American Express Credit 10-Q/A 2009 Q3 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 September 30, 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	(I.R.S. Employer Identification No.)
incorporation or organization)
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.
xYes   o 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).
oYes   o 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 filer   o	Accelerated filer   o
Non-accelerated filer   x	Smaller reporting company   o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
oYes   x 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 March 30, 2010
Common Stock (par value $.10 per share)	1,504,938 Shares

AMERICAN EXPRESS CREDIT CORPORATION

FORM 10-Q/A

INDEX

			Page No.
PART I.	FINANCIAL INFORMATION		4
		Explanatory Note	3
	Item 1.	Financial Statements	4
		Consolidated Statements of Income and Retained Earnings – Three and Nine months ended September 30, 2009 and 2008	4
		Consolidated Balance Sheets – September 30, 2009 and December 31, 2008	5
		Consolidated Statements of Cash Flows – Nine months ended September 30, 2009 and 2008	6
		Notes to Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 4.	Controls and Procedures	28
PART II.	OTHER INFORMATION		30
	Item 1A.	Risk Factors	30
	Item 6.	Exhibits	30
		Signatures	31
		Exhibit Index	E-1

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AMERICAN EXPRESS CREDIT CORPORATION

EXPLANATORY NOTE

Restated Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2009

American Express Credit Corporation (Credco) is filing this amendment to its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009 (Third Quarter 2009 Form 10-Q/A) to restate its Consolidated Statement of Cash Flows for the nine months ended September 30, 2009. This restatement is to correct an overstatement of cash flows from investing activities and an equal and offsetting understatement of cash flows from operating activities, as further explained below. This restatement does not impact Credco’s previously reported overall net change in cash and cash equivalents in its Consolidated Statement of Cash Flows or Credco’s Consolidated Balance Sheet or Consolidated Statement of Income for the period presented.

The restatement is the result of a correction of a manual error in the classification of cash flows pertaining to amounts Due from Affiliates. The error resulted from an incorrect identification of cash flows from transactions with entities affiliated with Credco between investing and operating activities whereby a cash outflow from investing activities was inadvertently recorded as a cash inflow, with an equal and offsetting error in cash flow from operating activities. The error resulted in an overstatement of cash from investing activities of $3.9 billion and an understatement of cash from operating activities of $3.9 billion.

Note 1 to the Consolidated Financial Statements included herein also contains information regarding the nature and impact of the restatement.

For the convenience of the reader, this Third Quarter 2009 Form 10-Q/A sets forth the Form 10-Q in its entirety. Other than amending the disclosures relating to the restatement in the items discussed above, and the elimination of certain disclosures relating to the restatement disclosed in the original September 30, 2009 Form 10-Q, no attempt has been made in this Third Quarter 2009 Form 10-Q/A to amend or update other disclosures presented in the original Form 10-Q. Among other things, forward-looking statements made in the original Form 10-Q have not been revised to reflect events that occurred or facts that became known to Credco after the filing of the original Form 10-Q, and such forward-looking statements should be read in their historical context.

The following items of the original Form 10-Q are being amended in this Third Quarter 2009 Form 10-Q/A as a result of this restatement:

• Part I – Item 1 – Financial Statements

• Part I – Item 2 – Management’s Discussion and Analysis

• Part I – Item 4 – Controls and Procedures

Restatement of Results in Previously Filed Financial Statements

As disclosed previously, on November 16, 2009, Credco restated its financial statements and filed an amended Annual Report on Form 10-K/A for the fiscal year ended December 31, 2008, and amended its Quarterly Reports on Form 10-Q for the periods ended March 31, 2009 and June 30, 2009 and also included in the report on Form 10-Q for the quarterly period ended September 30, 2009 (i) a restated Consolidated Balance Sheet as of December 31, 2008, (ii) restated Consolidated Statements of Income for the three and nine month periods ended September 30, 2008, and (iii) a related restatement of the Consolidated Statement of Cash Flows for the nine months ended September 30, 2008.

That restatement was 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 connection with the preparation for the maturity of debt related to the investment, 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.

That restatement also included the impact of (i) certain other unrelated immaterial errors primarily impacting the 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.

Refer to Part I – Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part I – Item 4 – Controls and Procedures in this Third Quarter 2009 Form 10-Q/A for further discussion of this restatement.

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PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
Revenues
Discount revenue earned from purchased cardmember receivables and loans	$	143		$	569		$	524		$	1,818
Interest income from affiliates		101			201			320			583
Interest income from investments		16			76			73			219
Finance revenue		12			14			37			31
Other		40			30			(7	)		40
Total revenues		312			890			947			2,691
Expenses
Provisions for losses, net of recoveries		56			192			163			548
Interest expense		132			345			450			1,061
Interest expense to affiliates		6			60			38			215
Service fees to affiliates		—			50			1			152
Other		1			1			2			3
Total expenses		195			648			654			1,979
Pretax income		117			242			293			712
Income tax provision		10			26			24			87
Net income		107			216			269			625
Retained earnings at beginning of period		3,533			3,361			3,446			3,162
Dividends		(125	)		(50	)		(200	)		(260	)
Retained earnings at end of period	$	3,515		$	3,527		$	3,515		$	3,527

See Notes to Consolidated Financial Statements.

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AMERICAN EXPRESS CREDIT CORPORATION

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

	September 30, 2009			December 31, 2008
Assets
Cash and cash equivalents	$	181		$	8,855
Cardmember receivables, less reserves: 2009, $144; 2008, $204		9,079			10,655
Cardmember loans, less reserves: 2009, $19; 2008, $14		447			484
Loans to affiliates		9,831			11,726
Investment securities		2,048			3,084
Deferred charges and other assets		678			801
Due from affiliates		5,150			3,660
Total assets	$	27,414		$	39,265
Liabilities and Shareholder’s Equity
Short-term debt	$	1,130		$	7,367
Short-term debt to affiliates		4,158			8,317
Current portion of long-term debt		2,538			5,201
Long-term debt		15,759			14,809
Total debt		23,585			35,694
Accrued interest and other liabilities		409			538
Total liabilities		23,994			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		3,515			3,446
Accumulated other comprehensive loss, net of tax:
Net unrealized securities gains, net of tax: 2009, $(9); 2008, $(15)		16			28
Net unrealized derivatives losses, net of tax: 2009, $4; 2008, $19		(8	)		(35	)
Foreign currency translation adjustments, net of tax: 2009, $13; 2008, $13		(265	)		(568	)
Total accumulated other comprehensive loss		(257	)		(575	)
Total shareholder’s equity		3,420			3,033
Total liabilities and shareholder’s equity	$	27,414		$	39,265

See Notes to Consolidated Financial Statements.

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AMERICAN EXPRESS CREDIT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions)
(Unaudited)

	Nine Months Ended September 30,
	2009			2008
	Restated
Cash Flows from Operating Activities
Net income	$	269		$	625
Adjustments to reconcile net income to net cash provided by operating activities:
Provisions for losses		220			667
Amortization and other		20			(1	)
Deferred taxes		22			31
Changes in operating assets and liabilities:
Due from affiliates		236			67
Other operating assets and liabilities		82			1
Net cash provided by operating activities		849			1,390
Cash Flows from Investing Activities
Net decrease in cardmember receivables and loans		1,430			2,507
Purchase of investments		—			(598	)
Maturities of investments		1,000			600
Net decrease (increase) in loans to affiliates		3,037			(559	)
Net increase in due from affiliates		(1,726	)		(230	)
Net cash provided by investing activities		3,741			1,720
Cash Flows from Financing Activities
Net (decrease) increase in short-term debt to affiliates		(4,159	)		10
Net decrease in short-term debt		(6,237	)		(1,705	)
Issuance of debt		1,500			6,257
Redemption of long-term debt		(4,165	)		(5,548	)
Dividends paid		(200	)		(260	)
Net cash used in financing activities		(13,261	)		(1,246	)
Effect of exchange rate changes on cash and cash equivalents		(3	)		—
Net (decrease) increase in cash and cash equivalents		(8,674	)		1,864
Cash and cash equivalents at beginning of period		8,855			2,925
Cash and cash equivalents at end of period	$	181		$	4,789

See Notes to Consolidated Financial Statements.

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.	Restated Statement of Cash Flows
	American Express Credit Corporation (Credco) is filing this amendment to its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009 (Third Quarter 2009 Form 10-Q/A) to restate its Consolidated Statement of Cash Flows for the nine months ended September 30, 2009. This restatement is to correct an overstatement of cash flows from investing activities and an equal and offsetting understatement of cash flows from operating activities, as further explained below. This restatement does not impact Credco’s previously reported overall net change in cash and cash equivalents in its Consolidated Statement of Cash Flows or Credco’s Consolidated Balance Sheet or Consolidated Statement of Income for the period presented.
	The restatement is the result of a correction of a manual error in the classification of cash flows pertaining to amounts Due from Affiliates. The error resulted from an incorrect identification of cash flows from transactions with entities affiliated with Credco between investing and operating activities whereby a cash outflow from investing activities was inadvertently recorded as a cash inflow, with an equal and offsetting error in cash flow from operating activities. The error resulted in an overstatement of cash from investing activities of $3.9 billion and an understatement of cash from operating activities of $3.9 billion.
	IMPACT ON CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30, 2009
(Millions)			As Previously Reported		Restated
Due from affiliates	$	(3,707		)	$	236
Net cash provided by operating activities		(3,094		)		849
Net increase in due from affiliates		2,217				(1,726	)
Net cash provided by investing activities	$	7,684			$	3,741

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).
	In October 2008, as part of American Express’ strategy to increase its flexibility in funding U.S. consumer and small business charge card receivables, Credco and both American Express Centurion Bank (Centurion Bank) and American Express Bank, FSB (FSB) (together, the Banks) mutually agreed to amend their respective Receivables Agreements. 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, from time to time, to sell the receivables to Credco or to retain the receivables and fund them from their own sources. However, the amended agreements require the Banks to sell either all or none of their charge card receivables to Credco at any given time. The Banks, therefore, may not direct receivables with particular risk characteristics for sale to Credco. The arrangements between Credco and the Banks will have no impact on Credco’s funding of U.S. Corporate Card charge receivables and charge card receivables outside the United States.
	Credco includes its expenses in the calculation of the discount rate at which Credco offers to purchase receivables from the Banks and that discount rate is further adjusted to maintain Credco’s required fixed charge coverage ratio of 1.25. Those expenses include provision for losses, interest cost and any applicable service fees.
	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 (Form 10-K/A) of Credco for the year ended December 31, 2008, which was filed with the Securities and Exchange Commission (SEC) on November 16, 2009. 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 and 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.

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Recently Issued Accounting Standards

Effective for interim and annual periods ending after September 15, 2009, the Financial Accounting Standards Board (FASB) Accounting Standards Codification^TM (the Codification) is the single source of authoritative literature of U.S. generally accepted accounting principles (GAAP). The Codification consolidates all authoritative accounting literature into one internet-based research tool, which supersedes all pre-existing non-SEC accounting and reporting standards, excluding separate rules and other interpretive guidance released by the Securities and Exchange Commission. New accounting guidance is now issued in the form of Accounting Standards Updates, which update the Codification. Credco has adopted the Codification in the period ending September 30, 2009, and as a result has replaced references to standards that were issued prior to the Codification with a description of the applicable accounting guidance.

The FASB recently issued the following accounting standards, which are effective beginning January 1, 2010. Credco is currently assessing the impact of these standards.

		•	An amendment to the accounting guidance for transfers of financial assets (originally issued as Statement of Financial Accounting Standards No. 166, “Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140”) : The amendment eliminated the concept of a qualifying special purpose entity (QSPE), therefore requiring these entities to be evaluated under the accounting guidance for consolidation of variable interest entities (VIE). Other changes include additional considerations when determining if sale accounting is appropriate, as well as enhanced disclosures requirements. The new standard is to be applied prospectively to transactions completed after the effective date.
		•	An amendment to the accounting guidance for consolidation of VIEs (originally issued as FASB Statement No. 167, “Amendments to FASB Interpretation No. 46(R)”) : The new standard eliminates the scope exception for QSPEs and requires an entity to reconsider its previous consolidation conclusions reached under the VIE consolidation model, including (i) whether an entity is a VIE, (ii) whether the enterprise is the VIE’s primary beneficiary, and (iii) the required financial statement disclosures. The new standard can be applied as of the effective date, with a cumulative-effect adjustment to retained earnings recognized on that date, or retrospectively, with a cumulative-effect adjustment to retained earnings recognized as of the beginning of the first year adjusted.
3.	Investment Securities
	The following is a summary of investment securities at September 30, 2009 and December 31, 2008:

(Millions)	September 30, 2009								December 31, 2008
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. Government agency obligations	$	2,022	$	26	$	—	$	2,048	$	2,640	$	37	$	—	$	2,677
U.S. Government treasury obligations		—		—		—		—		400		7		—		407
Total	$	2,022	$	26	$	—	$	2,048	$	3,040	$	44	$	—	$	3,084
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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

All of Credco’s investment securities are classified as available-for-sale. There were no realized gains or losses on investment securities for the nine months ended September 30, 2009.

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 three general classifications of such items pursuant to the fair value hierarchy (Level 1, Level 2, and Level 3). 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.

• Level 1 - 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. Credco has not classified any investment securities in Level 1 of the fair value hierarchy.

• Level 2 - When quoted prices in an active market are not available, the fair market values for Credco’s investment securities are obtained from a pricing service engaged by Credco, and Credco receives one price for each security. The fair values provided by the pricing service are estimated by using a pricing model, where the inputs to the model are based on observable market inputs. The underlying inputs to the valuation techniques applied by the pricing service are typically benchmark yields, benchmark security prices, credit spreads, reported trades, broker-dealer quotes, all with reasonable levels of transparency. The pricing service did not apply any adjustments to the pricing models used. In addition, Credco did not apply any adjustments to prices received from the pricing service. Although the underlying inputs are directly observable from active markets or recent trades of similar securities in inactive markets, the pricing model used does 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.

• Level 3 - In certain circumstances, the fair market value for Credco’s investment securities could be based on internally derived assumptions surrounding the timing and amount of expected cash flows for the financial instrument. Therefore, these assumptions would be unobservable in either an active or inactive market. Credco has not classified any investment securities in Level 3 of the fair value hierarchy.

As of September 30, 2009 and December 31, 2008, all of Credco’s investment securities are classified within Level 2 of the fair value hierarchy. Credco periodically reaffirms its understanding of the valuation techniques used by its pricing service. No adjustments were deemed necessary to the prices provided by the pricing service as a result of current market conditions.

Other-Than-Temporary Impairment

Credco reviews and evaluates its 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 other-than-temporary impairment. The key factors considered include the determination of the extent to which the decline in the fair value of the security is due to increased default risk for the specific issuer, or market interest rate risk. With respect to increased default risk, Credco assesses the collectibility of principal and interest payments by monitoring issuers’ credit ratings, related changes to those ratings, specific credit events associated with the individual issuers as well as the credit ratings of financial guarantors, where applicable, and the extent to which amortized cost exceeds fair value and the duration and size of that difference.

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

With respect to market interest rate risk, including benchmark interest rates and credit spreads, Credco assesses whether it has the intent to sell the investment securities, and whether it is more likely than not that Credco will not be required to sell the investment securities before recovery of any unrealized losses. As of September 30, 2009 and December 31, 2008, Credco did not hold any investment securities that were in an unrealized loss position.

Supplemental Information

Contractual maturities of investment securities classified as available-for-sale as of September 30, 2009 are as follows:

(Millions)	Cost		Estimated Fair Value
Due within 1 year	$	177	$	178
Due after 1 year through 5 years		1,845		1,870
Total	$	2,022	$	2,048

4.	Fair Values of Financial Instruments
	GAAP requires the disclosure of the estimated fair value of financial instruments. A financial instrument is defined as cash, evidence of an ownership in an entity, or a contract between two entities to deliver cash or another financial instrument or to exchange other financial instruments. The disclosure requirements for the fair value of financial instruments exclude leases, equity method investments, affiliate investments, pension and benefit obligations, insurance contracts, and all non-financial instruments.
	The following table discloses fair value information for Credco’s financial assets and financial liabilities, as of the dates presented:

(Billions)	September 30, 2009				December 31, 2008
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Instrument Assets:
Assets for which carrying values equal or approximate fair value	$	17	$	17	$	27	$	27
Loans to affiliates	$	10	$	10	$	12	$	12
Financial Instrument Liabilities:
Liabilities for which carrying values equal or approximate fair value	$	5	$	5	$	16	$	16
Long-term debt	$	18	$	18	$	20	$	18

The fair values of these financial instruments are estimates based upon market conditions and perceived risks as of September 30, 2009 and December 31, 2008, and require management judgment. These figures may not be indicative of their future fair values. The fair value of Credco cannot be estimated by aggregating the amounts presented.

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following methods were used to determine estimated fair values:

Financial Assets for Which Carrying Values Equal or Approximate Fair Value

Financial assets for which carrying values equal or approximate fair values include cash and cash equivalents, cardmember receivables, accrued interest, and certain other assets. For these assets, the carrying values approximate fair value because they are short-term in duration or variable rate in nature.

In addition, the following financial assets are carried at fair value:

Investment Securities

Investment securities are recorded at fair value on the Consolidated Balance Sheets with unrealized gains and losses recorded in accumulated other comprehensive loss. Gains and losses are recognized in the Consolidated Statements of Income upon disposition of the securities or when management determines that a decline in value below amortized cost is other-than-temporary. Refer to Note 3 for additional information regarding investment securities, including the valuation methodologies used to calculate fair value.

Derivative Financial Instruments

Derivative financial instruments are recorded at fair value on the Consolidated Balance Sheets, with gains and losses recognized in the Consolidated Statements of Income or Consolidated Balance Sheets (accumulated other comprehensive loss) based upon the nature of the derivative. Refer to Note 6 for additional information regarding derivative financial instruments, including the valuation methodologies used to calculate fair value.

Financial Liabilities for Which Carrying Values Equal or Approximate Fair Value

Financial liabilities for which carrying values equal or approximate fair values include short-term debt, short-term debt to affiliates, current portion of long-term debt, accrued interest, and certain other liabilities. For these liabilities, the carrying values approximate fair value because they are short-term in duration, variable rate in nature, or have no defined maturity.

Financial Liabilities Carried at Other Than Fair Value

Long-Term Debt

Long-term debt is recorded at historical issuance cost on the Consolidated Balance Sheets. Fair value is estimated using either quoted market prices or discounted cash flows based on Credco’s current borrowing rates for similar types of borrowing.

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

5.	Comprehensive Income
	The components of comprehensive income, net of related tax, were as follows:

(Millions)	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
Net income	$	107		$	216		$	269		$	625
Other comprehensive income (loss):
Net unrealized securities (losses)		(3	)		(15	)		(12	)		(13	)
Net unrealized derivatives gains		6			23			27			16
Foreign currency translation adjustments		72			(240	)		303			(192	)
Total	$	182		$	(16	)	$	587		$	436

	See the Consolidated Balance Sheets for Credco’s accumulated other comprehensive loss position.
6.	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, for example, 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 and from foreign currency denominated assets and liabilities.
	General principles and the overall framework for managing market risk across Credco are defined in the Market Risk Policy approved by 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.
	Derivative financial instruments derive their value from an underlying variable or multiple variables, including interest rates, 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.
	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 regularly reviews its hedging strategy and may modify it. In addition, Credco may change the amount hedged and the hedge percentage may change based on changes in business volumes and mix, among other factors.
	Foreign exchange risk is generated by foreign currency denominated balance sheet exposures, translation exposure associated with Credco’s net investments in 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,

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

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’ ERMC guidelines and procedures and determines the risk mitigation actions, when necessary. Additionally, Credco may, on occasion, enter into master netting agreements.

As of September 30, 2009 and December 31, 2008, the credit and nonperformance risks associated with Credco’s derivative counterparties were not significant.

The following table summarizes the total gross fair value, excluding interest accruals, of derivative product assets and liabilities at September 30, 2009 and December 31, 2008:

(Millions)	Location	Other assets				Other liabilities
		Fair Value (a)				Fair Value (a)
		September 2009		December 2008		September 2009		December 2008
Derivatives designated as hedging instruments
Interest rate contracts
Fair value hedges		$	351	$	431	$	—	$	—
Cash flow hedges			—		—		12		54
Foreign exchange contracts
Net investment hedges			12		39		17		22
Total derivatives designated as hedging instruments			363		470		29		76
Derivatives not designated as hedging instruments
Interest rate contracts			—		—		7		5
Foreign exchange contracts			111		75		29		39
Total derivatives not designated as hedging instruments			111		75		36		44
Total derivatives (b)		$	474		545	$	65	$	120

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

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(b) GAAP permits the netting of derivative assets and derivative liabilities when a legally enforceable master netting agreement exists between Credco and its derivative counterparty. At September 30, 2009 and December 31, 2008, $7 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 GAAP.

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 September 30, 2009, Credco hedged $7.5 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 loss or gain 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 following tables summarize the impact of fair value hedges on the consolidated financial statements for the three and nine months ended September 30, 2009 and 2008, respectively:

For the three months ended September 30:

	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						Ineffective net gains (losses), net of tax
(Millions)		2009			2008			2009			2008			2009			2008
Fair value hedges:
Interest rate contracts	Other revenues	$	37		$	8	Other revenues	$	(41	)	$	(8	)	$	(4	)	$	—
For the nine months ended September 30:
	Statement of Income
	Derivative contract gain/(loss)						Hedged item gain/(loss)
Derivative relationship	Location	Amountrecognized,net of tax					Location	Amountrecognized,net of tax						Ineffective netgains (losses),net of tax
(Millions)		2009			2008			2009			2008			2009			2008
Fair value hedges:
Interest rate contracts	Other revenues	$	(52	)	$	2	Other revenues	$	52		$	(2	)	$	—		$	—

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

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 September 30, 2009, Credco hedged $1.2 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 $(9) million of net pretax losses on derivative instruments from accumulated other comprehensive loss 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 as part of the cumulative translation adjustment. Any ineffective portions of net investment hedges are recognized in other revenues during the period of change.

The following table summarizes the impact of cash flow hedges and net investment hedges on the consolidated financial statements for the three and nine months ended September 30, 2009 and 2008, respectively:

For the three months ended September 30:

(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 Reclassified into Income	Amount
Derivative relationship	2009			2008			2009			2008				2009		2008
Cash flow hedges:
Interest rate contracts	$	—		$	—	Interest expense	$	(6	)	$	(23	)	Other revenues	$	—	$	—
Net investment hedges:
Foreign exchange contracts	$	(15	)	$	59	Other revenues	$	—		$	—		Other revenues	$	—	$	—

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

For the nine months ended September 30:

(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 Reclassified into Income	Amount
Derivative relationship	2009			2008				2009			2008				2009		2008
Cash flow hedges:
Interest rate contracts	$	(8	)	$	(37	)	Interest expense	$	(35	)	$	(53	)	Other revenues	$	—	$	—
Net investment hedges:
Foreign exchange contracts	$	(83	)	$	(7	)	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 three and nine months ended September 30, 2009 and 2008, respectively:

For the three months ended September 30:

Derivative Relationship	Income Statement classification of gain (loss) on derivatives not designated as hedges	Amount recognized net of tax
(Millions)		2009		2008
Derivatives not designated as hedges
Interest rate contracts	Other revenues	$	—	$	(1	)
Foreign exchange contracts	Other revenues		44		(110	)
	Interest expense		2		4
Total		$	46	$	(107	)

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AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

          For the nine months ended September 30:

DerivativeRelationship	Income Statement classification of gain(loss) on derivatives not designated ashedges	Amount recognized net of tax
(Millions)		2009		2008
Derivatives not designated as hedges
Interest rate contracts	Other revenues	$	—	$	—
Foreign exchange contracts	Other revenues		51		(95	)
	Interest expense		10		13
Total		$	61	$	(82	)

7.	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. In July 2009, the IRS completed its field examination of American Express’ federal tax returns for the years 2003 and 2004. However, all of these years continue to remain open as a consequence of certain issues under appeal.
	Credco had approximately $105 million and $63 million of unrecognized tax benefits at September 30, 2009 and December 31, 2008, respectively. The change is primarily due to an increase in unrecognized tax benefits relating to the attribution of taxable income to a particular jurisdiction or jurisdictions. Included in the $105 million and $63 million of unrecognized tax benefits at September 30, 2009 and December 31, 2008, respectively, are corresponding benefits of approximately $88 million and $53 million, respectively, that, if recognized, would favorably affect the tax rate in a future period. These benefits primarily relate to Credco’s gross permanent benefits and corresponding foreign tax credits and federal tax effects. Credco had approximately $25 million and $15 million accrued for the payment of interest and penalties at September 30, 2009 and December 31, 2008, respectively. For the three and nine months ended September 30, 2009, Credco recognized a net charge of approximately $2 million and $10 million of interest and penalties, respectively.
	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 8 percent for both the three and nine months ended September 30, 2009, respectively, compared with 13 percent for the full year 2008.

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AMERICAN EXPRESS CREDIT CORPORATION

Item 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	Restated Consolidated Statement of Cash Flows
	As discussed in the “Explanatory Note” to this Third Quarter 2009 Form 10-Q/A and in Note 1 to the Consolidated Financial Statements, American Express Credit Corporation (Credco) is restating its Consolidated Statement of Cash Flows for the nine months ended September 30, 2009. This restatement is to correct an overstatement of cash flows from investing activities and an equal and offsetting understatement of cash flows from operating activities, as further explained below. This restatement does not impact Credco’s previously reported overall net change in cash and cash equivalents in its Consolidated Statement of Cash Flows or Credco’s Consolidated Balance Sheet or Consolidated Statement of Income for the period presented.
	The restatement is the result of a correction of a manual error in the classification of cash flows pertaining to amounts Due from Affiliates. The error resulted from an incorrect identification of cash flows from transactions with entities affiliated with Credco between investing and operating activities whereby a cash outflow from investing activities was inadvertently recorded as a cash inflow, with an equal and offsetting error in cash flow from operating activities. The error resulted in an overstatement of cash from investing activities of $3.9 billion and an understatement of cash from operating activities of $3.9 billion.
	Note 1 to the Consolidated Financial Statements included herein also contains information regarding the nature and impact of the restatement.
	Restatement of Results in Previously Filed Financial Statements
	As disclosed previously and discussed in the “Explanatory Note”, on November 16, 2009, Credco restated its financial statements and filed an amended Annual Report on Form 10-K/A for the fiscal year ended December 31, 2008, and amended its Quarterly Reports on Form 10-Q for the periods ended March 31, 2009 and June 30, 2009 and also included in the report on Form 10-Q for the quarterly period ended September 30, 2009 (i) a restated Consolidated Balance Sheet as of December 31, 2008, (ii) restated Consolidated Statements of Income for the three and nine month periods ended September 30, 2008, and (iii) a related restatement of the Consolidated Statement of Cash Flows for the nine months ended September 30, 2008.
	The restatement was 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 connection with the preparation for the maturity of debt related to the investment, 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.
	That restatement also included the impact of (i) certain other unrelated immaterial errors primarily impacting the 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.
	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 engaged in the business of financing non-interest-bearing cardmember receivables arising from the use of the American Express® Card, the American Express® Gold Card, Platinum Card®, 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 loans mainly comprised of American Express credit cards issued in non-U.S. markets, although interest-bearing and revolving loans are primarily funded by subsidiaries of TRS other than Credco.
	Current Economic Environment/Outlook
	While year-over-year cardmember spending volume comparisons remained negative during the third quarter, monthly comparisons have recently improved as spending levels have stabilized. This pattern was fairly consistent across all of American Express’ businesses. In addition, the number of cardmember transactions on American Express’ network was relatively flat year-over-year. If third quarter spending volumes continue through the fourth quarter, which is subject to various uncertainties such as consumer confidence and the strength of the economy, among other factors, American Express would expect further narrowing of the decline in growth metrics given easier year-over-year comparisons. Credit trends continued to show overall improvement. Charge card losses have moderated in the United States and worldwide past-due trends have improved.
	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 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.
	Certain prior year amounts have been reclassified to conform to the current year presentation of the Consolidated Statement of Cash Flows.
	Results of Operations for the Nine Months ended September 30, 2009 and 2008
	Pretax income depends primarily on the volume of cardmember receivables 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 purchased. Credco’s consolidated net income decreased 57 percent to $269 million for the nine months ended September 30, 2009, as compared to the nine months ended September 30, 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. A portion of the decrease in net income was also due to the year-over-year decrease in other revenues for the reasons described below.

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AMERICAN EXPRESS CREDIT CORPORATION

The following table summarizes the changes attributable to the increase (decrease) in key revenue and expense accounts for the nine month period ended September 30, 2009, compared with the nine month period ended September 30, 2008 (millions):

Discount revenue earned on purchased cardmember receivables and loans:
Volume of receivables and loans purchased	$	(1,082	)
Discount rates		(212	)
Total	$	(1,294	)
Interest income from affiliates:
Average loans to affiliates	$	(53	)
Interest rates		(210	)
Total	$	(263	)
Interest income from investments:
Average investments outstanding	$	49
Interest rates		(195	)
Total	$	(146	)
Provisions for losses, net of recoveries:
Volume of receivables purchased	$	(392	)
Provisions rates and volume of recoveries		7
Total	$	(385	)
Interest expense:
Average debt outstanding	$	(408	)
Interest rates		(203	)
Total	$	(611	)
Interest expense to affiliates:
Average debt outstanding	$	9
Interest rates		(186	)
Total	$	(177	)

Discount Revenue Earned on Purchased Cardmember Receivables and Loans

Discount revenue decreased 71 percent or $1,294 million to $524 million for the nine months ended September 30, 2009, as compared to the nine months ended September 30, 2008, due to a decrease in both the volume of receivables purchased and discount rates. Volume of receivables and loans purchased for the nine months ended September 30, 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 the Banks. 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 26 basis points compared to the nine months ended September 30, 2008.

Interest Income from Affiliates

Interest income from affiliates decreased 45 percent or $263 million to $320 million for the nine months ended September 30, 2009, as compared to the nine months ended September 30, 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 interest rate charged to affiliates during the nine months ended September 30, 2009, was 195 basis points lower than the average interest rate charged to affiliates in the same nine month period a year ago.

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AMERICAN EXPRESS CREDIT CORPORATION

Interest Income from Investments

Interest income from investments decreased 67 percent or $146 million to $73 million for the nine months ended September 30, 2009, as compared to the nine months ended September 30, 2008. The year-over-year decrease is due to the decrease of the average interest rate on the total investment portfolio of approximately 179 basis points for the nine months ended September 30, 2009, as compared to the same nine month period a year ago, as well as the maturity of $1 billion of U.S. Treasury securities in 2009.

Other Revenues

Other revenues decreased $47 million to $(7) million for the nine months ended September 30, 2009 as compared to the prior year period primarily as a result of the change in value of foreign exchange forward contracts.

Provisions for Losses, Net of Recoveries

The provisions for losses, net of recoveries, decreased 70 percent or $385 million to $163 million for the nine months ended September 30, 2009, as compared to the nine months ended September 30, 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 58 percent and 82 percent, respectively, for the nine months ended September 30, 2009, as compared to the same period a year ago. Interest expense decreased due to lower interest rates and lower average debt outstanding. Interest expense to affiliates decreased due to lower interest rates, partially offset by an increase in average debt with affiliates outstanding. The average interest rate on debt outstanding during the nine months ended September 30, 2009, was 98 basis points lower than the same period a year ago. The average rate due to affiliates during the nine months ended September 30, 2009, was 184 basis points lower than the same period a year ago.

Service Fees to Affiliates

Service fees to affiliates decreased to $1 million for the nine months ended September 30, 2009, as compared to $152 million for the nine months ended September 30, 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.

Income Taxes

Credco’s effective tax rate was 8 percent and 12 percent for the nine months ended September 30, 2009, and 2008, respectively.

Cardmember Receivables

At September 30, 2009, and December 31, 2008, Credco owned $9.2 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 September 30, 2009, and December 31, 2008, CRC owned approximately $1.9 billion and $2.4 billion, respectively, of participation interests purchased from RFC V.

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AMERICAN EXPRESS CREDIT CORPORATION

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

As of and for nine months ended (Millions, except percentages)	September 30, 2009			December 31, 2008			September 30, 2008
Total cardmember receivables	$	9,223		$	10,859		$	22,672
Loss reserves	$	144		$	204		$	717
as a % of receivables (a)		1.6	%		1.9	%		3.2	%
Average life of cardmember receivables (in days) (b)		30			32			33
Cardmember receivables – 180 day write-off (a)	$	1,894		$	2,444			N/A
30 days past due as a % of total		1.9	%		2.6	%		N/A
Average receivables	$	1,961		$	10,187			N/A
Write-offs, net of recoveries	$	48		$	695			N/A
Net write-off rate (a)		3.3	%		9.1	%		N/A
Cardmember receivables – 360 day write-off	$	7,329		$	8,415		$	22,672
90 days past due as a % of total		1.8	%		2.8	%		4.3	%
Write-offs, net of recoveries	$	144		$	107		$	560
Net write-off rate (c)		0.21	%		0.12	%		0.27	%

(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 an annualized 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 September 30, 2009, decreased approximately $1.6 billion from December 31, 2008, primarily as a result of a reduction in cardmember receivables purchased due to the expected seasonal changes in cardmember spending.

Reserves for Cardmember Receivables and Cardmember Loans

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

Nine months ended (Millions)	September 30,2009			September 30,2008
Balance, beginning of period	$	218		$	841
Provisions for losses (a)		163			548
Accounts written-off (a)		(210	)		(568	)
Other		(8	)		(92	)
Balance, end of period	$	163		$	729

(a) Includes recoveries on accounts previously written-off of $57 million and $119 million during the nine months ended September 30, 2009 and 2008, respectively.

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AMERICAN EXPRESS CREDIT CORPORATION

Loans to Affiliates

Components of loans to affiliates were as follows:

(Millions)	September 30, 2009		December 31, 2008		September 30, 2008
TRS Subsidiaries:
American Express Australia Limited	$	3,503	$	3,204	$	3,994
American Express Services Europe Limited		2,675		2,388		2,971
Amex Bank of Canada		2,557		2,257		2,627
American Express Centurion Bank (a)		—		2,225		—
American Express International, Inc.		358		943		861
American Express Co. (Mexico) S.A. de C.V.		408		392		476
American Express Bank (Mexico) S.A.		330		317		340
Total (b)	$	9,831	$	11,726	$	11,269

(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 $9.8 billion outstanding of loans to affiliates, approximately $6.6 billion are collateralized by the underlying cardmember receivables transferred with recourse.

Due from Affiliates

At September 30, 2009, and December 31, 2008, due from affiliates was $5.2 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)	September 30,2009		December 31,2008		September 30,2008
American Express	$	2,458	$	3,579	$	4,072
AE Exposure Management Ltd.		743		2,356		2,427
TRS		—		1,483		1,485
American Express Holdings (Netherlands) C.V.		419		417		386
American Express Europe Limited		175		175		—
National Express Company, Inc.		130		91		106
American Express Publishing Corp.		50		84		61
Other		183		132		155
Total	$	4,158	$	8,317	$	8,692

Short-term debt to affiliates consists primarily of master note agreements for which there is no stated term.

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.

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AMERICAN EXPRESS CREDIT CORPORATION

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 both maintaining 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. It has a variety of funding sources available to access the debt capital markets, including commercial paper and senior unsecured debentures. The market for Credco’s unsecured term debt has improved in 2009 as the capital markets continue to recover. 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. Credco continues to assess its funding needs and investor demand and could 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 is to raise funds and maintain access to a sufficient amount of its own and its affiliates’ cash and readily-marketable securities that are easily convertible to cash in order to, at a minimum, meet seasonal and other working capital needs for the next 12 months. Working capital needs include maturing debt obligations, both long and short term, changes in receivables and other asset balances, as well as operating requirements.

Credco’s liquidity and funding strategy is designed to maintain appropriate 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). There have been no changes to the ratings during the last quarter.

Credit Agency	Short- Term ratings	Long- Term ratings	Outlook
DBRS	R-1 (middle)	A (high)	Negative
Fitch	F1	A+	Negative
Moody’s	Prime-1	A2	Stable
S&P	A-2	BBB+	Negative

A downgrade in Credco’s 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 debt rating could also reduce Credco’s borrowing capacity in the unsecured term debt and commercial paper markets.

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 widely recognized 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 working capital funding needs as well as to cover the daily maturities of commercial paper issued, and has had continuous access to the commercial paper markets during the credit crisis.

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AMERICAN EXPRESS CREDIT CORPORATION

In addition, Credco is eligible to have up to $14.7 billion of commercial paper outstanding with the special purpose vehicle (SPV) established as part of the Commercial Paper Funding Facility (CPFF). Credco has not issued commercial paper to the CPFF during 2009 and had no commercial paper outstanding with the CPFF as of September 30, 2009. The CPFF is currently set to expire at February 1, 2010.

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 September 30, 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 defined as any debt with an original maturity greater than 12 months.

Credco had the following long-term debt outstanding:

(Billions)	Quarter endedSeptember 30,2009		Year endedDecember 31,2008
Long-term debt outstanding	$	18.3	$	20.0
Average long-term debt	$	18.6	$	21.2

Credco 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. On August 25, 2009, Credco successfully issued $1.5 billion of non-guaranteed fixed-rate senior unsecured debt from its U.S. shelf registration. At September 30, 2009, Credco had $11.7 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 which is 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 September 30, 2009, $2.0 billion was outstanding under this program, of which $1.5 billion was issued by Credco. Subsequent to September 30, 2009, Credco successfully accessed the U.K. unsecured debt markets, and issued £750 million (approximately $1.2 billion) of senior unsecured debt.

Credco has also established a program in Australia for the issuance of debt securities from time to time of up to approximately $5.2 billion. During the nine months ended September 30, 2009, no notes were issued under this program. At September 30, 2009, approximately $4.4 billion was available for issuance under this program.

Credco maintains a shelf registration in Canada for a medium-term note program providing for the issuance from time to time, in Canada, of up to approximately $3.2 billion of notes by American Express Canada Credit Corporation (Cancredco), an indirect wholly-owned subsidiary of Credco. All notes issued under this shelf registration are guaranteed by Credco. During the nine months ended September 30, 2009, no notes were issued under this program. Subsequent to September 30, 2009, CanCredco successfully accessed the Canadian unsecured debt markets, and issued CAD $950 million (approximately $1.0 billion) of senior unsecured debt guaranteed by Credco. 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 $200 million to TRS during the nine months ended September 30, 2009.

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AMERICAN EXPRESS CREDIT CORPORATION

Liquidity Strategy

Credco seeks to ensure that it has adequate liquidity in the form of cash and cash equivalents 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, and maintaining a variety of contingent sources of cash and financing.

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

(Billions)	Debt Maturities
Quarter Ending:
December 31, 2009	$	1.1
March 31, 2010		—
June 30, 2010		1.4
September 30, 2010		—
Total	$	2.5

Credco incurs net interest cost of carry on the cash and readily-marketable securities it holds which will be dependent on the amount of cash and readily-marketable securities that Credco maintains, as well as the difference between its cost of funding these amounts and their investment yields.

Cash and Readily-Marketable Securities

At September 30, 2009, Credco had cash and cash equivalents of approximately $0.2 billion as well as $2.0 billion of longer-term readily-marketable securities. These investments are limited to high credit quality, highly liquid short-term instruments, as well as longer term, highly liquid instruments, such as U.S. Government Sponsored Enterprises’ obligations. 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. In addition to its actual holdings of cash and readily-marketable securities, Credco maintains access to additional liquidity, also in the form of cash and cash equivalents held by certain affiliates, through intercompany loan agreements.

Money Market Fund

Credco owned a $500 million investment in the Reserve Primary Fund (the Fund), a money market fund. In September 2008, the net asset value of the Fund fell below $1 per share, at which time Credco recorded a loss of $15 million related to this investment. As of October 2, 2009, Credco has received approximately $459 million from the Fund since it filed a redemption order with Reserve, the Fund sponsor, in September 2008. Credco’s remaining original principal balance in the Reserve Primary Fund totals $40.9 million (excluding $15 million write-off). The remaining amount due from the Fund is recorded in deferred charges and other assets on Credco’s Consolidated Balance Sheets. The timing of future redemptions from the Fund for the receipt of remaining proceeds cannot be determined at this time.

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AMERICAN EXPRESS CREDIT CORPORATION

Committed Bank Credit Facilities

Credco maintained committed bank credit facilities at September 30, 2009, as follows:

(Billions)	Total		AmericanExpress		Credco
Committed (a)	$	11.2	$	1.3	$	9.9	(b)
Outstanding	$	3.1	$	—	$	3.1

(a)	Included is $3.1 billion outstanding related to the Australian facility.
(b)	Credco has an allocation of $9.9 billion under these facilities and also has access to the Parent Company’s allocation of $1.3 billion, for a maximum borrowing capacity of $11.2 billion.
Credco’s committed bank credit facilities expire as follows:

(Billions)
2010	$	1.9
2011		2.7
2012		6.6
Total	$	11.2

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 1.60 for the nine months ended September 30, 2009. The ratio of earnings to fixed charges for American Express for the nine months ended September 30, 2009 was 2.09.

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 September 30, 2009.

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AMERICAN EXPRESS CREDIT CORPORATION

Forward-Looking Statements
Various statements have been made in this Amendment No. 1 to the Quarterly Report on Third Quarter 2009 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 other things, the housing market and the rates of bankruptcies, which can affect spending on card products and debt payments by individual and business 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 the Credit Card Accountability Responsibility and Disclosure Act of 2009 and 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 restatements or (ii) its material weaknesses 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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AMERICAN EXPRESS CREDIT CORPORATION

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”, Note 1 to the Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
	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 (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 September 30, 2009 due to the material weaknesses identified and described below.
	As disclosed previously, Credco restated its financial statements and filed an amended Annual Report on Form 10-K/A for the fiscal year ended December 31, 2008, and amended Quarterly Reports on Form 10-Q/A for the periods ended March 31 and June 30, 2009. The restatement was to correct errors in the translation of foreign currency balances related to an investment in a consolidated foreign subsidiary. These errors were discovered by management in the third quarter of 2009 in connection with its preparation for the maturity of debt related to the investment, and brought immediately to the attention of the internal and external auditors, prior to the preparation of Credco’s financial statements for the third quarter of 2009. These errors resulted in:
		•	Incorrect transaction losses of $135 million being recorded in Other Revenues in the Consolidated Statements of Income from September 2007 through June 2009; and
		•	Corresponding incorrect credits in Foreign Currency Translation Adjustments (FCTA) in Accumulated Other Comprehensive Income (Loss) in the Consolidated Balance Sheets over the same period.
	The effect of the error in the translation of foreign currency balances, together with 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 these errors resulted in an increase in Credco’s ratio of earnings to fixed charges from 1.50 to 1.62 (as restated) for fiscal year 2008 and no change to Credco’s 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 June 30, 2009 and March 31, 2009 by $41 million (from $68 million to $27 million, as restated) and $9 million (from $144 million to $135 million, as restated), respectively. The correction of these errors resulted in a decrease in Credco’s ratio of earnings to fixed charges from 1.66 to 1.51 (as restated) for the six-month period ended June 30, 2009 and an increase in this ratio from 1.78 to 1.81 (as restated) for the three month period ended March 31, 2009.
	Following a review of its controls and processes for recording and monitoring its investments in consolidated foreign subsidiaries, Credco’s management has determined that it did not maintain effective controls over processes to accurately record and subsequently monitor certain of its investments in consolidated foreign subsidiaries with funding structures similar to the structure in which the error occurred. This deficiency 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.
	Additionally, Credco has filed this amendment to its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009 (Third Quarter 2009 Form 10-Q/A) to restate its Consolidated Statement of Cash Flows for the nine months then ended September 30, 2009. This restatement is to correct an overstatement of cash flows from investing activities and an equal and offsetting understatement of cash flows from operating activities, as further explained below. This restatement does not impact Credco’s previously reported overall net change in cash and cash equivalents in its Consolidated Statement of Cash Flows, or Credco’s Consolidated Balance Sheet or Consolidated Statement of Income, for the period presented.
	The restatement is the result of a correction of a manual error in the classification of cash flows pertaining to amounts Due from Affiliates. The error resulted from an incorrect identification of cash flows between investing and operating activities from transactions between Credco and its affiliates. As a result, a cash outflow from investing activities was inadvertently recorded as a cash inflow, with an equal and offsetting error in cash flow from operating activities. The error resulted in an overstatement of cash from investing activities of $3.9 billion and an understatement of cash from operating activities of $3.9 billion. This error was identified by management in the course of preparing the Consolidated Statement of Cash Flows for Credco’s 2009 Annual Report on Form 10-K and brought immediately to the attention of the internal and external auditors. As part of the remediation activities for the material weakness identified in the third quarter of 2009 described above, more senior personnel were deployed to the accounting and control processes of Credco.

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Following a further review of its controls and processes, Credco’s management has determined that it did not maintain effective controls over the preparation and review of its Consolidated Financial Statements. Accordingly, Credco’s management concluded that this deficiency constitutes a second material weakness.
Remediation Steps to Address Material Weaknesses in Internal Controls
Credco has reviewed its processes and controls for recording and monitoring its investments in consolidated foreign subsidiaries and has determined that the error was limited to a discrete number of similar transactions (specifically three funding structures related to its investments in certain consolidated foreign subsidiaries). Credco has performed a detailed review of each of these investment funding structures and has determined there have been no other errors in accounting for them. To address the control deficiency described above, Credco instituted the following new controls:
	1.	Cross–training of Credco accounting personnel and introduction of more senior personnel to the accounting and control processes;
	2.	Enhanced cross-functional review of foreign currency exposures;
	3.	Quarterly monitoring of funding structures related to its investments in foreign subsidiaries to ensure they are being properly accounted for at inception, post-inception and upon maturity;
	4.	Redesign of the account reconciliation process for FCTA;
	5.	Enhanced monitoring of control effectiveness by American Express internal control specialists; and
	6.	Reinforcement of the requirement for new, similar transactions to be escalated for senior level and subject matter expert review.
Controls 1 and 5 above apply broadly to Credco’s process of preparing and reviewing its financial statements, and were instrumental in discovering the error being corrected in this Third Quarter 2009 Form 10-Q/A. In addition to these controls, Credco is also implementing the following additional controls for both its Third Quarter 2009 Form 10-Q/A and its 2009 Form 10-K:
	•	Improving the spreadsheet controls for the preparation of the Consolidated Financial Statements;
	•	Developing refreshed training for preparers and reviewers of financial statement items; and
	•	Enhancing management’s review and analysis of key financial statement items, footnotes, and disclosures, including formal documentation of composition and trend analysis for all financial statement line items.
Based on the foregoing, management believes that, as of the filing date of this Third Quarter 2009 Form 10-Q/A, 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. Testing of the effectiveness of the recently instituted controls is ongoing. As a result, Credco’s management believes the material weaknesses have not yet been fully remediated.
Changes in Internal Control over Financial Reporting
There were changes to Credco’s internal control over financial reporting relating to remediation measures as described above that occurred during the third quarter ended September 30, 2009 and through the date of this filing 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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AMERICAN EXPRESS CREDIT CORPORATION

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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AMERICAN EXPRESS CREDIT CORPORATION

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: March 31, 2010	By	/s/ David L. Yowan
		David L. Yowan
		Chief Executive Officer
DATE: March 31, 2010	By	/s/ Kimberly R. Scardino
		Kimberly R. Scardino
		Vice President and Chief Accounting Officer

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AMERICAN EXPRESS CREDIT CORPORATION

EXHIBIT INDEX

Pursuant to Item 601 of Regulation S-K

	Description	How Filed
Exhibit 4.1	Trust Indenture Providing for the Issuance of Medium Term Notes dated as of October 28, 2005.	Incorporated by reference to Exhibit 4.1 to Registrant’s Quarterly Report of Form 10-Q (Commission File No. 1-6908) for the quarter ended September 30, 2009.
Exhibit 4.2	First Supplemental Indenture dated as of January 22, 2008.	Incorporated by reference to Exhibit 4.2 to Registrant’s Quarterly Report of Form 10-Q (Commission File No. 1-6908) for the quarter ended September 30, 2009.
Exhibit 4.3	Second Supplemental Indenture dated as of January 22, 2008.	Incorporated by reference to Exhibit 4.3 to Registrant’s Quarterly Report of Form 10-Q (Commission File No. 1-6908) for the quarter ended September 30, 2009.
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