American Express Credit 10-Q/A 2009 Q1 Quarterly report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1 to Form 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

OR

o 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 incorporation or organization)	(I.R.S. Employer Identification No.)
One Christina Centre, 301 North Walnut Street Suite 1002, Wilmington, Delaware	19801-2919
(Address of principal executive offices)	(Zip Code)

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

None

(Former name, former address and former fiscal year, if changed since last report.)

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND HAS THEREFORE OMITTED CERTAIN ITEMS FROM THIS REPORT IN ACCORDANCE WITH THE REDUCED DISCLOSURE FORMAT PERMITTED UNDER GENERAL INSTRUCTIONS H(2).

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.

x Yeso No

Indicate by a check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
o Yeso No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filero	Accelerated filero
Non-accelerated filerx	Smaller reporting companyo

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yesx No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at May 8, 2009
Common Stock (par value $.10 per share)	1,504,938 Shares

AMERICAN EXPRESS CREDIT CORPORATION

FORM 10-Q/A

INDEX

			Page No.
EXPLANATORY NOTE			3
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Consolidated Statements of Income and Retained Earnings – Three months ended March 31, 2009 and 2008	5
		Consolidated Balance Sheets – March 31, 2009 and December 31, 2008	6
		Consolidated Statements of Cash Flows – Three months ended March 31, 2009 and 2008	7
		Notes to Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION
	Item 1A.	Risk Factors	32
	Item 6.	Exhibits	32
		Signatures	33
		Exhibit Index	E-1

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AMERICAN EXPRESS CREDIT CORPORATION

EXPLANATORY NOTE

American Express Credit Corporation (Credco) is filing this amendment to its Quarterly Report on Form 10-Q (Form 10-Q/A) for the period ended March 31, 2009 in order to reflect the restatement of its Consolidated Financial Statements and other financial information as of and for the three months ended March 31, 2009 and 2008. The restatement has no effect on Credco’s net cash flows provided by (used in) operating activities, investing activities and financing activities. All dollar amounts and percentages herein have been adjusted for the effect of the restatement adjustments.

The restatement is the result of the correction of a non-cash error in the accounting for a net investment in a consolidated foreign subsidiary that stemmed from a funding structure executed in 2004. In the course of preparing the financial statements for the third quarter of 2009, an error was identified in the initial set up of this structure in Credco’s subsidiary ledgers that caused an incorrect automated bookkeeping entry to be recorded beginning in the third quarter of 2007 when a portion of the funding for this net investment was refinanced. As a result of this incorrect automated bookkeeping entry, (i) other revenues in Credco’s Consolidated Statements of Income and (ii) accrued interest and other liabilities, retained earnings and the foreign currency translation adjustments account included in the accumulated other comprehensive income (loss) component of shareholder’s equity in Credco’s Consolidated Balance Sheets were incorrect beginning in the third quarter of 2007.

The restatement also includes the impact of (i) certain other unrelated immaterial errors primarily impacting income tax provision in Credco’s Consolidated Statements of Income and (ii) the correction of an asset line item reclassification affecting cardmember receivables and due from affiliates in Credco’s Consolidated Balance Sheets.

The effect of the error in the accounting for a net investment in a consolidated foreign subsidiary, together with the unrelated immaterial errors affecting the income tax provision, resulted in an understatement of net income for fiscal year 2008 and 2007 by $119 million (from $745 million to $864 million, as restated) and $5 million (from $720 million to $725 million, as restated), respectively. The correction of the errors resulted in an increase in our ratio of earnings to fixed charges from 1.50 to 1.62 (as restated) for fiscal year 2008 and no change to our ratio of earnings to fixed charges of 1.38 for fiscal year 2007. The effect of these errors also resulted in an overstatement of net income for the three month periods ended March 31, 2009 and March 31, 2008 by $9 million (from $144 million to $135 million, as restated) and $2 million (from $154 million to $152 million, as restated), respectively. The correction of the errors resulted in an increase in our ratio of earnings to fixed charges from 1.78 to 1.81 (as restated) for the three month period ended March 31, 2009 and no change to this ratio of 1.37 for the three month period ended March 31, 2008.

Notes 1, 4, 5 and 6 to the Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Restatement” included herein also contain information regarding the nature and impact of the restatement.

For the convenience of the reader, this 10-Q/A sets forth the Quarterly Report on Form 10-Q in its entirety. Other than amending the disclosures relating to the restatement in the items discussed below, no attempt has generally been made in this 10-Q/A to amend or update other disclosures presented in the original 10-Q. Among other things, forward-looking statements made in the original 10-Q have not been revised to reflect events that occurred or facts that became known to Credco after the filing of the Original 10-Q, and such forward-looking statements should be read in their historical context. Accordingly this 10-Q/A should be read in conjunction with Credco’s filings with the Securities and Exchange Commission (“SEC”) subsequent to the filing of the original 10-Q.

The following items of the original Form 10-Q are being amended in this Form 10-Q/A as a result of this restatement:

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AMERICAN EXPRESS CREDIT CORPORATION

•	Part I – Item 1 – Financial Statements
•	Part I – Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
•	Part I – Item 4 – Controls and Procedures
•	Part II – Item 6 - Exhibits
	As reported in American Express Company’s Quarterly Report on Form 10-Q for the period ending September 30, 2009, American Express Company determined that the impact of the incorrect accounting was not material to its financial statements in any of the quarterly or annual periods in which it occurred. American Express Company also determined that the restatement by Credco would have no impact on, and would not require amendment of, any of American Express Company’s financial statements and related disclosures previously filed with the SEC.

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AMERICAN EXPRESS CREDIT CORPORATION

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
(Millions)
(Unaudited)

	Three Months Ended March 31,
	2009			2008
	Restated			Restated
Revenues
Discount revenue earned from purchased cardmember receivables and loans	$	208		$	654
Interest income from affiliates		114			188
Interest income from investments		32			72
Finance revenue		13			15
Other		33			—
Total revenues		400			929
Expenses
Provisions for losses, net of recoveries		48			248
Interest expense		174			377
Interest expense to affiliates		21			83
Service fees to affiliates		—			51
Other		—			1
Total expenses		243			760
Pretax income		157			169
Income tax provision		22			17
Net income		135			152
Retained earnings at beginning of period		3,446			3,162
Dividends		(75	)		(125	)
Retained earnings at end of period	$	3,506		$	3,189

See Notes to Consolidated Financial Statements.

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AMERICAN EXPRESS CREDIT CORPORATION

CONSOLIDATED BALANCE SHEETS
(Millions, except share data)
(Unaudited)

	March 31, 2009			December 31, 2008
	Restated			Restated
Assets
Cash and cash equivalents	$	8,944		$	8,855
Cardmember receivables, less reserves: 2009, $169; 2008, $204		8,377			10,655
Cardmember loans, less reserves: 2009, $15; 2008, $14		443			484
Loans to affiliates		8,983			11,726
Investment securities		3,066			3,084
Deferred charges and other assets		665			801
Due from affiliates		3,644			3,660
Total assets	$	34,122		$	39,265
Liabilities and Shareholder’s Equity
Short-term debt	$	1,963		$	7,367
Short-term debt to affiliates		9,390			8,317
Current portion of long-term debt		4,353			5,201
Long-term debt		14,763			14,809
Total debt		30,469			35,694
Accrued interest and other liabilities		573			538
Total liabilities		31,042			36,232
Shareholder’s Equity
Common stock, $.10 par value, authorized 3 million shares; issued and outstanding 1.5 million shares		1			1
Capital surplus		161			161
Retained earnings		3,506			3,446
Accumulated other comprehensive income (loss), net of tax:
Net unrealized securities gains, net of tax: 2009, $(11); 2008, $(15)		21			28
Net unrealized derivatives losses, net of tax: 2009, $13; 2008, $19		(22	)		(35	)
Foreign currency translation adjustments, net of tax: 2009, $17; 2008, $13		(587	)		(568	)
Total accumulated other comprehensive loss		(588	)		(575	)
Total shareholder’s equity		3,080			3,033
Total liabilities and shareholder’s equity	$	34,122		$	39,265

See Notes to Consolidated Financial Statements.

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AMERICAN EXPRESS CREDIT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions)
(Unaudited)

	Three Months Ended March 31,
	2009			2008
Cash Flows from Operating Activities
Net income (restated)	$	135		$	152
Adjustments to reconcile net income to net cash provided by operating activities:
Provisions for losses		68			290
Amortization and other		7			3
Deferred taxes		53			(9	)
Changes in operating assets and liabilities:
Due from affiliates		141			(21	)
Other operating assets and liabilities (restated)		265			184
Net cash provided by operating activities		669			599
Cash Flows from Investing Activities
Net decrease in cardmember receivables and loans (restated)		2,133			1,505
Purchase of investments		—			(201	)
Maturities of investments		—			200
Net decrease (increase) in loans to affiliates		2,628			(165	)
Net increase in due from affiliates (restated)		(125	)		(1,741	)
Net cash provided by (used in) investing activities		4,636			(402	)
Cash Flows from Financing Activities
Net increase in short-term debt to affiliates		1,074			3,205
Net (decrease) increase in short-term debt		(5,404	)		3,546
Redemption of long-term debt		(808	)		(2,201	)
Dividends paid		(75	)		(125	)
Net cash (used in) provided by financing activities		(5,213	)		4,425
Effect of exchange rate changes on cash and cash equivalents		(3	)		1
Net increase in cash and cash equivalents		89			4,623
Cash and cash equivalents at beginning of period		8,855			2,925
Cash and cash equivalents at end of period	$	8,944		$	7,548

See Notes to Consolidated Financial Statements.

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.	Restated Financial Results
	American Express Credit Corporation (Credco) is filing this amendment to its Quarterly Report on Form 10-Q (Form 10-Q/A) for the period ended March 31, 2009 in order to reflect the restatement of its Consolidated Financial Statements and other financial information as of and for the three months ended March 31, 2009 and 2008. The restatement has no effect on Credco’s net cash flows provided by (used in) operating activities, investing activities and financing activities. All dollar amounts and percentages herein have been adjusted for the effects of the restatement adjustment.
	The restatement is the result of the correction of a non-cash error in the accounting for a net investment in a consolidated foreign subsidiary that stemmed from a funding structure executed in 2004. In the course of preparing the financial statements for the third quarter of 2009, an error was identified in the initial set up of this structure in Credco’s subsidiary ledgers that caused an incorrect automated bookkeeping entry to be recorded beginning in the third quarter of 2007 when a portion of the funding for this net investment was refinanced. As a result of this incorrect automated bookkeeping entry, (i) other revenues in Credco’s Consolidated Statements of Income and (ii) accrued interest and other liabilities, retained earnings and the foreign currency translation adjustments account included in the accumulated other comprehensive income (loss) component of shareholder’s equity in Credco’s Consolidated Balance Sheets were incorrect beginning in the third quarter of September 2007.
	The restatement also includes the impact of (i) certain other unrelated immaterial errors primarily impacting income tax provision in Credco’s Consolidated Statements of Income and (ii) the correction of an asset line item reclassification affecting cardmember receivables and due from affiliates in Credco’s Consolidated Balance Sheets.
	Certain disclosures in Notes 4, 5 and 6 have been restated consistent with the Consolidated Financial Statements.
	The following tables set forth the effects of the restatement adjustments on affected line items with Credco’s previously reported Consolidated Statements of Income for the three months ended March 31, 2009 and 2008, and the Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008.

CONSOLIDATED STATEMENTS OF INCOME
	March 31, 2009				March 31, 2008
(Millions)	As Previously Reported		Restated		As Previously Reported		Restated
Other revenues	$	28	$	33	$	1	$	—
Total revenues	$	395	$	400	$	930	$	929
Pretax income	$	152	$	157	$	170	$	169
Income tax provision	$	8	$	22	$	16	$	17
Net income	$	144	$	135	$	154	$	152

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

CONSOLIDATED BALANCE SHEETS
	March 31, 2009						December 31, 2008
(Millions)	As Previously Reported			Restated			As Previously Reported			Restated
Accrued interest and other liabilities	$	493		$	573		$	473		$	538
Total liabilities	$	30,962		$	31,042		$	36,167		$	36,232
Retained earnings	$	3,391		$	3,506		$	3,322		$	3,446
Foreign currency translation adjustments, net of tax	$	(392	)	$	(587	)	$	(379	)	$	(568	)
Total accumulated other comprehensive loss	$	(393	)	$	(588	)	$	(386	)	$	(575	)
Total shareholder’s equity	$	3,160		$	3,080		$	3,098		$	3,033

2.	Basis of Presentation
	Credco together with its subsidiaries 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).
	The accompanying Consolidated Financial Statements should be read in conjunction with the financial statements in Amendment No. 1 to the Annual Report on Form 10-K/A (Form 10-K/A) of Credco for the year ended December 31, 2008. Significant accounting policies disclosed therein have not changed.
	The interim financial information in this report has not been audited. In the opinion of management, all adjustments necessary for a fair statement of the consolidated financial position and the consolidated results of operations for the interim periods have been made. All adjustments made were of a normal, recurring nature. Results of operations reported for interim periods are not necessarily indicative of results for the entire year.
	Accounting estimates are an integral part of the Consolidated Financial Statements. These estimates are based, in part, on management’s assumptions concerning future events. Among the more significant assumptions are those that relate to reserves for cardmember losses relating to cardmember receivables and loans, fair value measurement, and income taxes. These accounting estimates reflect the best judgment of management, but actual results could differ.
	Recently Issued Accounting Standards
	The Financial Accounting Standards Board (FASB) recently issued the following accounting standards, which are effective beginning June 30, 2009. The adoption of the accounting standards listed below will not have a material impact on Credco’s financial position or results of operations.

• FASB Staff Position (FSP) No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (FSP FAS 107-1), amends Statement of Financial Accounting Standards (SFAS) No. 107, “Disclosures about Fair Value of Financial Instruments,” and APB Opinion No. 28, “Interim Financial Reporting,” to require disclosures about fair value of financial instruments in interim financial statements on a prospective basis.

• FSP No. FAS 115-2/FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments”

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

		(FSP FAS 115-2/FAS 124-2), requires a limited form of retrospective application. FSP FAS 115-2/FAS 124-2 modifies current impairment guidance for debt securities, changes the requirements for recognizing an other-than-temporary impairment on debt securities, and modifies the presentation of other-than-temporary impairment losses in the Statement of Income and Balance Sheet. In addition, FSP FAS 115-2/FAS 124-2 also requires expanded financial statement disclosures for both debt and equity securities in interim and annual periods.
	•	FSP No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (FSP FAS 157-4), provides additional guidance in determining whether a market for an asset or a liability within the scope of SFAS No. 157 is inactive, and requires the evaluation of available evidence to determine whether a transaction in an inactive market is not orderly.
3.	Investment Securities
	The following is a summary of investment securities at March 31, 2009 and December 31, 2008:

Available-for-Sale	2009								2008
(Millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Government and agency obligations	$	3,034	$	32	$	—	$	3,066	$	3,040	$	44	$	—	$	3,084
Total(a)	$	3,034	$	32	$	—	$	3,066	$	3,040	$	44	$	—	$	3,084

^(a) Total investment securities include $2.7 billion of senior debentures issued by Government Sponsored Enterprises (Fannie Mae and Freddie Mac) at March 31, 2009 and December 31, 2008.

All of Credco’s investment securities are classified as available-for-sale. There were no realized gains or losses on U.S. Government and agency obligations for the three months ended March 31, 2009.
Credco reviews and evaluates investment securities at least quarterly, and more often as market conditions may require, to identify investment securities that have indications of other-than-temporary impairment. The determination of other-than-temporary impairment is a subjective process, requiring the use of judgments and assumptions. Accordingly, Credco considers several metrics when evaluating investment securities for an other-than-temporary impairment, including the extent to which amortized cost exceeds fair value, the duration and size of that difference, and the issuers’ credit ratings. As of March 31, 2009 and December 31, 2008, Credco did not hold any investment securities that were in an unrealized loss position.
Fair Value
The following is a description of the valuation techniques utilized by Credco to measure the fair value of its investment securities, including the general classification of such items pursuant to the fair value hierarchy. These techniques may produce fair values that may not be indicative of a future sale, or reflective of future fair values. The use of different techniques to determine the fair value of these types of investment securities could result in different estimates of fair value at the reporting date.
•	When available, quoted market prices are used to determine fair value and the investment securities are classified within Level 1 of the fair value hierarchy.
•	When quoted prices in an active market are not available, the fair market values for Credco’s investment securities are obtained primarily from pricing services engaged by Credco, and Credco receives one price for each security. The fair values provided by the pricing services are estimated by using pricing models,

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

		where the inputs to those models are based on observable market data. The inputs to the valuation techniques applied by the pricing services vary depending on the type of security being priced but are typically benchmark yields, benchmark security prices, credit spreads, prepayment speeds, reported trades, broker-dealer quotes, all with reasonable levels of transparency. The pricing services do not apply any adjustments to the pricing models used, nor does Credco apply any adjustments to prices received from the pricing services. Although the underlying inputs are directly observable from active markets or recent trades of similar securities in inactive markets, the pricing models used do entail a certain amount of subjectivity and therefore differing judgments in how the underlying inputs are modeled could result in different estimates of fair value. As of March 31, 2009, all of Credco’s investment securities are classified within Level 2 of the fair value hierarchy.
4.	Comprehensive Income
	The components of comprehensive income, net of related tax, were as follows:

	Three Months Ended March 31,
(Millions)	2009			2008
	Restated			Restated
Net income	$	135		$	152
Other comprehensive income (loss):
Net unrealized securities (losses) gains		(7	)		26
Net unrealized derivatives gains (losses)		13			(46	)
Foreign currency translation adjustments (a)		(19	)		35
Total	$	122		$	167
(a) See further discussion in Note 1 regarding the basis of the restatement of these amounts.

5.	Derivatives and Hedging Activities
	Credco uses derivative financial instruments to manage exposure to various market risks. Market risk is the risk to earnings or value resulting from movements in interest rates, foreign exchange rates, or equity market prices. Credco’s market risk exposures primarily arise through:
		•	Interest rate risk associated with the cost of financing its receivables and loans; and
		•	Foreign exchange risk within its international operations.
	General principles and the overall framework for managing market risk across Credco are defined in the Market Risk Policy approved by the American Express’ Enterprise-wide Risk Management Committee (ERMC). Market risk is centrally managed by the Market Risk Committee, chaired by the Chief Market Risk Officer of American Express Company. Within each business, market risk exposures are monitored and managed by various asset/liability committees, guided by Board-approved policies covering derivative financial instruments, funding, and investments.
	Derivative financial instruments derive their value from an underlying variable or multiple variables, including interest rate, foreign exchange rates, and equity indices or prices. These instruments can increase, reduce or otherwise alter exposure to various market risks and, for that reason, are an integral component of Credco’s market risk and related asset/liability management strategy and processes. Credco uses derivatives to manage these exposures that arise within its business operations, but does not engage in derivative financial instruments for trading purposes.

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

For the receivables Credco owns related to charge card and fixed rate lending products, interest rate exposure is managed by shifting the mix of funding toward fixed rate debt and by using derivative instruments, with an emphasis on interest rate swaps, which effectively fix interest expense for the length of the swap. Credco may change the amount hedged and the hedge percentage may change based on changes in business volumes and mix, among other factors. Credco regularly reviews its strategy and may modify it.

Foreign exchange risk is generated by foreign currency denominated balance sheet exposures, translation exposure of foreign operations, and foreign currency earnings in international units. Credco’s foreign exchange risk is managed primarily by entering into agreements to buy and sell currencies on a spot basis or by hedging this market exposure to the extent it is economically justified through various means, including the use of derivative financial instruments such as foreign exchange forwards and cross-currency swap contracts, which can help “lock in” the value of Credco’s exposure to specific currencies.

Fair Value Measurements

The fair value of Credco’s derivatives is estimated by using pricing models that do not contain a high level of subjectivity as the valuation techniques used do not require significant judgment and inputs to those models are readily observable from actively quoted markets. The valuation models used by Credco are consistently applied and reflect the contractual terms of the derivatives, including the period of maturity, and market-based parameters such as interest rates, foreign exchange rates, equity indices or prices, and volatility.

Credit valuation adjustments are necessary when the market parameters (for example, a benchmark curve) used to value derivatives is not indicative of the credit quality of Credco or its counterparties. Credco considers the counterparty credit risk by applying an observable forecasted default rate to the current exposure.

Credco manages derivative counterparty credit risk by considering the current exposure, which is the replacement cost of contracts on the measurement date, as well as estimating the maximum potential value of the contracts over the next twelve months, considering such factors as the volatility of the underlying or reference index. To mitigate derivative credit risk, counterparties are required to be pre-approved and rated as investment grade. Counterparty risk exposures are monitored by American Express’ Institutional Risk Management Committee (IRMC). The IRMC formally reviews large institutional exposures to ensure compliance with American Express Company’s ERMC guidelines and procedures and determines the risk mitigation actions, when necessary. Additionally, Credco may, on occasion, enter into master netting agreements.

As of March 31, 2009 and December 31, 2008, the credit and nonperformance risks associated with Credco’s derivative counterparties were not significant.

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following table summarizes the total gross fair value, excluding interest accruals, of derivative product assets and liabilities at March 31, 2009 and December 31, 2008:

(Millions)
Location	Other assets				Other liabilities
	Fair Value (a)				Fair Value (a)
	March 2009		December 2008		March 2009		December 2008
Derivatives designated as hedging instruments
Interest rate contracts
Fair value hedges	$	435	$	431	$	—	$	—
Cash flow hedges		—		—		34		54
Foreign exchange contracts
Net investment hedges		18		39		32		22
Total derivatives designated as hedging instruments	$	453	$	470	$	66	$	76
Derivatives not designated as hedging instruments
Interest rate contracts	$	1	$	—	$	2	$	5
Foreign exchange contracts		61		75		71		39
Total derivatives not designated as hedging instruments		62		75		73		44
Total derivatives (b)	$	515	$	545	$	139	$	120

(a)

The fair values of Credco’s derivative instruments are classified within Level 2 of the fair value hierarchy.

(b)

Financial Interpretation No. 39, “Offsetting of Amounts Related to Certain Contracts” (FIN 39), permits the netting of derivative assets and derivative liabilities when a legally enforceable master netting agreement exists between Credco and its derivative counterparty. At March 31, 2009 and December 31, 2008, $26 million and $8 million, respectively of derivative assets and liabilities have been offset and represents the impact of legally enforceable master netting agreements that provide for the net settlement of all contracts in accordance with FIN 39.

Fair Value Hedges

A fair value hedge is a derivative designated to hedge the exposure of future changes in the fair value of an asset or a liability, or an identified portion thereof that is attributable to a particular risk. Credco is exposed to interest rate risk associated with its fixed rate long-term debt. Credco enters into interest rate swaps to convert certain fixed rate long-term debt to floating rate debt at the time of issuance. As of March 31, 2009, Credco hedged $4.8 billion of its fixed rate debt to floating rate debt using interest rate swaps.

To the extent the fair value hedge is effective, the gain or loss on the hedging instrument offsets the gain or loss on the hedged item attributable to the hedged risk. Any difference between the changes in the fair value of the derivative and the hedged item is referred to as hedge ineffectiveness. Hedge ineffectiveness may be caused by differences between the debt’s interest coupon and the benchmark rate, which is in turn primarily due to credit spreads at inception of the hedging relationship, which is not reflected in the valuation of the interest rate swap. Furthermore, hedge ineffectiveness may be caused by changes in the relationship between 3-month LIBOR and 1-month LIBOR rates, as these so-called basis spreads may impact the valuation of the interest rate swaps without causing an offsetting impact in the value of the hedged debt. The ineffective net gains (losses), net of tax on fair value hedges totaled approximately $17 million and nil for the quarter ended March 31, 2009 and 2008, respectively.

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following table summarizes the impact of fair value hedges on the consolidated financial statements for the quarters ended March 31:

Statement of Income
	Derivative contract gain/(loss)					Hedged item gain/(loss)
Derivative relationship	Location	Amount recognized, net of tax				Location	Amount recognized, net of tax
(Millions)		2009		2008			2009		2008
Fair value hedges:
Interest rate contracts	Other revenues	$	2	$	22	Other revenues	$	15	$	(22	)

Cash Flow Hedges

A cash flow hedge is a derivative designated to hedge the exposure of variable future cash flows attributable to a particular risk of an existing recognized asset or liability, or a forecasted transaction. Credco hedges existing long-term variable-rate debt, the rollover of short-term borrowings and the anticipated forecasted issuance of additional funding through the use of derivative instruments, primarily interest rate swaps. These derivative instruments effectively convert floating rate debt to a fixed rate debt for the duration of the swap. As of March 31, 2009, Credco hedged $2.3 billion of its floating rate debt to fixed rate debt using interest rate swaps.

For derivative financial instruments that qualify as cash flow hedges, the effective portions of the gain or loss on the derivatives are recorded in accumulated other comprehensive (loss) income and reclassified into earnings when the hedged cash flows are recognized into earnings. The amount that is reclassified into earnings is presented in the Consolidated Statements of Income with the hedged instrument or transaction impact, primarily in interest expense. Any ineffective portion of the gain or loss, as determined by the accounting requirements, is reported as a component of other revenues.

In the normal course of business, as the hedged cash flows are recognized into earnings, Credco expects to reclassify $21 million of net pretax losses on derivative instruments from accumulated other comprehensive (loss) income to earnings during the next 12 months.

Net Investment Hedges

A net investment hedge is used to hedge future changes in currency exposure of a net investment in a foreign operation. Credco designates foreign currency derivatives, primarily forward agreements, typically foreign exchange forwards, and on occasion foreign currency denominated debt, as hedges of net investments in certain foreign operations. These instruments reduce exposure to changes in currency exchange rates on Credco’s investments in non-U.S. subsidiaries. The effective portions of financial instruments that qualify as net investment hedges are recorded in accumulated other comprehensive (loss) income part of the cumulative translation adjustment. Any ineffective portions of net investment hedges are recognized in other revenues during the period of change.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following table summarizes the impact of cash flow hedges and net investment hedges on the consolidated financial statements for the quarters ended March 31:

(Millions)	Derivative Impact on OCI gain/(loss), net of tax													Derivative Ineffectiveness gain/(loss), net of tax
	Recognized in other comprehensive income						Location reclassified into income	Amount reclassified into Income						Location	Amount
Derivative Relationship	2009			2008				2009			2008				2009			2008
Cash flow hedges:
Interest rate contracts	$	(5	)	$	(60	)	Interest expense	$	(18	)	$	(13	)	Other revenues	$	(1	)	$	—
Net investment hedges:
Foreign exchange contracts		20			(26	)	Other revenues		—			—		Other revenues		—			—

Derivatives Not Designated as Hedges

Credco has derivatives that act as economic hedges and are not designated for hedge accounting treatment. Foreign currency transactions and non-U.S. dollar cash flow exposures from time to time may be partially or fully economically hedged through foreign currency contracts, primarily forward contracts and cross-currency swaps. These hedges generally mature within one year. Foreign currency contracts involve the purchase and sale of a designated currency at an agreed upon rate for settlement on a specified date. For Credco’s economic hedges, the changes in the fair value of the derivative instrument significantly offset within the Consolidated Statements of Income, the related foreign exchange gains or losses on the underlying hedged exposures. From time to time, Credco may enter into interest rate swaps to specifically manage funding costs related to its proprietary card business.

For derivative financial instruments that are not designated as hedges, changes in fair value are reported in current period earnings.

The following table summarizes the impact of derivatives not designated as hedges on the consolidated financial statements for the quarters ended March 31:

Derivative Relationship	Income Statement classification of gain (loss) on derivatives not designated as hedges	Amount recognized net of tax
(Millions)		2009			2008
						Restated
Derivatives not designated as hedges Foreign exchange contracts	Interest expense	$	3		$	4
	Other revenues		(33	)		12
Total		$	(30	)	$	16

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

6.	Income Taxes
	The results of operations of Credco are included in the consolidated U.S. federal income tax return of American Express. Under an agreement with TRS, provision for income taxes is recognized on a separate company basis. If benefits for net operating losses, future tax deductions and foreign tax credits cannot be recognized on a separate company 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.
	American Express is under continuous examination by the Internal Revenue Service (IRS) and tax authorities in other countries and states in which American Express has significant business operations. The tax years under examination and open for examination vary by jurisdiction. In June 2008, the IRS completed its field examination of American Express’ federal tax returns for the years 1997 through 2002. However, for federal income tax purposes, these years continue to remain open as a consequence of certain issues under appeal. American Express is currently under examination by the IRS for the years 2003 and 2004.
	Credco routinely assesses the likelihood of additional assessments in each of the taxing jurisdictions and has established a liability for unrecognized tax benefits that Credco’s management believes to be adequate. Once established, unrecognized tax benefits are adjusted if more accurate information is available, or a change in circumstance, or an event occurs necessitating a change to the liability. It is reasonably possible that the unrecognized tax benefits may significantly increase or decrease within the next twelve months. Due to the inherent complexities and the number of tax years currently under examination, it is not possible to quantify the impact such changes may have on the effective tax rate and net income.
	Credco’s effective tax rate was 14 percent for the three months ended March 31, 2009, compared with 13 percent for the full year 2008.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Restatement

As discussed in “Explanatory Note” to this Form 10-Q/A and in Note 1 to the Consolidated Financial Statements, American Express Credit Corporation (Credco) is restating its Consolidated Financial Statements and other financial information as of and for the three months ended March 31, 2009 and 2008. The restatement has no effect on Credco’s net cash flow provided by (used in) operating activities, investing activities and financing activities. All dollar amounts and percentages herein have been adjusted for the effects of the restatements adjustments.

The restatement is the result of the correction of a non-cash error in the accounting for a net investment in a consolidated foreign subsidiary that stemmed from a funding structure executed in 2004. In the course of preparing the financial statements for the third quarter of 2009, an error was identified in the initial set up of this structure in Credco’s subsidiary ledgers that caused an incorrect automated bookkeeping entry to be recorded beginning in the third quarter 2007 when a portion of the funding for this net investment was refinanced. As a result of this incorrect automated bookkeeping entry, (i) other revenues in Credco’s Consolidated Statements of Income and (ii) accrued interest and other liabilities, retained earnings and the foreign currency translation adjustments account included in the accumulated other comprehensive income (loss) component of shareholder’s equity in Credco’s Consolidated Balance Sheets were incorrect beginning in the third quarter of 2007.

The restatement also includes the impact of (i) certain other unrelated immaterial errors primarily impacting income tax provision in Credco’s Consolidated Statements of Income and (ii) the correction of an asset line item reclassification affecting cardmember receivables and due from affiliates in Credco’s Consolidated Balance Sheets.

Notes 1, 4, 5 and 6 to the Consolidated Financial Statements included herein also contain information regarding the nature and impact of the restatement.

The following tables set forth the effects of the restatement adjustments on the Ratio of Earnings to Fixed Charges for the years ended December 31, 2008 and 2007, and for the quarter ended March 31, 2009.

RATIO OF EARNINGS TO FIXED CHARGES

(Millions)	As Previously Reported		Restated
2007		1.38		1.38
2008		1.50		1.62
March 31, 2009		1.78		1.81

Overview

Credco, together with its subsidiaries is a wholly-owned subsidiary of American Express Travel Related Services Company, Inc. (TRS), a wholly-owned subsidiary of American Express Company (American Express). Credco is primarily engaged in the business of financing non-interest-bearing cardmember receivables arising from the use of the American Express^â Card, the American Express^â Gold Card, Platinum Card^â, Corporate Card, and other American Express Cards issued in the United States and in designated currencies outside the United States. Credco also finances certain interest-bearing and discounted revolving

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loans comprised of American Express credit cards and Sign & Travel^â, although interest-bearing and revolving loans are primarily funded by subsidiaries of TRS other than Credco.

Current Economic Environment/Outlook

Concerns over the availability and cost of credit generally, a historic decline in real estate values in the United States, rising unemployment, and the collapse of major financial institutions have contributed to a worsening global recession, increased volatility and reduced liquidity in the capital markets, and diminished expectations for the economy. In addition, increasing stress in the worldwide financial markets has continued to erode consumer and business confidence levels. Based on these trends, American Express expects consumer and business sentiment will likely deteriorate further and will translate into weaker economies around the globe and increased unemployment through 2009, which may result in declines in credit and charge card spending. If this occurs, the impact on Credco is likely to be a reduction in the financing of cardmember receivables and loans.

In the first quarter of 2009, American Express continued to experience slowing cardmember spending throughout all its businesses as well as lower loan volumes. American Express also experienced higher delinquencies and write-off rates. Higher write-off rates were due to both increased levels of dollar write-offs and lower lending balances.

As further discussed in the Funding Strategy section below, since late September 2008, the market for unsecured term debt generally has been unavailable to all financial institutions, including Credco. However, Credco has continued to issue commercial paper. During the first quarter of 2009, Credco issued commercial paper at a slower pace and in smaller amounts that is commensurate with its current funding strategy and the lower level of receivables owned.

On October 7, 2008, the Federal Reserve Board (the Board) established the Commercial Paper Funding Facility (CPFF). The CPFF provides three month liquidity to U.S. issuers of commercial paper through a special purpose vehicle (SPV), which purchases three month unsecured and asset-backed commercial paper directly from eligible issuers using financing provided by the Federal Reserve Bank of New York. Credco is eligible to have up to $14.7 billion of commercial paper outstanding with the SPV at any one time. Credco remains, after the downgrade of its short-term rating to A-2 by Standard & Poor’s (S&P), eligible to participate in the CPFF based on Credco’s current short-term ratings assigned by Moody’s Investor Services (Moody’s) and Fitch Ratings (Fitch). The commercial paper must be rated at least A1/P1/F1 by two or more major nationally recognized statistical rating organizations (NRSRO) to qualify for participation in the CPFF. The SPV is currently scheduled to cease purchasing commercial paper on October 30, 2009, unless the Board extends the facility. At March 31, 2009, Credco had $1.8 billion of commercial paper outstanding, none of which was placed with the CPFF.

In October 2008, American Express moved to increase its flexibility in funding U.S. consumer and small business charge card receivables by amending the receivables purchase agreements between Credco and each of American Express Centurion Bank (Centurion Bank) and American Express Bank, FSB (FSB) (together, the Banks). The previous agreements called for the Banks, which issue American Express’ U.S. consumer and small business charge cards, to sell all unsecuritized receivables related to spending on those cards to Credco. The amended agreements will give the Banks the flexibility to continue to sell the receivables to Credco or to retain the receivables and fund them from their own sources. These amendments will allow American Express to shift, from time-to-time, the funding of those receivables from Credco to the Banks. Credco, which raises funds for the purpose of buying receivables through the sale of commercial paper, as well as through the issuance of medium- and long-term debt securities, can transfer proceeds of its funding activities in excess of its needs broadly to other subsidiaries of American Express, including to the Banks. The new arrangements between Credco and the Banks will have no impact on Credco’s funding of U.S. corporate charge card receivables and charge card receivables outside the United States.

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Results of Operations for the three months ended March 31, 2009 and 2008

Pretax income depends primarily on the volume of cardmember receivables and loans purchased, the discount factor used to determine purchase price, the relationship of the total discount to Credco’s interest expense, and the collectibility of cardmember receivables and loans purchased.

Credco’s consolidated net income decreased 11 percent to $135 million for the three months ended March 31, 2009, as compared to the three months ended March 31, 2008. The year-over-year decrease was primarily due to a decrease in discount revenue earned from a smaller base of purchased cardmember receivables and loans, interest income earned on loans to affiliates, and interest income from investments, partially offset by a decrease in interest expense and provisions for losses, net of recoveries.

The following table summarizes the changes attributable to the increase (decrease) in key revenue and expense accounts for the three month period ended March 31, 2009, compared with the three month period ended March 31, 2008 (millions):

Discount revenue earned on purchased cardmember receivables and loans:
Volume of receivables and loans purchased	$	(387	)
Discount rates		(59	)
Total	$	(446	)
Interest income from affiliates:
Average loans to affiliates	$	(17	)
Interest rates		(57	)
Total	$	(74	)
Interest income from investments:
Average investments outstanding	$	47
Interest rates		(87	)
Total	$	(40	)
Provisions for losses, net of recoveries:
Volume of receivables purchased	$	(170	)
Provisions rates and volume of recoveries		(30	)
Total	$	(200	)
Interest expense:
Average debt outstanding	$	(123	)
Interest rates		(80	)
Total	$	(203	)
Interest expense to affiliates:
Average debt outstanding	$	13
Interest rates		(75	)
Total	$	(62	)

Discount Revenue Earned on Purchased Cardmember Receivables and Loans

Discount revenue decreased 68 percent or $446 million to $208 million for the three months ended March 31, 2009, as compared to the three months ended March 31, 2008, due to a decrease in both the volume of

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receivables purchased and discount rates. Volume of receivables and loans purchased for the three months ended March 31, 2009, was 59 percent lower than the same period a year ago, primarily due to the amendment of the receivables purchase agreements between Credco and each of Centurion Bank and FSB. Purchased volume does not include those cardmember receivables transferred with recourse to Credco and cardmember receivables and loans funded by loans to affiliates. Discount rates, which vary over time due to changes in market interest rates or changes in the collectibility of cardmember receivables, decreased an average of approximately 22 basis points compared to the three months ended March 31, 2008.

Interest Income from Affiliates

Interest income from affiliates decreased 39 percent or $74 million to $114 million for the three months ended March 31, 2009, as compared to the three months ended March 31, 2008. The year-over-year decrease is due to a decrease in both the interest rates charged to affiliates and, to a lesser extent, the volume of loans to affiliates. The average volume of loans to affiliates decreased primarily due to the impact of foreign exchange rates and, to a lesser extent, to the amendment of the funding structure with respect to Germany. The average interest rate charged to affiliates during the three months ended March 31, 2009, was 53 basis points lower than the average interest rate charged to affiliates in the same three month period a year ago.

Interest Income from Investments

Interest income from investments decreased 56 percent or $40 million to $32 million for the three months ended March 31, 2009, as compared to the three months ended March 31, 2008. The year-over-year decrease is due to the decrease of the average interest rate on the total investment portfolio of approximately 67 basis points for the three months ended March 31, 2009, as compared to the same three month period a year ago.

Provisions for Losses, Net of Recoveries

The provisions for losses, net of recoveries, decreased 81 percent or $200 million to $48 million for the three months ended March 31, 2009, as compared to the three months ended March 31, 2008. The year-over-year decrease primarily reflects a reduction in the volume of receivables purchased, due to the amendment of the receivables purchase agreements with the Banks previously discussed.

Interest Expense and Interest Expense to Affiliates

Interest expense and interest expense to affiliates decreased 54 percent and 75 percent, respectively, for the three months ended March 31, 2009, as compared to the same period a year ago, due to lower interest rates and lower average debt outstanding. The average interest rate on debt outstanding during the three months ended March 31, 2009, was 35 basis points lower than the same period a year ago. The average rate due to affiliates during the three months ended March 31, 2009, was 72 basis points lower than the same period a year ago.

Service Fees to Affiliates

There were no service fees to affiliates for the three months ended March 31, 2009, as compared to $51 million for the three months ended March 31, 2008, due to a decrease in servicing provided under service level agreements with affiliates as a result of the previously discussed amendment of the receivables purchase agreements with the Banks.

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Income Taxes

Credco’s effective tax rate for the three months ended March 31, 2009, was 14 percent compared with 10 percent for the three month period ended March 31, 2008. The effective tax rate was higher for the three months ended March 31, 2009, as compared to 2008 primarily due to the change in the geographic mix of pretax income and the impact of revisions of certain prior year estimated tax liabilities.

Cardmember Receivables

At March 31, 2009, and December 31, 2008, Credco owned $8.5 billion and $10.9 billion of cardmember receivables, respectively. Cardmember receivables represent amounts due from charge card customers and are recorded at the time they are purchased from the seller. Included in cardmember receivables are Credco Receivables Corporation (CRC)’s purchases of the participation interests from American Express Receivables Financing Corporation V LLC (RFC V) in conjunction with TRS’ securitization program. At March 31, 2009, and December 31, 2008, CRC owned approximately $1.6 billion and $2.4 billion, respectively, of participation interests purchased from RFC V.

The following table summarizes selected information related to the cardmember receivables portfolio:

As of and for three months ended (Millions, except percentages)	March 31, 2009			December 31, 2008			March 31, 2008 Restated
Total cardmember receivables	$	8,546		$	10,859		$	24,477
Loss reserves	$	169		$	204		$	880
as a % of receivables (a)		2.0	%		1.9	%		3.6	%
Average life of cardmember receivables (in days) (b)		30			32			34
Cardmember receivables – 180 day write-off (a)	$	1,613		$	2,444			N/A
30 days past due as a % of total		2.9	%		2.6	%		N/A
Average receivables	$	2,020		$	11,413			N/A
Write-offs, net of recoveries	$	20		$	323			N/A
Net write-off rate (a)		4.0	%		28.4	%		N/A
Cardmember receivables – 360 day write-off	$	6,933		$	8,415		$	24,477
90 days past due as a % of total		2.7	%		2.8	%		4.4	%
Write-offs, net of recoveries	$	50		$	38		$	191
Net write-off rate (c)		0.23	%		0.13	%		0.29	%

(a)	In the fourth quarter of 2008, American Express revised the time period in which past due cardmember receivables for its U.S. Card Services segment are written off to 180 days past due, consistent with applicable bank regulatory guidance. Previously, receivables were written off when 360 days past due. Credco’s receivables subject to 180 day write-off and the related net write-off rate, which reflects write-offs, net of recoveries expressed as a percentage of the average amount of cardmember receivables owned by Credco at the beginning of the year and at the end of each month in each of the periods indicated, are reflected above.
(b)	Represents the average life of 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 periods indicated, to the volume of cardmember receivables purchased by Credco.
(c)	Credco’s write-offs, net of recoveries, expressed as a percentage of the volume of cardmember receivables purchased by Credco in each of the periods indicated.

Cardmember receivables owned at March 31, 2009, decreased approximately $2.3 billion from December 31, 2008, as a result of a reduction in cardmember receivables purchased due to expected seasonal changes in cardmember spending, and to a lesser extent, the wind down of receivables purchased from Amex Bank of Canada.

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Reserves for Cardmember Receivables and Cardmember Loans

The following is an analysis of the reserves for cardmember receivables and cardmember loans:

Three months ended (Millions)	March 31, 2009			March 31, 2008
Balance, beginning of period	$	218		$	841
Provisions for losses (a)		48			248
Accounts written-off (a)		(75	)		(194	)
Other		(7	)		(5	)
Balance, end of period	$	184		$	890

(a) Includes recoveries on accounts previously written-off of $20 million and $42 million during the three months ended March 31, 2009 and 2008, respectively.

Loans to Affiliates

Components of loans to affiliates were as follows:

(Millions)	March 31, 2009		December 31, 2008		March 31, 2008
TRS Subsidiaries:
American Express Australia Limited	$	2,946	$	3,204	$	3,942
American Express Services Europe Limited		2,390		2,388		3,776
Amex Bank of Canada		2,256		2,257		2,605
American Express Centurion Bank (a)		—		2,225		—
American Express International, Inc.		705		943		849
American Express Co. (Mexico) S.A. de C.V.		379		392		461
American Express Bank (Mexico) S.A.		307		317		—
Total (b)	$	8,983	$	11,726	$	11,633

(a)	During 2008, Credco loaned $2.2 billion to Centurion Bank as a consequence of the previously discussed amendment of the receivables purchase agreements. In February 2009, Centurion Bank repaid $2.2 billion to Credco.
(b)	Of the approximately $9.0 billion outstanding of loans to affiliates, approximately $5.7 billion are collateralized by the underlying cardmember receivables transferred with recourse.

Due from Affiliates

At March 31, 2009, and December 31, 2008, due from affiliates was $3.6 billion and $3.7 billion, respectively. These amounts relate primarily to timing differences between the purchase of cardmember receivables and remittances from TRS on cardmember receivables purchased by Credco, which are net settled in the subsequent month in the normal course of business.

Short-term Debt to Affiliates

Components of short-term debt to affiliates were as follows:

(Millions)	March 31, 2009		December 31, 2008		March 31, 2008
American Express	$	6,631	$	3,579	$	6,919
AE Exposure Management Ltd.		1,163		2,356		2,308
TRS		717		1,483		—
American Express Holdings (Netherlands) C.V.		417		417		381
American Express Europe Limited		175		175		—
National Express Company, Inc.		105		91		2,089
American Express Publishing Corp.		42		84		63
Other		140		132		127
Total	$	9,390	$	8,317	$	11,887

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Short-term debt to affiliates consists primarily of master note agreements for which there is no stated term. Credco does not expect any changes to its short-term funding strategies with affiliates.

Impact of Credit and Capital Markets Environment

Credit Markets – Global Cardmember Receivables

In the first quarter of 2009, many economies around the globe continued to face challenging conditions. In the United States and many other countries, consumer confidence and the housing markets continued to weaken, and unemployment continued to rise. These challenging conditions adversely affected credit card issuers, including American Express issuers that sell receivables to Credco.

In managing risk on behalf of Credco, TRS’ objective is to preserve its profitability, but also protect, to the extent it can, TRS’ ongoing relationship with its cardmembers. With this in mind, the following actions have been taken by TRS across its cardmember portfolios:

• focusing on areas of high risk and canceling certain accounts;

• reducing some customer lines of credit;

• creating customer advocacy groups; and

• assisting cardmembers who are experiencing temporary financial difficulty.

American Express’ view is that economic conditions will deteriorate further in 2009. The impact on Credco is that its financing of receivables and loans will decline due to reduced cardmember spending. This is in addition to the reduction in purchases as a result of the previously discussed amendment of the receivables purchase agreements in October 2008.

Capital Markets

In the latter part of 2008 and through the first quarter of 2009, the market for Credco’s term unsecured, nonguaranteed debt, like that for virtually all financial institutions, was substantively frozen. Various government programs have provided some stability to the capital markets and reduced dislocations in benchmarks and indices such as LIBOR. However, if the unprecedented levels of volatility and disruptions reemerge or worsen, they could further negatively impact Credco’s funding capabilities, liquidity position, and investment portfolios or derivative positions. See the Consolidated Capital Resources and Liquidity section below for a more detailed discussion of Credco’s funding strategies.

Investment Portfolio

Credco’s investment portfolio primarily supports its contingent liquidity strategy by investing in U.S. Government and agency obligations. Credco’s objective is to manage the type and mix of assets as well as their maturity profile in order to ensure the cash and liquidity needs can be met without relying on the sale of investments prior to maturity. As a result, Credco generally holds its investments to maturity. Credco nonetheless seeks to invest in portfolios of securities with sufficient liquidity that could be accessed prior to maturity should changes in cash needs occur.

All of Credco’s investments are classified as available-for-sale. Credco reviews its investments at least quarterly and more often as market conditions may require to evaluate their fair values and to identify investments that have indications of other-than-temporary impairments. The determination of other-than-temporary impairments for available-for-sale securities is a subjective process, requiring the use of various assumptions and application of judgment.

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Government Sponsored Enterprises

At March 31, 2009, Credco owned approximately $2.7 billion of senior unsecured debentures issued by Government Sponsored Enterprises (GSEs): Fannie Mae and Freddie Mac. On September 7, 2008, the Federal Housing Finance Agency (FHFA) announced the decision to place Fannie Mae and Freddie Mac into a conservatorship controlled by the FHFA. These actions were designed to protect the senior and subordinated debt and the mortgage-backed securities of the GSEs. The total net unrealized gains on these securities were approximately $30 million at March 31, 2009.

Money Market Fund

Credco owned a $500 million investment in the Reserve Primary Fund (the Fund), a money market fund. The net asset value of the Fund fell below $1 per share in September 2008, at which time Credco recorded a loss of $15 million related to this investment. Credco has received approximately $449 million from the Fund since it filed a redemption order with Reserve, the Fund sponsor, in September 2008, which includes $22 million received on April 17, 2009. The remaining amount due from the Fund is recorded in deferred charges and other assets on Credco’s Consolidated Balance Sheets. The timing of receipt of the remaining proceeds cannot be determined at this time.

With the exception of its exposure to the Fund, Credco did not experience any defaults or events of default, or determine it would not receive timely contractual payments of interest and repayment of principal on any of its holdings in its investment portfolios.

Consolidated Capital Resources and Liquidity

Credco’s balance sheet management objectives are to maintain a broad, deep, and diverse set of funding sources to finance its assets and meet operating requirements and liquidity programs that enable Credco to meet its obligations for at least a 12 month period should some or all of its funding sources become inaccessible.

Funding Strategy

Credco seeks to maintain broad and well-diversified funding sources to allow it to meet its maturing obligations and cost-effectively finance current and future asset growth as well as to maintain a strong liquidity profile. Diversity of funding sources by type of debt instrument, by maturity and by investor base, among other factors, provides additional insulation from the impact of disruptions in any one type of debt, maturity, or investor. The mix of Credco’s funding in any period will seek to achieve cost-efficiency while maintaining both diversified sources and achieving its liquidity objectives. Credco’s funding strategy and activities are integrated into its asset-liability management activities.

Credco, like many financial services companies, has historically relied on the debt capital markets to fulfill a substantial amount of its funding needs. Credco has a variety of funding sources available to access the debt capital markets, including commercial paper and senior unsecured debentures. One of the principal tenets of Credco’s funding strategy is to issue debt with a wide range of maturities to reduce and distribute its refinancing requirements in future periods. However, Credco’s ability to obtain financing in the debt capital market for unsecured term debt is subject to prevailing market conditions, including a renewal of investor demand. Credco continues to assess its funding needs and investor demand, which will likely change the mix of its existing sources as well as seek to add new sources to its funding mix. Credco’s funding plan is subject to various risks and uncertainties, such as disruption of financial markets, market capacity, and demand for securities offered by Credco as well as any regulatory changes. Many of these risks and uncertainties are beyond Credco’s control.

Credco’s current funding strategy for 2009 is to raise funds to maintain sufficient cash and readily-marketable securities that are easily convertible to cash in order to meet short-term borrowings outstanding, seasonal, and

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other working capital needs for the next 12 months, including maturing obligations, changes in receivables and other asset balances, as well as operating requirements.

Credco’s liquidity and funding strategy is designed to maintain high and stable debt ratings from the major credit rating agencies, Standard & Poor’s (S&P), Moody’s Investor Services (Moody’s), Dominion Bond Rating Service (DBRS), and Fitch Ratings (Fitch). However, Credco is not immune to the impact on corporate ratings arising from the uncertainty in financial markets and the weakening economic environment. Recently, three credit rating agencies provided updates on Credco’s ratings as follows:

• On April 30, 2009, S&P downgraded Credco’s debt ratings as follows:

• Senior debt ratings were lowered from A to BBB+

• Short-term ratings were lowered from A-1 to A-2

• Outlook for the ratings is negative

• On April 24, 2009, Moody’s downgraded Credco’s debt ratings as follows:

• Senior debt ratings were lowered from A1 to A2

• Short-term ratings of Prime-1 were affirmed

• Outlook for debt ratings is now stable

• On April 16, 2009, Fitch announced that it had revised its outlook on the long-term and short-term ratings of Credco from stable to negative. The long-term and short-term ratings of Credco were affirmed at A+/F1.

A downgrade in Credco’s long-term debt rating could result in paying higher interest expense on Credco’s unsecured debt, as well as higher fees related to its committed lines of credit. In addition to increased funding costs, a lower long-term debt rating could also reduce Credco’s borrowing capacity in the unsecured term debt capital markets when such markets become available. S&P’s recent downgrade of Credco’s short-term rating to A-2 will likely result in Credco further reducing or eliminating its small outstanding commercial paper program.

Short-term Funding Programs

Credco’s short-term funding requirements have historically been met primarily by the sale of commercial paper. Credco’s commercial paper is a widely recognized name in the money markets and is supported by a diverse base among short-term investors. 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. During the first quarter of 2009 and all of 2008, Credco had continuous access to the commercial paper markets. Its commercial paper issuances after mid-September 2008 were issued at shorter weighted average maturities than Credco’s historical trend, consistent with the changes in issuance maturities occurring across the overall commercial paper market, as reported by the Federal Reserve. During this period, Credco has significantly reduced its reliance on the commercial paper market.

On October 7, 2008, the Federal Reserve Board established the CPFF. The CPFF provides three-month liquidity to U.S. issuers of commercial paper through a SPV, which purchases three month unsecured and asset-backed commercial paper directly from eligible issuers using financing provided by the Federal Reserve Bank of New York. Credco is eligible to have up to $14.7 billion of commercial paper outstanding with the SPV at any one time. Credco remains, after the downgrade of its short-term rating to A-2 by S&P, eligible to participate in the CPFF based on Credco’s current short-term ratings assigned by Moody’s and Fitch. The commercial paper must be rated at least A1/P1/F1 by two or more major NRSRO to qualify for participation in the CPFF. The SPV is currently scheduled to cease purchasing commercial paper on October 30, 2009, unless the Board extends the facility. At March 31, 2009, Credco had $1.8 billion of commercial paper outstanding, none of which was placed with the CPFF.

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Credco currently manages the level of net short-term debt outstanding, defined as commercial paper less cash and cash equivalents, such that its total back-up liquidity, including maximum available bank credit facilities and term liquidity portfolio investment securities, is not less than 100 percent of net short-term debt. Based on the maximum available borrowings under committed third party bank credit facilities and term liquidity portfolio investment securities, Credco’s total back-up liquidity coverage of net short-term borrowings was in excess of 100 percent at March 31, 2009 and December 31, 2008.

Long-term Funding Programs

Long-term debt is raised through the offering of debt securities in the United States and international capital markets. Long-term debt is generally defined as any debt with an original maturity greater than 12 months.

Credco had the following long-term debt outstanding:

(Billions)	Quarter ended March 31, 2009		Full year December 31, 2008
Long-term debt outstanding	$	19.1	$	20.0
Average long-term debt	$	19.0	$	21.2

Credco also has the ability to issue debt securities under shelf registrations filed with the Securities and Exchange Commission (SEC). The shelf registration statement filed with the SEC is for an unspecified amount of debt securities to be issued from time to time. During the three months ended March 31, 2009, Credco did not issue any debt securities from its U.S. shelf registration. At March 31, 2009, Credco had $12.6 billion of debt securities outstanding issued under the SEC registration statements.

Credco, in conjunction with certain subsidiaries of American Express, has established a program for the issuance of debt instruments outside the United States to be listed on the Luxembourg Stock Exchange. The maximum aggregate principal amount of debt instruments outstanding at any one time under the program cannot exceed $50.0 billion. At March 31, 2009, $3.1 billion was outstanding under this program, of which $2.3 billion was issued by Credco.

Credco established a program in Australia for the issuance of debt securities from time to time of up to approximately $4.2 billion. During the three months ended March 31, 2009, no notes were issued under this program. At March 31, 2009, approximately $3.6 billion was available for issuance under this program.

During the first quarter of 2008, a new shelf prospectus was filed and became effective in Canada for a medium-term note program providing for the issuance from time to time, in Canada, of up to approximately $2.9 billion of notes by American Express Canada Credit Corporation (Cancredco), an indirect wholly-owned subsidiary of Credco. All notes issued under this shelf registration will be guaranteed by Credco. During the three months ended March 31, 2009, no notes were issued under this program. The financial results of Cancredco are included in the consolidated financial results of Credco.

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 significant restrictions on the ability of Credco to obtain funds from its subsidiaries by dividend or loan. Additionally, there are no limitations on the amount of debt that can be issued by Credco.

Credco paid cash dividends of $75 million to TRS during the three months ended March 31, 2009.

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Liquidity Strategy

Credco seeks to ensure that it has adequate liquidity in the form of cash and readily-marketable securities easily convertible into cash, as well as access to cash and cash equivalents, to continuously meet its business needs, sustain operations and satisfy its obligations for a period of at least 12 months without access to the unsecured debt capital markets. This objective is managed by accessing capital to finance business growth through a broad and diverse set of funding programs, by maintaining cash and readily-marketable securities, as well as through a variety of contingent sources of cash and financing. Credco maintains a liquidity plan that enables it to continuously meet its daily obligations when its access to financing becomes impaired or markets become inaccessible. The plan contemplates a hypothetical 12-month liquidity crisis occurring as a sudden and unexpected event that makes financing from its various funding sources unavailable.

As a result of Credco’s funding activities during 2008, Credco raised funds that substantially exceeded its 2008 and 2009 funding needs. The excess was invested with the purpose of increasing the amount of cash and readily-marketable securities Credco holds. The availability of these funds raised in 2008 meant that Credco had no requirement to access the term debt markets in the first quarter of 2009.

The upcoming approximate maturities of the Company’s long-term debt are as follows:

(Billions)	Debt Maturities
Quarter Ending:
June 30, 2009	$	1.8
September 30, 2009		1.5
December 31, 2009		1.1
March 31, 2010		—
Total	$	4.4

The amount of cash and readily-marketable securities Credco expects to maintain will be substantially greater than its historical levels of holdings. Credco expects to incur higher net interest cost of carry on these amounts, which will be dependent on the amount Credco actually maintains, as well as the difference between its cost of funding these amounts and their investment yields.

Cash and Readily-Marketable Securities

At March 31, 2009, Credco had cash and cash equivalents of approximately $8.9 billion as well as $3.1 billion of longer-term readily-marketable securities. These investments consist of high credit quality, highly liquid short-term instruments, as well as longer term, highly liquid instruments, such as U.S. Treasury securities, government-sponsored enterprise debt, or government-guaranteed debt. These instruments are managed to either mature prior to the maturity of borrowings that will occur within the next 12 months, or are sufficiently liquid that Credco can sell them or enter into sale/repurchase agreements to immediately raise cash proceeds to meet liquidity needs.

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Committed Bank Credit Facilities

Credco maintained committed bank credit facilities at March 31, 2009, as follows:

(Billions)	Total		American Express		Credco
Committed (a)	$	10.4	$	1.3	$	9.1 (b	)
Outstanding	$	2.5	$	—	$	2.5

(a)	Included is $2.5 billion outstanding related to the Australian facility.
(b)	Credco has the right to borrow a maximum amount of $10.4 billion with a commensurate maximum $1.3 billion reduction in the amount available to American Express.

Credco’s committed bank credit facilities expire as follows:

(Billions)
2010	$	1.9
2011		2.6
2012		5.9
Total	$	10.4

The availability of the credit lines is subject to Credco’s compliance with certain financial covenants that require maintenance of a 1.25 ratio of combined earnings and fixed charges to fixed charges. The ratio of earnings to fixed charges for Credco was 1.81 for the three months ended March 31, 2009. The ratio of earnings to fixed charges for American Express for the three months ended March 31, 2009 was 1.94.

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

In consideration of all its funding sources, Credco believes that it has the liquidity to satisfy all maturing obligations and fund normal business operations for at least a 12-month period from March 31, 2009.

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Forward-Looking Statements

Various statements have been made in this Amendment No. 1 to the Quarterly Report on Form 10-Q that may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may also be made in Credco’s other reports filed with or furnished to 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,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely” and similar expressions are intended to identify forward-looking statements. Credco cautions you that the risk factors described below are not exclusive. There may also be other risks that Credco is unable to predict at this time that may cause actual results to differ materially from those in 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 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:

• credit trends, which will depend in part on the economic environment, including, among things, the housing market and the rates of bankruptcies, which can affect spending on card products and debt payments by individual and corporate customers;

• Credco’s ability to accurately estimate the provisions for losses in Credco’s outstanding portfolio of cardmember receivables and loans;

• fluctuations in foreign currency exchange rates;

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

• changes in laws or government regulations affecting American Express’ business, including the potential impact of regulations adopted by federal bank regulators relating to certain credit and charge card practices;

• the effect of fluctuating interest rates, which could affect Credco’s borrowing costs;

• the impact on American Express’ business resulting from continuing geopolitical uncertainty;

• Credco’s ability to satisfactorily remediate (i) the accounting error resulting in the restatement or (ii) its material weakness in internal control over financial reporting;

• Credco’s ability to satisfy its liquidity needs and execute on its funding plans, which will depend on, among other things, Credco’s future business growth, its credit ratings, market capacity and demand for securities offered by Credco, performance by Credco’s counterparties under its bank credit facilities and other lending facilities, and regulatory changes, including adoption of changes to the policies, rules and regulations of the Board of Governors of the Federal Reserve System;

• Credco’s ability to meet the criteria for participation in certain liquidity facilities and other funding programs, including the Commercial Paper Funding Facility being made available through the Federal Reserve Bank of New York, or through other governmental entities; and

• Credco’s ability to access in a timely manner its remaining investment in the Reserve Primary Fund.

OTHER REPORTING MATTERS

Accounting Developments

See “Recently Issued Accounting Standards” section of Note 2 to the Consolidated Financial Statements.

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Item 4. CONTROLS AND PROCEDURES

The following has been amended to reflect the restatement of Credco’s Consolidated Financial Statements as discussed further in the “Explanatory Note” and in Note 1 to the Consolidated Financial Statements.

Evaluation of Disclosure 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 Credco’s disclosure controls and procedures were not effective as of March 31, 2009 due to the material weakness identified and described below. 

As described in “Explanatory Note” herein, Credco identified an error in its accounting for a net investment in a consolidated foreign subsidiary that stemmed from a funding structure executed in 2004. In the course of preparing the financial statements for the third quarter of 2009, an error was identified in the initial set up of this structure in Credco’s subsidiary ledgers that caused an incorrect automated bookkeeping entry to be recorded beginning in the third quarter of 2007 when a portion of the funding for this net investment was refinanced. As a result of this incorrect automated bookkeeping entry, (i) other revenues in Credco’s Consolidated Statements of Income and (ii) accrued interest and other liabilities, retained earnings and the foreign currency translation adjustments account included in the accumulated other comprehensive income (loss) component of shareholder’s equity in Credco’s Consolidated Balance Sheets were incorrect beginning in the third quarter of 2007. Following a review of its controls and processes, Credco’s management has determined that it did not maintain effective controls over processes to accurately record or monitor certain of its net investments in consolidated foreign subsidiaries with similar funding structures. This deficiency resulted in an error that was not prevented or detected on a timely basis and resulted in restatements of the financial statements for the fiscal years ended December 31, 2008 and 2007, including each of the quarterly periods in fiscal year 2008 and the third and fourth quarters in fiscal year 2007, and for the first and second quarters in 2009. Accordingly, Credco’s management concluded that this deficiency constitutes a material weakness.

Remediation Steps to Address Material Weakness in Internal Controls

Credco has reviewed its processes and controls for recording and monitoring net investments in foreign consolidated subsidiaries and has determined that the error was limited to a discrete number of similar transactions (specifically three funding structures related to net investments in consolidated foreign subsidiaries). Credco has performed a detailed review of each of these net investment funding structures and has determined there have been no other errors in accounting. Credco has also enhanced its controls with respect to recording and monitoring funding structures related to net investments in consolidated foreign subsidiaries to prevent future errors in accounting from occurring.

Based on the actions taken, Credco believes that, as of the date of this Form 10-Q/A, the potential risk of a material misstatement related to the accounting for net investments in consolidated foreign subsidiaries for these three funding structures is remote. In addition, management is performing additional actions to remediate the material weakness including the continued evaluation of the effectiveness of its internal control over financial reporting on an ongoing basis, and will take further actions as appropriate.

To address the material weakness, Credco performed additional analysis and other procedures in connection with the preparation of the financial statements included in this Form 10-Q/A. Accordingly, management believes that the Consolidated Financial Statements included herein fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

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Changes in Internal Control over Financial Reporting

There were no changes to Credco’s internal control over financial reporting that occurred during the first quarter ended March 31, 2009 that would have a material effect, or are reasonably likely to have a material effect, on Credco’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

For a discussion of Credco’s risk factors, see Part I, Item 1A. “Risk Factors” of Credco’s Form 10-K/A for the year ended December 31, 2008. There are no material changes from the risk factors set forth in such Form 10-K/A.

Item 6. EXHIBITS

The exhibits required to be filed with this report are listed on page E-1 hereof, under “Exhibit Index,” which is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements 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:      November 16, 2009	By	/s/ David L. Yowan
		David L. Yowan
		Chief Executive Officer
DATE:      November 16, 2009	By	/s/ Lawrence A. Belmonte
		Lawrence A. Belmonte
		Vice President and Chief Accounting Officer

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EXHIBIT INDEX

Pursuant to Item 601 of Regulation S-K

	Description	How Filed
Exhibit 12.1	Computation in Support of Ratio of Earnings to Fixed Charges of American Express Credit Corporation.	Electronically filed herewith.
Exhibit 12.2	Computation in Support of Ratio of Earnings to Fixed Charges of American Express Company.	Electronically filed herewith.
Exhibit 31.1	Certification of David L. Yowan, Chief Executive Officer, pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.	Electronically filed herewith.
Exhibit 31.2	Certification of Anderson Y. Lee, Chief Financial Officer, pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended.	Electronically filed herewith.
Exhibit 32.1	Certification of David L. Yowan, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Electronically filed herewith.
Exhibit 32.2	Certification of Anderson Y. Lee, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Electronically filed herewith.

E-1