AMERICAN EXPRESS CREDIT CORP - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-K

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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 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. 1-6908

AMERICAN EXPRESS CREDIT CORPORATION
(Exact name of Registrant as specified in its charter)

Delaware 11-1988350
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

One Christina Centre, 301 North Walnut Street 19801-2919
Suite 1002, Wilmington, Delaware (Zip Code)
(Address of principal executive offices)

Registrant's telephone number including area code: (302) 594-3350.

Securities registered pursuant to Section 12 (b) of the Act:

Name of each exchange
Title of each class on which registered
- ---------------------------------------- -----------------------

Step-Up Senior Notes due August 10, 2005 New York Stock Exchange

Securities registered pursuant to Section 12 (g) of the Act: None.

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a) AND
(b) OF FORM 10-K AND HAS THEREFORE OMITTED CERTAIN ITEMS FROM THIS REPORT IN
ACCORDANCE WITH THE REDUCED DISCLOSURE FORMAT PERMITTED UNDER INSTRUCTION I.

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [_] No [X]

American Express Company, through a wholly owned subsidiary, owns all of the
outstanding common stock of the Registrant. Accordingly, there is no market for
the Registrant's common stock. At March 24, 2004, 1,504,938 shares were
outstanding.

Documents incorporated by reference: None

PART I

Item 1. BUSINESS.

Introduction

American Express Credit Corporation (Credco) was incorporated in Delaware in
1962 and was acquired by American Express Company (American Express) in December
1965. On January 1, 1983, Credco became a wholly owned subsidiary of American
Express Travel Related Services Company, Inc. (TRS), a wholly-owned subsidiary
of American Express.

Credco is primarily engaged in the business of financing most
non-interest-bearing charge cardmember receivables arising from the use of the
American Express'r' card, the American Express'r' Gold card, Platinum card'r'
and Corporate card issued in the United States, and in designated currencies
outside the United States. Credco also purchases certain interest-bearing and
discounted revolving credit and extended payment plan receivables comprised of
American Express credit cards, Sign & Travel'r' and Extended Payment Option
receivables, lines of credit and loans to American Express Bank Ltd. customers
and interest-bearing equipment financing installment loans and leases. American
Express cards and American Express credit cards are collectively referred to
herein as the card.

American Express Card Business

American Express cards are currently issued in 47 currencies (including cards
issued by third-party banks and other qualified institutions). The card, which
is issued to individual consumers for their personal account or through a
corporate account established by their employer for its business purposes,
permits cardmembers to charge purchases of goods or services in the United
States and in most countries around the world at service establishments that
have agreed to accept the card. As a merchant processor, TRS accepts and
processes from each participating establishment the charges arising from
cardmember purchases at a discount that is principally determined by the value
that is delivered to the service establishment and generally includes a premium
over other card networks. Value is delivered to the service establishment
through higher spending cardmembers relative to competing card networks, the
volume of spending by all cardmembers, marketing programs and the insistence of
cardmembers to use their cards when enrolled in rewards or other card loyalty
programs. When establishing the discount rate, consideration is also given to a
number of other factors, such as industry specific requirements, estimated
charge volume and payment terms.

The charge card, which is marketed in the United States and many other countries
and carries no preset spending limit, is primarily designed as a method of
payment and not as a means of financing purchases of goods or services. Charges
are approved based on a variety of factors including a cardmember's account
history, credit record and personal resources. Charge cards generally require
payment by the cardmember of the full amount billed each month, and no finance
charges are assessed. Charge card accounts that are past due are subject, in
most cases, to a delinquency assessment and, if not brought to current status,
subject to cancellation. TRS and its licensees also offer a variety of revolving
credit cards marketed in the United States and other countries. These cards have
a range of payment terms, grace periods and rate and fee structures.

The American Express card businesses are subject to extensive regulation in the
United States as well as in foreign jurisdictions. In the United States the
business is subject to a number of federal laws and regulations, including the
Equal Credit Opportunity Act, which generally prohibits discrimination in the
granting and handling of credit; the Fair Credit Reporting Act, which, among
other things, regulates use by creditors of consumer credit reports and credit
prescreening practices and requires certain disclosures when an application for
credit is rejected; the Truth in Lending Act, which, among other things,
requires extensive disclosure of the terms upon which credit is granted; the
Fair Credit Billing Act, which, among other things, regulates the manner in
which billing inquiries are handled and specifies certain billing requirements;
the Fair Credit and Charge Card Disclosure Act, which mandates certain
disclosures on credit and charge card

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applications; and the Electronic Funds Transfer Act, which regulates disclosures
and settlement of transactions for electronic funds transfers including those at
ATMs. In addition, certain federal privacy-related laws and regulations govern
the collection and use of customer information by financial institutions.
Federal legislation also regulates abusive debt collection practices. In
addition, a number of states and foreign countries have similar consumer credit
protection, disclosure and privacy-related laws. The application of bankruptcy
and debtor relief laws affect Credco to the extent that such laws result in
amounts owed by cardmembers being classified as delinquent and/or charged off as
uncollectible. Card issuers and card networks are subject to anti-money
laundering and anti-terrorism legislation, including, in the United States, the
U.S.A. Patriot Act.

General Nature of Credco's Business

Credco purchases certain cardmember receivables arising from the use of the card
throughout the world pursuant to agreements (the Receivables Agreements) with
TRS and certain of its subsidiaries that issue the card (Card Issuers). Net
income primarily depends on the volume of receivables arising from the use of
the card purchased by Credco, the discount rates applicable thereto, the
relationship of total discount to Credco's interest expense and the
collectibility of the receivables purchased. The average life and collectibility
of accounts receivable generated by the use of the card are affected by factors
such as general economic conditions, overall levels of consumer debt and the
number of new cards issued.

Credco purchases cardmember receivables without recourse. Amounts resulting from
unauthorized charges (for example, those made with a lost or stolen card) are
excluded from the definition of receivables under the Receivables Agreements and
are not eligible for purchase by Credco. If the unauthorized nature of the
charge is discovered after purchase by Credco, the Card Issuer repurchases the
charge from Credco.

Credco generally purchases non-interest-bearing charge cardmember receivables at
face amount less a specified discount agreed upon from time to time, and
interest-bearing revolving credit cardmember receivables at face amount. The
Receivables Agreements generally require that non-interest-bearing receivables
be purchased at a discount rate which yields to Credco earnings of at least 1.25
times its fixed charges on an annual basis. The Receivables Agreements also
provide that consideration will be given from time to time to revising the
discount rate applicable to purchases of new receivables to reflect changes in
money market interest rates or significant changes in the collectibility of the
receivables. New groups of cardmember receivables are generally purchased net of
reserve balances applicable thereto.

Extended payment plan receivables and loans (lending receivables) are primarily
funded by subsidiaries of TRS other than Credco, although certain lending
receivables are purchased by Credco. At December 31, 2003 and 2002, gross
lending receivables owned by Credco totaled $5.1 billion and $4.9 billion,
representing approximately 19 percent and 22 percent, respectively, of all
interests in receivables owned by Credco. These receivables consist of certain
interest-bearing and discounted extended payment plan receivables comprised of
American Express credit card, Sign & Travel and Extended Payment Option
receivables, lines of credit and loans to American Express Bank Ltd. customers
and interest-bearing equipment financing installment loans and leases.

Credco, through a wholly owned subsidiary, Credco Receivables Corp. (CRC),
purchases gross participation interests in the seller's interest in both
non-interest-bearing and interest-bearing cardmember receivables owned by two
master trusts operated by TRS as part of its asset securitization programs. The
gross participation interests represent undivided interests in the receivables
originated by TRS and by American Express Centurion Bank (Centurion Bank), a
wholly owned subsidiary of TRS. See Note 3 in Notes to Consolidated Financial
Statements appearing herein.

The Card Issuers, at their expense and as agents for Credco, perform accounting,
clerical and other services necessary to bill and collect all cardmember
receivables owned by Credco. The Receivables Agreements provide that, without
the prior written consent of Credco, the credit standards used to determine
whether a

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card is to be issued to an applicant may not be materially reduced and that the
policy as to the cancellation of cards for credit reasons may not be materially
liberalized.

American Express, as the parent of TRS, has agreed with Credco that it will take
all necessary steps to assure performance of certain TRS obligations under the
Receivables Agreement between TRS and Credco. The Receivables Agreements may be
terminated at any time by the parties thereto, generally upon little or no
notice. Alternatively, such parties may agree to reduce the required 1.25 fixed
charge coverage ratio, which could result in lower discount rates and,
consequently, lower revenues and net income for Credco. The obligations of
Credco are not guaranteed under the Receivables Agreements or otherwise by
American Express or the Card Issuers.

Volume of Business

The following table shows the volume of all charge cardmember and lending
receivables purchased by Credco, excluding cardmember receivables sold to
affiliates, during each of the years indicated, together with receivables owned
by Credco at the end of such years (billions):

Volume of Gross Receivables Owned
Receivables Purchased at December 31,
--------------------------- --------------------------
Year Domestic Foreign Total Domestic Foreign Total
- ---- --------------------------- --------------------------

2003 $153.2 $56.1 $209.3 $17.8 $8.4 $26.2
2002 137.2 46.9 184.1 15.2 6.8 22.0
2001 159.0 45.1 204.1 17.4 5.6 23.0
2000 161.3 44.8 206.1 19.5 5.2 24.7
1999 131.9 41.8 173.7 18.3 5.0 23.3

The card business does not experience significant seasonal fluctuation, although
card billed business tends to be moderately higher in the fourth quarter than in
other quarters.

TRS' asset securitization programs disclosed above have reduced the volume of
domestic cardmember receivables purchased and the amount owned by Credco.

Charge Cardmember Receivables

At December 31, 2003 and 2002, Credco owned $21.2 billion and $17.2 billion,
respectively, of charge cardmember receivables and participation in charge
cardmember receivables, representing 81 percent and 78 percent of the total
receivables owned at December 31, 2003 and 2002, respectively. The charge
cardmember receivables owned at December 31, 2003 and 2002 include $5.1 billion
and $3.1 billion, respectively, of participation interests owned by Credco
Receivables Corp. (CRC). CRC owns a participation in the seller's interest in
charge cardmember receivables that have been conveyed to the American Express
Master Trust (the Trust). During 2003, $2.1 billion of investor certificates
previously issued by the Trust matured and alternate funding is being provided
through CRC's purchase of $2.1 billion gross seller's interest in charge
cardmember receivables ($2.1 billion, net of reserves) from American Express
Receivables Financing Corporation (RFC), a wholly owned subsidiary of TRS.

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Years ended December 31, (Millions, except
percentages and where indicated) 2003 2002 2001 2000 1999
-----------------------------------------------

Total charge cardmember receivables $21,165 $17,169 $19,121 $22,565 $20,618
90 days past due as a % of total 2.2% 2.6% 3.6% 2.7% 2.9%
Loss reserves $ 555 $ 498 $ 683 $ 640 $ 587
as a % of receivables 2.6% 2.9% 3.5% 2.8% 2.8%
as a % of 90 days past due 121% 112% 99% 105% 98%
Write-offs, net of recoveries $ 463 $ 568 $ 703 $ 543 $ 496
Net loss ratio (1) 0.23% 0.32% 0.35% 0.27% 0.29%
Average life of charge cardmember
receivables (in days) (2) 33 34 36 37 38

(1) Credco's write-offs, net of recoveries, expressed as a percentage of the
volume of charge cardmember receivables purchased by Credco in each of the
years indicated.

(2) Represents the average life of charge cardmember receivables owned by
Credco, based upon the ratio of the average amount of both billed and
unbilled receivables owned by Credco at the end of each month, during the
years indicated, to the volume of charge cardmember receivables purchased
by Credco.

Lending Receivables

At December 31, 2003 and 2002, Credco owned lending receivables totaling $5.1
billion and $4.9 billion, respectively, representing 19 percent and 22 percent
of all interests in receivables owned by Credco at December 31, 2003 and 2002,
respectively. These receivables consist of certain interest-bearing and
discounted extended payment plan receivables comprised of American Express
credit card, Sign & Travel and Extended Payment Option receivables, lines of
credit and loans to American Express Bank Ltd. customers and interest-bearing
equipment financing installment loans and leases. At December 31, 2003, CRC did
not own any participation interests in lending receivables. The lending
receivables owned at December 31, 2002 include $189 million of participation
interest owned by CRC. This represents a participation interest in the seller's
interest in lending receivables that have been conveyed to the American Express
Credit Account Master Trust (the Master Trust), formed to securitize lending
receivables.

Years ended December 31, (Millions, except
percentages and where indicated) 2003 2002 2001 2000 1999
------------------------------------------

Total lending receivables $5,067 $4,858 $3,927 $2,145 $2,707
Past due lending receivables as a % of total:
30-89 days 3.2% 4.2% 5.2% 6.7% 9.0%
90+ days 1.5% 1.7% 1.6% 1.7% 1.4%
Loss reserves $ 182 $ 243 $ 164 $ 99 $ 97
as a % of lending receivables 3.6% 5.0% 4.2% 4.6% 3.7%
as a % of past due 76% 84% 62% 55% 36%
Write-offs, net of recoveries $ 310 $ 330 $ 165 $ 111 $ 120
Net write-off rate (1) 6.07% 7.37% 5.31% 4.66% 5.17%

(1) Credco's write-offs, net of recoveries, expressed as a percentage of the
average amount of lending receivables owned by Credco at the beginning of
the year and at the end of each month in each of the years indicated.

Sources of Funds

Credco's business is financed by short-term borrowings consisting
principally of commercial paper, borrowings under bank lines of credit and
issuances of medium- and long-term debt, as well as through operations.
The weighted average interest cost on an annual basis of all borrowings,
after giving effect to commitment fees under lines of credit and the
impact of interest rate swaps, during the following years were:

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Weighted Average
Year Interest Cost
- -----------------------------------------

2003 3.46%
2002 3.96
2001 5.98
2000 6.04
1999 5.16

From time to time, American Express and certain of its subsidiaries purchase
Credco's commercial paper at prevailing rates, enter into variable rate note
agreements at interest rates generally above the 13-week treasury bill rate or
at interest rates based on LIBOR, and provide lines of credit. The largest
amount of borrowings from American Express or its subsidiaries at any month end
during the five years ended December 31, 2003 was $7.4 billion. At December 31,
2003, the amount borrowed was $6.8 billion. See Notes 4 and 5 to the
Consolidated Financial Statements appearing herein for information about
Credco's debt, including Credco's lines of credit and long-term debt.

Foreign Operations

See Notes 1, 7 and 10 to the Consolidated Financial Statements appearing herein
for information about Credco's foreign exchange risks and operations in
different geographic regions.

Employees

At December 31, 2003, Credco had 25 employees.

Item 2. PROPERTIES.

Credco neither owns nor leases any material physical properties.

Item 3. LEGAL PROCEEDINGS.

There are no material pending legal proceedings to which Credco or its
subsidiaries is a party or of which any of their property is the subject. Credco
knows of no such proceedings being contemplated by government authorities or
other parties.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Omitted pursuant to General Instruction I(2)(c) to Form 10-K.

PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

American Express, through a wholly owned subsidiary, TRS, owns all of the
outstanding common stock of Credco. Therefore, there is no market for Credco's
common stock.

Credco did not pay dividends to TRS in 2003 or 2002. For information about
limitations on Credco's ability to pay dividends, see Note 6 to the Consolidated
Financial Statements appearing herein.

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Item 6. SELECTED FINANCIAL DATA.

The following summary of certain consolidated financial information of Credco
was derived from audited financial statements for the five years ended December
31:

($ in millions) 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------

Income Statement Data

Revenues $ 1,987 $ 2,153 $ 2,842 $ 2,601 $ 2,168

Interest expense 852 916 1,458 1,459 1,130

Provision for losses, net of recoveries 701 846 937 689 672

Income tax provision 135 118 140 150 120

Net income 260 228 277 286 223

Balance Sheet Data

Gross charge cardmember receivables $21,165 $17,169 $19,121 $22,565 $20,618

Reserve for credit losses, charge cardmember receivables (555) (498) (683) (640) (587)

Gross lending receivables 5,067 4,858 3,927 2,145 2,707

Reserve for credit losses, lending receivables (182) (243) (164) (99) (97)

Total assets 31,949 27,665 26,542 28,326 26,726

Short-term debt 15,718 15,145 20,584 22,972 20,231

Current portion of long-term debt 1,978 5,751 800 550 550

Long-term debt 10,217 2,117 1,030 1,811 2,575

Shareholder's equity 2,750 2,315 2,200 2,152 2,061

Cash dividends -- -- -- 200 150

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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

Certain Critical Accounting Policies

American Express Credit Corporation's (Credco) significant accounting policies
are described in Note 1 to the Consolidated Financial Statements. The following
provides information about certain critical accounting policies that are
important to the Consolidated Financial Statements and that involve estimates
requiring significant management assumptions and judgments about the effect of
matters that are uncertain. These policies relate to reserves for cardmember
credit losses and investment securities valuation.

Reserves for cardmember credit losses

Credco's reserves for credit losses relating to charge cardmember receivables
and lending receivables represent management's estimate of the amount necessary
to absorb future credit losses inherent in Credco's outstanding portfolio of
charge cardmember and lending receivables. Management's evaluation process
requires many estimates and judgments. Reserves for these credit losses are
primarily based upon models that analyze specific portfolio statistics and also
reflect, to a lesser extent, management's judgment regarding overall adequacy.
The analytic models take into account several factors, including average
write-off rates for various stages of receivable aging (i.e., current, 30 days,
60 days, 90 days) over a 24-month period and average bankruptcy and recovery
rates. In exercising its judgment to adjust reserves that are calculated by the
analytic model, management considers the level of coverage of past-due accounts,
as well as external indicators, such as leading economic indicators,
unemployment rate, consumer confidence index, purchasing manager's index,
bankruptcy filings and the regulatory environment. Management believes the
impact of each of these indicators can change from time to time and thus reviews
these indicators in concert.

Receivables are charged off when management deems amounts to be uncollectible,
which is generally determined by the numbers of days past due. For charge
cardmember receivables, Credco generally writes off against its reserve for
losses the total balance in an account for which any portion remains unpaid
twelve months from the date of original billing. For lending receivables, Credco
generally writes off against its reserve for losses the total balance in an
account for which any portion remains unpaid after six contractual payments are
past due. Accounts are written off earlier if deemed uncollectible. In general,
bankruptcy and deceased accounts are written-off upon notification. Given both
the size and the volatility of write-offs, management continually monitors
evolving trends and adjusts its business strategy accordingly. To the extent
historic credit experience is not indicative of future performance or other
assumptions used by management do not prevail, loss experience could differ
significantly, resulting in either higher or lower future provisions for credit
losses, as applicable. As of December 31, 2003, if average write-offs were 5%
higher or lower, the reserve for credit losses would change by approximately $37
million.

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). Gains and losses are
recognized in 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. Credco 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 $11 million in unrealized gains that related
to $2.6 billion of securities.

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Liquidity and Capital Resources

Financing Activities

Credco's funding strategy is designed to maintain high and stable debt ratings
from the major credit rating agencies, Moody's, Standard & Poor's and
Fitch Ratings. Maintenance of high and stable debt ratings is critical to
ensuring Credco has continuous access to the capital and credit markets. It also
enables Credco to reduce its overall borrowing costs. At December 31, 2003,
Credco's debt ratings were as follows:

Standard
Moody's & Poor's Fitch Ratings
- ---------------------------------------------------------------------------------

Short-term P-1 A-1 F1
Senior unsecured Aa3 A+ A+
- ---------------------------------------------------------------------------------

Rating agencies review factors such as capital adequacy with a view towards
maintaining certain levels of capital, liquidity, business volumes, asset
quality and economic market trends, among others, in assessing Credco's and its
subsidiaries' appropriate ratings.

Credco's portfolio consists principally of charge cardmember and lending
receivables purchased without recourse from Card Issuers throughout the world
and participation interests purchased without recourse in the seller's interest
in both non-interest-bearing and interest-bearing cardmember receivables. These
participation interests are owned by two master trusts operated by American
Express Travel Related Services Company, Inc. (TRS) as part of its asset
securitization programs. At December 31, 2003 and 2002, respectively, Credco
owned $21.2 billion and $17.2 billion of charge cardmember receivables and
participation in charge cardmember receivables, representing approximately 81
percent and 78 percent, respectively, of the total receivables owned. Lending
receivables, representing approximately 19 percent and 22 percent of the total
receivables owned, were $5.1 billion and $4.9 billion at December 31, 2003 and
2002, respectively.

Credco's assets are financed through a combination of short-term debt, medium-
term notes, long-term senior notes and equity capital. Daily funding
requirements are met primarily by the sale of commercial paper. Credco has
readily sold the volume of commercial paper necessary to meet its funding needs
as well as to cover the daily maturities of commercial paper issued. In 2003,
Credco had uninterrupted access to the commercial paper and capital markets to
fund its business operations.

The commercial paper market represents the primary source of short-term funding
for Credco. Credco's commercial paper is a widely recognized name among
short-term investors and is a principal source of debt.

The average amount of commercial paper outstanding was $9.7 billion for 2003 and
$12.2 billion for 2002. At December 31, 2003, Credco had $8.8 billion of
commercial paper outstanding, net of cash equivalents. The outstanding amount,
net of cash equivalents, declined $0.5 billion or 5.6 percent from a year ago as
part of Credco's efforts to lessen its reliance on short-term funding sources.
Average commercial paper outstanding, net of cash equivalents, was $7.7 billion
and $10.6 billion in 2003 and 2002, respectively. Credco currently manages the
level of commercial paper outstanding, net of cash equivalents, such that the
ratio of its committed bank credit facility to total short-term debt, which
consists mainly of commercial paper, is not less than 100%.

Medium- and long-term debt is raised through the offering of debt securities
principally in the U.S. capital markets. Medium-term debt is generally defined
as any debt with an original maturity greater than 12 months but less than 36
months. Long-term debt is generally defined as any debt with an original
maturity greater than 36 months. At December 31, 2003, Credco had an aggregate
of $9.4 billion of medium-term notes outstanding at fixed and floating rates
with maturities of one to three years, a portion of which can be

8

extended by the holders up to an additional four years. During 2003 and 2002,
Credco's average medium- and long-term debt outstanding was $10.4 billion and
$5.8 billion, respectively.

In 2003, medium- and long-term debt with maturities ranging from two to five
years was issued. Credco's 2003 term offerings are highlighted in the
table below:

Description Amount (millions) Coupon/Rate Maturity
- ----------------------------------------------------------------------------------------------

Floating Rate Medium-Term Notes $4,891 1.24% Various
Floating Rate Medium-Term
Extendible Notes $2,000 1.20% February 14, 2005(1)
Floating Rate Extendible
Notes $1,000 1.17% January 21, 2005(2)
Fixed Rate Senior Notes $1,000 3.00% May 16, 2008
Floating Rate Senior Notes $ 500 1.32% May 16, 2006
- ----------------------------------------------------------------------------------------------

(1) These floating rate medium-term extendible notes had an initial maturity
date of March 5, 2004 and are subject to extension by the holders through March
5, 2008.

(2) These floating rate extendible notes had an initial maturity date of July
19, 2004 and are subject to extension by the holders through June 20, 2008.

These medium- and long-term debt issues have longer average maturities and a
wider distribution along the maturity spectrum as compared to the 2002 medium-
and long-term funding activity to reduce and spread out the refinancing
requirement in future periods. In early 2004, Credco issued an additional $2.2
billion of floating rate medium-term notes. Credco's aggregate annual maturities
of medium- and long-term debt are as follows (millions): 2004, $1,978; 2005,
$7,245; 2006, $1,798; 2007, $176; and 2008, $998.

At December 31, 2003, Credco had approximately $9.8 billion of medium- and
long-term debt and warrants available for issuance under shelf registrations
filed with the Securities and Exchange Commission (SEC). In addition, Credco had
the ability to issue $5.5 billion of debt under a Euro Medium-Term Note program
for the issuance of debt outside the United States to non-U.S. persons. This
program was established by Credco, TRS, American Express Overseas Credit
Corporation Limited (AEOCC), American Express Centurion Bank (Centurion Bank)
and American Express Bank Ltd. (a wholly owned indirect subsidiary of American
Express). The maximum aggregate principal amount of debt instruments outstanding
at any one time under the program will not exceed $6.0 billion.

In 2003, the American Express Credit Account Master Trust (the Master Trust)
securitized $3.5 billion of lending receivables through the public issuances of
two classes of investor certificates and privately placed collateral interests
in the assets of the Master Trust. At the time of these issuances, Credco
Receivables Corp. (CRC) sold an aggregate of $110 million of gross seller's
interest in lending receivables ($106 million, net of reserves) to American
Express Receivables Financing Corporation II (RFCII), a wholly owned subsidiary
of TRS. In addition, at the time of these issuances, CRC purchased from the
Master Trust, as an investment, an aggregate of $87 million of Class C
Certificates issued by the Master Trust, collateralized by the revolving credit
receivables held by the Master Trust.

In connection with the June 2003 maturity of $1.0 billion of investor
certificates previously issued by the Master Trust, $95 million of Class C
Certificates, previously issued by the Master Trust, which were held by CRC as
investments, matured.

During 2003, $2.1 billion of investor certificates previously issued by the
American Express Master Trust (the Trust) to securitize charge cardmember
receivables matured. In connection with these maturities, $135 million of Class
B Certificates, previously issued by the Trust, which were held by CRC as
investments, matured. At the time of these maturities, CRC purchased $2.1
billion of gross seller's interest in charge

9

cardmember receivables ($2.1 billion, net of reserves) from American Express
Receivables Financing Corporation (RFC), a wholly owned subsidiary of TRS.

Credco did not pay dividends to TRS in 2003 or 2002.

Liquidity

Credco balances the trade-offs between having too much liquidity, which can be
costly and limit financial flexibility, with having inadequate liquidity, which
may result in financial distress during a liquidity crisis (see Contingent
Liquidity Planning section below). Credco considers various factors in
determining its liquidity needs, such as economic and financial market
conditions, seasonality in business operations, cost and availability of
alternative liquidity sources, and credit rating agency considerations.

During the normal course of business, funding activities may raise more proceeds
than are necessary for immediate funding needs. These amounts are invested
principally in overnight, highly liquid instruments.

Credco believes that its available liquidity provides sufficient funding to meet
normal operating needs at all times. In addition, alternative liquidity sources
are available, mainly in the form of the liquidity portfolio, and committed bank
credit facilities, to provide uninterrupted funding over a twelve-month period
should access to unsecured debt sources become impaired.

Liquidity Portfolio

In the fourth quarter of 2003, Credco began a program to develop a liquidity
portfolio in which proceeds raised from such borrowings are invested in two to
three year U.S. Treasury securities. At December 31, 2003, Credco held $800
million in two year U.S. Treasury notes under this program. This program was
increased to $3 billion in the first quarter of 2004.

The invested amounts of the liquidity portfolio provide back-up liquidity,
primarily for Credco's commercial paper program. U.S. Treasury securities are
the highest credit quality and most liquid of investment instruments available.
Credco can easily sell these securities or enter into sale/repurchase agreements
to immediately raise cash proceeds to meet liquidity needs.

From time to time, Credco may increase its liquidity portfolio in order to
pre-refund maturing debt obligations or when financial market conditions are
favorable. These levels are monitored and adjusted when necessary to maintain
short-term liquidity needs in response to seasonal or changing business
conditions.

Committed Bank Credit Facilities

An alternate source of borrowing consists of committed credit line facilities.
Committed credit line facilities at December 31, 2003 and 2002 totaled $9.2
billion and $10.0 billion, respectively. Credco has the right to borrow up to a
maximum amount of $10.5 billion, with a commensurate reduction in the amount
available to American Express. Based on this maximum amount of available
borrowing, Credco's committed bank line coverage of its net short-term debt
would have been 117% as of December 31, 2003. These facilities expire as follows
(billions): 2004, $5.0; 2005, $1.7; 2006, $1.7 and 2007, $0.8. The availability
of credit lines is subject to Credco's maintenance of a 1.25 ratio of combined
earnings and fixed charges to fixed charges. For the year ended December 31,
2003, this ratio was 1.46.

In addition, Credco, through its wholly owned subsidiary, AEOCC, had short-term
borrowings under uncommitted lines of credit totaling $119 million and $58
million at December 31, 2003 and 2002, respectively.

10

Committed bank credit facilities do not contain material adverse change clauses,
which may preclude borrowing under the credit facilities. The facilities may not
be terminated should there be a change in Credco's credit rating.

Contingent Liquidity Planning

Credco also enhanced its contingent liquidity resources for alternative funding
sources principally through the addition of an investment liquidity portfolio as
discussed in the Liquidity Portfolio section earlier. Credco believes that its
funding strategy allows for the continued funding of business operations through
difficult economic, financial market and business conditions. Credco actively
manages the risk of liquidity and cost of funds resulting from Credco's
financing activities. Management believes a decline in Credco's long-term credit
rating by two levels could result in Credco having to significantly reduce its
commercial paper and other short-term borrowings. Remaining borrowing
requirements would be addressed through other means such as the issuance of
long-term debt, additional securitizations, the sale of investment securities or
drawing on existing credit lines. This would result in higher interest expense
on Credco's commercial paper and other debt, as well as higher fees related to
unused lines of credit. Credco believes a two level downgrade is highly unlikely
due to its capital position and growth prospects.

Credco has developed a contingent funding plan that enables it to meet its daily
funding obligations when access to unsecured funds in the debt capital markets
is impaired or unavailable. This plan is designed to ensure that Credco could
continuously maintain normal business operations for at least a 12-month period
in which its access to unsecured funds is interrupted. The contingent funding
plan includes access to diverse sources of alternative funding, including but
not limited to its liquidity portfolio, committed bank lines, intercompany
borrowings, sale of consumer loans and cardmember receivables through existing
TRS securitization programs and sale of other eligible receivables, such as
corporate and small business receivables and international cardmember loans and
receivables, through enhanced securitization programs.

The funding sources that would be relied upon depend on the exact nature of such
a hypothetical liquidity crisis; nonetheless, Credco's liquidity sources are
designed with the goal of ensuring there is sufficient cash on hand to fund
business operations over a 12-month period regardless of whether the liquidity
crisis was caused by an external, industry or company specific event. The
simulated liquidity crisis is defined as a sudden and unexpected event that
impairs access to or makes unavailable funding in the unsecured debt markets. It
does not address asset quality deterioration. Asset quality deterioration, if it
were to occur, would be expected to unfold over an extended time period and
should allow management sufficient time to take appropriate corrective actions
to mitigate further asset quality deterioration as it becomes more visible.

Results of Operations

Credco purchases cardmember receivables without recourse from TRS.
Non-interest-bearing charge cardmember receivables are purchased at face amount
less a specified discount agreed upon from time to time and interest-bearing
lending receivables are generally purchased at face amount. Non-interest-bearing
receivables are purchased under Receivables Agreements that generally provide
that the discount rate shall not be lower than a rate that yields earnings of at
least 1.25 times fixed charges on an annual basis. The ratio of earnings to
fixed charges was 1.46, 1.38 and 1.29 in 2003, 2002 and 2001, respectively. The
ratio of earnings to fixed charges for American Express, for the years ended
December 31, 2003, 2002 and 2001 was 3.43, 2.88 and 1.52, respectively. The
Receivables Agreements also provide that consideration will be given from time
to time to revising the discount rate applicable to purchases of new receivables
to reflect changes in money market interest rates or significant changes in the
collectibility of the receivables. Pretax income depends primarily on the volume
of charge cardmember and lending receivables purchased, the discount rates
applicable thereto, the relationship of total discount to Credco's interest
expense and the collectibility of receivables purchased.

11

Credco's decrease in discount revenue earned on purchased accounts receivable
during 2003 is attributable to lower discount rates, partially offset by an
increase in the volume of receivables purchased. Finance charge revenue in 2003
decreased as a result of lower interest rates. Interest income in 2003 decreased
due to a decrease in interest rates. Interest expense decreased in 2003 as a
result of lower interest rates, partially offset by an increase in the volume of
average debt outstanding. Provision for losses decreased in 2003 reflecting a
decrease in the provision rates, partially offset by an increase in volume of
receivables purchased.

The following is a further analysis of the changes attributable to the increase
(decrease) in key revenue and expense accounts (millions):

2003 2002
- -------------------------------------------------------------------------------

Discount revenue earned on purchased accounts receivable:
Volume of receivables purchased $ 240 $(252)
Discount rates (329) (494)
- -------------------------------------------------------------------------------
Total $ (89) $(746)
- -------------------------------------------------------------------------------
Finance charge revenue:
Volume of receivables purchased $ (14) $ 150
Interest rates (41) (1)
- -------------------------------------------------------------------------------
Total $ (55) $ 149
- -------------------------------------------------------------------------------
Interest income from investments:
Volume of average investments outstanding $ 12 $ 27
Interest rates (26) (79)
- -------------------------------------------------------------------------------
Total $ (14) $ (52)
- -------------------------------------------------------------------------------
Interest income from affiliates:
Volume of average investments outstanding $ (2) $ 9
Interest rates (12) (46)
- -------------------------------------------------------------------------------
Total $ (14) $ (37)
- -------------------------------------------------------------------------------
Interest expense other:
Volume of average debt outstanding $ 72 $(178)
Interest rates (108) (302)
- -------------------------------------------------------------------------------
Total $ (36) $(480)
- -------------------------------------------------------------------------------
Provision for losses:
Volume of receivables purchased $ 146 $(110)
Provision rates and volume of recoveries (291) 19
- -------------------------------------------------------------------------------
Total $(145) $ (91)
- -------------------------------------------------------------------------------
Interest expense affiliates:
Volume of average debt outstanding $ (2) $ 62
Interest rates (26) (124)
- -------------------------------------------------------------------------------
Total $ (28) $ (62)
- -------------------------------------------------------------------------------

12

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Credco's risk management objective is to monitor and control risk exposures to
earn returns commensurate with the appropriate level of risk assumed. American
Express management establishes and oversees implementation of Board-approved
policies covering its funding, investments and the use of derivative financial
instruments. American Express' Treasury department, along with various asset and
liability committees in its business segments, is responsible for managing
financial market risk exposures within the context of Board-approved policies.
See Note 7 in the Consolidated Financial Statements appearing herein for a
discussion of Credco's use of derivatives.

The American Express Enterprisewide Risk Management Committee (ERMC) supplements
the risk management capabilities resident within American Express' business
segments by routinely reviewing key financial market, credit, operational and
other risk concentrations across American Express and recommending action where
appropriate. The ERMC recommends risk limits, promotes a rigorous understanding
of risks across American Express and supports senior management in making
risk-return decisions.

The following sections include sensitivity analyses of two different types of
market risk and 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 strengthening of the U.S. dollar versus all other currencies.
Computations of the prospective effects of hypothetical interest rate and
foreign exchange rate changes are based on numerous assumptions, including
relative levels of market interest rates and foreign exchange rates, as well as
the levels of assets and liabilities. The hypothetical changes and assumptions
will be different from what actually occurs in the future. Furthermore, the
computations do not incorporate actions that management could take if the
hypothetical market changes actually occur, including revising the discount rate
applicable to purchases of new receivables. As a result, actual earnings
consequences will differ from those quantified.

Credco's hedging strategies for financial market risk exposures are established,
maintained and monitored by the American Express Treasury department and are
employed to manage interest rate and foreign currency exposures over a
multi-year time horizon. The extent of Credco's unhedged exposures varies over
time based on current interest and foreign exchange rates, the macro-economic
environment and the hedging impact on particular business objectives.

Credco's policies generally require that derivatives may be used only to meet
business objectives and not to be used for speculative purposes. Hedging
counterparties at Credco must be rated by a recognized rating agency in one of
its three highest categories. Derivative credit and market exposures are
aggregated to determine counterparty exposures. Netting agreements and, in
certain instances, collateral are utilized to mitigate these exposures.
Documentation is subject to counsel review and approval and is generally written
on standard industry agreements.

In addition, Credco funds a portion of its local currency operations by raising
U.S. dollar funding and converting U.S. dollars to local currency through
foreign exchange derivative contracts. These foreign exchange instruments are
sometimes combined with interest rate swaps to achieve the desired level of
local market interest rate risk.

Credco funds its charge cardmember receivables and lending receivables using
various funding sources such as long- and short-term debt, medium-term notes,
commercial paper and other debt. For Credco's charge cardmember and fixed rate
lending receivables, interest rate exposure is managed through a combination of
shifting the mix of funding toward a fixed rate debt and through the use of
derivative instruments, with an emphasis on interest rate swaps, that
effectively fix Credco's interest expenses for the length of the swap. Credco
endeavors to lengthen the maturity of interest rate hedges in periods of falling
interest rates and to

13

shorten their maturity in periods of rising interest rates. For the majority of
Credco's lending receivables, which are linked to a floating rate base and
generally reprice each month, Credco uses floating rate funding.

The detrimental effect on Credco's pretax earnings of a hypothetical 100 basis
point increase in interest rates would be approximately $47 million and $29
million, based on 2003 and 2002 year-end positions, respectively. This effect is
primarily a function of the extent of variable rate funding of charge card and
fixed rate lending products, to the degree that interest rate exposure is not
managed by derivative financial instruments. With respect to the managed portion
of that interest rate exposure, a substantial amount of the $179 million of
Credco's net after-tax unrealized losses recorded in other comprehensive income
on the consolidated balance sheet at December 31, 2003 represents the fair value
of the related derivative financial instruments. These losses will be recognized
in earnings during the terms of those derivative contracts at the same time that
Credco realizes the benefits of lower market rates of interest on its funding of
charge card and fixed rate lending products.

Credco's foreign exchange risk arising from cross-currency charges and balance
sheet exposures is managed primarily by entering into agreements to buy and sell
currencies on a spot or forward basis. Based on the year-end 2003 and 2002
foreign exchange positions, the effect on Credco's earnings of the hypothetical
10 percent strengthening of the U.S. dollar would be immaterial.

Forward-looking Statements

Various forward-looking statements have been made in this Form 10-K Annual
Report. Forward-looking statements may also be made in Credco's other reports
filed with the SEC and in other documents. In addition, from time to time,
Credco through its management may make oral forward-looking statements.
Forward-looking statements are subject to risks and uncertainties, including
those identified below, which could cause actual results to differ materially
from such statements. The words "believe", "expect", "anticipate", "optimistic",
"intend", "evaluate", "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. Credco undertakes no
obligation to update publicly or revise any forward-looking statements. Factors
that could cause actual results to differ materially from Credco's
forward-looking statements include, but are not limited to:

o credit trends and the rate of bankruptcies, which can affect spending
on card products and debt payments by individual and corporate
customers;

o Credco's ability to accurately estimate the provision for credit
losses in Credco's outstanding portfolio of charge cardmember and
lending receivables;

o fluctuations in foreign currency exchange rates;

o negative changes in Credco's credit ratings, which could result in
decreased liquidity and higher borrowing costs;

o the effect of fluctuating interest rates, which could affect Credco's
borrowing costs; and

o the impact on American Express Company's business resulting from
continuing geopolitical uncertainty.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

1. Financial Statements.

See Index to Financial Statements at page F-1 hereof.

14

2. Supplementary Financial Information.

Selected quarterly financial data. See Note 11 to the
Consolidated Financial Statements appearing herein.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

Item 9A. CONTROLS AND PROCEDURES.

Credco's management, with the participation of Credco's Chief
Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of Credco'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,
Credco's Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of such period, Credco's disclosure
controls and procedures are effective. There have not been any changes
in Credco'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 Credco's fourth fiscal quarter that have materially affected,
or are reasonably likely to material affect, Credco's internal control
over financial reporting.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Omitted pursuant to General Instruction I(2) (c) to Form 10-K.

Item 11. EXECUTIVE COMPENSATION.

Omitted pursuant to General Instruction I(2) (c) to Form 10-K.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Omitted pursuant to General Instruction I(2) (c) to Form 10-K.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Omitted pursuant to General Instruction I(2) (c) to Form 10-K.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The Audit Committee of the Board of Directors of American Express Company
has appointed Ernst & Young LLP as independent auditors to audit the
consolidated financial statements of Credco for the year ended December 31,
2003.

Audit Fees

The aggregate fees billed or to be billed by Ernst & Young for each of the
last two years for professional services rendered for the audit of Credco's
annual financial statements and services that were provided in connection with
statutory and regulatory filings or engagements and other attest services were
$407,000 for 2003 and $267,000 for 2002.

Audit-Related Fees

Credco was not billed by Ernst & Young for any fees for audit-related
services for 2003 or 2002.

Tax Fees

Credco was not billed by Ernst & Young for any tax fees for 2003 or 2002.

All Other Fees

Credco was not billed by Ernst & Young for any other fees for 2003 or 2002.

Policy on Pre-Approval of Services Provided by Independent Auditor

Pursuant to the requirements of the Sarbanes-Oxley Act of 2002, the terms
of the engagement of Ernst & Young are subject to the specific pre-approval of
the Audit Committee of American Express. All audit and permitted non-audit
services to be performed by Ernst & Young for Credco require pre-approval by the
Audit Committee of American Express in accordance with pre-approval procedures
established by the Audit Committee of American Express. The procedures require
all proposed engagements of Ernst & Young for services to Credco of any kind
to be directed to the General Auditor of American Express and then submitted
for approval to the Audit Committee of American Express prior to the beginning
of any services.

15

PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) 1. Financial Statements:
See Index to the Financial Statements at page F-1 hereof.

2. Financial Statement Schedule:
See Index to the Financial Statements at page F-1 hereof.

3. Exhibits:
See Exhibit Index hereof.

(b) Reports on Form 8-K:

None.

16

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.

AMERICAN EXPRESS CREDIT CORPORATION
(Registrant)

DATE: March 24, 2004 By /s/Walker C. Tompkins, Jr.
-------------------------------------
Walker C. Tompkins, Jr.
President and Chief Executive Officer

Pursuant to the requirement of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities on the dates indicated.

DATE: March 24, 2004 By /s/Walker C. Tompkins, Jr.
-------------------------------------
Walker C. Tompkins, Jr.
President, Chief Executive Officer
and Director

DATE: March 24, 2004 /s/Erich Komdat
-------------------------------------
Erich Komdat
Vice President and Chief Accounting
Officer

DATE: March 24, 2004 /s/Walter S. Berman
-------------------------------------
Walter S. Berman
Chief Financial Officer and Director

DATE: March 24, 2004 /s/David L. Yowan
-------------------------------------
David L. Yowan
Vice President and Director

17

AMERICAN EXPRESS CREDIT CORPORATION
INDEX TO FINANCIAL STATEMENTS
COVERED BY REPORT OF INDEPENDENT AUDITORS

(Item 14 (a))

Page Number
---------------

Financial Statements:

Report of independent auditors F - 2

Consolidated statements of income for each of the
three years ended December 31, 2003, 2002 and 2001 F - 3

Consolidated balance sheets at December 31,
2003 and 2002 F - 4

Consolidated statements of cash flows for each of
the three years ended December 31, 2003, 2002 and 2001 F - 5

Consolidated statements of shareholder's equity for each
of the three years ended December 31, 2003, 2002 and 2001 F - 6

Notes to consolidated financial statements F - 7 to F - 14

Schedule:

II - Valuation and qualifying accounts for each of
the three years ended December 31, 2003, 2002 and 2001 F - 15

All other schedules are omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the
consolidated financial statements or notes thereto.

F-1

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
American Express Credit Corporation

We have audited the accompanying consolidated balance sheets of American Express
Credit Corporation as of December 31, 2003 and 2002, and the related
consolidated statements of income, shareholder's equity and cash flows for each
of the three years in the period ended December 31, 2003. Our audits also
included the financial statement schedule listed in the Index at Item 14 (a).
These financial statements and schedule are the responsibility of the management
of American Express Credit Corporation. Our responsibility is to express an
opinion on these financial statements and schedule 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. 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 consolidated financial position of American Express
Credit Corporation at December 31, 2003 and 2002, and the consolidated 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 schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.

/s/ Ernst & Young LLP

New York, New York
January 26, 2004

F-2

AMERICAN EXPRESS CREDIT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

Years Ended December 31, (Millions) 2003 2002 2001
- ---------------------------------------------------------------------

Revenues

Discount revenue earned from purchased
accounts receivable $1,399 $1,488 $2,234
Finance charge revenue 476 531 382
Interest income from investments 69 83 135
Interest income from affiliates 31 45 82
Other 12 6 9

- ---------------------------------------------------------------------
Total revenues 1,987 2,153 2,842
- ---------------------------------------------------------------------

Expenses

Interest expense - other 782 818 1,298
Provision for losses, net
of recoveries of: 2003, $204;
2002, $221; 2001, $193 701 846 937
Interest expense - affiliates 70 98 160
Other 39 45 30

- ---------------------------------------------------------------------
Total expenses 1,592 1,807 2,425
- ---------------------------------------------------------------------

Pretax income 395 346 417
Income tax provision 135 118 140

- ---------------------------------------------------------------------
Net income $ 260 $ 228 $ 277
- ---------------------------------------------------------------------

See notes to consolidated financial statements.

F-3

AMERICAN EXPRESS CREDIT CORPORATION
CONSOLIDATED BALANCE SHEETS

December 31, (Millions, except share data) 2003 2002
- -------------------------------------------------------------------------------

Assets

Cash and cash equivalents $ 1,528 $ 1,924
Investments 2,593 1,901
Charge cardmember receivables, less credit reserves:
2003, $555; 2002, $498 20,610 16,671
Lending receivables, less credit reserves:
2003, $182; 2002, $243 4,885 4,615
Loans and deposits with affiliates 1,923 2,047
Deferred charges and other assets 410 507
- -------------------------------------------------------------------------------
Total assets $31,949 $27,665
- -------------------------------------------------------------------------------

Liabilities and Shareholder's Equity

Short-term debt $10,563 $11,366
Short-term debt with affiliates 5,155 3,779
Current portion of long-term debt 1,060 5,751
Current portion of long-term debt with affiliates 918 --
Long-term debt 9,497 1,174
Long-term debt with affiliates 720 943
------- -------
Total debt 27,913 23,013
Due to affiliates 419 1,418
Accrued interest and other liabilities 867 919
- -------------------------------------------------------------------------------
Total liabilities 29,199 25,350
- -------------------------------------------------------------------------------

Shareholder's Equity

Common stock-authorized 3 million shares of $.10 par value;
issued and outstanding 1.5 million shares 1 1
Capital surplus 161 161
Retained earnings 2,756 2,496
Other comprehensive loss, net of tax:
Net unrealized securities gains (losses) 11 (11)
Net unrealized derivatives losses (179) (332)
- -------------------------------------------------------------------------------
Accumulated other comprehensive loss (168) (343)
- -------------------------------------------------------------------------------
Total shareholder's equity 2,750 2,315
- -------------------------------------------------------------------------------
Total liabilities and shareholder's equity $31,949 $27,665
- -------------------------------------------------------------------------------

See notes to consolidated financial statements.

F-4

AMERICAN EXPRESS CREDIT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, (Millions) 2003 2002 2001
- ---------------------------------------------------------------------------------------------

Cash Flows from Operating Activities
Net income $ 260 $ 228 $ 277
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Provision for losses 701 846 937
Amortization and other -- -- (4)
Changes in operating assets and liabilities:
Deferred tax assets (3) 54 (183)
Increase (decrease) due to affiliates 16 (143) 316
Other operating assets and liabilities 182 388 173
- ---------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,156 1,373 1,516
- ---------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
(Increase) decrease in accounts receivable (3,166) (1,329) 832
Recoveries of accounts receivable previously written off 204 221 193
Purchase of participation interest in seller's interest in
accounts receivable from affiliate (2,051) (1,518) (1,062)
Sale of participation interest in seller's interest in accounts
receivable to affiliate 106 1,866 825
Sale of net accounts receivable to affiliate 460 1,543 700
Purchase of net accounts receivable from affiliate (462) (713) (655)
Purchase of investments (888) (579) (467)
Maturity of investments 230 95 54
Sale of investments -- -- 249
Loans and deposits due from affiliates 123 (140) (165)
(Decrease) increase due to affiliates (1,015) 136 383
- ---------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities (6,459) (418) 887
- ---------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Net increase (decrease) in short-term debt with affiliates with
maturities of ninety days or less 1,376 1,565 (71)
Net decrease in short-term debt - other with maturities of
ninety days or less (559) (5,050) (3,515)
Issuance of debt 13,560 11,209 7,629
Redemption of debt (9,470) (7,163) (7,046)
- ---------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 4,907 561 (3,003)
- ---------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (396) 1,516 (600)
Cash and cash equivalents at beginning of year 1,924 408 1,008
- ---------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 1,528 $ 1,924 $ 408
- ---------------------------------------------------------------------------------------------

See notes to consolidated financial statements.

F-5

AMERICAN EXPRESS CREDIT CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY

Accumulated
Other
Common Capital Comprehensive Retained
Three Years Ended December 31, (Millions) Total Stock Surplus Loss Earnings
- ---------------------------------------------------------------------------------------------------------------

Balances at December 31, 2000 $2,152 $1 $161 $ (1) $1,991
- ---------------------------------------------------------------------------------------------------------------
Comprehensive income:
Net income 277 277
Change in net unrealized securities losses (3) (3)
Cumulative effect of adopting SFAS No. 133 (59) (59)
Change in net unrealized derivatives losses (456) (456)
Derivatives losses reclassified to earnings 289 289
------
Total comprehensive income 48
- ---------------------------------------------------------------------------------------------------------------
Balances at December 31, 2001 2,200 1 161 (230) 2,268
- ---------------------------------------------------------------------------------------------------------------
Comprehensive income:
Net income 228 228
Change in net unrealized securities losses (7) (7)
Change in net unrealized derivatives losses (400) (400)
Derivatives losses reclassified to earnings 294 294
------
Total comprehensive income 115
- ---------------------------------------------------------------------------------------------------------------
Balances at December 31, 2002 2,315 1 161 (343) 2,496
- ---------------------------------------------------------------------------------------------------------------
Comprehensive income:
Net income 260 260
Change in net unrealized securities gains 22 22
Change in net unrealized derivatives losses (147) (147)
Derivatives losses reclassified to earnings 300 300
------
Total comprehensive income 435
- ---------------------------------------------------------------------------------------------------------------
Balances at December 31, 2003 $2,750 $1 $161 $(168) $2,756
- ---------------------------------------------------------------------------------------------------------------

See notes to consolidated financial statements.

F-6

AMERICAN EXPRESS CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------

Note 1 Summary of Significant Accounting Policies

Basis of Presentation

American Express Credit Corporation together with its subsidiaries (Credco) is a
wholly owned subsidiary of American Express Travel Related Services Company,
Inc. (TRS), which is a wholly owned subsidiary of American Express Company
(American Express). American Express Overseas Credit Corporation Limited
together with its subsidiaries (AEOCC), Credco Receivables Corporation (CRC) and
Credco Finance, Inc. together with its subsidiaries (CFI), are wholly owned
subsidiaries of Credco.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
Credco and its subsidiaries. All significant intercompany transactions are
eliminated. Certain prior year amounts have been reclassified to conform to the
current year presentation.

Amounts Based on Estimates and Assumptions

Accounting estimates are an integral part of the consolidated financial
statements. In part they are based upon assumptions concerning future events.
Among the more significant are those that relate to reserves for cardmember
credit losses and investment securities valuation. These accounting estimates
reflect the best judgment of management and actual results could differ.

Revenue Earned from Purchased Accounts Receivable

Credco earns revenue from purchasing cardmember receivables. A portion of
discount revenue earned on purchases of non-interest-bearing cardmember
receivables equal to the provision for losses is recognized as revenue at the
time of purchase; the remaining portion is deferred and recorded as revenue
ratably over the period that the receivables are outstanding.

Finance charge revenue on interest-bearing lending receivables is recognized as
it is earned. Credco ceases accruing finance charge revenue after six
contractual payments are past due, or earlier, if deemed uncollectible. Accruals
that cease generally are not resumed.

Reserves for Credit Losses

Credco's reserves for credit losses relating to charge cardmember and lending
receivables represent management's estimate of the amount necessary to absorb
future credit losses inherent in Credco's outstanding portfolio of charge
cardmember and lending receivables. Management's evaluation process requires
many estimates and judgments. Reserves for these credit losses are primarily
based upon models that analyze specific portfolio statistics and also reflect,
to a lesser extent, management's judgment regarding overall adequacy. The
analytic models take into account several factors, including average write-off
rates for various stages of receivable aging (i.e., current, 30 days, 60 days,
90 days) over a 24-month period and average bankruptcy and recovery rates. In
exercising its judgment to adjust reserves that are calculated by the analytic
model, management considers the level of coverage of past-due accounts, as well
as external indicators, such as leading economic indicators, unemployment rate,
consumer confidence index, purchasing manager's index, bankruptcy filings and
the regulatory environment.

Receivables are charged off when management deems amounts to be uncollectible,
which is generally determined by the numbers of days past due. For charge
cardmember receivables, Credco generally writes off against its reserve for
losses the total balance in an account for which any portion remains unpaid
twelve months from the date of original billing. For lending receivables, Credo
generally writes off against its reserve for losses the total balance in an
account for which any portion remains unpaid after six contractual payments are
past due. Accounts are written off earlier if deemed uncollectible. In general,
bankruptcy and deceased accounts are written-off upon

F-7

notification. Given both the size and the volatility of write-offs, management
continually monitors evolving trends and adjusts its business strategy
accordingly. To the extent historic credit experience is not indicative of
future performance or other assumptions used by management do not prevail, loss
experience could differ significantly, resulting in either higher or lower
future provisions for credit losses, as applicable.

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). Gains and losses are
recognized in 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. Credco 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.

Cash and Cash Equivalents

Credco has defined cash and cash equivalents as cash and short-term investments
with original maturities of ninety days or less.

Fair Values of Financial Instruments

The fair values of financial instruments are estimates based upon current market
conditions and perceived risks at December 31, 2003 and 2002 and require varying
degrees of management judgment. The fair values of the financial instruments
presented may not be indicative of their future fair values.

The fair values of investments and long-term debt are included in the related
footnotes. For all other financial instruments, the carrying amounts in the
consolidated balance sheets approximate the fair values.

Interest Rate Transactions

Credco uses interest rate products, primarily swaps, to manage funding costs
related to its charge cardmember and lending receivables. For its charge card
and fixed rate lending products, Credco uses interest rate swaps to achieve a
mix of fixed and floating rate funding. For the majority of its lending
receivables, which are linked to a floating rate base and generally reprice each
month, Credco uses floating rate funding. These interest rate products, which
modify the terms of an underlying debt obligation, are accounted for by
recording interest expense using the revised interest rate with any fees or
other payments amortized as yield adjustments. It is Credco's normal practice
not to terminate, sell or dispose of interest rate products or the underlying
debt to which the products are designated prior to maturity. In the event Credco
terminates, sells or disposes of an interest rate product prior to maturity, the
gain or loss would be deferred and recognized as an adjustment of yield over the
remaining life of the underlying debt.

Foreign Currency

Foreign currency assets and liabilities are translated into their U.S. dollar
equivalents based on rates of exchange prevailing at the end of each year.
Revenue and expense accounts are translated at exchange rates prevailing during
the year. Credco enters into various foreign exchange contracts as a means of
managing foreign exchange exposure.

Recently Issued Accounting Standards

In April 2003, the Financial Accounting Standard Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." The Statement amends and
clarifies accounting for derivative instruments embedded in other contracts and
for hedging activities under SFAS No. 133. The adoption of this Statement did
not have a material impact on Credco's financial statements.

In November 2003, the FASB ratified a consensus on the disclosure provisions of
Emerging Issues Task Force Issue 03-1, "The Meaning of Other-Than-Temporary
Impairment and Its Application of Certain Investments." Credco adopted the
disclosure provisions of this rule, however, at December 31, 2003, there were no
investment securities with gross unrealized losses.

F-8

Note 2 Investments

At December 31, 2003 and 2002, Credco held American Express Master Trust Class B
Certificates with a fair value of $220 million (cost of $220 million) and
$357 million (cost of $355 million), respectively, and American Express Credit
Account Master Trust Class C Certificates with a fair value of $1,570 million
(cost of $1,555 million) and $1,544 million (cost of $1,563 million),
respectively. These securities are classified as Available-for-Sale.
Additionally, Credco held two-year U.S. Treasury notes with a fair value of
$803 million (cost of $801 million) at December 31, 2003. These securities are
classified as Available-for-Sale securities. A distribution of Available-for-
Sale securities by maturity as of December 31, 2003 is as follows: due within
one year, $334 million; due after one year through five years, $2,200 million;
and due after five years through ten years, $59 million.

Available-for-Sale securities are reported at fair value, with the unrealized
gains and losses included in shareholder's equity. The Available-for-Sale
classification does not mean that Credco necessarily expects to sell these
securities. They are available to meet possible liquidity needs should there be
significant changes in market interest rates, customer demand or funding sources
and terms.

The change in net unrealized securities gains (losses) recognized in other
comprehensive income includes two components: (1) unrealized gains (losses) that
arose from changes in market value of securities that were held during the
period (holding gains (losses)), and (2) gains (losses) that were previously
unrealized, but have been recognized in current period net income due to sales
of Available-for-Sale securities (reclassification for realized gains). This
reclassification has no effect on total comprehensive income (loss) or
shareholder's equity. The components of the change in other comprehensive gain
(loss) net of tax were $22.3 million and ($7.1) million in holding gains
(losses) for the years ended December 31, 2003 and 2002, respectively.

Note 3 Accounts Receivable

At December 31, 2003 and 2002, respectively, Credco owned $21.2 billion and
$17.2 billion of charge cardmember receivables and participation in charge
cardmember receivables, representing approximately 81 percent and 78 percent,
respectively, of the total receivables owned. In connection with TRS'
securitization program for U.S. charge cardmember receivables, CRC purchases
from American Express Receivables Financing Corporation (RFC), a wholly owned
subsidiary of TRS, a participation interest in RFC's seller's interest in the
receivables owned by the American Express Master Trust (the Trust). The gross
participation interests represent undivided interests in the receivables
conveyed to the Trust by RFC.

In 2003, $2.1 billion of investor certificates previously issued by the Trust
matured. In connection with these maturities, $135 million of Class B
Certificates, previously issued by the Trust, which were held by CRC as
investments, matured. At the time of these maturities, CRC purchased $2.1
billion of gross seller's interest in charge cardmember receivables ($2.1
billion, net of reserves) from RFC. At December 31, 2003 and 2002, CRC owned
approximately $5.1 billion and $3.1 billion, respectively, of participation
interests in receivables conveyed to the Trust, representing approximately 20
percent and 14 percent, respectively, of Credco's total receivables owned.

At December 31, 2003 and 2002, Credco owned lending receivables totaling $5.1
billion and $4.9 billion, respectively, including certain interest-bearing and
discounted extended payment plan receivables comprised of American Express
credit card, Sign & Travel and Extended Payment Option receivables, lines of
credit and loans to American Express Bank Ltd. customers and interest-bearing
equipment financing installment loans and leases, representing approximately 19
percent and 22 percent, respectively, of the total receivables owned. At
December 31, 2003, there was no participation interest in lending receivables
owned by CRC. The lending receivables owned at December 31, 2002 included a $189
million of participation interest owned by CRC. This represents a participation
interest in the seller's interest in lending receivables that have been conveyed
to the American Express Credit Account Master Trust (the Master Trust). In 2003,
the Master Trust securitized $3.5 billion of lending receivables through the
public issuances of two classes of investor certificates and privately placed
collateral interests in the assets of the Master Trust. At the time of these
issuances, CRC sold an aggregate of $110 million of gross seller's interest in
lending receivables ($106 million, net of reserves) to American Express
Receivables Financing Corporation II (RFCII), a wholly owned subsidiary of TRS.
In addition, at the time of these issuances, CRC purchased from the Master
Trust, as an investment, an aggregate of $87 million of Class C Certificates
issued by the Master Trust, collateralized by the revolving credit receivables
held by the Master Trust.

F-9

Note 4 Short-term Debt

December 31, (Millions) 2003 2002
- -------------------------------------------------------------------------------

Commercial paper $10,308 $11,221
Borrowings from affiliates 5,155 3,779
Borrowings under lines of credit 119 58
Borrowing agreements with bank trust departments and others 136 87
- -------------------------------------------------------------------------------
Total short-term debt $15,718 $15,145
- -------------------------------------------------------------------------------

Credco has various facilities available to obtain short-term funding, including
the issuance of commercial paper and agreements with banks. Credco had committed
credit line facilities totaling $9.2 billion and $10.0 billion at December 31,
2003 and 2002, respectively. Credco pays fees to the financial institutions that
provide these credit line facilities. The fair value of the unused lines of
credit is not significant at December 31, 2003 and 2002. At December 31, 2003
and 2002, Credco, through AEOCC, had short-term borrowings under uncommitted
lines of credit totaling $119 million and $58 million, respectively.

At December 31, 2003 and 2002, the weighted average interest rate of Credco's
short-term debt outstanding was 1.20 percent and 1.37 percent, respectively. At
December 31, 2003 and 2002, $5.5 billion and $6.1 billion of short-term debt
outstanding was hedged by interest rate swaps. The year-end weighted average
interest rates after giving effect to hedges were 1.85 percent and 2.73 percent
for 2003 and 2002, respectively.

Credco paid $0.8 billion, $0.7 billion and $1.3 billion of interest on
short-term debt obligations in 2003, 2002 and 2001, respectively.

Note 5 Long-term Debt

December 31, (Millions) 2003
- -----------------------------------------------------------------------------------------------
Year- Year-End
End Effective
Stated Interest
Notional Rate on Rate with
Outstanding Amount Debt Swaps Maturity
Balance of Swaps (a,b) (a,b) of Swaps
- -----------------------------------------------------------------------------------------------

Floating Rate Medium-Term Extendible
Notes due February 14, 2005 (c) $ 2,000 $ -- 1.20% -- --
Floating Rate Extendible Notes
due January 21, 2005 (d) 1,000 -- 1.17% -- --
Fixed Rate Senior Notes due
May 16, 2008 998 -- 3.00% -- --
Floating Rate Debt with American
Express due 2004 910 -- 1.04% -- --
Fixed Rate debt with affiliates due
2004 - 2007 729 -- 2.41% -- --
Floating Rate Medium-Term Notes
due 2003 - 2006 5,691 1,300 1.23% 1.76% Various
Fixed Rate Medium-Term Notes due 2005 258 250 4.25% 1.24% 2005
Floating Rate Senior Notes due
May 16, 2006 500 -- 1.32% -- --
Fixed Rate Notes due 2003 - 2005 109 100 7.45% 1.36% 2005
- -----------------------------------------------------------------------------------------------
Total $12,195 $1,650 1.55%
- -----------------------------------------------------------------------------------------------

December 31, (Millions) 2002
- --------------------------------------------------------------------------------------------------
Year- Year-End
End Effective
Stated Interest
Notional Rate on Rate with
Outstanding Amount Debt Swaps Maturity
Balance of Swaps (a, b) (a, b) of Swaps
- --------------------------------------------------------------------------------------------------

Floating Rate Medium-Term Extendible
Notes due February 14, 2005 (c) $ -- $ -- -- -- --
Floating Rate Extendible Notes
due January 21, 2005 (d) -- -- -- -- --
Fixed Rate Senior Notes due
May 16, 2008 -- -- -- -- --
Floating Rate Debt with American
Express due 2004 910 -- 1.30% -- --
Fixed Rate debt with affiliates due
2004 - 2007 33 -- 4.32% -- --
Floating Rate Medium-Term Notes 2003-
due 2003 - 2006 6,550 6,550 1.45% 5.34% 2004
Fixed Rate Medium-Term Notes due 2005 261 250 4.25% 1.54% 2005
Floating Rate Senior Notes due
May 16, 2006 -- -- -- -- --
Fixed Rate Notes due 2003 - 2005 114 100 7.45% 1.59% 2003 - 2005
- --------------------------------------------------------------------------------------------------
Total $7,868 $6,900 1.63%
- --------------------------------------------------------------------------------------------------

(a) For floating rate debt issuances, the stated and effective interest rates
were based on the respective rates at December 31, 2003 and 2002; these
rates are not an indication of future interest rates.

(b) Weighted average rates were determined where appropriate.

(c) These issuances are subject to extension by the holders through March 5,
2008.

(d) These issuances are subject to extension by the holders through June 20,
2008.

F-10

The above table includes the current portion of long-term debt of $1,978 million
and $5,751 million at December 31, 2003 and 2002, respectively. Aggregate annual
maturities of long-term debt are as follows (millions): 2004, $1,978; 2005,
$7,245; 2006, $1,798; 2007, $176; and 2008, $998.

The book value of variable rate long-term debt that reprices within a year
approximates fair value. The fair value of other long-term debt is based on
quoted market price or discounted cash flow. The aggregate fair value of
long-term debt, including the current portion outstanding, was $12.2 billion and
$7.9 billion, at December 31, 2003 and 2002, respectively.

Credco paid interest on long-term debt obligations of $170 million, $121 million
and $119 million in 2003, 2002 and 2001, respectively.

Note 6 Restrictions as to Dividends and Limitations on Indebtedness

The most restrictive limitation on dividends imposed by the debt instruments
issued by Credco is the requirement that Credco maintain a minimum consolidated
net worth of $50 million. There are no limitations on the amount of debt that
can be issued by Credco.

Note 7 Derivatives and Hedging Activities

As prescribed by SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," derivative instruments that are designated and qualify as
hedging instruments are further classified as either a cash flow hedge or a fair
value hedge, based upon the exposure being hedged.

For derivative instruments that are designated and qualify as a cash flow hedge,
the portion of the gain or loss on the derivative instrument effective at
offsetting changes in the hedged item is reported as a component of other
comprehensive income (loss) and reclassified into earnings when the hedged
transaction affects earnings. Any ineffective portion of the gain or loss on the
derivative instrument is recognized currently in earnings. For derivative
instruments that are designated and qualify as a fair value hedge, the gain or
loss on the derivative instrument as well as the offsetting loss or gain on the
hedged item attributable to the hedged risk is recognized in current earnings
during the period of the change in fair values. For derivative instruments not
designated as hedging instruments, the gain or loss is recognized currently
in earnings.

For the year ended December 31, 2003, Credco recorded $0.5 million of realized
gains on derivative transactions that were ineffective as hedges, excluded from
the assessment of hedge effectiveness or reclassified into earnings as a result
of the discontinuance of cash flow hedges. For the years ended December 31,
2002 and 2001, there were no such realized gains or losses.

Cash Flow Hedges

Credco uses interest rate products, primarily swaps, to manage funding costs
related to its purchase of charge cardmember receivables. For its charge
cardmember receivables, Credco uses interest rate swaps to achieve a targeted
mix of fixed and floating rate funding. These interest rate swaps are used to
protect Credco from the interest rate risk that arises from short-term funding.

During 2003, 2002 and 2001, Credco reclassified into earnings pretax losses of
$461 million, $452 million and $445 million, respectively. At December 31, 2003,
Credco expects to reclassify $446 million of net pretax losses on derivative
instruments from accumulated other comprehensive income (loss) to earnings
during the next twelve months.

F-11

Currently, the longest period of time over which Credco is hedging exposure to
the variability in future cash flows for forecasted transactions, excluding
those forecasted transactions related to the payment of variable interest on
existing financial instruments, is 7.4 years and relates to funding of foreign
currency denominated receivables.

Fair Value Hedges

Credco is exposed to interest rate risk associated with fixed rate debt and uses
interest rate swaps to convert certain fixed rate debt to floating rate.

Derivatives not Designated as Hedges Under SFAS No. 133

Credco has economic hedges that either do not qualify or are not designated for
hedge accounting treatment under SFAS No. 133. Accordingly, the derivatives are
marked to market and the gain or loss is included in net income.

Foreign currency transaction exposures are economically hedged, where practical,
through foreign currency contracts. Foreign currency contracts involve the
purchase and sale of a designated currency at an agreed upon rate for settlement
on a specified date. Such foreign currency forward contracts entered into by
Credco generally mature within one year.

See Notes 4 and 5 for further information regarding Credco's use of interest
rate products related to short- and long-term debt obligations.

Note 8 Transactions with Affiliates

In 2003, 2002 and 2001, Credco purchased charge cardmember and lending
receivables without recourse from TRS and certain of its subsidiaries totaling
approximately $209 billion, $184 billion and $204 billion, respectively.
Agreements for the purchase of charge cardmember receivables generally require
that Credco purchase such receivables at discount rates that yield to Credco
earnings of not less than 1.25 times its fixed charges on an annual basis. The
agreements require TRS and other Card Issuers, at their expense, to perform
accounting, clerical and other services necessary to bill and collect all
cardmember receivables owned by Credco. Since settlements under the agreements
occur monthly, an amount due from, or payable to, such affiliates may arise at
the end of each month.

At December 31, 2003 and 2002, CRC held American Express Master Trust Class B
Certificates with a fair value of $220 million and $357 million, respectively,
and American Express Credit Account Master Trust Class C Certificates with a
fair value of $1,570 million and $1,544 million, respectively.

At December 31, 2003 and 2002, CRC owned approximately $5.1 billion and $3.1
billion, respectively, of participation interests in charge cardmember
receivables conveyed to the Trust, representing approximately 20 percent and
14 percent, respectively, of Credco's total accounts receivable.

At December 31, 2003, there was no participation interest in lending receivables
owned by CRC. The lending receivables owned at December 31, 2002 include $189
million of participation interest owned by CRC. This represents a participation
interest in the seller's interest in lending receivables that have been conveyed
to the Master Trust.

F-12

Other transactions with American Express and its subsidiaries for the years
ended December 31 were as follows:

December 31, (Millions) 2003 2002 2001
- --------------------------------------------------------------------------------

Cash and cash equivalents $ 4 $ 2 $ 4
Maximum month-end level of cash and cash
equivalents during the year 8 6 10
Loans and deposits to affiliates 1,923 2,047 1,907
Maximum month-end level of loans and deposits to
affiliates during the year 1,923 2,047 1,907
Borrowings 6,793 4,722 3,124
Maximum month-end level of borrowings during the year 7,404 6,311 6,436
Interest income 31 45 82
Other income 12 6 9
Interest expense 70 98 160
- --------------------------------------------------------------------------------

At December 31, 2003, 2002 and 2001, Credco held variable rate loans to American
Express due in 2004 of $850 million. Additionally, Credco had $385 million, $489
million and $468 million of loans to American Express ATM Holdings, Inc., a
wholly owned subsidiary of TRS, at December 31, 2003, 2002 and 2001,
respectively. Credco also had $329 million, $369 million and $225 million of
loans to American Express International Inc., a wholly owned subsidiary of TRS,
at December 31, 2003, 2002 and 2001, respectively. At December 31, 2003, 2002
and 2001, CFI had $359 million, $339 million and $330 million, respectively, of
loans to Amex Bank of Canada, a wholly owned subsidiary of TRS.

During the first quarter of 2004, Credco lent $660 million to American Express
Bank, FSB, a wholly owned subsidiary of TRS, under a new revolving secured loan
agreement.

Note 9 Income Taxes

The taxable income of Credco is included in the consolidated U.S. federal income
tax return of American Express. Under an agreement with TRS, taxes are
recognized on a stand-alone basis. If benefits for all future tax deductions,
foreign tax credits and net operating losses cannot be recognized on a
stand-alone basis, such benefits are then recognized based upon a share, derived
by formula, of those deductions and credits that are recognizable on a TRS
consolidated reporting basis.

The provisions for income taxes were as follows (millions):

2003 2002 2001
- --------------------------------------------------------------------------------

Federal $132 $109 $128
Foreign 3 9 12
- --------------------------------------------------------------------------------
Total $135 $118 $140
- --------------------------------------------------------------------------------

Deferred income tax assets and liabilities result from the recognition of
temporary differences. Temporary differences are differences between the tax
bases of assets and liabilities and their reported amounts in the financial
statements that will result in differences between income for tax purposes and
income for financial statement purposes in future years. The current and
deferred components of the provision (benefit) for income taxes were as follows
(millions):

2003 2002 2001
- -------------------------------------------------------------------------------

Current $138 $ 64 $200
Deferred (3) 54 (60)
- -------------------------------------------------------------------------------
Total income tax provision $135 $118 $140
- -------------------------------------------------------------------------------

Credco's deferred tax assets were $350 million and $435 million as of December
31, 2003 and 2002, respectively. These amounts were included in other assets.
Credco's deferred tax liabilities were $6 million as of December 31, 2003 and
insignificant as of December 31, 2002.

F-13

Deferred tax assets for 2003 and 2002 are primarily related to loss reserves not
yet deducted for tax purposes of $254 million and $251 million, respectively,
and deferred taxes related to net unrealized derivative losses of $96 million
and $179 million, respectively. Deferred tax liabilities for 2003 consist
primarily of deferred taxes related to net unrealized securities gains of $6
million. At December 31, 2003 and 2002, no valuation allowances were required.

In 2003 and 2002, due to affiliates included current federal tax payable to TRS
of $35 million and $78 million, respectively.

In 2003, 2002 and 2001, total net income taxes paid, including taxes paid to
TRS, were $183 million, $0.2 million and $166 million, respectively. These
amounts include estimated tax payments and cash settlements relating to prior
tax years.

The principal reason that the aggregate income tax provision is different from
that computed by using the U.S. statutory rate of 35 percent is due to a 1
percent impact of foreign operations, resulting in an effective tax rate of
34 percent for each of the years ended December 31, 2003, 2002 and 2001.

The items comprising comprehensive income in the Consolidated Statements of
Shareholder's Equity are presented net of income tax (benefit) provision. The
changes in net unrealized securities gains (losses) are presented net of tax
provision (benefit) of $12 million for 2003 and ($4 million) for 2002. The
changes in net unrealized derivatives losses are presented net of tax provision
(benefit) of $83 million for 2003 and ($57 million) for 2002.

Note 10 Geographic Segments

Credco is principally engaged in the business of purchasing cardmember
receivables arising from the use of the American Express card in the United
States and foreign locations. The following presents information about
operations in different geographic areas (millions):

2003 2002 2001
- --------------------------------------------------------------------------------

Revenues
United States $1,408 $1,550 $2,353
International 579 603 489
- --------------------------------------------------------------------------------
Consolidated $1,987 $2,153 $2,842
- --------------------------------------------------------------------------------
Pretax income
United States $ 313 $ 308 $ 357
International 82 38 60
- --------------------------------------------------------------------------------
Consolidated $ 395 $ 346 $ 417
- --------------------------------------------------------------------------------

Note 11 Quarterly Financial Data (Unaudited)

2003 2002
- ------------------------------------------------------------------------------------

Quarters Ended, (Millions) 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31
- ------------------------------------------------------------------------------------
Revenues $510 $488 $507 $482 $566 $516 $554 $517
Pretax income 107 82 105 101 119 65 82 80
Net income 71 54 69 66 78 43 54 53
- ------------------------------------------------------------------------------------

F-14

AMERICAN EXPRESS CREDIT CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Years Ended December 31, (Millions) 2003 2002 2001
- -------------------------------------------------------------------------------

Reserve for credit losses:

Balance at beginning of year $741 $ 847 $ 739
Additions:
Provision for credit losses
charged to income (1) 905 1,067 1,130
Other credits (2) 134 144 124
Deductions:
Accounts written off 976 1,119 1,061
Other charges (3) 67 198 85
---- ------ ------

Balance at end of year $737 $ 741 $ 847
==== ====== ======

Reserve for credit losses as a percentage
of gross cardmember receivables owned at
year-end 2.80% 3.34% 3.65%
==== ====== ======

(1) Before recoveries on accounts previously written off of $204 million, $221
million and $193 million in 2003, 2002 and 2001, respectively.

(2) Reserve balances applicable to new groups of charge cardmember and lending
receivables purchased from TRS and certain of its subsidiaries and
participation interests purchased from affiliates.

(3) Primarily relates to reserve balances applicable to certain groups of
charge cardmember and lending receivables and participation interests sold
to affiliates.

F-15

EXHIBIT INDEX

Pursuant to Item 601 of Regulation S-K

Exhibit No. Description
- ----------- -------------------------------------------------------

3(a) Registrant's Certificate of Incorporation, as amended Incorporated by reference to
Exhibit 3(a) to Registrant's
Registration
Statement on Form S-1
dated February 25, 1972
(File No. 2-43170).

3(b) Registrant's By-Laws, amended and restated as of Incorporated by reference to
November 24, 1980 Exhibit 3 (b) to Registrant's
Annual Report on Form 10-K
(Commission File No. 1-6908) for
the year ended December 31, 1985.

4(a) Registrant's Debt Securities Indenture dated as of Incorporated by reference to
September 1, 1987 Exhibit 4 (s) to Registrant's
Registration Statement on Form
S-3 dated September 2, 1987
(File No. 33-16874).

4(b) Form of Note with optional redemption provisions Incorporated by reference to
Exhibit 4 (t) to Registrant's
Registration Statement on Form
S-3 dated September 2, 1987
(File No. 33-16874).

4(c) Form of Debenture with optional redemption and sinking Incorporated by reference to
fund provisions Exhibit 4 (u) to Registrant's
Registration Statement on Form
S-3 dated September 2, 1987
(File No. 33-16874).

E-1

4(d) Form of Original Issue Discount Note with Incorporated by reference to
optional redemption provisions Exhibit 4 (v) to Registrant's
Registration Statement on Form
S-3 dated September 2, 1987 (File
No. 33-16874).

4(e) Form of Zero Coupon Note with optional redemption Incorporated by reference to
provisions Exhibit 4 (w) to Registrant's
Registration Statement on Form
S-3 dated September 2, 1987 (File
No. 33-16874).

4(f) Form of Variable Rate Note with optional redemption Incorporated by reference to
and repayment provisions Exhibit 4 (x) to Registrant's
Registration Statement on Form
S-3 dated September 2, 1987 (File
No. 33-16874).

4(g) Form of Extendible Note with optional redemption and Incorporated by reference to
repayment provisions Exhibit 4 (y) to Registrant's
Registration Statement on Form
S-3 dated September 2, 1987
(File No. 33-16874).

4(h) Form of Fixed Rate Medium-Term Note Incorporated by reference to
Exhibit 4 (z) to Registrant's
Registration Statement on Form
S-3 dated September 2, 1987
(File No. 33-16874).

4(i) Form of Floating Rate Medium-Term Note Incorporated by reference to
Exhibit 4 (aa) to Registrant's
Registration Statement on Form
S-3 dated September 2, 1987
(File No. 33-16874).

E-2

4(j) Form of Warrant Agreement Incorporated by reference to
Exhibit 4 (bb) to Registrant's
Registration Statement on Form S-3
dated September 2, 1987
(File No. 33-16874).

4(k) Form of Supplemental Indenture Incorporated by reference to
Exhibit 4 (cc) to Registrant's
Registration Statement on Form S-3
dated September 2, 1987
(File No. 33-16874).

4(l) Terms and conditions of debt instruments to be issued Incorporated by reference to
outside the United States Exhibit 4(l) to Registrant's Annual
Report on Form 10-K (Commission
File No. 1-6908) for the year ended
December 31, 1997.

4(m) Form of Permanent Global Fixed Rate Medium-Term Incorporated by reference to
Senior Note, Series B Exhibit 4(s) to Registrant's
Current Report on Form 8-K
(Commission File No. 1-6908) dated
December 21, 2001.

4(n) Form of Permanent Global Floating Rate Medium-Term Incorporated by reference to
Senior Note, Series B Exhibit 4(t) to Registrant's
Current Report on Form 8-K
(Commission File No. 1-6908) dated
December 21, 2001.

4(o) Form of Senior Floating Rate Note Extendible Incorporated by reference to
Liquidity Securities'r'(EXLs'r') Exhibit 4(u) to Registrant's
Current Report on Form 8-K
(Commission File No. 1-6908) dated
February 6, 2003.

4(p) Form of Global Fixed Rate Note Incorporated by reference to
Exhibit 4(v) to Registrant's
Current Report on Form 8-K
(Commission File No. 1-6908) dated
May 14, 2003.

4(q) Form of Global LIBOR Floating Rate Note Incorporated by reference to
Exhibit 4(w) to Registrant's
Current Report on Form 8-K
(Commision File No. 1-6908) dated
May 14, 2003.

E-3

4(r) The Registrant hereby agrees to furnish the Commission,
upon request, with copies of the instruments defining
the rights of holders of each issue of long-term debt
of the Registrant for which the total amount of
securities authorized thereunder does not exceed 10% of
the total assets of the Registrant.

10(a) Receivables Agreement dated as of January 1, 1983 Incorporated by reference to
between the Registrant and American Express Travel Exhibit 10 (b) to Registrant's
Related Services Company, Inc. Annual Report on Form 10-K
(Commission File No. 1-6908) for
the year ended December 31, 1987.

10(b) Participation Agreement dated as of August 3, 1992 Incorporated by reference to
between American Express Receivables Financing Exhibit 10(c) to Registrant's
Corporation and Credco Receivables Corp. Annual Report on Form 10-K
(Commission File No. 1-6908) for
the year ended December 31, 1992.

12.1 Computation in Support of Ratio of Earnings to Fixed Electronically filed herewith.
Charges of American Express Credit Corporation

12.2 Computation in Support of Ratio of Earnings to Fixed Electronically filed herewith.
Charges of American Express Company

23 Consent of Independent Auditors Electronically filed herewith.

31.1 Certification of Walker C. Tompkins, Jr., Chief Electronically filed herewith.
Executive Officer, pursuant to Rule 13a-14(a)
promulgated under the Securities Exchange Act of 1934,
as amended

31.2 Certification of Walter S. Berman, Chief Financial Electronically filed herewith.
Officer, pursuant to Rule 13a-14(a) promulgated under
the Securities Exchange Act of 1934, as amended

E-4

32.1 Certification of Walker C. Tompkins Jr., Chief Electronically filed herewith.
Executive Officer, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002

32.2 Certification of Walter S. Berman, Chief Financial Electronically filed herewith.
Officer, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002

E-5

STATEMENT OF DIFFERENCES
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The registered trademark symbol shall be expressed as................... 'r'