4,000 3,931
---------------------------------------------------------------
New York
NEW YORK CITY GO - LT 2008 3.000% 5,000 5,004 4,859
---------------------------------------------------------------
Total - New York 5,000 5,004 4,859
---------------------------------------------------------------
Pennsylvania
WYOMING VALLEY PA SANI AUTH WT 2007 5.125% 60 60 63
---------------------------------------------------------------
Total - Pennsylvania 60 60 63
---------------------------------------------------------------
Total - Municipal Bonds 9,535 9,539 9,330
---------------------------------------------------------------
Corporate Debt Securities
Corporate - Finance
ALLIANCE CAPITAL MGMT -LP 2006 5.625% 12,500 12,462 13,313
ALLSTATE CORP 2006 5.375% 5,000 4,990 5,361
ALLSTATE CORP 2008 4.250% 5,000 4,991 5,108 (d)
AMB PROPERTY CORP 2005 7.200% 5,000 4,997 5,466
AMERICAN GENERAL FINANCE CORP 2007 4.500% 7,500 7,483 7,790
AMERICAN GENERAL FINANCE CORP 2008 2.750% 7,500 7,410 7,210
AON CORP 2004 6.900% 3,000 3,000 3,070
ASSOCIATED BANC CORP 2007 3.700% 6,000 5,950 6,086
BANK OF AMERICA CORP 2010 7.800% 5,000 5,905 5,946
BANK OF NEW YORK CO INC 2007 5.200% 7,000 7,079 7,499
BANK OF NEW YORK CO INC 2009 3.625% 10,000 9,973 9,967
BANK ONE NA 2008 3.700% 19,000 19,199 19,232
BANKAMERICA CORP 2009 5.875% 5,000 5,416 5,478
BANKAMERICA CORP 2004 6.625% 5,000 4,999 5,119
BANKNORTH GROUP INC 2008 3.750% 6,150 6,210 6,108
BEAR STEARNS 2008 4.000% 10,000 10,490 10,185
BERKSHIRE HATHAWAY 2008 3.375% 17,500 17,441 17,417 (d)
CAPITAL ONE BANK 2006 6.875% 8,800 9,270 9,520
CITIGROUP INC 2010 7.250% 6,500 7,567 7,576
COUNTRYWIDE FUNDING CORP 2004 5.250% 10,000 9,996 10,170
COUNTRYWIDE HOME LOANS 2006 5.500% 5,000 4,986 5,345
CREDIT SUISSE FIRST BOSTON INC 2008 4.625% 15,000 15,375 15,615
CREDIT SUISSE FIRST BOSTON INC 2009 3.875% 2,000 2,000 1,998
ERAC USA FINANCE COMPANY 2004 6.950% 9,000 9,004 9,073 (d)
FIFTH THIRD BANCORP 2008 3.375% 12,000 11,897 11,970
FIRST UNION CORP 2004 6.625% 3,000 2,999 3,070
FLEET BOSTON FINANCIAL CORP 2007 4.200% 11,000 11,157 11,359
FLEET FINANCIAL GROUP INC. 2005 7.250% 2,900 3,148 3,153
FORD MOTOR CREDIT CO 2006 6.875% 5,000 5,048 5,337
GOLDMAN SACHS GROUP INC 2005 7.625% 10,000 10,256 10,930
GOLDMAN SACHS GROUP INC 2012 6.600% 10,000 10,160 11,175
HERTZ CORP 2004 1.710% 10,000 10,000 9,976
HOUSEHOLD FINANCE CORP 2006 6.500% 2,000 1,998 2,163
HOUSEHOLD FINANCE CORP 2008 4.625% 12,000 12,329 12,474
HOUSEHOLD INTERNATIONAL 2007 5.750% 5,000 4,929 5,406
JP MORGAN CHASE & COMPANY 2008 4.000% 10,000 10,046 10,174
F-37
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE I
Investments of Securities in Unaffiliated Issuers
At December 31, 2003
(Thousands)
Bal Held at 12/31/03 Principal Value at
Amt of Bonds & Notes or # of Cost 12/31/03
Issuer Name and Issuer Title Shares (Notes a & c) (Note a)
- ------------------------------------------ ------------------------------- --------------------- --------------
KELLOGG UK HOLDING CO LIMITED 2006 4.490% 8,400 8,400 8,692 (d)
KEY BANK OF NY 2008 7.500% 9,000 10,740 10,440
LEHMAN BROTHERS HLDGS 2006 6.250% 10,000 9,990 10,853
LEHMAN BROTHERS HLDGS 2008 4.000% 5,000 5,192 5,089
LEHMAN BROTHERS HLDGS 2010 4.375% 8,500 8,430 8,351
MARSH & MCLENNAN COMPANIES IN 2008 3.625% 5,000 4,990 5,012
MARSHALL & ILSLEY CORP 2006 5.750% 10,000 9,996 10,885
MBNA AMERICA BANK NA 2005 7.750% 6,000 5,991 6,543
MBNA CORP 2008 4.625% 5,000 4,993 5,134
MERRILL LYNCH & CO INC 2009 4.750% 10,000 9,982 10,343
MERRILL LYNCH & CO INC 2008 3.700% 7,500 7,717 7,549
MERRILL LYNCH & CO INC 2010 4.500% 2,000 2,010 2,019
MERRILL LYNCH AIG CBO 2010 2.490% 6,500 0 0 (b)(e)
MERRILL LYNCH ELLIOTT & PAIGE 2010 2.601% 11,000 0 0 (b)(d)(e)
METLIFE INC 2005 3.911% 10,000 10,139 10,284
MGIC INVESTMENT CORP/WI 2005 7.500% 7,000 6,989 7,638
MORGAN STANLEY 2006 6.100% 5,000 4,998 5,411
MORGAN STANLEY 2007 5.800% 5,000 4,990 5,423
MORGAN STANLEY 2008 3.625% 5,000 5,017 5,007
NATIONWIDE BLDG SOCIETY 2009 4.000% 5,000 4,989 5,041
NATWEST - NATIONAL WESTMINSTER 2009 7.375% 12,650 14,927 14,943
O'N'E' LOAN TRUST 2007 2.170% 25,000 27,092 27,790 (b)(d)
OLD NATIONAL BANCORP 2008 3.500% 7,000 6,980 6,880
POPULAR NA INC 2008 4.250% 12,500 12,461 12,711
POPULAR NA INC 2008 3.875% 2,500 2,504 2,495
SAFECO CORP 2010 4.875% 6,000 5,972 6,165
SIMON DEBARTOLO GROUP INC. 2007 7.125% 10,000 10,176 11,340
SLM CORP 2008 3.625% 15,000 15,038 14,936
SOUTHERN COMPANY FUNDING 2007 5.300% 6,500 6,493 7,013
SOVEREIGN BANCORP INC 2005 10.200% 3,189 3,189 3,421 (d)
ST PAUL COMPANIES 2007 5.750% 7,000 6,984 7,535
SUNTRUST BANKS INC 2007 5.050% 7,500 7,498 8,085
TIAA GLOBAL MARKETS 2008 3.875% 7,500 7,494 7,630 (d)
TRAVELERS PROPERTY CASUALTY 2008 3.750% 5,000 4,989 5,011
UNION PLANTERS CORP 2007 5.125% 5,000 4,999 5,311
US BANCORP 2008 3.125% 5,000 4,887 4,931
US BANK NA 2011 6.375% 10,000 11,030 11,139
WACHOVIA BANK 2005 7.450% 5,000 5,000 5,420
WACHOVIA BANK 2006 4.950% 6,000 5,993 6,370
WASHINGTON MUTUAL INC 2006 7.500% 1,400 1,395 1,569
WASHINGTON MUTUAL INC 2008 4.375% 12,980 13,277 13,344
WASHINGTON MUTUAL SAVINGS BANK 2011 6.875% 1,500 1,695 1,701
WAYLAND INVESTMENT FUND LLC 2004 7.790% 5,000 5,000 5,179 (d)
WELLS FARGO & CO 2007 5.125% 5,000 5,000 5,334
WELLS FARGO & CO 2008 3.500% 5,000 4,995 5,016
WELLS FARGO & CO 2011 6.450% 4,000 4,470 4,491
---------------------------------------------------------------
Total - Corporate - Finance 619,469 615,251 632,310
---------------------------------------------------------------
F-38
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE I
Investments of Securities in Unaffiliated Issuers
At December 31, 2003
(Thousands)
Bal Held at 12/31/03 Principal Value at
Amt of Bonds & Notes or # of Cost 12/31/03
Issuer Name and Issuer Title Shares (Notes a & c) (Note a)
- ------------------------------------------ ------------------------------- --------------------- --------------
Corporate - Industrial
ABITIBI CONSOLIDATED INC 2005 8.300% 3,250 3,250 3,445
ALCOA INC 2007 4.250% 10,000 9,975 10,387
AMERICAN AIRLINES 2008 6.400% 1,505 226 1,444 (b)(d)
AMERICAN AIRLINES 2008 6.400% 1,040 156 999 (b)(d)
AMERICAN AIRLINES 2008 6.400% 1,535 230 1,473 (b)(d)
AMERICAN AIRLINES 2008 6.400% 855 128 821 (b)(d)
AMERICAN AIRLINES 2008 6.400% 855 128 821 (b)(d)
AMERICAN AIRLINES 2008 6.400% 855 128 821 (b)(d)
AMERICAN STANDARD COMPANIES 2008 7.375% 2,000 1,941 2,210
ANADARKO PETRO CORP 2008 3.250% 10,000 10,122 9,820
AOL TIME WARNER 2007 6.150% 8,000 8,664 8,704
APOGENT TECHNOLOGIES INC 2013 6.500% 1,500 1,554 1,564
ARCH COAL INC 2013 6.750% 1,000 1,022 1,028 (d)
ASHLAND INC 2005 7.830% 1,100 1,100 1,176
BALL CORP 2012 6.875% 2,000 2,065 2,090
BRITISH SKY BROADCASTING 2009 6.875% 1,500 1,461 1,684
BURLINGTON NORTHERN SANTA FE C 2005 6.375% 5,000 4,999 5,397
BURLINGTON NORTHERN SANTA FE C 2010 7.125% 5,000 5,796 5,788
CABLEVISION SYSTEMS - NY GRP - 2007 7.875% 2,500 2,416 2,638
CADBURY SCHWEPPES US 2008 3.875% 12,500 12,465 12,443 (d)
CAMPBELL SOUP CO. 2008 5.875% 6,000 6,757 6,578
CARNIVAL CORP 2007 3.750% 10,000 9,966 10,018 (d)
CASCADES INC 2013 7.250% 435 448 459
CASE CORP 2005 7.250% 1,500 1,550 1,564
CATERPILLAR FINANCE SERVICES L 2004 6.875% 5,000 4,997 5,157
CBD MEDIA/FINANCE INC 2011 8.625% 550 593 602 (d)
CHESAPEAKE ENERGY CORP 2013 7.500% 1,500 1,589 1,624
CINTAS CORP 2007 5.125% 2,000 2,000 2,138
COCA-COLA ENTERPRISES INC 2007 5.250% 10,000 9,963 10,735
COMCAST CABLEVISION 2006 6.375% 1,300 1,298 1,398
COMCAST CORP 2008 6.200% 15,000 16,392 16,460
CONAGRA FOODS INC 2005 7.500% 4,000 3,997 4,348
CONOCO FINANCIAL 2006 5.450% 3,000 3,096 3,219
CONOCO INC 2004 5.900% 7,500 7,499 7,594
COTT BEVERAGES INC 2011 8.000% 1,750 1,739 1,890
CSX CORP 2009 4.875% 8,000 8,112 8,245
CSX TRANSPORTATION INC 2007 7.450% 3,600 4,036 4,083
DAIMLER CHRYSLER NA - US 2006 6.400% 6,000 6,146 6,445
DAIMLER CHRYSLER NA - US 2008 4.750% 9,000 9,444 9,207
DEVON ENERGY CORPORATION 2004 6.750% 6,500 6,506 6,529
DEVON ENERGY CORPORATION 2004 8.050% 2,000 1,997 2,053
DEX MEDIA EAST 2010 8.500% 890 945 990 (d)
DIAGEO PLC 2007 3.500% 4,000 3,993 4,034
DIAGEO PLC 2004 6.625% 6,000 5,999 6,151
DIAGEO PLC 2008 3.375% 10,000 9,936 9,955
DISNEY COMPANY - THE WALT 2006 5.500% 10,000 10,043 10,723
DISNEY COMPANY - THE WALT 2007 5.375% 5,000 4,992 5,312
DOMINOS INC 2011 8.250% 500 527 540 (d)
DRS TECHNOLOGIES INC 2013 6.875% 1,800 1,823 1,850 (d)
ECHOSTAR DBS CORP 2008 5.750% 1,500 1,500 1,517 (d)
ECHOSTAR DBS CORP 2011 6.375% 1,000 1,000 1,028 (d)
F-39
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE I
Investments of Securities in Unaffiliated Issuers
At December 31, 2003
(Thousands)
Bal Held at 12/31/03 Principal Value at
Amt of Bonds & Notes or # of Cost 12/31/03
Issuer Name and Issuer Title Shares (Notes a & c) (Note a)
- ------------------------------------------ ------------------------------- --------------------- --------------
ENCORE ACQUISITION CO 2012 8.375% 1,000 1,062 1,083
EQUIFAX INC 2007 4.950% 4,000 3,994 4,184
EURAMAX INTERNATIONAL INC 2011 8.500% 1,000 1,048 1,065 (d)
FIRSTPLUS FINL GROUP - ABS 2023 42.594% 503 500 1,411 (b)(d)
FISHER SCIENTIFIC INTL INC 2013 8.000% 500 527 536
FISHER SCIENTIFIC INTL INC 2013 8.000% 1,000 1,074 1,073 (d)
FLEXTRONICS INTERNATIONAL 2013 6.500% 800 808 828
FORT JAMES CORP 2007 6.875% 1,000 1,028 1,055
GANNETT CO INC 2007 5.500% 10,000 9,952 10,770
GENERAL ELECTRIC CAP CORP 2008 3.500% 7,500 7,493 7,493
GENERAL ELECTRIC CAP CORP 2010 4.250% 2,000 1,990 1,986
GENERAL ELECTRIC CAP CORP 2007 5.375% 5,000 4,987 5,365
GENERAL ELECTRIC CAP CORP 2008 4.250% 4,000 3,980 4,120
GENERAL MILLS 2007 5.125% 7,300 7,575 7,754
GENERAL MOTORS ACCEPTANCE CORP 2008 5.125% 12,500 12,461 12,922
GEORGIA GULF CORP 2013 7.125% 1,200 1,228 1,248 (d)
GULFTERRA ENERGY PARTNERS LP 2010 6.250% 500 507 520
HALLMARK CARDS INC 2008 4.220% 10,000 10,000 9,957 (d)
HARRAH'S ENTERTAINMENT INC 2005 7.875% 2,000 2,036 2,175
HCA INC 2012 6.300% 1,800 1,827 1,856
HILTON HOTELS CORP 2009 7.200% 1,500 1,554 1,643
HMH PROPERTIES INC 2008 7.875% 1,200 1,242 1,248
HOLLINGER INTERNATIONAL PUBLIS 2010 9.000% 750 785 797
HORTON D R INC 2009 8.000% 2,000 1,993 2,260
HOST MARRIOTT CORP 2013 7.125% 1,000 1,000 1,033 (d)
INGERSOLL RAND 2004 5.800% 10,000 9,999 10,168
INTERNATIONAL PAPER COMPANY 2008 3.800% 15,000 15,098 14,953
INTERNATIONAL PAPER COMPANY 2009 4.250% 2,000 1,997 2,007
JC PENNEY INC 2015 6.875% 500 524 526
JOHN DEERE CAPITAL CORPORATION 2008 3.900% 15,000 15,152 15,255
JONES APPAREL GROUP INC 2004 7.500% 3,000 2,999 3,080
JONES APPAREL GROUP INC 2006 7.875% 2,000 1,997 2,224
KAUFMAN & BROAD HOME 2004 7.750% 3,000 2,997 3,075
KELLOGG CO. 2006 6.000% 5,150 5,461 5,518
KELLOGG CO. 2008 2.875% 5,000 4,999 4,843
KENDALL-JACKSON WINE ESTATES L 2009 2.411% 12,000 12,000 12,375 (d)
KEY ENERGY GROUP INC 2013 6.375% 1,000 944 1,015
KIRBY CORPORATION 2013 2.370% 15,000 15,000 15,036 (d)
KOPPERS CO 2013 9.875% 925 974 1,020 (d)
KRAFT FOODS INC 2006 4.625% 15,000 14,987 15,661
KRAFT FOODS INC 2008 4.000% 4,000 3,978 4,027
KROGER COMPANY 2006 8.150% 4,000 4,002 4,484
L-3 COMMUNICATIONS CORP 2013 6.125% 2,500 2,491 2,519
LAMAR ADVERTISING 2013 7.250% 745 771 801
LEAR CORP 2005 7.960% 1,500 1,502 1,605
LIBERTY MEDIA CORP 2006 3.500% 6,000 5,977 6,030
LIN TELEVISION CORP 2013 6.500% 1,000 978 1,001 (d)
LOCKHEED MARTIN CORPORATION. 2009 8.200% 16,000 19,481 19,430
LOUISIANA PACIFIC 2005 8.500% 1,000 995 1,080
MANITOWOC CO 2013 7.125% 1,575 1,611 1,628
MASCO CORP 2007 4.625% 5,000 4,991 5,219
MEDIA GENERAL 2006 6.950% 5,000 4,998 5,283
F-40
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE I
Investments of Securities in Unaffiliated Issuers
At December 31, 2003
(Thousands)
Bal Held at 12/31/03 Principal Value at
Amt of Bonds & Notes or # of Cost 12/31/03
Issuer Name and Issuer Title Shares (Notes a & c) (Note a)
- ------------------------------------------ ------------------------------- --------------------- --------------
MEDIANEWS GROUP INC 2013 6.875% 1,500 1,493 1,526 (d)
MGM MIRAGE INC 2009 6.000% 2,000 2,000 2,055
MOHEGAN TRIBAL GAMING AUTHORIT 2009 6.375% 1,500 1,518 1,549
MORRIS PUBLISHING 2013 7.000% 1,000 1,000 1,015 (d)
NALCO CHEMICAL 2011 7.750% 1,500 1,553 1,605 (d)
NEIGHBORCARE INC 2013 6.875% 500 505 509 (d)
NEWFIELD EXPLORATION CO 2011 7.625% 2,500 2,589 2,788
NEWS AMERICA HOLDINGS INC 2008 6.625% 13,750 15,487 15,293
NORAMPAC INC 2013 6.750% 2,000 1,958 2,085
NORTHROP GRUMMAN 2011 7.125% 5,000 5,663 5,783
NORTHWEST AIRLINES CORP 2011 6.841% 10,000 10,000 9,950
OCCIDENTAL PETROLEUM CORP 2008 7.375% 7,500 8,337 8,652
OFFSHORE LOGISTICS INC. 2013 6.125% 500 477 490
OMNICARE INC 2013 6.125% 1,750 1,783 1,759
OWENS-BROCKWAY GLASS 2011 7.750% 1,500 1,564 1,611
PACKAGING CORP OF AMERICA 2008 4.375% 3,250 3,236 3,251
PEABODY ENERGY CORP 2013 6.875% 2,500 2,597 2,638
PRAXAIR INC. 2008 2.750% 15,000 14,943 14,473
QUEBECOR WORLD INC 2006 7.200% 10,000 10,000 10,714 (d)
RAYTHEON COMPANY 2010 6.550% 1,655 1,897 1,826
RAYTHEON COMPANY 2010 6.000% 2,500 2,791 2,672
REPUBLIC SERVICES INC 2004 6.625% 5,000 4,998 5,088
RHODIA 2010 7.625% 500 516 480 (d)
RIO ALTO EXPLORATION LTD 2005 7.690% 9,000 9,000 9,759 (d)
RIO TINTO LTD 2008 2.625% 12,500 12,497 11,979
ROGERS CABLE SYSTEMS 2013 6.250% 1,500 1,524 1,511
SAFEWAY INC 2007 4.800% 5,000 4,993 5,193
SARA LEE CORP 2008 2.750% 15,000 14,954 14,500
SCHULER HOMES INC 2009 9.375% 1,000 1,000 1,125
SCOTTS COMPANY 2013 6.625% 1,500 1,532 1,538 (d)
SEAGATE TECHNOLOGY HOLDINGS 2009 8.000% 250 272 269
SHAW COMMUNICATIONS INC 2011 7.250% 750 784 811
SILGAN HOLDING 2013 6.750% 1,000 1,001 1,003 (d)
SINCLAIR BROADCAST GROUP INC. 2012 8.000% 500 529 540
SPX CORP 2011 6.250% 500 505 514
STANDARD PACIFIC CP 2008 6.500% 1,000 1,000 1,025
STANLEY WORKS 2007 3.500% 2,500 2,492 2,525
STARWOOD HOTELS AND RESORTS WO 2012 7.875% 500 556 563
STATION CASINOS INC. 2008 8.375% 1,500 1,509 1,609
SUSQUEHANNA MEDIA CO 2013 7.375% 1,000 1,039 1,043
TARGET CORP 2009 5.375% 6,150 6,386 6,592
TEKKAY SHIPPING CORP 2006 8.320% 1,500 1,505 1,575
TENET HEALTHCARE CORP. 2007 5.000% 2,500 2,484 2,419
TEREX CORPORATION 2014 7.375% 500 495 511 (d)
TEXTRON INC 2004 6.375% 3,000 2,998 3,078
THOMSON CORP 2009 4.250% 7,500 7,438 7,572
TIME WARNER ENTERTAINMENT CO 2006 6.125% 8,000 7,992 8,612
TOM BROWN 2013 7.250% 2 1,550 1,586
TOYOTA MOTOR CREDIT CORP 2008 2.875% 20,000 19,906 19,573
TRANS OCEAN CONTAINER CORP 2007 6.670% 4,124 4,117 4,454 (d)
TRANSDIGM INC 2011 8.375% 750 800 798
TRIAD HOSPITALS 2009 8.750% 500 542 542
F-41
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE I
Investments of Securities in Unaffiliated Issuers
At December 31, 2003
(Thousands)
Bal Held at 12/31/03 Principal Value at
Amt of Bonds & Notes or # of Cost 12/31/03
Issuer Name and Issuer Title Shares (Notes a & c) (Note a)
- ------------------------------------------ ------------------------------- --------------------- --------------
TTX COMPANY 2004 7.350% 4,000 4,000 4,170 (d)
UNION PACIFIC CORP 2004 5.840% 5,000 5,000 5,074
UNION PACIFIC CORP 2009 3.875% 6,000 5,985 5,974
UNION PACIFIC CORP 2010 3.625% 3,000 2,981 2,862
UNION TANK 2008 6.500% 2,754 2,752 2,931
UNITED AIR LINES INC 2010 7.032% 3,920 3,920 3,394
UNITED HEALTHCARE 2005 7.500% 6,000 5,991 6,587
UNITED RENTALS INC 2013 7.750% 1,250 1,243 1,288 (d)
UNITED STATES STEEL 2010 9.750% 1,500 1,590 1,703
USX CORP 2004 7.200% 10,000 10,007 10,057
VALERO ENERGY CORP 2007 6.125% 3,500 3,495 3,778
VALSPAR CORP 2007 6.000% 10,000 9,965 10,677
VIACOM INC 2007 5.625% 10,000 10,118 10,812
VIDEOTRON - LE GRPE LTD 2014 6.875% 1,000 1,022 1,030 (d)
VIN & SPIRIT AB - V&S 2008 3.570% 15,000 15,000 14,734 (d)
VIVENDI UNIVERSAL 2008 6.250% 1,070 1,102 1,132 (d)
WABTEC 2013 6.875% 1,000 1,017 1,036 (d)
WALMART STORES 2006 5.450% 10,000 10,175 10,766
WCI COMMUNITIES 2013 7.875% 1,810 1,860 1,910 (d)
WEYERHAEUSER CO 2008 5.950% 10,000 10,337 10,749
WYETH 2004 6.125% 5,000 5,000 5,045
WYETH 2006 6.500% 5,000 5,000 5,393
XTO ENERGY INC 2013 6.250% 1,500 1,542 1,583
---------------------------------------------------------------
Total - Corporate - Industrial 771,004 781,670 804,752
---------------------------------------------------------------
Corporate - Utility
AMERICAN ELECTRIC POWER 2006 6.125% 2,500 2,496 2,694
BELLSOUTH CORP 2010 7.750% 15,000 17,577 17,725
BRITISH TELECOMM/PP 2005 7.875% 12,500 13,046 13,775
CINCINNATI BELL INC 2013 7.250% 1,250 1,275 1,328 (d)
CINERGY CORP 2004 6.125% 4,000 4,000 4,048
CINGULAR WIRELESS LLC 2006 5.625% 5,000 4,989 5,363
CITIZENS COMMUNICATIONS COMPAN 2008 7.625% 2,591 3,026 2,837
CONSOLIDATED EDISON NY 2008 6.250% 6,000 6,642 6,592
CONSOLIDATED EDISON NY 2008 3.625% 9,000 8,974 8,974
CONSOLIDATED NAT GAS CO 2008 6.625% 5,700 6,372 6,388
CONSUMERS ENERGY 2008 6.375% 2,500 2,769 2,720
CONSUMERS ENERGY 2008 4.250% 9,500 9,805 9,576 (d)
DAYTON POWER & LIGHT CO 2011 6.875% 1,250 1,298 1,300
DEUTSCHE TELEKOM 2010 8.500% 8,250 10,058 9,975
DEUTSCHE TELEKOM 2008 3.875% 5,000 5,002 5,002
DTE ENERGY CO 2004 6.000% 10,000 9,997 10,163
DUKE ENERGY CORP. 2008 3.750% 4,500 4,501 4,516
DUKE ENERGY CORP. 2008 4.200% 10,000 10,083 10,044
ENERGY EAST CORP 2006 5.750% 7,500 7,474 8,005
FIRST ENERGY CORP 2006 5.500% 10,000 9,993 10,359
FPL FUELS INC 2006 2.340% 5,370 5,370 5,325 (d)
FPL FUELS INC 2006 2.340% 4,630 4,630 4,591 (d)
FRANCE TELECOM 2006 8.700% 2,850 2,956 3,183
KANSAS CITY POWER & LIGHT 2005 7.125% 10,000 10,212 10,893
KANSAS CITY POWER & LIGHT 2007 6.000% 4,000 3,994 4,274
MIDAMERICAN ENERGY HLDGS 2008 3.500% 9,500 9,487 9,340
NISOURCE INC 2006 3.200% 3,000 3,002 3,016
PACIFICORP 2008 4.300% 6,500 6,491 6,639
PECO ENERGY COMPANY 2008 3.500% 20,000 20,000 19,917
F-42
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE I
Investments of Securities in Unaffiliated Issuers
At December 31, 2003
(Thousands)
Bal Held at 12/31/03 Principal Value at
Amt of Bonds & Notes or # of Cost 12/31/03
Issuer Name and Issuer Title Shares (Notes a & c) (Note a)
- ------------------------------------------ ------------------------------- --------------------- --------------
PPL CORPORATION 2005 7.750% 3,000 2,999 3,191
PPL CORPORATION 2007 5.875% 6,135 6,759 6,695
PROGRESS ENERGY INC 2004 6.550% 2,500 2,500 2,519
PROGRESS ENERGY INC 2006 6.750% 2,100 2,099 2,277
PROGRESS ENERGY INC 2008 5.850% 10,000 9,997 10,756
PUB SERV CO OF COLORADO 2008 4.375% 1,830 1,863 1,877
PUGET ENERGY INC 2008 3.363% 3,500 3,500 3,391
SBC COMMUNICATIONS INC 2008 6.150% 7,000 7,817 7,697
SBC COMMUNICATIONS INC 2011 6.250% 7,000 7,645 7,663
SBC COMMUNICATIONS INC 2006 5.750% 5,000 5,088 5,365
SEMCO ENERGY INC 2008 7.125% 670 682 698
SOUTHWESTERN PUB SRV CO 2006 5.125% 7,000 6,989 7,385
SPRINT CAPITAL CORP 2008 6.125% 10,000 10,576 10,659
TAMPA ELECTRIC CO 2007 5.375% 3,785 4,101 4,023
TELEFONICA EUROPE 2005 7.350% 8,000 7,999 8,681
TELUS CORP ORD 2007 7.500% 6,500 7,086 7,274
TRANS CONTINENTAL GAS PIPELINE 2011 7.000% 500 541 533
VERIZON COMMUNICATIONS 2012 6.875% 4,000 4,422 4,426
VIRGINIA ELEC & PWR CO 2006 5.750% 4,675 4,667 5,006
VODAFONE GROUP PLC 2005 7.625% 10,000 10,070 10,658
VODAFONE GROUP PLC 2010 7.750% 4,400 5,344 5,209
VODAFONE GROUP PLC 2008 3.950% 3,500 3,543 3,556
WESTERN RESOURCES 2007 7.875% 2,448 2,713 2,736
WILLIAMS COMPANIES INC - THE 2007 7.550% 3,000 3,002 3,210
WISCONSIN ENERGY 2006 5.875% 10,000 9,976 10,661
WISCONSIN ENERGY 2008 5.500% 2,500 2,616 2,669
XCEL ENERGY 2010 4.750% 3,500 3,490 3,587
XCEL ENERGY 2008 3.400% 2,500 2,421 2,443
---------------------------------------------------------------
Total - Corporate - Utility 332,934 346,024 353,406
---------------------------------------------------------------
Total - Corporate Debt Securities 1,723,406 1,742,945 1,790,468
---------------------------------------------------------------
Total - BONDS AND NOTES 4,346,304 4,373,525 4,446,168
---------------------------------------------------------------
PREFERRED STOCK
Preferred Stock - Stated Maturity
Corporate - Industrial
BHP OPERATIONS 2006 6.760% 50 5,000 5,419 (d)
WHIRLPOOL CORP 2008 6.550% 9 902 929 (d)
---------------------------------------------------------------
Total - Corporate - Industrial 59 5,902 6,348
---------------------------------------------------------------
Corporate - Utility
APPALACHIAN POWER 2008 5.900% 5 468 454
APPALACHIAN POWER 2008 5.920% 6 561 562
CENTRAL ILLINOIS LIGHT COMPANY 2008 5.850% 35 3,499 3,514
INDIANA MICHIGAN PWR CO 2009 6.300% 52 5,224 5,421
INDIANA MICHIGAN PWR CO 2009 6.250% 20 2,000 2,065
INDIANA MICHIGAN PWR CO 2009 5.900% 33 3,186 3,302
LOUISVILLE GAS & ELECTRIC CO 2008 5.875% 11 1,139 1,154
OHIO POWER CO 2009 5.900% 36 3,567 3,632
POTOMAC ELECTRIC 2007 3.400% 146 7,279 7,351
RGS ENERGY GROUP INC 2009 6.600% 100 10,067 10,172
SAN DIEGO GAS & ELEC COMPANY 2008 1.763% 57 1,448 1,509
---------------------------------------------------------------
Total - Corporate - Utility 501 38,439 39,136
--------------------------------------------------------------
Total - Preferred Stock - Stated Maturity 559 44,340 45,484
--------------------------------------------------------------
Preferred Stock - Perpetual
Corporate - Finance
CITIBANK-NEW YORK NY 0.000% 100 10,000 10,100
CITIGROUP INC 5.860% 150 7,782 7,952
---------------------------------------------------------------
Total - Corporate - Finance 250 17,782 18,052
---------------------------------------------------------------
Total - Preferred Stock - Perpetual 250 17,782 18,052
---------------------------------------------------------------
Total - PREFERRED STOCK 809 62,122 63,536
--------------------------------------------------------------
F-43
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE I
Investments of Securities in Unaffiliated Issuers
At December 31, 2003
(Thousands)
Bal Held at 12/31/03 Principal Value at
Amt of Bonds & Notes or # of Cost 12/31/03
Issuer Name and Issuer Title Shares (Notes a & c) (Note a)
- ------------------------------------------ ------------------------------- --------------------- --------------
COMMON STOCK
Common Stock
Corporate - Industrial
AMR CORP 0.000% 2 0 21
Total - Corporate - Industrial 2 0 21
---------------------------------------------------------------
Total - Common Stock 2 0 21
---------------------------------------------------------------
Total - COMMON STOCK 2 0 21
---------------------------------------------------------------
TOTAL Investments in Securities of Unaffiliated Issuers 4,347,115 4,435,647 4,509,726
---------------------------------------------------------------
NOTES:
a) See Notes 1 and 3 to the financial statements regarding determination of
cost and fair values. All Available-for-Sale securities are carried at fair
value on the balance sheet.
b) In the absence of market quotations, securities are valued by AmEx
Certificate Company at fair value.
c) Aggregate cost of investment in securities of unaffiliated issuers for
federal income tax purposes was $4,494,887.
d) Securities acquired in private negotiation which may require registration
under federal securities law if they were to be publicly sold.
e) Non-income producing securities.
F-44
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE II
Investments in and Advances to Affiliates and Income Thereon
December 31, 2003, 2002 and 2001
(Thousands)
Balance December 31, 2003
------------------------------------------
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 ($45) ($45) $0
=================
Investors Syndicate Development Corporation:
Other.......................................... $0 4 4 0
=================
Other Affiliates (as defined in Sec. 2(a)(3) of the
Investment Company Act of 1940)...................... $0 0 0 0
================= ---------- ----------- --------------
Total affiliates................................. ($41) ($41) $0
========== =========== ==============
Balance December 31, 2002
------------------------------------------
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 (467) (467) 0
=================
Other Affiliates (as defined in Sec. 2(a)(3) of the
Investment Company Act of 1940)...................... $0 0 0 0
================= ---------- ----------- --------------
Total affiliates................................. ($45) ($45) $0
========== =========== ==============
F-45
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE II
Investments in and Advances to Affiliates and Income Thereon
December 31, 2003, 2002 and 2001
(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
========== =========== ==============
NOTES:
(a) The aggregate cost for federal income tax purposes was ($41), ($45), and
$422 at December 31, 2003, 2002, and 2001, respectively, 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.
F-46
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE III
Mortgage Loans on Real Estate and Interest
Earned on Mortgages
Year Ended December 31, 2003
(Thousands)
Mortgage loans on real estate at Part 2 - Interest
Part 1 - end of period earned on mortgages
-------- --------------------------------------- ---------------------
Amount of principal
unpaid at end of
period
--------------------
Average
gross
rate of
Carrying Interest interest
amount of Subject Amount due and on
mortgages to of accrued mortgages
Number Prior (c),(g), delinquent mortgages at end of held at end
Description (a) of liens (h) and interest being period of period
Loan No. Mortgagor Property Location loans (b) (i) Total (d) foreclosed (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 0 0 0 0 0 0.000%
$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 1 255 255 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%
21-47139 Treasure's Island Inc. Eagan, MN 1 1,170 1,170 0 0 8.25000
21-47157 John A. Belanich Tampa, FL 1 2,676 2,676 0 0 7.65000
21-47164 Center Hol Hamilton, OH 1 3,117 5,117 0 0 6.00000
21-47167 Wilder Corp of Delaware Ruskin, FL 1 5,649 5,649 0 0 7.44000
21-47168 Wilder Corp of Delaware Riverview, FL 1 3,028 3,028 0 0 7.44000
21-47173 Cinram Associates Fairfield, NJ 1 3,560 3,560 0 0 7.26000
21-47186 Mack Edison Company Edison, NJ 1 5,408 5,408 0 0 6.85000
21-47187 Industrial Development
Association Mebane, NC 1 2,603 2,603 0 0 7.22000
21-47195 Tipotex Inc. Pharr, TX 1 1,975 1,975 0 0 3.80000
21-47196 Tropic Star Pharr, TX 1 4,419 4,419 0 0 3.80000
21-47197 Winter Ranch Alamo, TX 1 1,012 1,012 0 0 3.80000
21-47204 Fort Walton Mary Esther, FL 1 2,669 2,669 0 0 7.04000
21-47205 Kavanagh Tucson, AZ 1 3,578 3,578 0 0 7.05000
21-47206 Artrisco Albuquerque, NM 1 3,761 4,761 0 0 6.00000
21-47209 Fountain Lake Brandeton, FL 1 5,289 5,289 0 0 6.40000
21-47210 Orion West Haven, CT 1 3,767 3,767 0 0 6.60000
21-47214 West Health Inc. Plymouth, MN 1 9,991 9,991 0 0 7.45000
21-47215 Invespro Urbandale, IA 1 3,014 3,014 0 0 6.25000
21-47216 Invespro Urbandale, IA 1 2,372 2,372 0 0 6.25000
21-47223 Westwood Plaza Houston, TX 1 5,494 5,494 0 0 6.15000
21-47224 Custer Office Plano, TX 1 2,531 2,531 0 0 6.00000
21-47225 Valley Mining Eagan, MN 1 1,386 1,386 0 0 7.21000
21-47226 Jake's LP Austin, TX 1 2,509 2,509 0 0 5.50000
21-47228 Lafayette Square Bridgeport, CT 1 3,941 3,941 0 0 7.14000
21-47230 Wilcrest Gree Houston, TX 1 1,870 1,870 0 0 7.08000
21-47232 DHIR Group LLC Milwaukee, WI 1 3,854 3,854 0 0 7.40000
21-47233 Capital Plaza Jefferson City, MO 1 1,884 1,884 0 0 7.15000
21-47234 Southwest Medical Littleton, CO 1 2,992 2,992 0 0 7.18000
21-47235 2507 & 2473 Assc Southport, CT 1 2,500 2,500 0 0 7.02000
21-47237 Abmar Valley Roanoke, VA 1 1,436 1,436 0 0 5.25000
21-47238 Cicero Place Cicero, IN 1 3,150 3,150 0 0 7.00000
21-47240 Crystal Plaza Baltimore, MD 1 3,640 3,640 0 0 7.02000
21-47241 Pal, Inc Sioux Falls, SD 1 991 991 0 0 7.05000
21-47242 Northpoint AT San Antonio, TX 1 4,322 4,322 0 0 7.33000
21-47243 Pam-Joy Realty Chesapeake. VA 1 2,780 2,780 0 0 6.96000
21-47245 Tide Mill Southport, CT 1 2,270 2,270 0 0 6.98000
21-47246 JLC, IX PF LTD Dallas, TX 1 892 892 0 0 7.01000
21-47248 HMJ Moorehead, MN 1 5,242 5,242 0 0 6.96000
21-47249 MIDEB Ventura, CA 1 4,625 4,625 0 0 6.75000
21-47250 Thomas Ribis Alexandria, VA 1 2,534 2,534 0 0 6.90000
21-47251 Arcadia Villa Phoenix, AZ 1 2,596 2,596 0 0 6.80000
21-47252 Broken Arrow Broken Arrow, OK 1 3,098 3,098 0 0 6.80000
F-47
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE III
Mortgage Loans on Real Estate and Interest
Earned on Mortgages
Year Ended December 31, 2003
(Thousands)
Mortgage loans on real estate at Part 2 - Interest
Part 1 - end of period earned on mortgages
-------- --------------------------------------- ---------------------
Amount of principal
unpaid at end of
period
--------------------
Average
gross
rate of
Carrying Interest interest
amount of Subject Amount due and on
mortgages to of accrued mortgages
Number Prior (c),(g), delinquent mortgages at end of held at end
Description (a) of liens (h) and interest being period of period
Loan No. Mortgagor Property Location loans (b) (i) Total (d) foreclosed (e) (f)
- ----------------------------------- ------------------ ------ ------ --------- ------ ----------- ---------- ---------- -----------
21-47253 Palo Verde Plaxa Phoenix, AZ 1 1,549 1,549 0 0 6.80000
21-47254 Village S. Tulsa, OK 1 3,234 3,234 0 0 6.80000
21-47255 Gaughan Forest Lake/
Stillwater, MN 1 4,777 4,777 0 0 6.83000
21-47256 Fremont Apts Rapid City, SD 1 952 952 0 0 6.75000
21-47257 American Bank Plaza Corpus Christi, TX 1 6,601 6,601 0 0 6.90000
21-47259 Anza Plaza Santa Clarita, CA 1 1,783 1,783 0 0 6.95000
21-47260 Eisenhower 3 Ann Arbor, MI 1 2,665 2,665 0 0 6.98000
21-47261 KKMP Properties Bloomington, MN 1 1,030 1,030 0 0 7.06000
21-47262 312 Third Street Fargo, ND 1 5,351 5,351 0 0 6.90000
21-47263 G.O.L.D Columbus, OH 1 2,028 2,028 0 0 6.95000
21-47264 Esnet Properties Orem, UT 1 1,807 1,807 0 0 6.81000
21-47265 Eaglecreek A Lakewood, CO 1 2,090 2,090 0 0 6.77000
21-47266 Independence Clarkston, MI 1 3,841 3,841 0 0 6.89000
21-47267 Blairhill LLC Charlotte, NC 1 1,284 1,284 0 0 6.91000
21-47268 Lemans Limited Seebring, FL 1 5,196 5,196 0 0 6.85000
21-47269 Hampton Inn Spokane, WA 1 3,726 3,726 0 0 7.15000
21-47270 Brookhollow-2 Houston, TX 1 2,591 2,591 0 0 6.80000
21-47271 Wilsonville Wilsonville, OR 1 1,605 1,605 0 0 6.85000
21-47272 Southeast Com Aurora, CO 1 1,824 1,824 0 0 6.44000
21-47273 Sears Bldg Rapid City, SD 1 777 777 0 0 6.85000
21-47274 Edison Towson, MD 1 1,092 1,092 0 0 6.85000
21-47275 Colorado & SA Colorado
Springs, CO 1 1,830 1,830 0 0 6.55000
21-47277 Alvernon Place Tucson, AZ 1 2,092 2,092 0 0 7.00000
21-47278 VL Grand Rdge Kennewick, WA 1 6,179 6,179 0 0 6.75000
21-47279 Daniel G Chetek, WI 1 1,920 1,920 0 0 7.25000
21-47281 Cleveland Shaker Heights, OH 1 2,213 2,213 0 0 7.00000
21-47282 Cary Bldg LP Springfield, VA 1 2,051 2,051 0 0 6.85000
21-47285 Equity One In Fort Meyers, FL 1 3,898 3,898 0 0 6.75000
21-47286 Silvercrest Las Vegas, NV 1 2,398 2,398 0 0 7.00000
21-47287 ML LTD Moen Rogers, MN 1 5,230 5,230 0 0 7.30000
21-47288 Hilde Plymouth, MN 1 1,827 1,827 0 0 6.85000
21-47289 Camp Morrison Newport News, VA 1 2,358 2,358 0 0 6.90000
21-47290 Oakcliff Doraville, GA 1 2,434 2,434 0 0 7.00000
21-47291 Truway Liverpool, NY 1 2,838 2,838 0 0 7.00000
21-47292 Desert Inn Las Vegas, NV 1 7,601 7,601 0 0 6.84000
21-47293 Julantru Corvallis, OR 1 4,105 4,105 0 0 6.75000
21-47294 Carolace Emb. Hope Mills, NC 1 1,417 1,417 0 0 7.00000
21-47295 Arabica, LLC Concord, OH 1 1,108 1,108 0 0 7.00000
21-47296 Viviani Painesville, OH 1 1,010 1,010 0 0 7.00000
21-47297 Viviani Concord, OH 1 1,699 1,699 0 0 7.00000
21-47298 Shiland Hills Rock Hill, SC 1 795 795 0 0 7.25000
21-47299 Crest Escondido, CA 1 2,113 2,113 0 0 7.00000
21-47303 1304 15th Santa Monica, CA 1 5,043 5,043 0 0 3.21375
21-47304 Memorial Six Houston, TX 1 6,951 6,951 0 0 6.40000
21-47306 Falls Towne FairviewPrk/
Cuyahoga Falls, OH 1 4,404 4,404 0 0 3.23000
21-47308 Wilder Clearwater, FL 1 6,065 6,065 0 0 6.18000
21-47309 Center Point III Arlington, TX 1 3,864 3,864 0 0 6.48000
21-47310 Hurley-Howe Sacramento, CA 1 5,580 5,580 0 0 3.11938
21-47311 Hurley-Howe Sacramento, CA 1 3,622 3,622 0 0 3.11938
21-47312 80 Central Street Boxborough, MA 1 7,691 7,691 0 0 3.36375
21-47313 J P Spec Orchard Park, NY 1 4,197 4,197 0 0 3.23000
21-47314 Gateway Bismark, ND 1 4,904 4,904 0 0 3.26938
21-47315 Deerbrook Humble, TX 1 6,796 6,796 0 0 3.36938
21-47316 Hudson Mill Hudson, MA 1 1,481 1,481 0 0 3.38000
21-47317 Oak Lawn Assoc Oak Lawn, IL 1 1,865 1,865 0 0 5.00000
21-47318 Pacific N'Wst Silverdale, WA 1 5,026 5,026 0 0 4.41000
21-47319 Ridc Plaza Pittsburgh, PA 1 1,993 1,993 0 0 4.93000
21-47320 Vander Hoek Kirland, WA 1 3,293 3,293 0 0 4.66000
21-47321 Thirty Fifth Clinton
Township, MI 1 7,000 7,000 0 0 3.81000
21-47323 Greit Bay Vie Alameda, CA 1 6,200 6,200 0 0 3.27000
--- --------- ------- -------- -------- -----------
Total Other 102 334,489 337,489 0 0 6.108%
---- --------- ------- -------- -------- -----------
Unallocated Reserve for Losses 3,536
---------
Total First Mortgage Loans on Real Estate 102 330,953 337,489 $0 $0 6.108%
==== ========= ======= ======== ======== ==========
F-48
AMERICAN EXPRESS CERTIFICATE COMPANY
Mortgage Loans on Real Estate
Year Ended December 31, 2003
(Thousands)
Part 3 - Location of mortgaged properties SCHEDULE III
- -----------------------------------------
(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 4 9,815 9,815 0 0
California 7 28,965 28,965 0 0
Colorado 4 8,738 8,738 0 0
Connecticut 4 12,477 12,477 0 0
Florida 8 34,469 34,469 0 0
Georgia 1 2,434 2,434 0 0
Iowa 2 5,386 5,386 0 0
Ilinois 1 1,865 1,865 0 0
Indiana 1 3,150 3,150 0 0
Massachusetts 2 9,173 9,173 0 0
Maryland 2 4,732 4,732 0 0
Michigan 3 13,506 13,506 0 0
Minnesota 8 30,652 30,652 0 0
Missouri 1 1,884 1,884 0 0
Nevada 2 9,999 9,999 0 0
New Jersey 2 8,968 8,968 0 0
New Mexico 1 3,761 4,761 0 0
New York 2 7,035 7,035 0 0
North Carolina 4 6,412 6,412 0 0
North Dakota 2 10,255 10,255 0 0
Ohio 6 14,473 16,473 0 0
Oklahoma 2 6,332 6,332 0 0
Oregon 2 5,710 5,710 0 0
Pennsylvania 1 1,993 1,993 0 0
South Carolina 1 795 795 0 0
South Dakota 3 2,719 2,719 0 0
Texas 14 51,826 51,826 0 0
Utah 1 1,807 1,807 0 0
Virginia 5 11,159 11,159 0 0
Washington 4 18,225 18,225 0 0
Wisconsin 2 5,774 5,774 0 0
--- ------- ------- ------ ------
102 334,489 337,489 0 0
--- ------- ------- ------ ------
Unallocated Reserve
for Losses 3,536
-----
Total 102 $330,953 $337,489 $0 $0
=== ======== ======== ====== ======
F-49
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE III
Mortgage Loans on Real Estate and Interest
Earned on Mortgages
Year Ended December 31, 2003
(Thousands)
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 AECC 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, 2003 are shown by type and class of
loan.
The average gross interest rates on mortgage loans held at December 31,
2003, 2002, and 2001 are summarized as follows:
2003 2002 2001
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 6.108 6.613 6.978
-------- -------- --------
Combined average 6.108% 6.613% 6.978%
======== ======== ========
(g) Following is a reconciliation of the carrying amount of mortgage loans for
the years ended December 31, 2003, 2002 and 2001.
2003 2002 2001
Balance at beginning of period $338,924 $343,434 $358,575
New loans acquired:
Nonaffiliated companies 43,030 45,128 16,356
Reserve for loss reversal 0 0 0
-------- -------- --------
Total additions 43,030 45,128 16,356
-------- -------- --------
381,954 388,562 374,931
-------- -------- --------
Deductions during period:
Collections of principal 47,688 48,349 30,306
Reserve for loss 3,313 1,289 1,191
-------- -------- --------
Total deductions 51,001 49,638 31,497
-------- -------- --------
Balance at end of period $330,953 $338,924 $343,434
======== ======== ========
(h) The aggregate cost of mortgage loans for federal income tax purposes at
December 31, 2003 was $337,489.
(i) At December 31, 2003, an unallocated reserve for loss on first mortgage
loans of $3,536 is recorded.
F-50
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE V
Qualified Assets on Deposit
December 31, 2003
(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 $50 $0 $0 $0 $50
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 114 0 0 0 114
-------------- -------------- ----------- ----------- -------------
Total deposits with states or their
depositories to meet requirements of
statutes and agreements 363 0 0 0 363
Central depository - American
Express Trust Company 4,537,526 62,122 330,953 73,953 5,004,554
-------------- -------------- ----------- ----------- -------------
Total $4,537,889 $62,122 $330,953 $73,953 $5,004,917
============== ============== =========== =========== =============
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.
F-51
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE VI
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2003
(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)
----------- -------------- ---------- ----------- ----------- ---------- ----------- ----------
Installment certificates:
Reserves to mature:
Series 15, includes extended maturities
15, " " " 0 0 0 0 0 0
20, " " " 0 0 0 0 0 0
15A, " " " 0 0 0 0 0 0
22A, " " " 4.00 367 8,787 7,533 205 77 67
I-76, " " " 4.00 327 7,319 5,130 169 123 9
Reserve Plus Flex Payment 70 670 314 0 27 2
IC-Q-Installment 29 406 99 0 14 1
IC-Q-Ins 205 2,431 1,072 0 126 6
IC-Q-Ins Emp 2 23 16 0 1 0
IC-I 14,947 244,184 120,405 0 22,496 2,382
IC-I-Emp 87 1,290 1,096 0 314 24
Inst 9,056 0 31,048 0 16,004 234
Inst-E 51 0 134 0 81 2
RP-Q-Installment 59 875 536 0 10 3
RP-Q-Flexible Payment 5 65 49 0 0 0
RP-Q-Ins 6 278 56 0 2 0
RP-Q-Ins Emp 0 0 1 0 0 0
RP-I 69 1,706 932 0 58 15
RP-I-EMP 0 0 0 0 0 0
Inst-R & RP I95 165 12,826 385 0 480 3
Inst-R-E 4 1,602 18 0 1 0
---------- ----------- ----------- ----------- ----------- -----------
Total 25,449 282,462 168,824 374 39,814 2,748
---------- ----------- ----------- ----------- ----------- -----------
Payments made in advance of certificate
year requirements and accrued interest
thereon:
15, includes ext maturities 2 0 0 0 0 0 0
20, " " " 2 0 0 (1) 0 0 0
15A, " " " 3 0 0 1 0 0 0
22A, " " " 3 0 0 227 5 17 3
I-76, " " " 3.5 0 0 337 12 18 1
---------- ----------- ----------- ----------- ----------- -----------
Total 0 0 564 17 35 4
---------- ----------- ----------- ----------- ----------- -----------
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
15, " " " 0 0 0 0 0 0
20, " " " 0 0 0 0 0 0
15A, " " " 0 0 0 0 0 0
22A, " " " 182 196 1,254 289 7,076 6,250
I-76, " " " 0 341 187 294 6,581 4,903
Reserve Plus Flex Payment 90 73 22 24 249 158
IC-Q-Installment 9 35 0 21 328 70
IC-Q-Ins 148 216 0 156 1,813 840
IC-Q-Ins Emp 0 0 0 2 23 17
IC-I 15,111 37,618 0 10,841 175,508 92,554
IC-I-Emp 52 491 0 70 1,092 891
Inst 0 8,723 0 10,112 0 38,563
Inst-E 0 53 0 55 0 164
RP-Q-Installment 143 132 0 39 559 274
RP-Q-Flexible Payment 0 1 0 5 65 48
RP-Q-Ins 0 15 0 5 272 43
RP-Q-Ins Emp 0 0 0 0 0 1
RP-I 136 473 0 32 610 396
RP-I-EMP 0 0 0 0 0 0
Inst-R & RP I95 0 88 0 246 30,766 780
Inst-R-E 0 9 0 4 260 10
--------- ----------- --------- --------- ----------- -----------
Total 15,871 48,464 1,463 22,195 225,202 145,962
--------- ----------- --------- --------- ----------- -----------
Payments made in advance of certificate
year requirements and accrued interest
thereon:
15, includes ext maturities 0 0 0 0 0 0
20, " " " 0 0 0 0 0 (1)
15A, " " " 0 0 0 0 0 1
22A, " " " 2 3 84 0 0 163
I-76, " " " 0 22 10 0 0 336
--------- ----------- --------- --------- ----------- -----------
Total 2 25 94 0 0 499
--------- ----------- --------- --------- ----------- -----------
F-52
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE VI
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2003
(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)
----------- -------------- ---------- ----------- ----------- ---------- ----------- ----------
Additional credits and accrued interest
thereon:
" 15, includes ext mat 2.5 0 0 0 0 0 0
" 20, " " " 2.5 0 0 0 0 0 0
" 15A, " " " 3 0 0 (1) 0 0 0
" 22A, " " " 3 0 0 1,846 48 0 37
" I-76, " " " 3.5 0 0 1,223 40 0 19
" Res Plus Flex Pay 0 0 0 2 0 0
" IC-Q-Installment 0 0 (1) 1 0 0
" IC-Q-Ins 0 0 0 6 0 0
" IC-Q-Ins Emp 0 0 0 0 0 0
" IC-I 0 0 121 2,342 0 0
" IC-I-Emp 0 0 1 23 0 0
" Inst 0 0 11 235 0 0
" Inst-E 0 0 0 2 0 0
" RP-Q-Installment 0 0 0 3 0 0
" RP-Q-Flexible Pay 0 0 0 0 0 0
" RP-Q-Ins 0 0 0 0 0 0
" RP-Q-Ins Emp 0 0 0 0 0 0
" RP-I 0 0 1 14 0 0
" RP-I-EMP 0 0 0 0 0 0
" Inst-R 0 0 0 3 0 0
" Inst-R-E 0 0 0 0 0 0
0 0 0 0 0 0
---------- ----------- ----------- ----------- ----------- -----------
Total 0 0 3,201 2,719 0 56
---------- ----------- ----------- ----------- ----------- -----------
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
----------- ------------ ------------ ---------- ---------- ------------ ----------
Additional credits and accrued interest
thereon:
" 15, includes ext mat 0 0 0 0 0 0
" 20, " " " 0 0 0 0 0 0
" 15A, " " " 0 0 0 0 0 (1)
" 22A, " " " 51 48 336 0 0 1,496
" I-76, " " " 0 82 44 0 0 1,156
" Res Plus Flex Pay 0 0 2 0 0 0
" IC-Q-Installment 0 0 1 0 0 (1)
" IC-Q-Ins 0 0 6 0 0 0
" IC-Q-Ins Emp 0 0 0 0 0 0
" IC-I 0 0 2,386 0 0 77
" IC-I-Emp 0 0 24 0 0 0
" Inst 0 0 235 0 0 11
" Inst-E 0 0 2 0 0 0
" RP-Q-Installment 0 0 3 0 0 0
" RP-Q-Flexible Pay 0 0 0 0 0 0
" RP-Q-Ins 0 0 0 0 0 0
" RP-Q-Ins Emp 0 0 0 0 0 0
" RP-I 0 0 15 0 0 0
" RP-I-EMP 0 0 0 0 0 0
" Inst-R 0 0 3 0 0 0
" Inst-R-E 0 0 0 0 0 0
0 0 0 0 0 0
--------- ----------- --------- --------- ----------- -----------
Total 51 130 3,057 0 0 2,738
--------- ----------- --------- --------- ----------- -----------
F-53
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE VI
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2003
(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)
----------- -------------- ---------- ----------- ----------- ---------- ----------- ----------
Res for accrued 3rd year 2113 -
Installment Prod only 0 0 891 608 (662) 0
Res for accrued 6th year 2114 0 0 0 0 0 0
Acc int - default I-76 2003/2025 3.5 0 0 1 2 0 0
Res for add'l credits to be allowed 0 0 0 0 0 0
Installment Cert-Special Add'l 0 0 0 0 0 0
Credits I-76 (2105) 0 0 0 0 0 0
Accrued for add'l credits to 0 0 0 0 0 0
be allowed at next anni (2102) 0 0 29 50 0 0
Reserve for death & disab (2111) 0 0 0 0 0 0
Res for reconversion (2104) 0 0 33 0 0 0
---------- ----------- ----------- ----------- ----------- -----------
Total 954 660 (662) 0
---------- ----------- ----------- ----------- ----------- -----------
Total installment certificates 25,449 282,462 173,543 3,770 39,187 2,808
---------- ----------- ----------- ----------- ----------- -----------
Fully paid certificates:
Single-Payment certificates:
SP 74 (C2740-10 Prod 40) 3.5 0 0 0 0 0 0
SP 75 - 50 3.5 0 0 0 0 0 0
SP 76 - 60 3.5 0 0 0 0 0 0
SP 77 - 70 3.5 0 0 0 0 0 0
SP 78 - 80 3.5 0 0 0 0 0 0
SP 79 - 90 3.5 2 15 15 0 0 0
SP 80 - 100 3.5 0 0 2 0 0 0
SP 81A - 110 3.5 2 20 20 0 0 0
SP 82A - 111 3.5 5 61 61 0 0 0
SP 82B - 112 3.5 162 1,370 1,363 6 0 0
SP 83A - 113 3.5 48 373 368 5 0 0
SP 83B - 114 3.5 110 1,115 1,079 32 0 0
IC-2-84 - 115, 116,117,118,119 3.5 367 3,685 3,451 114 0 0
IC-2-85 - 120,121,122,123.124,125,
126,127,128,129,130 3.5 184 2,475 2,569 0 0 87
IC-2-86 - 131 3.5 101 1,721 1,409 0 0 47
IC-2-87 - 132 3.5 139 2,203 1,943 0 0 67
IC-2-88 - 133 3.5 264 4,114 3,727 0 0 125
Reserve Plus Single Payment - 150 166 809 1,399 0 0 (10)
Cash Reserve Single Payment - 160 19 139 151 0 0 0
IC-Flexible Savings (Variable Term) -
165 98,380 1,279,720 1,369,229 0 742,256 40,823
IC-Flexible Savings Emp (VT) - 166 627 8,455 11,081 0 459 292
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
----------- ------------ ------------ ---------- ---------- ------------ ----------
Res for accrued 3rd year 2113 -
Installment Prod only 0 0 0 0 0 837
Res for accrued 6th year 2114 0 0 0 0 0 0
Acc int - default I-76 2003/2025 0 0 3 0 0 0
Res for add'l credits to be allowed 0 0 0 0 0 0
Installment Cert-Special Add'l 0 0 0 0 0 0
Credits I-76 (2105) 0 0 0 0 0 0
Accrued for add'l credits to 0 0 0 0 0 0
be allowed at next anni (2102) 0 0 54 0 0 25
Reserve for death & disab (2111) 0 0 0 0 0 0
Res for reconversion (2104) (3) 0 0 0 0 36
--------- ----------- --------- --------- ----------- -----------
Total (3) 0 57 0 0 898
--------- ----------- --------- --------- ----------- -----------
Total installment certificates 15,921 48,619 4,671 22,195 225,202 150,097
--------- ----------- --------- --------- ----------- -----------
Fully paid certificates:
Single-Payment certificates: 0 0 0 0 0 0
SP 74 (C2740-10 Prod 40) 0 0 0 0 0 0
SP 75 - 50 0 0 0 0 0 0
SP 76 - 60 0 0 0 0 0 0
SP 77 - 70 0 0 0 0 0 0
SP 78 - 80 0 0 0 0 0 0
SP 79 - 90 0 0 0 2 15 15
SP 80 - 100 0 0 0 0 0 2
SP 81A - 110 0 0 10 1 10 10
SP 82A - 111 2 0 37 2 22 22
SP 82B - 112 665 66 609 4 30 29
SP 83A - 113 242 23 108 0 0 0
SP 83B - 114 416 105 166 48 427 425
IC-2-84 - 115, 116,117,118,119 0 304 0 336 3,364 3,262
IC-2-85 - 120,121,122,123.124,125,
126,127,128,129,130 0 286 0 163 2,249 2,370
IC-2-86 - 131 0 147 0 95 1,599 1,310
IC-2-87 - 132 0 132 0 126 2,082 1,878
IC-2-88 - 133 0 249 0 244 3,822 3,603
Reserve Plus Single Payment - 150 871 93 25 43 239 400
Cash Reserve Single Payment - 160 0 1 0 19 139 150
IC-Flexible Savings (Variable Term) -
165 0 648,088 0 114,974 1,407,686 1,504,219
IC-Flexible Savings Emp (VT) - 166 0 1,727 0 554 7,711 10,104
F-54
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE VI
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2003
(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-Preferred Investors - 250 25 23,376 23,775 0 17,602 182
IC-Investors - 201, 202,203 579 981,601 1,041,387 0 889,763 12,449
IC-Special Deposits U.K. - 204 39 51,050 68,774 0 13,911 587
IC-Special Deposits HONG KONG - 205 3 11,354 0 0 0 0
IC-1-84 - 170, 171,172,173,174 29 243 232 0 0 8
Cash Reserve Variable Payment - 660 200 831 1,215 0 48 1
Cash Reserve Variable PMT-3mo. - 662 31,103 106,423 112,739 0 97,215 415
IC-Future Value - 155 1,129 12,589 12,589 0 0 0
IC-Future Value Emp - 156 23 179 178 0 0 0
IC-Stock Market - 180 86,992 385,066 432,653 0 157,714 11,697
IC-MSC - 181 21,790 301,876 310,332 0 93,366 7,244
IC-EISC - 185 20 2,731 2,731 0 1,965 61
IC-AEBI Stock Market - 301, 302,303,
304,305 138 52,407 53,242 0 205,644 2,009
---------- ----------- ----------- ----------- ----------- -----------
Total 242,646 3,236,001 3,457,714 157 2,219,943 76,084
---------- ----------- ----------- ----------- ----------- -----------
Additional credits and accrued interest
thereon:
SP 74 (2030/1 4022) 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 0 0 15 0 0 0
SP 80 3.5 0 0 1 0 0 0
SP 81A 3.5 0 0 18 0 0 0
SP 82A 3.5 0 0 51 0 0 0
SP 82B 3.5 0 0 995 4 0 0
SP 83A 3.5 0 0 216 3 0 0
SP 83B 3.5 0 0 603 18 0 0
IC-2-84 3.5 0 0 1,923 64 0 0
IC-2-85 3.5 0 0 40 86 0 0
IC-2-86 3.5 0 0 25 47 0 0
IC-2-87 3.5 0 0 36 67 0 0
IC-2-88 3.5 0 0 71 127 0 0
Reserve Plus SP 2004-4061 0 0 0 1 0 0
Cash Reserve SP 0 0 0 0 0 0
IC-Flexible Savings 0 0 1,888 44,205 0 0
IC-Preferred Investors 0 0 16 177 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-Preferred Investors - 250 0 27,803 0 17 13,607 13,757
IC-Investors - 201, 202,203 0 982,664 0 473 925,975 960,935
IC-Special Deposits U.K. - 204 0 39,382 0 31 41,218 43,891
IC-Special Deposits HONG KONG - 205 0 0 0 0 0 0
IC-1-84 - 170, 171,172,173,174 0 31 0 27 233 210
Cash Reserve Variable Payment - 660 0 310 0 166 645 953
Cash Reserve Variable PMT-3mo. - 662 0 106,678 0 29,506 98,723 103,690
IC-Future Value - 155 2,364 743 0 810 9,481 9,481
IC-Future Value Emp - 156 52 1 0 17 126 125
IC-Stock Market - 180 0 129,443 0 82,167 424,970 472,621
IC-MSC - 181 0 75,815 0 22,488 322,900 335,128
IC-EISC - 185 0 2,285 0 34 2,468 2,472
IC-AEBI Stock Market - 301, 302,303,
304,305 0 15,563 0 562 243,486 245,331
--------- ----------- --------- --------- ----------- -----------
Total 4,612 2,031,939 955 252,909 3,513,227 3,716,392
--------- ----------- --------- --------- ----------- -----------
Additional credits and accrued interest
thereon:
SP 74 (2030/1 4022) 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 0 0 15
SP 80 0 0 0 0 0 1
SP 81A 0 0 9 0 0 9
SP 82A 2 0 31 0 0 19
SP 82B 503 51 422 0 0 23
SP 83A 145 14 60 0 0 0
SP 83B 227 61 86 0 0 248
IC-2-84 0 176 0 0 0 1,811
IC-2-85 0 3 87 0 0 35
IC-2-86 0 1 47 0 0 24
IC-2-87 0 2 66 0 0 35
IC-2-88 0 4 125 0 0 69
Reserve Plus SP 2004-4061 0 0 1 0 0 0
Cash Reserve SP 0 0 0 0 0 0
IC-Flexible Savings 0 3,663 40,843 0 0 1,587
IC-Preferred Investors 0 5 182 0 0 6
F-55
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE VI
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2003
(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-FS-EMP 0 0 18 356 0 0
IC-Investors 0 0 592 13,646 0 0
IC-Special Deposits U.K. 0 0 36 590 0 0
IC-Special Deposits HONG KONG 0 0 0 0 0 0
IC-1-84 - 2013-4061 0 0 4 7 0 0
Cash Reserve VP 2004-4061 0 0 0 1 0 0
Cash Reserve Variable Payment-3mo. 0 0 229 676 (291) 0
IC-Future Value 0 0 10,198 1,466 0 0
IC-Future Value Emp 0 0 152 23 0 0
IC-Stk Mkt, 2004/16/31-4000/16 0 0 588 989 0 0
IC-MSC 0 0 124 745 0 0
IC - EISC 0 0 1 6 0 0
IC-AEBI Stk Mkt 2004/31/19-4000/16 0 0 101 564 0 0
---------- ----------- ----------- ----------- ----------- -----------
Total 0 0 17,941 63,868 (291) 0
---------- ----------- ----------- ----------- ----------- -----------
Accrued for additional credits to be
allowed at next anniversaries:
SP 74 (2102-4070) 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 0 0 0
SP 80 0 0 0 0 0 0
SP 81A 0 0 (1) 0 0 0
SP 82A 0 0 0 0 0 0
SP 82B 0 0 1 0 0 0
SP 83A 0 0 0 0 0 0
SP 83B 0 0 (1) 0 0 0
IC-2-84 - 2019-4061 0 0 1 1 0 0
IC-2-85 0 0 0 0 0 0
IC-2-86 0 0 1 0 0 0
IC-2-87 0 0 0 0 0 0
IC-2-88 0 0 (1) 0 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-FS-EMP 0 70 292 0 0 12
IC-Investors 0 1,322 12,449 0 0 468
IC-Special Deposits U.K. 0 17 587 0 0 22
IC-Special Deposits HONG KONG 0 0 0 0 0 0
IC-1-84 - 2013-4061 0 1 7 0 0 3
Cash Reserve VP 2004-4061 0 0 1 0 0 0
Cash Reserve Variable Payment-3mo. 0 6 415 0 0 192
IC-Future Value 2,002 622 0 0 0 9,040
IC-Future Value Emp 37 1 0 0 0 137
IC-Stk Mkt, 2004/16/31-4000/16 0 90 980 0 0 506
IC-MSC 0 13 714 0 0 143
IC - EISC 0 0 6 0 0 1
IC-AEBI Stk Mkt 2004/31/19-4000/16 0 18 363 0 0 284
--------- ----------- --------- --------- ----------- -----------
Total 2,916 6,140 57,773 0 0 14,689
--------- ----------- --------- --------- ----------- -----------
Accrued for additional credits to be
allowed at next anniversaries:
SP 74 (2102-4070) 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 0 0 0
SP 80 0 0 0 0 0 0
SP 81A 0 0 0 0 0 (1)
SP 82A 0 0 0 0 0 0
SP 82B 0 0 0 0 0 1
SP 83A 0 0 0 0 0 0
SP 83B 0 0 0 0 0 (1)
IC-2-84 - 2019-4061 0 0 0 0 0 2
IC-2-85 0 0 0 0 0 0
IC-2-86 0 0 0 0 0 1
IC-2-87 0 0 0 0 0 0
IC-2-88 0 0 0 0 0 (1)
F-56
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE VI
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2003
(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-Stock Mkt - 2019/31-4061 SEC 5 from
C2785-81 0 0 1,725 29,866 0 0
IC-Market Strategy Certificate
(SEC 5 from c2785-81) 0 0 1,090 17,624 0 0
IC-EISC 0 0 13 158 0 0
IC-AEBI Stock Market 0 0 70 12,617 0 0
---------- ----------- ----------- ----------- ----------- -----------
Total 0 0 2,898 60,266 0 0
---------- ----------- ----------- ----------- ----------- -----------
Total Single Payment - Non Qualified 242,646 3,236,001 3,478,554 124,291 2,219,652 76,084
---------- ----------- ----------- ----------- ----------- -----------
R Series Single-Payment certificates:
R-76 - 900 3.5 4 13 12 0 0 0
R-77 - 910 3.5 15 320 205 0 0 7
R-78 - 911 3.5 34 279 255 0 0 9
R-79 - 912 3.5 48 584 503 0 0 17
R-80 - 913 3.5 38 374 281 0 0 10
R-81 - 914 3.5 16 138 105 0 0 3
R-82A - 915 3.5 106 705 483 0 0 17
RP-Q - 916 220 365 891 0 0 1
R-II - 920 3.5 71 584 305 0 0 10
RP-2-84 - 921,922,923,924,925 3.5 188 2,585 1,095 0 0 38
RP-2-85 - 926,927,928,929,930,931,932,933,
934,935,936 3.5 64 249 313 0 0 11
RP-2-86 - 937 3.5 19 69 77 0 0 3
RP-2-87 - 938 3.5 37 647 245 0 0 9
RP-2-88 - 939 3.5 47 293 221 0 0 7
Cash Reserve RP - 970 5 15 32 0 0 0
RP-Flexible Savings - 971 25,630 452,429 481,470 0 209,314 15,898
RP-Preferred Investors - 950 5 2,148 2,367 0 265 51
Cash Reserve RP-3 mo. - 972 1,629 15,351 16,182 0 24,659 94
RP-Flexible Savings Emp - 973 219 2,974 3,995 0 115 128
RP-Future Value - 975 954 17,057 17,057 0 0 0
RP-Future Value Emp - 976 38 462 462 0 0 0
RP-Stock Market - 960 11,937 103,259 113,776 0 55,084 3,249
Market Strategy Cert - 961 (section 1-6
from Report 2785-81-RP-STOCK-VB 2001) 3,474 84,498 86,330 0 22,126 2,008
D-1 - sum of SERIES D on Summary page -
400 + 990-993 142 12,934 16,417 0 847 332
---------- ----------- ----------- ----------- ----------- -----------
Total 44,940 698,332 743,079 0 312,410 21,902
---------- ----------- ----------- ----------- ----------- -----------
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-Stock Mkt - 2019/31-4061 SEC 5 from
C2785-81 0 422 10,726 0 0 20,443
IC-Market Strategy Certificate
(SEC 5 from c2785-81) 0 259 6,535 0 0 11,920
IC-EISC 0 0 55 0 0 116
IC-AEBI Stock Market 0 53 1,645 0 0 10,989
--------- ----------- --------- --------- ----------- -----------
Total 0 734 18,963 0 0 43,468
--------- ----------- --------- --------- ----------- -----------
Total Single Payment - Non Qualified 7,528 2,038,815 77,691 252,909 3,513,227 3,774,547
--------- ----------- --------- --------- ----------- -----------
R Series Single-Payment certificates:
R-76 - 900 0 3 0 3 10 9
R-77 - 910 0 8 0 14 286 204
R-78 - 911 0 57 0 32 214 207
R-79 - 912 0 29 0 45 553 491
R-80 - 913 0 61 0 34 258 230
R-81 - 914 0 9 0 15 126 99
R-82A - 915 0 35 0 99 655 465
RP-Q - 916 0 155 0 193 279 737
R-II - 920 0 23 0 66 540 292
RP-2-84 - 921,922,923,924,925 0 77 0 174 2,212 1,056
RP-2-85 - 926,927,928,929,930,931,932,933,
934,935,936 0 9 0 63 243 315
RP-2-86 - 937 0 5 0 17 64 75
RP-2-87 - 938 0 8 0 35 640 246
RP-2-88 - 939 0 18 0 43 263 210
Cash Reserve RP - 970 0 2 0 4 14 30
RP-Flexible Savings - 971 0 195,362 0 31,664 478,987 511,320
RP-Preferred Investors - 950 0 2,187 0 1 441 496
Cash Reserve RP-3 mo. - 972 0 27,306 0 1,637 12,980 13,629
RP-Flexible Savings Emp - 973 0 829 0 203 2,483 3,409
RP-Future Value - 975 3,349 857 0 680 12,850 12,851
RP-Future Value Emp - 976 93 0 0 29 368 369
RP-Stock Market - 960 0 37,098 0 12,723 124,162 135,011
Market Strategy Cert - 961 (section 1-6
from Report 2785-81-RP-STOCK-VB 2001) 0 23,282 0 3,641 84,337 87,182
D-1 - sum of SERIES D on Summary page -
400 + 990-993 19 3,323 0 126 11,108 14,254
--------- ----------- --------- --------- ----------- -----------
Total 3,461 290,743 0 51,541 734,073 783,187
--------- ----------- --------- --------- ----------- -----------
F-57
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE VI
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2003
(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)
----------- -------------- ---------- ----------- ----------- ---------- ----------- ----------
Additional Interest on R-Series Single
Payment Reserves:
R-76 3.5 0 0 0 0 0 0
R-77 3.5 0 0 1 7 0 0
R-78 3.5 0 0 6 9 0 0
R-79 3.5 0 0 8 17 0 0
R-80 3.5 0 0 7 9 0 0
R-81 3.5 0 0 1 4 0 0
R-82A 3.5 0 0 14 17 0 0
RP-Q 0 0 0 1 0 0
R-II 3.5 0 0 5 11 0 0
RP-2-84 3.5 0 0 22 38 0 0
RP-2-85 3.5 0 0 7 11 0 0
RP-2-86 3.5 0 0 2 3 0 0
RP-2-87 3.5 0 0 6 9 0 0
RP-2-88 3.5 0 0 4 8 0 0
Cash Reserve RP 0 0 0 0 0 0
RP-Flexible Savings 0 0 701 16,685 0 0
RP-Preferred Investors 0 0 5 65 0 0
Cash Reserve RP-3 mo. Plus 0 0 34 122 (40) 0
RP-Flexible Savings Emp 0 0 8 138 0 0
RP-Future Value 0 0 13,445 1,951 0 0
RP-Future Value Emp 0 0 396 66 0 0
RP-Stock Market 0 0 142 248 0 0
Market Strategy Cert (2785-81 RP-STOCK VB
2004/4000 & 2016/2031/4016) 0 0 39 192 0 0
D-1 - 400 0 0 1 364 0 0
---------- ----------- ----------- ----------- -----------
Total 0 0 14,854 19,975 (40) 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
----------- ------------ ------------ ---------- ---------- ------------ ----------
Additional Interest on R-Series Single
Payment Reserves:
R-76 0 0 0 0 0 0
R-77 0 0 7 0 0 1
R-78 0 1 9 0 0 5
R-79 0 1 17 0 0 7
R-80 0 1 10 0 0 5
R-81 0 0 3 0 0 1
R-82A 0 1 17 0 0 14
RP-Q 0 0 1 0 0 0
R-II 0 0 10 0 0 5
RP-2-84 0 1 38 0 0 21
RP-2-85 0 0 11 0 0 7
RP-2-86 0 0 3 0 0 2
RP-2-87 0 0 9 0 0 6
RP-2-88 0 0 7 0 0 4
Cash Reserve RP 0 0 0 0 0 0
RP-Flexible Savings 0 909 15,898 0 0 579
RP-Preferred Investors 0 19 51 0 0 0
Cash Reserve RP-3 mo. Plus 0 0 94 0 0 22
RP-Flexible Savings Emp 0 13 128 0 0 5
RP-Future Value 2,749 702 0 0 0 11,945
RP-Future Value Emp 91 0 0 0 0 371
RP-Stock Market 0 12 246 0 0 132
Market Strategy Cert (2785-81 RP-STOCK VB
2004/4000 & 2016/2031/4016) 0 2 184 0 0 45
D-1 - 400 0 32 332 0 0 1
----------- --------- -----------
Total 2,840 1,694 17,075 0 0 13,180
--------- ----------- --------- --------- ----------- -----------
F-58
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE VI
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2003
(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)
----------- -------------- ---------- ----------- ----------- ---------- ----------- ----------
Accrued for additional credits to be allowed
at next anniversaries:
RP-Stock Market 0 0 510 8,453 0 0
Market Strategy Cert (C2785-81 2019/2102/
4061) 0 0 314 4,808 0 0
---------- ----------- ----------- ----------- ----------- -----------
Total 0 0 824 13,261 0 0
---------- ----------- ----------- ----------- ----------- -----------
Total Single Payment - Qualified 44,940 698,332 758,757 33,236 312,370 21,902
---------- ----------- ----------- ----------- ----------- -----------
Paid-up certificates:
Series 15 and 20 3.25 4 45 44 1 0 0
" 15A and 22A 3.5 150 3,397 3,056 101 0 582
" I-76 - 640 3.5 486 2,386 1,868 67 0 180
---------- ----------- ----------- ----------- ----------- -----------
Total 640 5,828 4,968 169 0 762
---------- ----------- ----------- ----------- ----------- -----------
Additional credits and accrued interest
thereon:
Series 15 and 20 2.5 0 0 3 0 0 0
" 15A and 22A 3 0 0 95 2 0 0
" I-76 3.5 0 0 188 6 0 0
---------- ----------- ----------- ----------- ----------- -----------
Total 0 0 286 8 0 0
---------- ----------- ----------- ----------- ----------- -----------
Accrued for additional credits to be allowed
at next anniversaries 0 0 0 0 0 0
---------- ----------- ----------- ----------- ----------- -----------
Total paid-up 640 5,828 5,254 177 0 762
---------- ----------- ----------- ----------- ----------- -----------
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
----------- ------------ ------------ ---------- ---------- ------------ ----------
Accrued for additional credits to be allowed
at next anniversaries:
RP-Stock Market 0 43 3,004 0 0 5,916
Market Strategy Cert (C2785-81 2019/2102/
4061) 0 108 1,824 0 0 3,190
--------- ----------- ---------- --------- ----------- -----------
Total 0 151 4,828 0 0 9,106
--------- ----------- ---------- --------- ----------- -----------
Total Single Payment - Qualified 6,301 292,588 21,903 51,541 734,073 805,473
--------- ----------- ---------- --------- ----------- -----------
Paid-up certificates:
Series 15 and 20 0 2 0 3 43 43
" 15A and 22A 283 207 581 120 2,896 2,668
" I-76 - 640 0 231 0 465 2,314 1,884
--------- ----------- ---------- --------- ----------- -----------
Total 283 440 581 588 5,253 4,595
--------- ----------- ---------- --------- ----------- -----------
Additional credits and accrued interest
thereon:
Series 15 and 20 0 0 0 0 0 3
" 15A and 22A 13 3 19 0 0 62
" I-76 0 13 0 0 0 181
--------- ----------- ---------- --------- ----------- -----------
Total 13 16 19 0 0 246
--------- ----------- ---------- --------- ----------- -----------
Accrued for additional credits to be allowed
at next anniversaries 0 0 0 0 0 0
--------- ----------- ---------- --------- ----------- -----------
Total paid-up 296 456 600 588 5,253 4,841
--------- ----------- ---------- --------- ----------- -----------
F-59
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE VI
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 2003
(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)
----------- -------------- ---------- ----------- ----------- ---------- ----------- ----------
Optional settlement certificates:
Series IST&G 3 12 0 0 0 0 0
Source
Other series and conversions from Single 2740-10:
Options 0 0 0 0 0 0
Payment certificates 2.5-3-3-3.5 4,685 0 70,420 2,128 0 3,644
Series R-76 thru R-82A - Prod 900 3 0 0 28 1 0 0
Series R-II & RP-2-84 thru 88 - Prod 921 3.5 0 0 200 7 0 0
Reserve Plus Single-Payment (Prod 150) 50 0 491 0 0 25
Reserve Plus Flex-Pay & IC-Q-Inst (Prod 650,
651, 652) 14 0 70 0 0 22
Series R-Installment (Prod 980, 981,982) 20 0 122 1 0 0
Series R-Single-Payment (Prod 133) 7 0 2 0 0 0
Add'l credits and accrued int. thereon 2.5-3 0 0 8,930 240 0 6
Add'l credits and accrued int. thereon-IST&G 2.5-3 0 0 0 0 0 0
Accrued for additional credits to be allowed 0 0 0 0 0 0
at next anniversaries 0 0 4 7 0 0
Accrued for additional credits to be allowed 0 0 0 0 0 0
at next anniversaries-R-76-R-82A & R-II 0 0 (1) 0 0 0
Accrued for additional credits to be allowed 0 0 0 0 0 0
at next anniversaries-IST&G 0 0 0 0 0 0
---------- ----------- ----------- ----------- ----------- -----------
Total optional settlement 4,788 0 80,266 2,384 0 3,697
---------- ----------- ----------- ----------- ----------- -----------
Due to unlocated cert holders 0 0 170 0 0 19
---------- ----------- ----------- ----------- ----------- -----------
Total certificate reserves 318,463 4,222,623 4,496,544 163,858 2,571,209 105,272
========= =========== =========== =========== =========== ===========
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
----------- ------------ ------------ ---------- ---------- ------------ ----------
Optional settlement certificates:
Series IST&G 1 0 0 3 0 (1)
Other series and conversions from Single
0 0 0 0 0 0
Payment certificates 3,963 3,913 0 4,292 0 68,316
Series R-76 thru R-82A - Prod 900 5 0 0 2 0 24
Series R-II & RP-2-84 thru 88 - Prod 921 18 0 0 6 0 189
Reserve Plus Single-Payment (Prod 150) 2 84 0 43 0 430
Reserve Plus Flex-Pay & IC-Q-Inst (Prod 650,
651, 652) 15 10 0 13 0 67
Series R-Installment (Prod 980, 981,982) 20 21 0 14 0 82
Series R-Single-Payment (Prod 133) 2 0 0 5 0 0
Add'l credits and accrued int. thereon 468 416 438 0 0 7,854
Add'l credits and accrued int. thereon-IST&G 0 0 0 0 0 0
Accrued for additional credits to be allowed 0 0 0 0 0 0
at next anniversaries 0 0 7 0 0 4
Accrued for additional credits to be allowed 0 0 0 0 0 0
at next anniversaries-R-76-R-82A & R-II 0 0 0 0 0 (1)
Accrued for additional credits to be allowed 0 0 0 0 0 0
at next anniversaries-IST&G 5 0 0 0 (5)
--------- ----------- ---------- --------- ----------- -----------
Total optional settlement 4,499 4,444 445 4,378 0 76,959
--------- ----------- ---------- --------- ----------- -----------
Due to unlocated cert holders 0 5 92 0 0 92
--------- ----------- ---------- --------- ----------- -----------
Total certificate reserves 34,544 2,384,929 105,401 331,611 4,477,755 4,812,007
========= ========== ========== ========= =========== ===========
F-60
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 2003
(Thousands)
Additions to reserves charged to other accounts
------------------------------------------------------------------------
Transfers of
maturities to
Reconversions extended
of paid-up maturities-
certificate charged to
charged Charged reserves to
to paid-up to mature, addi- Transferred
reserves and advance tional credits/ to Federal
reserve for payments interest and Withholding
reconversions reserve advance payments Total
-------------- ---------- ----------------- ------------ --------
Reserves to mature installment
certificates:
Series 15, including extended
maturities 0 0 0 0 0
Series 20, including extended
maturities 0 0 0 0 0
Series 15A, including extended
maturities 0 0 0 0 0
Series 22A, including extended
maturities 0 58 9 0 67
Series I-76 0 9 0 0 9
Series Reserve Plus Flexible Payment 2 20 22
Series IC-Q-Installment 0 0 1 0 1
Series IC-Q-Ins 0 0 6 0 6
Series IC-Q-Ins Emp 0 0 0 0 0
Series IC-I 0 0 2,382 4 2,386
Series IC-I-EMP 0 0 24 0 24
Series Inst 0 0 234 0 234
Series Inst-E 0 0 2 0 2
Series RP-Q-Installment 0 0 3 0 3
Series RP-Q-Flexible Pay 0 0 0 0 0
Series RP-Q-Ins 0 0 0 0 0
Series RP-Q-Ins Emp 0 0 0 0 0
Series RP-I 0 0 15 0 15
Series RP-I-EMP (R I95) 0 0 3 0 3
-------------- ---------- ----------------- ------------ --------
Total 0 67 2,681 24 2,772
============== ========== ================= ============ ========
Deductions from reserves credited to other accounts
----------------------------------------------------------
Conversions
to optional Maturities
settlement transferred
Conversions certificates- to extended
to paid-up credited maturities-
certificates- to optional credited to
credited settlement reserves to
to paid-up reserves and mature-
surrender surrender extended
income income maturities Total
------------ ------------- ------------ -----------
Reserves to mature installment
certificates:
Series 15, including extended 0 0 0 0
maturities 0 0 0 0
Series 20, including extended
maturities 0 0 0 0
Series 15A, including extended
maturities 0 0 0 0
Series 22A, including extended
maturities 463 782 9 1,254
Series I-76 143 44 0 187
Series Reserve Plus Flexible Payment 0 22 0 22
Series IC-Q-Installment 0 0 0 0
Series IC-Q-Ins 0 0 0 0
Series IC-Q-Ins Emp 0 0 0 0
Series IC-I 0 0 0 0
Series IC-I-EMP 0 0 0 0
Series Inst 0 0 0 0
Series Inst-E 0 0 0 0
Series RP-Q-Installment 0 0 0 0
Series RP-Q-Flexible Pay 0 0 0 0
Series RP-Q-Ins 0 0 0 0
Series RP-Q-Ins Emp 0 0 0 0
Series RP-I 0 0 0 0
Series RP-I-EMP (R I95) 0 0 0 0
------------ ---------- ------------ -----------
Total 606 848 9 1,463
============ ========== ============ ===========
F-61
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 2003
(Thousands)
Additions to reserves charged to other accounts
-------------------------------------------------------
Additions Additions to
to advance reserves to
Reconversions payments- mature-extended
of paid-up charged to maturities
Payments made in advance certificates- default charged to
of current certificate charged to interest reserves to
year requirements and paid-up on late mature from
accrued interest thereon: reserves payments maturity Total
-------------- ----------- ---------------- ------
Series 20, including extended
maturities 0 0 0 0
Series 15A, including extended 0 0 0
maturities 0 0 0 0
Series 22A, including extended
maturities 0 0 3 3
Series I-76 0 1 0 1
Series Reserve Plus Flex Pay 0 0 0 0
Series IC-Q Installment 0 0 0 0
Series IC-Q Ins 0 0 0 0
Series IC-Q Ins Emp 0 0 0 0
Series IC-I 0 0 0 0
Series IC-I-EMP 0 0 0 0
Series RP-Q Flexible Payment 0 0 0 0
Series RP-Q Ins 0 0 0 0
Series RP-Q Ins Emp 0 0 0 0
Series RP-I 0 0 0 0
Series RP-I-EMP 0 0 0 0
-------------- ----------- ------------- -------
Total 0 1 3 4
============== =========== ============= =======
Deductions from reserves credited to other accounts
----------------------------------------------------------------------
Maturities
Conversions transferred
Applied to to optional to extended
certificates- settlement maturities- Conversions
credited to certificates- credited to to paid-up
Payments made in advance reserves to credited reserves certificates-
of current certificate mature, to optional to mature- credited to
year requirements and loading settlement extended paid-up
accrued interest thereon: and insurance reserves maturities reserves Total
-------------- -------------- ------------ -------------- ------
Series 20, including extended
maturities 0 0 0 0 0
Series 15A, including extended
maturities 0 0 0 0 0
Series 22A, including extended
maturities 58 22 3 0 84
Series I-76 9 1 0 0 10
Series Reserve Plus Flex Pay 0 0 0 0 0
Series IC-Q Installment 0 0 0 0 0
Series IC-Q Ins 0 0 0 0 0
Series IC-Q Ins Emp 0 0 0 0 0
Series IC-I 0 0 0 0 0
Series IC-I-EMP 0 0 0 0 0
Series RP-Q Flexible Payment 0 0 0 0 0
Series RP-Q Ins 0 0 0 0 0
Series RP-Q Ins Emp 0 0 0 0 0
Series RP-I 0 0 0 0 0
Series RP-I-EMP 0 0 0 0 0
-------------- ------------ ------------ --------- ------
Total 67 23 3 0 94
============== ============ ============ ========= ======
F-62
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 2003
(Thousands)
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 $ 54
Reconversions of paid-up certificates-charged to paid-up reserves 0
Transfers from maturities to extended maturities 2
------------
$ 56
============
Other deductions represent:
Transfers to reserves on a quarterly basis for Reserve Plus Flexible-
Payment, IC-Q-Installment and R-Flexible-Payment $ 2,677
Conversions to optional settlement certificates-credited to optional
settlement reserves 225
Conversions to paid-up certificates-credited to paid-up reserves 153
Transfers to extended maturities at maturity 2
------------
$ 3,057
============
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 $ 54
============
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) $ 763
Transfers from accrual for additional credits to be allowed at next
anniversaries 0
------------
$ 763
============
Other deductions represent:
Transfers credited to installment reserves on reconversions to installment
certificates $ 0
Transfers for accrual for additional credits and accrued interest thereon 0
Transfers to settlement options 600
------------
$ 600
============
F-63
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 2003
(Thousands)
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 $ 2
Transfers to advance payments as late payments are credited to certificates 1
-------------
$ 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 $ 3,091
Transfers from paid-up certificate reserves 600
Transfers from accruals for additional credits to be allowed at next anniversaries 6
-------------
$ 3,697
=============
Other deductions represent:
Transfers to reserve for additional credits and accrued interest thereon $ 7
Transfers to optional settlement reserves 438
-------------
$ 445
=============
Single-Payment certificates:
Other additions represent:
Transfers from accruals for additional credits to be allowed at next anniversaries $ 1
Transfers from accruals on a quarterly basis on: 0
Reserve Plus Single-Payment (10)
Cash Reserve Single-Payment 0
Flexible Savings 40,821
Flexible Savings-Emp 292
Preferred Investors 182
Investors 12,449
Special Deposits 587
Cash Reserve 1
Cash Reserve-3mo 415
Future Value 0
Stock Market 11,697
Market Strategy 7,244
AEBI Stock Market 2,009
R82-B 1
Cash Reserve-RP 0
Cash Reserve-RP-3mo 94
Flexible Saving-RP 15,898
Flexible Savings-RP-Emp 128
Preferred Investors-RP 51
Stock Market-RP 3,249
Market Strategy-RP 2,008
Equity Indexed Savings Cert 61
R Single Payment Cert 0
Transfers from accruals at anniversaries maintained in a separate reserve account. 808
-------------
$ 97,986
=============
F-64
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 2003
(Thousands)
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 $ 10,874
R Single-Payment 0
Transfers to reserves for additional credits and accrued interest thereon 808
Transfers to a separate reserve account from the accrual account 1
Transfers to reserves on a quarterly basis:
Reserve Plus Single-Payment 1
Cash Reserve Single-Payment 0
Flexible Savings 40,821
Flexible Savings-Emp 292
Preferred Investors 182
Investors 12,449
Special Deposits 587
Cash Reserve Variable Payment 1
Cash Reserve - Variable Payment 3mo 415
Stock Market 11,697
AEBI Stock Market 2,009
RP-Q (was R82-B) 1
Cash Reserve-RP 0
Cash Reserve-RP-3mo 94
Flexible Saving-RP 15,898
Flexible Savings-RP-Emp 128
Preferred Investors-RP 51
Stock Market-RP 3,249
Transfers to Federal tax withholding 35
-------------
$ 99,593
=============
Due to unlocated certificate holders:
Other additions represent:
Amounts equivalent to payments due certificate holders who could
not be located $ 92
=============
Other deductions represent:
Payments to certificate holders credited to cash $ 19
=============
F-65
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
Year ended December 31, 2003
(Thousands)
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
2002 2003 2002 2003 2002 2003 2002 2003
-------- -------- --------- --------- --------- --------- ---------- -------
15 INC EXT 61-72 0 0 0 0 0 0 0 0
73-84 0 0 0 0 0 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 0 0 0 0 0 0 0 0
133-144 0 0 0 0 0 0 0 0
145-156 0 0 0 0 0 0 0 0
157-168 0 0 0 0 0 0 0 0
169-180 0 0 0 0 0 0 0 0
181-192 0 0 0 0 0 0 0 0
193-204 0 0 0 0 0 0 0 0
205-216 0 0 0 0 0 0 0 0
217-228 0 0 0 0 0 0 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 0 0 0 0 0 0 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
20, including extended
maturities 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 0 0 0 0 0 0 0 0
133-144 0 0 0 0 0 0 0 0
145-156 0 0 0 0 0 0 0 0
157-168 0 0 0 0 0 0 0 0
169-180 0 0 0 0 0 0 0 0
181-192 0 0 0 0 0 0 0 0
193-204 0 0 0 0 0 0 0 0
F-66
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
Year ended December 31, 2003
(Thousands)
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
205-216 0 0 0 0 0 0 0 0
217-228 0 0 0 0 0 0 0 0
229-240 0 0 0 0 0 0 0 0
241-252 0 0 0 0 0 0 0 0
253-264 0 0 0 0 0 0 0 0
265-276 0 0 0 0 0 0 0 0
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 0 0 0 0 0 0 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
F-67
SCHEDULE VI (con't)
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
Year ended December 31, 2003
(Thousands)
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
15 A INC EXT 61-72 0 0 0 0 0 0 0 0
73-84 0 0 0 0 0 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 0 0 0 0 0 0 0 0
133-144 0 0 0 0 0 0 0 0
145-156 0 0 0 0 0 0 0 0
157-168 0 0 0 0 0 0 0 0
169-180 0 0 0 0 0 0 0 0
181-192 0 0 0 0 0 0 0 0
193-204 0 0 0 0 0 0 0 0
205-216 0 0 0 0 0 0 0 0
217-228 0 0 0 0 0 0 0 0
229-240 (a) 0 0 0 0 0 0 0 0
241-252 0 0 0 0 0 0 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 0 0 0 0 0 0 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
22A INC EXT 25-36 0 0 0 0 0 0 0 0
37-48 0 0 0 0 0 0 0 0
49-60 0 0 0 0 0 0 0 0
61-72 0 0 0 0 0 0 0 0
73-84 0 0 0 0 0 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 0 0 0 0 0 0 0 0
133-144 0 0 0 0 0 0 0 0
F-68
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
Year ended December 31, 2003
(Thousands)
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
145-156 2 1 32 19 15 9 0 0
157-168 0 1 0 13 0 7 0 0
169-180 1 0 15 0 9 0 0 0
181-192 1 1 38 15 24 9 0 0
193-204 0 1 0 38 0 26 0 0
205-216 2 1 38 19 27 14 0 0
217-228 1 1 19 19 15 14 0 0
229-240 0 1 0 19 0 16 0 0
241-252 1 1 15 15 13 14 0 0
253-264 (a) 2 1 19 9 18 9 0 9
265-276 2 1 75 16 45 10 0 0
277-288 2 1 36 65 23 42 0 6
289-300 4 1 146 19 100 13 11 0
301-312 2 4 325 146 233 106 0 0
313-324 13 2 364 325 279 246 0 0
325-336 66 15 1,663 403 1,319 326 0 88
337-348 68 60 1,588 1,532 1,332 1,284 14 38
349-360 75 59 1,793 1,390 1,590 1,228 100 113
361-372 69 72 1,598 1,663 1,488 1,554 71 182
373-384 56 65 1,026 1,351 1,003 1,323 0 818
-------- -------- --------- --------- --------- --------- ---------- -------
Total 367 289 8,787 7,076 7,533 6,250 196 1,254
-------- -------- --------- --------- --------- --------- ---------- -------
F-69
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
Year ended December 31, 2003
(Thousands)
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
I-76 25-36 0 0 0 0 0 0 0 0
37-48 0 0 0 0 0 0 0 0
49-60 0 0 0 0 0 0 0 0
61-72 0 0 0 0 0 0 0 0
73-84 0 0 0 0 0 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 0 0 0 0 0 0 0 0
133-144 0 0 0 0 0 0 0 0
145-156 0 0 0 0 0 0 0 0
157-168 0 0 0 0 0 0 0 0
169-180 1 1 37 37 13 13 0 0
181-192 0 0 0 0 0 0 0 0
193-204 0 0 0 0 0 0 0 0
205-216 2 0 40 0 18 0 0 0
217-228 1 2 25 40 12 19 0 0
229-240 0 1 0 25 0 13 0 0
241-252 8 0 178 0 102 0 0 0
253-264 37 9 941 197 568 120 36 11
265-276 54 32 1,313 846 847 546 26 20
277-288 60 44 1,313 1,159 904 797 99 54
289-300 68 53 1,267 1,126 923 823 73 44
301-312 59 63 1,381 1,092 1,072 845 59 0
313-324 37 53 824 1,298 670 1,068 48 50
325-336 0 36 0 763 0 657 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 327 294 7,319 6,583 5,129 4,901 341 179
-------- -------- --------- --------- --------- --------- ---------- -------
F-70
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
Year ended December 31, 2003
(Thousands)
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
RES+FP 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 0 0 0 0 0 0 0 0
133-144 0 0 0 0 0 0 0 0
145-156 0 0 0 0 0 0 0 0
157-168 0 0 0 0 0 0 0 0
169-180 0 0 0 0 0 0 0 0
181-192 0 0 0 0 0 0 0 0
193-204 0 0 0 0 0 0 0 0
205-216 0 0 0 0 0 0 0 0
217-228 22 0 225 0 108 0 0 0
229-240 47 22 427 225 165 115 6 0
241-252 1 1 18 6 41 3 67 22
253-264 0 1 0 18 0 42 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 70 24 670 249 314 160 73 22
-------- -------- --------- --------- --------- --------- ---------- -------
F-71
SCHEDULE VI
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
(Thousands)
Year ended December 31, 2003
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
IC-Q-INST 61-72 0 0 0 0 0 0 0 0
73-84 0 0 0 0 0 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 0 0 0 0 0 0 0 0
133-144 0 0 0 0 0 0 0 0
145-156 0 0 0 0 0 0 0 0
157-168 0 0 0 0 0 0 0 0
169-180 0 0 0 0 0 0 0 0
181-192 0 0 0 0 0 0 0 0
193-204 3 0 51 0 5 0 0 0
205-216 16 2 265 30 54 3 3 0
217-228 10 13 90 241 38 44 11 0
229-240 0 6 0 57 0 21 21 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 29 21 406 328 97 68 35 0
-------- -------- --------- --------- --------- --------- ---------- -------
F-72
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
Year ended December 31, 2003
(Thousands)
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
IC-Q-IN 1-12 0 0 0 0 0 0 0 0
13-24 0 0 0 0 0 0 0 0
25-36 0 0 0 0 0 0 0 0
37-48 0 0 0 0 0 0 0 0
49-60 0 0 0 0 0 0 0 0
61-72 0 0 0 0 0 0 0 0
73-84 0 0 0 0 0 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 23 0 292 0 113 0 0 0
133-144 47 18 517 244 246 91 23 0
145-156 33 41 343 439 231 216 25 0
157-168 33 28 468 290 158 198 41 0
169-180 48 23 590 292 257 118 46 0
181-192 13 30 147 380 54 157 58 0
193-204 8 10 75 114 14 47 13 0
205-216 0 6 0 54 0 13 8 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 205 156 2,432 1,813 1,073 840 214 0
-------- -------- --------- --------- --------- --------- ---------- -------
F-73
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
Year ended December 31, 2003
(Thousands)
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
IC-IN-EMP 1-12 0 0 0 0 0 0 0 0
13-24 0 0 0 0 0 0 0 0
25-36 0 0 0 0 0 0 0 0
37-48 0 0 0 0 0 0 0 0
49-60 0 0 0 0 0 0 0 0
61-72 0 0 0 0 0 0 0 0
73-84 0 0 0 0 0 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 0 0 0 0 0 0 0 0
133-144 0 0 0 0 0 0 0 0
145-156 1 0 6 0 0 0 0 0
157-168 0 1 0 6 0 1 0 0
169-180 1 0 17 0 16 0 0 0
181-192 0 1 0 17 0 16 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 2 2 23 23 16 17 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
F-74
SCHEDULE VI
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
(Thousands)
Year ended December 31, 2003
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
IC-I 1-12 2 3 18 87 1 4 2 0
13-24 0 1 0 12 0 2 1 0
25-36 2 0 12 0 2 0 0 0
37-48 7 2 76 12 30 4 0 0
49-60 2 6 32 52 15 25 12 0
61-72 1,849 1 31,177 24 13,355 16 1 0
73-84 3,775 1,428 63,148 23,254 28,868 10,691 3,272 0
85-96 4,103 3,134 66,807 51,397 34,904 25,582 4,680 0
97-108 3,165 3,526 51,879 57,404 26,781 32,027 4,386 0
109-120 2,011 2,682 30,627 42,635 16,211 23,810 2,823 0
121-132 31 35 407 331 237 233 2,477 0
133-144 0 23 0 299 0 160 35 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 14,947 10,841 244,183 175,507 120,404 92,554 17,689 0
-------- -------- --------- --------- --------- --------- ---------- -------
IC-I-EMP 1-12 1 0 6 0 3 0 0 0
13-24 0 1 0 6 0 4 0 0
25-36 0 0 0 0 0 0 0 0
37-48 0 0 0 0 0 0 0
49-60 0 0 0 0 0 0 0 0
61-72 10 0 114 0 68 0 0 0
73-84 27 9 484 102 250 70 10 0
85-96 23 22 266 424 182 248 30 0
97-108 18 22 222 260 193 195 5 0
109-120 7 15 78 180 63 93 45 0
121-132 1 0 120 0 337 0 31 0
133-144 0 1 0 120 0 280 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 87 70 1,290 1,092 1,096 890 121 0
-------- -------- ------------------- --------- --------- ---------- -------
F-75
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
Year ended December 31, 2003
(Thousands)
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
IC-I95 1-12 2,220 2,446 0 0 2,840 3,859 149 0
13-24 1,351 1,810 0 0 3,128 5,061 414 0
25-36 1,221 1,187 0 0 4,065 4,322 333 0
37-48 1,432 1,051 0 0 6,158 4,651 478 0
49-60 1,729 1,260 0 0 8,681 6,767 536 0
61-72 1,103 1,481 0 0 6,174 8,545 1,176 0
73-84 0 877 0 0 0 5,358 1,285 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 9,056 10,112 0 0 31,046 38,563 4,371 0
-------- -------- --------- --------- --------- --------- ---------- -------
IC-I95-E 1-12 16 14 0 0 12 18 3 0
13-24 8 11 0 0 14 21 5 0
25-36 8 5 0 0 22 14 8 0
37-48 7 7 0 0 11 24 3 0
49-60 7 6 0 0 48 11 2 0
61-72 5 7 0 0 27 43 0 0
73-84 0 5 0 0 0 34 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 51 55 0 0 134 165 21 0
-------- -------- --------- --------- --------- --------- ---------- -------
F-76
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
Year ended December 31, 2003
(Thousands)
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
RP-Q-INST 73-84 0 0 0 0 0 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 0 0 0 0 0 0 0 0
133-144 0 0 0 0 0 0 0 0
145-156 0 0 0 0 0 0 0 0
157-168 0 0 0 0 0 0 0 0
169-180 0 0 0 0 0 0 0 0
181-192 0 0 0 0 0 0 0 0
193-204 0 0 0 0 0 0 0 0
205-216 24 0 349 0 214 0 0 0
217-228 7 21 115 290 31 130 54 0
229-240 21 7 301 115 154 30 0 0
241-252 7 6 110 67 137 29 18 0
253-264 0 5 0 86 0 85 50 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 59 39 875 558 536 274 122 0
-------- -------- --------- --------- --------- --------- ---------- -------
F-77
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
Year ended December 31, 2003
(Thousands)
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
RP-Q-FP 61-72 0 0 0 0 0 0 0 0
73-84 0 0 0 0 0 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 0 0 0 0 0 0 0 0
133-144 0 0 0 0 0 0 0 0
145-156 0 0 0 0 0 0 0 0
157-168 0 0 0 0 0 0 0 0
169-180 0 0 0 0 0 0 0 0
181-192 0 0 0 0 0 0 0 0
193-204 4 0 59 0 39 0 0 0
205-216 1 4 6 59 10 39 0 0
217-228 0 1 0 6 0 10 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 5 5 65 65 49 49 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
F-78
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
Year ended December 31, 2003
(Thousands)
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
RP-Q-IN 1-12 0 0 0 0 0 0 0 0
13-24 0 0 0 0 0 0 0 0
25-36 0 0 0 0 0 0 0 0
37-48 0 0 0 0 0 0 0 0
49-60 0 0 0 0 0 0 0 0
61-72 0 0 0 0 0 0 0 0
73-84 0 0 0 0 0 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 0 0 0 0 0 0 0 0
133-144 0 0 0 0 0 0 0 0
145-156 4 0 260 0 51 0 0 0
157-168 2 4 18 260 5 43 0 0
169-180 0 1 0 12 0 0 5 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 6 5 278 272 56 43 5 0
-------- -------- --------- --------- --------- --------- ---------- -------
RP-IN-EMP 1-12 0 0 0 0 0 0 0 0
13-24 0 0 0 0 0 0 0 0
25-36 0 0 0 0 0 0 0 0
37-48 0 0 0 0 0 0 0 0
49-60 0 0 0 0 0 0 0 0
61-72 0 0 0 0 0 0 0 0
73-84 0 0 0 0 0 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
-------- -------- --------- --------- --------- --------- ---------- -------
Total 0 0 0 0 0 0 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
F-79
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
Year ended December 31, 2003
(Thousands)
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
RP-I 1-12 0 0 0 0 0 0 0 0
13-24 0 0 0 0 0 0 0 0
25-36 0 0 0 0 0 0 0 0
37-48 0 0 0 0 0 0 0 0
49-60 0 0 0 0 0 0 0 0
61-72 15 0 215 0 139 0 0 0
73-84 15 6 235 48 173 24 117 0
85-96 11 9 538 105 219 72 63 0
97-108 14 8 376 281 186 203 31 0
109-120 14 9 341 177 215 97 74 0
121-132 0 0 0 0 0 0 87 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 69 32 1,705 611 932 396 372 0
-------- -------- --------- --------- --------- --------- ---------- -------
RP-I-EMP - Use C2790-26 1-12 0 0 0 0 0 0 0 0
13-24 0 0 0 0 0 0 0 0
25-36 0 0 0 0 0 0 0 0
37-48 0 0 0 0 0 0 0 0
49-60 0 0 0 0 0 0 0 0
61-72 0 0 0 0 0 0 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 0 0 0 0 0 0 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
Inst-R (RP-I95) 1-12 104 109 4,883 20,700 109 287 1 0
Note: Use C2790-26 13-24 21 86 3,725 2,260 75 206 25 0
25-36 9 16 2,106 3,652 44 91 6 0
37-48 15 9 1,261 2,105 85 47 0 0
49-60 13 13 182 1,237 63 90 16 0
61-72 3 10 669 142 10 51 21 0
73-84 0 3 0 669 0 10 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 165 246 12,826 30,765 386 782 69 0
-------- -------- --------- --------- --------- --------- ---------- -------
F-80
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
Year ended December 31, 2003
(Thousands)
Deductions from Reserves
------------------------
Number of 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
- ------------------ -------- -------------------- ------------------- ------------------- ---------- -------
Inst-R-E - Use C2790-26 1-12 2 1 1,590 8 11 0 0 0
13-24 0 1 0 240 0 2 0 0
25-36 0 0 0 0 0 0 0 0
37-48 1 0 6 0 4 0 0 0
49-60 1 1 6 6 3 5 0 0
61-72 0 1 0 6 0 3 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
Total 4 4 1,602 260 18 10 0 0
-------- -------- --------- --------- --------- --------- ---------- -------
TOTAL - ALL SERIES 25,449 22,195 282,464 225,202 168,823 145,962 23,629 1,455
======== ======== ========= ========= ========= ========= ========== =======
(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.
F-81
SCHEDULE VI
AMERICAN EXPRESS CERTIFICATE COMPANY
Part 4 - Amounts Periodically Credited to Certificate Holders' Accounts to
Accumulate the Maturity Amount of Installment Certificates.
Year ended December 31, 2003
(Thousands)
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. 2-258081and is incorporated herein by reference.
F-82
AMERICAN EXPRESS CERTIFICATE COMPANY SCHEDULE VII
Valuation and Qualifying Accounts
Years ended December 31, 2003, 2002, and 2001
(Thousands)
Year ended December 31, 2003
- ----------------------------------------------------------------------------------------------------------------------------
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/writedowns of period
- -------------------------- ------------- ------------ ------------ --------------------- ------------
Allowance for losses:
Conventional first
mortgage loans
and other loans 4,223 5,313 0 0 9,536
Year ended December 31, 2002
- ----------------------------------------------------------------------------------------------------------------------------
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/writedowns of period
- -------------------------- ------------- ------------ ------------ --------------------- ------------
Allowance for losses:
Conventional first
mortgage loans
and other loans 1,935 2,288 0 0 4,223
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/writedowns of period
- -------------------------- ------------- ------------ ------------ --------------------- ------------
Allowance for losses:
Conventional first
mortgage loans 744 1,191 0 0 1,935
F-83
EXHIBIT INDEX
The following exhibits are filed as part of this Annual Report:
Exhibit Description
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.
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.
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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 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.
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10(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.
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 Exhibit10(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 3, 2004, filed
electronically herewith as Exhibit 24(a).
24(b). Directors' Power of Attorney, dated March 3, 2004, filed
electronically herewith as Exhibit 24(b).
25-99. None or not applicable.
31.1 Certification of Paula R. Meyer pursuant to Rule 13a-14(a)
promulgated under the Securities Exchange Act of 1934, as
amended.
31.2 Certification of Brian J. McGrane pursuant to Rule 13a-14(a)
promulgated under the Securities Exchange Act of 1934, as
amended.
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32.1 Certification of Paula R. Meyer and Brian J. McGrane pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
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