EXHIBIT 99.1
News Release News Release News Release News
[LOGO OF AMERICAN EXPRESS COMPANY]
Contacts: Robert Glick Michael J. O'Neill
212-640-1041 212-640-5951
robert.a.glick@aexp.com mike.o'neill@aexp.com
FOR IMMEDIATE RELEASE
- --------------------------------------------------------------------------------
EARNINGS FROM CONTINUING OPERATIONS RISE 18%
REVENUES UP 12% ON HIGHER CARDMEMBER SPENDING
(Dollars in millions, except per share amounts)
Quarters Ended Percentage
March 31, Inc/(Dec)
------------------ ----------
2006 2005
------- -------
Revenues $ 6,332 $ 5,640 12%
Income From Continuing Operations $ 876 $ 745 18%
(Loss)/Income From Discontinued Operations $ (3) $ 201 #
Net Income $ 873 $ 946 (8%)
Earnings Per Common Share - Basic:
Income From Continuing Operations $ 0.71 $ 0.60 18%
(Loss)/Income From Discontinued Operations $ - $ 0.16 #
Net Income $ 0.71 $ 0.76 (7%)
Earnings Per Common Share - Diluted:
Income From Continuing Operations $ 0.70 $ 0.59 19%
(Loss)/Income From Discontinued Operations $ (0.01) $ 0.16 #
Net Income $ 0.69 $ 0.75 (8%)
Average Common Shares Outstanding
Basic 1,232 1,239 (1%)
Diluted 1,258 1,264 -%
Return on Average Total Shareholders' Equity* 27.3% 22.8%
- --------------------------------------------------------------------------------
* Computed on a trailing 12-month basis using reported net income over
average total shareholders' equity (including discontinued operations) as
included in the Consolidated Financial Statements prepared in accordance
with U.S. generally accepted accounting principles (GAAP).
# Denotes a variance of more than 100%.
-1-
NEW YORK - April 24, 2006 - AMERICAN EXPRESS COMPANY today reported first
quarter income from continuing operations of $876 million, up 18 percent from
$745 million a year ago. Diluted earnings per share from continuing operations
were $0.70, up 19 percent from $0.59 a year ago.
Including results for businesses* that the Company spun off and sold last
year, net income for the first quarter totaled $873 million, down 8 percent from
$946 million a year ago. Earnings per share on a diluted basis decreased to
$0.69, down 8 percent from $0.75.
The Company's reported return on equity (ROE) was 27.3 percent, up from
22.8 percent a year ago. Pro forma ROE, which is based on continuing operations,
was 32.1 percent. (For further information about pro forma ROE, see the "Pro
Forma ROE" section below.)
Consolidated revenues rose 12 percent to $6.3 billion, up from $5.6
billion a year ago.
Consolidated expenses totaled $5.0 billion, up 10 percent from $4.6
billion a year ago.
"First quarter results were excellent in each of our major businesses and
overall revenue growth was among the strongest we've generated in years," said
Kenneth I. Chenault, chairman and chief executive. "The results reflected
broad-based strength in the U.S., in major international markets and with bank
partners who issue cards on the American Express network.
"Our investments in new products, services and marketing initiatives
produced industry-leading growth of 16 percent in billed business and an
equivalent gain in Cardmember loans. Average spending per Cardmember, already
the highest on any card network, continued to rise among affluent consumers,
small businesses and mid-sized corporations.
"Equally important for the longer term, we added 1.5 million cards in
force during the last three months, or 6.4 million since
* Includes primarily Ameriprise Financial, Inc.
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this time last year. The 10 percent growth from a year ago in this key metric
reflects the innovative appeal of our new products and the competitive advantage
of reward programs we've been designing for specific market segments. The
quality of the new additions to our Cardmember base is excellent and should
generate strong returns as spending on these newer cards ramps up in the years
ahead.
"We are also continuing to strengthen our global merchant network, which
increasingly operates like a virtual marketplace. The aim is to keep building
business for our partners by driving high-spending Cardmembers to the point of
sale and rewarding them with customized offers, experiences and special access
to popular events."
Results for the quarter included costs associated with several
significant items:
o A $112 million ($73 million after-tax) charge related to
higher redemption estimates for the U.S. Membership
Rewards program;
o A $72 million ($47 million after-tax) net reduction in
finance charge revenues and securitization income
related to higher than anticipated cardmember completion
of consumer debt repayment programs and certain
associated payment waivers;
o $63 million ($53 million after-tax) higher provision for
losses in Taiwan due primarily to the impact of
industry-wide credit issues;
Results for the quarter also included:
o An estimated favorable impact of $150 million ($98
million after-tax) from lower early credit write-offs
primarily related to last year's bankruptcy legislation,
and lower than expected costs associated with Hurricane
Katrina;
-3-
o An $88 million ($40 million after-tax) gain related to
the completion of the sale of the Company's investment
in Egyptian American Bank (EAB).
DISCONTINUED OPERATIONS
Loss from discontinued operations for the quarter totaled $3 million. The
year ago period reflects income from discontinued operations of $201 million
primarily related to the results from Ameriprise, which is no longer part of
American Express.
SEGMENT RESULTS
The following discussion of first quarter results presents U.S. Card
Services segment results on a "managed basis," as if there had been no
cardmember lending securitization transactions and to reflect certain tax-exempt
investment income as if it had been earned on a taxable basis. This is the basis
used by management to evaluate operations. For further information about managed
basis and reconciliation of GAAP and managed information, see the "Managed
Basis" section below. The International Card & Global Commercial Services,
Global Network & Merchant Services, and Corporate & Other segment results below
are presented on a GAAP basis.
U.S. CARD SERVICES reported first quarter net income of $546
million, up 13 percent from $482 million a year ago.
Total revenues for the first quarter increased 11 percent to $3.4
billion, reflecting growth in spending and borrowing by U.S. consumers and small
businesses.
Total expenses increased 11 percent. Marketing, promotion, rewards
and cardmember services expenses increased 26 percent, reflecting greater
rewards costs and marketing and promotion activities. The rewards-related
expense reflects in part the higher redemption estimates mentioned earlier.
Provisions for losses declined 22 percent. Volume-related increases to the
reserves were more than offset by the favorable impact of lower
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bankruptcy filings and Hurricane Katrina-related activity mentioned above.
INTERNATIONAL CARD & GLOBAL COMMERCIAL SERVICES reported first
quarter net income of $213 million, up 11 percent from $192 million a year ago.
These results include the previously mentioned gain on the sale of EAB.
Total revenues for the first quarter increased 7 percent over the
year-ago period to $2.3 billion, primarily reflecting a rise in spending and
borrowing by Cardmembers. These benefits were partially offset by a decline in
travel commissions and fees.
First quarter total expenses increased 5 percent over the year-ago
period to $2.0 billion. The provision for losses and benefits rose 53 percent
primarily relating to credit issues in Taiwan mentioned earlier.
GLOBAL NETWORK & MERCHANT SERVICES reported first quarter net income
of $166 million, up 50 percent from $111 million a year ago.
Total revenues for the first quarter increased 11 percent over
year-ago levels to $705 million. The increase reflects continued strong growth
in billed business, offset by the impact of a decline in discount rate.
Bank partners that issue cards on the American Express network added
2 million cards from a year ago. Spending on bank-issued American Express cards
increased 25 percent from a year ago.
Total expenses decreased 5 percent from year-ago levels to $443
million. Marketing and promotion decreased 18 percent, primarily reflecting a
reduced level of brand-related advertising.
CORPORATE & OTHER reported first quarter net expenses of $49
million, compared with $40 million a year ago.
***
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MANAGED BASIS
For U.S. Card Services, managed basis means the presentation assumes
there have been no securitization transactions, i.e. all securitized cardmember
loans and related income effects are reflected as if they were in the Company's
balance sheet and income statements, respectively. The Company presents U.S.
Card Services information on a managed basis because that is the way the
Company's management views and manages the business. Management believes that a
full picture of trends in the Company's cardmember lending business can only be
derived by evaluating the performance of both securitized and non-securitized
cardmember loans. Asset securitization is just one of several ways for the
Company to fund cardmember loans. Use of a managed basis presentation, including
non-securitized and securitized cardmember loans, presents a more accurate
picture of the key dynamics of the cardmember lending business, avoiding
distortions due to the mix of funding sources at any particular point in time.
The Company does not currently securitize international loans.
Irrespective of the funding mix, it is important for management and
investors to see metrics, such as changes in delinquencies and write-off rates,
for the entire cardmember lending portfolio because they are more representative
of the economics of the aggregate cardmember relationships and ongoing business
performance and trends over time. It is also important for investors to see the
overall growth of cardmember loans and related revenue in order to evaluate
market share. These metrics are significant in evaluating the Company's
performance and can only be properly assessed when all non-securitized and
securitized cardmember loans are viewed together on a managed basis.
The managed basis presentation for U.S. Card Services also reflects
an increase to interest income recorded to enable management to evaluate tax
exempt investments on a basis consistent with taxable investment securities. On
a GAAP basis interest income associated with tax exempt investments is recorded
based on amounts earned. Accordingly, information presented on a managed basis
assumes that tax exempt securities earned income at rates as if the securities
produced taxable income with a corresponding increase in the provision for
income taxes.
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The following table reconciles the GAAP-basis U.S. Card Services income
statements to the managed-basis information.*
U.S. Card Services
Selected Financial Information
Securitization Tax Equivalent
(preliminary, millions) GAAP Basis Effect Effect Managed Basis
------------------------- -------------- -------------- -------------------------
% %
Quarters Ended Inc/ Inc/
March 31, 2006 2005 (Dec) 2006 2005 2006 2005 2006 2005 (Dec)
------- ------- ----- ----- ------ ----- ------ ------- ------- -----
Revenues:
Discount revenue, net
card fees and other $ 2,314 $ 2,059 12% $ 48 $ 53 $ 55 $ 57 $ 2,417 $ 2,169 11%
Cardmember Lending:
Finance charge revenue 674 522 29 733 609 1,407 1,131 24
Interest expense 194 120 62 247 140 441 260 70
------- ------- ----- ------ ------- -------
Net finance
charge revenue 480 402 19 486 469 966 871 11
Securitization income 386 316 22 (386) (316) - - -
------- ------- ----- ------ ----- ------ ------- -------
Total revenues 3,180 2,777 15 148 206 55 57 3,383 3,040 11
------- ------- ----- ------ ----- ------ ------- -------
Expenses:
Marketing, promotion,
rewards and cardmember
services 1,034 837 24 13 (4) 1,047 833 26
Provision for losses 307 342 (10) 126 212 433 554 (22)
Human resources and
other operating expenses 1,043 895 17 9 (2) 1,052 893 18
------- ------- ----- ------ ------- -------
Total expenses 2,384 2,074 15 $ 148 $ 206 2,532 2,280 11
------- ------- ----- ------ ----- ------ ------- -------
Pretax segment income 796 703 13 55 57 851 760 12
Income tax provision 250 221 13 $ 55 $ 57 $ 305 $ 278 10
------- ------- ----- ------ ------- -------
Segment income $ 546 $ 482 13
======= =======
* Amounts herein reflect certain reclassifications as noted in the Company's
Form 8-K filed with the SEC dated April 5, 2006.
***
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PRO FORMA ROE
The Company's consolidated return on equity (ROE) is calculated on a trailing
12-month basis using reported net income over average total shareholders'
equity (including discontinued operations). The Company also reports pro
forma ROE, which is determined on a trailing 12-month basis using income from
continuing operations (which excludes discontinued operations) over the
average month-end shareholders' equity at September 30, 2005 through March
31, 2006. Management believes pro forma ROE is an important measure because
it reflects performance of the Company's continuing businesses by excluding
the impact of Ameriprise Financial, Inc. and American Express Tax and
Business Services, Inc., which were disposed of as of September 30, 2005.
ROE Pro Forma ROE
---------------------------------------------------------------------------
Trailing 12-months net income: Trailing 12-months income from
$3.7 billion continuing operations: $3.4 billion
Trailing 12-months average Average month-end shareholders' equity for
total shareholders' the period from September 30, 2005 through
equity: $13.4 billion March 31, 2006: $10.4 billion
ROE: 27.3% Pro forma ROE: 32.1%
***
American Express Company (www.americanexpress.com) is a leading
global payments, network, travel, and banking company founded in 1850.
Note: The 2006 First Quarter Earnings Supplement, as well as CFO
Gary Crittenden's presentation from the investor conference call referred to
below, will be available today on the American Express web site at
http://ir.americanexpress.com. An investor conference call to discuss first
quarter earnings results, operating performance and other topics that may be
raised during the discussion will be held at 12:00 p.m. (EST) today. Live audio
of the conference call will be accessible to the general public on the American
Express web site at http://ir.americanexpress.com. A replay of the conference
call also will be available today at the same web site address.
***
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THIS RELEASE INCLUDES FORWARD-LOOKING STATEMENTS, WHICH ARE SUBJECT
TO RISKS AND UNCERTAINTIES. 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. 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. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY
FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED
TO, THE FOLLOWING: THE COMPANY'S ABILITY TO GENERATE SUFFICIENT NET INCOME TO
ACHIEVE A RETURN ON EQUITY ON A GAAP BASIS OF 28 PERCENT TO 30 PERCENT; THE
COMPANY'S ABILITY TO GROW ITS BUSINESS AND MEET OR EXCEED ITS RETURN ON
SHAREHOLDERS' EQUITY TARGET BY REINVESTING APPROXIMATELY 35 PERCENT OF
ANNUALLY-GENERATED CAPITAL, AND RETURNING APPROXIMATELY 65 PERCENT OF SUCH
CAPITAL TO SHAREHOLDERS, OVER TIME, WHICH WILL DEPEND ON THE COMPANY'S ABILITY
TO MANAGE ITS CAPITAL NEEDS AND THE EFFECT OF BUSINESS MIX, ACQUISITIONS AND
RATING AGENCY REQUIREMENTS; CONSUMER AND BUSINESS SPENDING ON THE COMPANY'S
CREDIT AND CHARGE CARD PRODUCTS AND TRAVELERS CHEQUES AND OTHER PREPAID PRODUCTS
AND GROWTH IN CARD LENDING BALANCES, WHICH DEPEND IN PART ON THE ABILITY TO
ISSUE NEW AND ENHANCED CARD AND PREPAID PRODUCTS, SERVICES AND REWARDS PROGRAMS,
AND INCREASE REVENUES FROM SUCH PRODUCTS, ATTRACT NEW CARDMEMBERS, REDUCE
CARDMEMBER ATTRITION, CAPTURE A GREATER SHARE OF EXISTING CARDMEMBERS' SPENDING,
SUSTAIN PREMIUM DISCOUNT RATES ON ITS CARD PRODUCTS IN LIGHT OF REGULATORY AND
MARKET PRESSURES, INCREASE MERCHANT COVERAGE, RETAIN CARDMEMBERS AFTER LOW
INTRODUCTORY LENDING RATES HAVE EXPIRED, AND EXPAND THE GLOBAL NETWORK SERVICES
BUSINESS; THE COMPANY'S ABILITY TO INTRODUCE NEW PRODUCTS, REWARD PROGRAM
ENHANCEMENTS AND SERVICE ENHANCEMENTS ON A TIMELY BASIS DURING 2006; THE SUCCESS
OF THE GLOBAL NETWORK SERVICES BUSINESS IN PARTNERING WITH BANKS IN THE UNITED
STATES, WHICH WILL DEPEND IN PART ON THE EXTENT TO WHICH SUCH BUSINESS FURTHER
ENHANCES THE COMPANY'S BRAND, ALLOWS THE COMPANY TO LEVERAGE ITS PROCESSING
SCALE, EXPANDS MERCHANT COVERAGE OF THE NETWORK, PROVIDES GLOBAL NETWORK
SERVICES' BANK PARTNERS IN THE UNITED STATES THE BENEFITS OF GREATER CARDMEMBER
LOYALTY AND HIGHER SPEND PER CUSTOMER, AND MERCHANT BENEFITS SUCH AS GREATER
TRANSACTION VOLUME AND ADDITIONAL HIGHER SPENDING CUSTOMERS; THE CONTINUATION OF
FAVORABLE TRENDS, INCLUDING INCREASED TRAVEL AND ENTERTAINMENT SPENDING, AND THE
OVERALL LEVEL OF CONSUMER CONFIDENCE; THE COSTS AND INTEGRATION OF ACQUISITIONS;
THE SUCCESS, TIMELINESS AND FINANCIAL IMPACT (INCLUDING COSTS, COST SAVINGS AND
OTHER BENEFITS INCLUDING INCREASED REVENUES), AND BENEFICIAL EFFECT ON THE
COMPANY'S OPERATING EXPENSE TO REVENUE RATIO, BOTH IN THE SHORT-TERM AND OVER
TIME, OF REENGINEERING INITIATIVES BEING IMPLEMENTED OR CONSIDERED BY THE
COMPANY, INCLUDING COST MANAGEMENT, STRUCTURAL AND STRATEGIC MEASURES SUCH AS
VENDOR, PROCESS, FACILITIES AND OPERATIONS CONSOLIDATION, OUTSOURCING
(INCLUDING, AMONG OTHERS, TECHNOLOGIES OPERATIONS), RELOCATING CERTAIN FUNCTIONS
TO LOWER-COST OVERSEAS LOCATIONS, MOVING INTERNAL AND EXTERNAL FUNCTIONS TO THE
INTERNET TO SAVE COSTS, AND PLANNED STAFF REDUCTIONS RELATING TO CERTAIN OF SUCH
REENGINEERING ACTIONS; THE COMPANY'S ABILITY TO REINVEST THE BENEFITS ARISING
FROM SUCH REENGINEERING ACTIONS IN ITS BUSINESSES; THE ABILITY TO CONTROL AND
MANAGE OPERATING, INFRASTRUCTURE, ADVERTISING AND PROMOTION EXPENSES AS BUSINESS
EXPANDS OR CHANGES, INCLUDING THE ABILITY TO ACCURATELY ESTIMATE THE PROVISION
FOR THE COST OF THE MEMBERSHIP REWARDS PROGRAM; THE COMPANY'S ABILITY TO MANAGE
CREDIT RISK RELATED TO CONSUMER DEBT, BUSINESS LOANS, MERCHANT BANKRUPTCIES AND
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OTHER CREDIT TRENDS AND THE RATE OF BANKRUPTCIES, WHICH CAN AFFECT SPENDING ON
CARD PRODUCTS, DEBT PAYMENTS BY INDIVIDUAL AND CORPORATE CUSTOMERS AND
BUSINESSES THAT ACCEPT THE COMPANY'S CARD PRODUCTS AND RETURNS ON THE COMPANY'S
INVESTMENT PORTFOLIOS; BANKRUPTCIES, RESTRUCTURINGS OR SIMILAR EVENTS AFFECTING
THE AIRLINE OR ANY OTHER INDUSTRY REPRESENTING A SIGNIFICANT PORTION OF THE
COMPANY'S BILLED BUSINESS, INCLUDING ANY POTENTIAL NEGATIVE EFFECT ON PARTICULAR
CARD PRODUCTS AND SERVICES AND BILLED BUSINESS GENERALLY THAT COULD RESULT FROM
THE ACTUAL OR PERCEIVED WEAKNESS OF KEY BUSINESS PARTNERS IN SUCH INDUSTRIES;
THE TRIGGERING OF OBLIGATIONS TO MAKE PAYMENTS TO CERTAIN CO-BRAND PARTNERS,
MERCHANTS, VENDORS AND CUSTOMERS UNDER CONTRACTUAL ARRANGEMENTS WITH SUCH
PARTIES UNDER CERTAIN CIRCUMSTANCES; A DOWNTURN IN THE COMPANY'S BUSINESSES
AND/OR NEGATIVE CHANGES IN THE COMPANY'S AND ITS SUBSIDIARIES' CREDIT RATINGS,
WHICH COULD RESULT IN CONTINGENT PAYMENTS UNDER CONTRACTS, DECREASED LIQUIDITY
AND HIGHER BORROWING COSTS; RISKS ASSOCIATED WITH THE COMPANY'S AGREEMENTS WITH
DELTA AIR LINES TO PREPAY $300 MILLION FOR THE FUTURE PURCHASES OF DELTA
SKYMILES REWARDS POINTS; FLUCTUATIONS IN FOREIGN CURRENCY EXCHANGE RATES;
FLUCTUATIONS IN INTEREST RATES, WHICH IMPACT THE COMPANY'S BORROWING COSTS AND
RETURN ON LENDING PRODUCTS; ACCURACY OF ESTIMATES FOR THE FAIR VALUE OF THE
ASSETS IN THE COMPANY'S INVESTMENT PORTFOLIO AND, IN PARTICULAR, THOSE
INVESTMENTS THAT ARE NOT READILY MARKETABLE, INCLUDING THE VALUATION OF THE
INTEREST-ONLY STRIP RELATING TO THE COMPANY'S LENDING SECURITIZATIONS; THE
POTENTIAL NEGATIVE EFFECT ON THE COMPANY'S BUSINESSES AND INFRASTRUCTURE,
INCLUDING INFORMATION TECHNOLOGY, OF TERRORIST ATTACKS, DISASTERS OR OTHER
CATASTROPHIC EVENTS IN THE FUTURE; POLITICAL OR ECONOMIC INSTABILITY IN CERTAIN
REGIONS OR COUNTRIES, WHICH COULD AFFECT LENDING AND OTHER COMMERCIAL
ACTIVITIES, AMONG OTHER BUSINESSES, OR RESTRICTIONS ON CONVERTIBILITY OF CERTAIN
CURRENCIES; CHANGES IN LAWS OR GOVERNMENT REGULATIONS; OUTCOMES AND COSTS
ASSOCIATED WITH LITIGATION AND COMPLIANCE AND REGULATORY MATTERS; AND
COMPETITIVE PRESSURES IN ALL OF THE COMPANY'S MAJOR BUSINESSES. A FURTHER
DESCRIPTION OF THESE AND OTHER RISKS AND UNCERTAINTIES CAN BE FOUND IN THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2005, AND
ITS OTHER REPORTS FILED WITH THE SEC.
***
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All information in the following tables is presented on a basis prepared in
accordance with U.S. generally accepted accounting principles (GAAP), unless
otherwise indicated. Amounts herein reflect certain reclassifications as
noted in the Company's Form 8-K dated April 5, 2006 filed with the Securities
and Exchange Commission.
(Preliminary)
AMERICAN EXPRESS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Millions)
<Table>
<Caption>
Quarters Ended
March 31,
------------------------------- Percentage
2006 2005 Inc/(Dec)
-------------- -------------- --------------
Revenues
Discount revenue $ 2,969 $ 2,639 13%
Cardmember lending net finance charge revenue 729 592 23
Net card fees 520 498 4
Travel commissions and fees 418 422 (1)
Other commissions and fees 639 558 15
Securitization income, net 386 316 22
Other investment and interest income, net 275 261 5
Other 396 354 12
-------------- --------------
Total 6,332 5,640 12
-------------- --------------
Expenses
Marketing, promotion, rewards
and cardmember services 1,522 1,323 15
Human resources 1,240 1,187 4
Provision for losses and benefits:
Charge card 209 215 (3)
Cardmember lending 321 295 9
Investment certificates and other 138 79 75
-------------- --------------
Total 668 589 13
Professional services 561 487 15
Occupancy and equipment 346 336 3
Interest 279 201 39
Communications 113 117 (3)
Other 278 312 (11)
-------------- --------------
Total 5,007 4,552 10
-------------- --------------
Pretax income from continuing operations 1,325 1,088 22
Income tax provision 449 343 31
-------------- --------------
Income from continuing operations 876 745 18
(Loss)/Income from discontinued operations, net of tax (3) 201 #
-------------- --------------
Net income $ 873 $ 946 (8)
============== ==============
</Table>
# - Denotes a variance of more than 100%.
-11-
<Page>
(Preliminary)
AMERICAN EXPRESS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Billions)
<Table>
<Caption>
March 31, December 31,
2006 2005
-------------- --------------
Assets
Cash and cash equivalents $ 5 $ 7
Accounts receivable 34 35
Investments 21 21
Loans 40 41
Other assets 10 10
-------------- --------------
Total assets $ 110 $ 114
============== ==============
Liabilities and Shareholders' Equity
Short-term debt $ 15 $ 16
Long-term debt 31 31
Other liabilities 53 56
-------------- --------------
Total liabilities 99 103
-------------- --------------
Shareholders' equity 11 11
-------------- --------------
Total liabilities and shareholders' equity $ 110 $ 114
============== ==============
</Table>
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<Page>
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY
(Millions)
<Table>
<Caption>
Quarters Ended
March 31,
------------------------------ Percentage
2006 2005 Inc/(Dec)
------------- ------------- --------------
REVENUES
U.S. Card Services $ 3,180 $ 2,777 15%
International Card & Global Commercial Services 2,303 2,146 7
Global Network & Merchant Services 705 638 11
------------- -------------
6,188 5,561 11
Corporate & Other,
including adjustments and eliminations 144 79 82
------------- -------------
CONSOLIDATED REVENUES $ 6,332 $ 5,640 12
============= =============
PRETAX INCOME (LOSS) FROM CONTINUING OPERATIONS
U.S. Card Services $ 796 $ 703 13
International Card & Global Commercial Services 311 242 29
Global Network & Merchant Services 262 171 53
------------- -------------
1,369 1,116 23
Corporate & Other (44) (28) 57
------------- -------------
PRETAX INCOME FROM CONTINUING OPERATIONS $ 1,325 $ 1,088 22
============= =============
NET INCOME (LOSS)
U.S. Card Services $ 546 $ 482 13
International Card & Global Commercial Services 213 192 11
Global Network & Merchant Services 166 111 50
------------- -------------
925 785 18
Corporate & Other (49) (40) 23
------------- -------------
Income from continuing operations 876 745 18
(Loss)/Income from discontinued operations, net of tax (3) 201 #
------------- -------------
NET INCOME $ 873 $ 946 (8)
============= =============
</Table>
# - Denotes a variance of more than 100%.
-13-
<Page>
(Preliminary)
AMERICAN EXPRESS COMPANY
FINANCIAL SUMMARY (CONTINUED)
<Table>
<Caption>
Quarters Ended
March 31,
------------------------------ Percentage
2006 2005 Inc/(Dec)
------------- ------------- -------------
EARNINGS PER COMMON SHARE
BASIC
Income from continuing operations $ 0.71 $ 0.60 18%
(Loss)/Income from discontinued operations - 0.16 #
------------- -------------
Net income $ 0.71 $ 0.76 (7)%
============= =============
Average common shares outstanding (millions) 1,232 1,239 (1)%
============= =============
DILUTED
Income from continuing operations $ 0.70 $ 0.59 19%
(Loss)/Income from discontinued operations (0.01) 0.16 #
------------- -------------
Net income $ 0.69 $ 0.75 (8)%
============= =============
Average common shares outstanding (millions) 1,258 1,264 -%
============= =============
Cash dividends declared per common share $ 0.12 $ 0.12 -%
============= =============
</Table>
SELECTED STATISTICAL INFORMATION
<Table>
<Caption>
Quarters Ended
March 31,
------------------------------ Percentage
2006 2005 Inc/(Dec)
------------- ------------- -------------
Return on average total shareholders' equity (A) 27.3% 22.8%
Common shares outstanding (millions) 1,233 1,245 (1)%
Book value per common share (B) $ 8.60 $ 12.95 (34)%
Shareholders' equity (billions) (B) $ 10.6 $ 16.1 (34)%
</Table>
# - Denotes a variance of more than 100%.
(A) Computed on a trailing 12-month basis using reported net income over
average total shareholders' equity (including discontinued operations) as
included in the Consolidated Financial Statements prepared in accordance
with GAAP.
(B) Total shareholders' equity and book value per common share amounts
prior to September 30, 2005 include discontinued operations reflected in
the Company's Consolidated Financial Statements.
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