Real profitable earnings announcement:
American Express Company Reports Record Second
Quarter Net Income of $578 Million
PR Newswire - July 27, 1998 14:49
(millions, except per share amounts)
Six Months
Quarter Ended Percentage Ended Percentage
June 30 Inc/(Dec) June 30 Inc/(Dec)
1998 1997 1998 1997
Net Income $578 $520 11.1% $1,037 $974 6.5%
Net Revenues $4,761 $4,422 7.7% $9,282 $8,585 8.1%
Per Share
Net Income
Basic $1.27 $1.12 13.4% $2.26 $2.09 8.1%
Diluted $1.24 $1.08 14.8% $2.22 $2.02 9.9%
Average Common
Shares Outstanding
Basic 456.3 465.1 (1.9%) 458.4 466.6 (1.8%)
Diluted 465.3 480.1 (3.1%) 467.4 481.8 (3.0%)
Return on
Average Equity 23.5% 23.2% -- 23.5% 23.2% --
The 1998 six-month results include a $138 million (after-tax) credit loss provision at American
Express Bank relating to its Asia/Pacific portfolio, as well as income of $78 million (after-tax)
representing gains on the sale of First Data Corporation shares and a preferred dividend based on
Lehman Brothers earnings. Excluding these items, income rose 13 percent to $1,097 million and
diluted earnings per share grew 16 percent to $2.35.
NEW YORK, July 27 /PRNewswire/ -- American Express Company today reported record second
quarter net income of $578 million, up from $520 million in the same period a year ago. Diluted
earnings per share rose 15 percent to $1.24 compared with $1.08. Revenues totaled $4.8 billion, up
8 percent from $4.4 billion. The Company's return on equity was 23.5 percent.
These results were in line with American Express' long-term targets of: 12-15 percent earnings per
share growth, with at least 8 percent coming from higher revenues; and a return on equity of 18-20
percent.
Travel Related Services (TRS) reported record quarterly net income of $360 million, up 18 percent
from $305 million in the second quarter a year ago.
TRS' net revenues increased 8 percent from the prior year, reflecting higher billed business in the
United States and internationally, as well as growth in Cardmember loans and wider interest margins.
The improvement in billed business was the result of a greater number of cards outstanding and
higher spending per basic Cardmember, which reflects the benefits of rewards programs and
expanded merchant coverage. Interest margins widened largely because a lower portion of the loan
portfolio was on introductory rates.
Provisions for losses reflect higher volumes overall and increased loss rates in the lending portfolio,
partially offset by improved charge card loss rates and the benefit of securitizing a portion of the loan
portfolio.
A gain of $36 million ($23 million after-tax) from securitizations was offset by increased spending on
marketing and promotion efforts and had no material impact on net income or total expenses.
American Express Financial Advisors (AEFA) reported record quarterly net income of $212 million,
up 16 percent from $183 million reported a year ago.
Revenue and earnings growth benefited from higher fee revenues due to an increase in managed
assets, reflecting stock market appreciation and record mutual fund sales. Sales of investment
certificates and life and other insurance products increased over last year; sales of annuities declined.
Human resources expenses rose, largely reflecting compensation costs associated with higher sales
and asset levels. Other operating expenses rose primarily from increased spending on technology,
advertising and other costs related to higher business volumes.
American Express Bank/Travelers Cheque (AEB/TC) reported quarterly net income of $47 million
compared with $70 million a year ago. The prior year's results included approximately $24 million
($16 million after-tax) of increased recognition of recoveries on abandoned property related to the
Travelers Cheque business, which is included in other revenues.
The continuing economic downturn in Asia contributed to declines in net interest income, and
commissions and fees. This decline was offset by higher foreign exchange trading revenues, primarily
in Asia.
Corporate and Other reported net expenses of $41 million, compared with $38 million a year ago.
American Express Company (http://www.americanexpress.com), founded in 1850, is a global travel,
financial and network services provider.
American Express Company
Financial Summary
(Unaudited)
(Dollars in millions)
Quarter Ended
June 30, Percentage
1998 1997 Inc/(Dec)
Revenues by Industry Segment (A)
Travel Related Services $3,270 $3,031 7.9%
American Express Financial
Advisors 1,282 1,143 12.2
American Express Bank/Travelers
Cheque 251 282 (10.8)
4,803 4,456 7.8
Corporate and Other,
including adjustments
and eliminations (42) (34) (24.1)
CONSOLIDATED REVENUES (A) $4,761 $4,422 7.7
Pretax Income by Industry Segment
Travel Related Services $546 $460 18.8
American Express Financial
Advisors 309 265 16.6
American Express Bank/Travelers
Cheque 23 66 (65.4)
878 791 11.1
Corporate and Other (78) (89) 11.7
PRETAX INCOME $800 $702 14.0
Net Income by Industry Segment
Travel Related Services $360 $305 18.0
American Express Financial
Advisors 212 183 16.0
American Express Bank/Travelers
Cheque 47 70 (33.7)
619 558 10.9
Corporate and Other (41) (38) (7.5)
NET INCOME $578 $520 11.1
Six Months Ended
June 30, Percentage
1998 1997 Inc/(Dec)
Revenues by Industry Segment (A)
Travel Related Services $6,353 $5,895 7.8%
American Express Financial
Advisors 2,503 2,227 12.4
American Express Bank/Travelers
Cheque 508 551 (7.7)
9,364 8,673 8.0
Corporate and Other,
including adjustments
and eliminations (82) (88) 5.5
CONSOLIDATED REVENUES (A) $9,282 $8,585 8.1
Pretax Income by Industry Segment
Travel Related Services $1,028 $877 17.3
American Express Financial
Advisors 580 501 15.8
American Express Bank/Travelers
Cheque (151) 130 --
1,457 1,508 (3.4)
Corporate and Other (44) (166) 73.5
PRETAX INCOME $1,413 $1,342 5.3
Net Income by Industry Segment
Travel Related Services $676 $572 18.0
American Express Financial
Advisors 398 340 17.1
American Express Bank/Travelers
Cheque (36) 139 --
1,038 1,051 (1.3)
Corporate and Other (1) (77) 99.4
NET INCOME $1,037 $974 6.5
(A) Revenues are reported net of interest expense, where
applicable.
American Express Company
Financial Summary (continued)
(Unaudited)
Quarter Ended
June 30, Percentage
1998 1997 Inc/(Dec)
EARNINGS PER SHARE
Basic
Net Income Per Common Share $1.27 $1.12 13.4%
Average common shares
outstanding (millions) 456.3 465.1 (1.9)
Diluted
Net Income Per Common Share $1.24 $1.08 14.8
Average common shares
outstanding (millions) 465.3 480.1 (3.1)
Cash dividends declared
per common share $0.225 $0.225 --
Six Months Ended
June 30, Percentage
1998 1997 Inc/(Dec)
EARNINGS PER SHARE
Basic
Net Income Per Common Share $2.26 $2.09 8.1%
Average common shares
outstanding (millions) 458.4 466.6 (1.8)
Diluted
Net Income Per Common Share $2.22 $2.02 9.9
Average common shares
outstanding (millions) 467.4 481.8 (3.0)
Cash dividends declared
per common share $0.45 $0.45 --
Selected Statistical Information
(Unaudited)
Quarter Ended
June 30, Percentage
1998 1997 Inc/(Dec)
Return on Average Equity* 23.5% 23.2% --
Common Shares Outstanding
(millions) 456.8 468.9 (2.6)%
Book Value per Common Share:
Actual $20.35 $18.82 8.1%
Pro Forma* $19.11 $17.95 6.5%
Shareholders' Equity (billions) $9.3 $8.8 5.4%
Six Months Ended
June 30, Percentage
1998 1997 Inc/(Dec)
Return on Average Equity* 23.5% 23.2% --
Common Shares Outstanding
(millions) 456.8 468.9 (2.6)%
Book Value per Common Share:
Actual $20.35 $18.82 8.1%
Pro Forma* $19.11 $17.95 6.5%
Shareholders' Equity (billions) $9.3 $8.8 5.4%
* Excludes the effect of SFAS #115 and for ROE, which is computed based
on the past twelve months' net income, also excludes a fourth quarter
1996 $300 million gain on the exchange of the Company's DECS and
$138 million restructuring charge.
SOURCE American Express Company
/CONTACT: Susan Miller-Korchak, 212-640-4953, or Michael J. O'Neill,
212-640-5951, both of the American Express Company/
/Web site: americanexpress.com |
