EXHIBIT 99.1
News Release News Release News Release News Release News Rel
[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
- --------------------------------------------------------------------------------
EARNINGS PER SHARE FROM CONTINUING OPERATIONS RISE 13%
NET REVENUES UP 12% ON STRONG CARDMEMBER SPENDING
MORE THAN 2 MILLION CARDS-IN-FORCE ADDED IN THIRD QUARTER
(Millions, except per share amounts)
Quarters Ended Percentage Nine Months Ended Percentage
September 30, Inc/(Dec) September 30, Inc/(Dec)
------------- --------- ------------- ---------
2006 2005 2006 2005
---- ---- ---- ----
Net Revenues $ 6,759 $ 6,028 12% $ 19,928 $17,688 13%
Income From Continuing Operations $ 956 $ 865 11% $ 2,804 $ 2,470 14%
Income/(Loss) From Discontinued Operations $ 11 $ 165 (93%) $ (19) $ 519 #
Net Income $ 967 $ 1,030 (6%) $ 2,785 $ 2,989 (7%)
Earnings Per Common Share - Basic:
Income From Continuing Operations $ 0.79 $ 0.70 13% $ 2.30 $ 2.00 15%
Income/(Loss) From Discontinued Operations $ 0.01 $ 0.14 (93%) $ (0.01) $ 0.42 #
Net Income $ 0.80 $ 0.84 (5%) $ 2.29 $ 2.42 (5%)
Earnings Per Common Share - Diluted:
Income From Continuing Operations $ 0.78 $ 0.69 13% $ 2.26 $ 1.96 15%
Income/(Loss) From Discontinued Operations $ 0.01 $ 0.13 (92%) $ (0.02) $ 0.42 #
Net Income $ 0.79 $ 0.82 (4%) $ 2.24 $ 2.38 (6%)
Average Common Shares Outstanding
Basic 1,202 1,229 (2%) 1,217 1,233 (1%)
Diluted 1,227 1,254 (2%) 1,242 1,257 (1%)
Return on Average Total Shareholders' Equity* 33.6% 24.2% 33.6% 24.2%
- --------------------------------------------------------------------------------
* Computed on a trailing 12-month basis using 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 - October 23, 2006 - AMERICAN EXPRESS COMPANY today reported
third quarter income from continuing operations of $956 million, up 11 percent
from $865 million a year ago. Diluted earnings per share from continuing
operations were $0.78, up 13 percent from $0.69 a year ago.
Including results for businesses that the Company has spun off or sold
during the past year, net income for the third quarter totaled $967 million,
down 6 percent from $1.0 billion a year ago.
Net income per share on a diluted basis was $0.79, down 4 percent from
$0.82.
The Company's return on equity (ROE) was 33.6 percent, up from 24.2 percent
a year ago.
Consolidated net revenues rose 12 percent to $6.8 billion, up from $6.0
billion a year ago.
Consolidated expenses totaled $5.4 billion, up 10 percent from $4.9 billion
a year ago.
"Bottom line results this quarter reflected a continuation of the strong
trends we've seen throughout 2006: higher spending volumes, excellent overall
credit quality and substantial growth in our loan portfolio," said Kenneth I.
Chenault, chairman and chief executive.
"Investments designed to extend our lead in the payments business have
been producing substantial returns. Cardmember spending rose 15 percent from
year-ago levels that were already among the best in our history and continued
a multi-year pattern of strong growth among consumer, small business and
corporate Cardmembers.
"We are in an excellent position with growth in Cardmember spending and
borrowing that was again at the top of the industry. We added more than 2
million cards-in-force this quarter, and 7.5 million during the last year, as
both our proprietary and bank network businesses continued to expand
globally."
-2-
The third quarter results included:
o A $33 million ($24 million after-tax) gain related to the sale of the
Company's card operations in Malaysia and Indonesia.
Significant items in the year ago quarter included:
o A $105 million tax benefit from the resolution of a prior year tax
item, and
o A $49 million ($32 million after-tax) provision to reflect the
estimated costs related to Hurricane Katrina.
This quarter's results also included $12 million ($8 million after-tax)
of reengineering costs related primarily to restructuring efforts in the
Company's business travel areas. Year ago reengineering costs totaled $86
million ($56 million after-tax).
DISCONTINUED OPERATIONS
Discontinued operations for the quarter reflected income of $11 million.
The year ago period reflected income from discontinued operations of $165
million primarily related to Ameriprise Financial, Inc., which is no longer
part of American Express.
SEGMENT RESULTS
THE FOLLOWING DISCUSSION OF THIRD QUARTER RESULTS PRESENTS ALL
SEGMENTS ON A GAAP BASIS.
U.S. CARD SERVICES reported third quarter net income of $580 million,
up 31 percent from $443 million a year ago.
Total net revenues for the third quarter increased 16 percent to $3.5
billion, reflecting growth in spending and borrowing by U.S. consumers and
small businesses. Net finance charge revenue increased 46 percent, reflecting
substantial loan volume growth and a higher yield.
-3-
Total expenses increased 13 percent. Marketing, promotion, rewards
and cardmember services expenses increased 12 percent, reflecting greater
rewards costs and marketing and promotion activities. Human resources and
other operating expenses increased by 20 percent, reflecting in part higher
interest expense and professional services. Provisions for losses declined 3
percent due to lower write-offs which benefited from last year's bankruptcy
legislation and improved collections. The year ago quarter reflects a $38
million provision for the estimated costs related to Hurricane Katrina.
INTERNATIONAL CARD & GLOBAL COMMERCIAL SERVICES reported third
quarter net income of $216 million, down 13 percent from $249 million a year
ago.
Total net revenues for the third quarter increased 3 percent over the
year ago period to $2.3 billion. Revenues related to corporate and
international consumer cards increased reflecting strong growth in spending
and borrowing by Cardmembers, partially offset by travel and international
banking revenues which remained relatively flat, and the impact of operations
sold in 2006.
Third quarter expenses increased 6 percent over the year ago period
to $2.0 billion. The increase reflected a higher provision for losses and
benefits that was driven by strong increases in lending volume growth and
higher cost of funds related to investment certificates sold through American
Express Bank. These items were partially offset by the previously mentioned
gains on the sale of the Company's card operations in Malaysia and Indonesia.
GLOBAL NETWORK & MERCHANT SERVICES reported third quarter net income
of $212 million, up 50 percent from $141 million a year ago.
Total net revenues for the third quarter increased 15 percent over
year ago levels to $798 million. The increase reflects continued strong growth
in company-wide billed business, as well as higher fees from network bank
partners.
-4-
Spending on Global Network Services cards rose substantially from
year ago levels, reflecting an underlying acceleration of growth with bank
partners, as well as the completion of independent operator agreements in
Brazil, Malaysia and Indonesia.
Total expenses increased 1 percent from year ago levels to $484
million, reflecting an 18 percent increase in human resources and other
operating expenses, partially offset by a 29 percent decrease in marketing and
promotion expenses.
CORPORATE & OTHER reported third quarter net expenses of $52 million,
compared with net income of $32 million a year ago. The year ago quarter
reflects $105 million of the previously mentioned tax benefit resulting from
the resolution of a prior year tax item.
***
American Express Company (www.americanexpress.com) is a leading
global payments, network, travel, and banking company founded in 1850.
Note: The 2006 Third 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 third
quarter earnings results, operating performance and other topics that may be
raised during the discussion will be held at 5:00 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.
***
-5-
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 significant 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; fluctuations in interest rates, which
impact the Company's borrowing costs and return on lending products; 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 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; 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.
-6-
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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------- PERCENTAGE ------------------ PERCENTAGE
2006 2005 INC/(DEC) 2006 2005 INC/(DEC)
------ ------ ---------- -------- ------- ----------
Net revenues
Discount revenue $3,259 $2,894 13% $ 9,520 $ 8,393 13%
Cardmember lending finance charge revenue, net of interest 912 648 41 2,467 1,877 31
Net card fees 462 511 (10) 1,515 1,515 --
Travel commissions and fees 427 421 1 1,328 1,345 (1)
Other commissions and fees 620 598 4 1,901 1,745 9
Securitization income, net 384 353 9 1,142 965 18
Other investment and interest income, net of interest 264 246 7 813 776 5
Other 431 357 21 1,242 1,072 16
------ ------ ------- -------
Total 6,759 6,028 12 19,928 17,688 13
------ ------ ------- -------
Expenses
Marketing, promotion, rewards
and cardmember services 1,589 1,492 7 4,782 4,260 12
Human resources 1,213 1,197 1 3,729 3,652 2
Provision for losses and benefits:
Charge card 257 299 (14) 658 748 (12)
Cardmember lending 412 364 13 1,139 934 22
Investment certificates and other 129 76 70 399 278 44
------ ------ ------- -------
Total 798 739 8 2,196 1,960 12
Professional services 684 563 21 1,903 1,594 19
Occupancy and equipment 375 346 8 1,086 1,038 5
Interest 324 238 36 898 671 34
Communications 107 112 (4) 333 342 (3)
Other 331 261 27 896 882 2
------ ------ ------- -------
Total 5,421 4,948 10 15,823 14,399 10
------ ------ ------- -------
Pretax income from continuing operations 1,338 1,080 24 4,105 3,289 25
Income tax provision 382 215 78 1,301 819 59
------ ------ ------- -------
Income from continuing operations 956 865 11 2,804 2,470 14
Income/(Loss) from discontinued operations, net of tax 11 165 (93) (19) 519 #
------ ------ ------- -------
Net income $ 967 $1,030 (6) $ 2,785 $ 2,989 (7)
====== ====== ======= =======
</Table>
# - Denotes a variance of more than 100%.
7
<Page>
(Preliminary)
American Express Company
Condensed Consolidated Balance Sheets
(Billions)
<Table>
<Caption>
SEPTEMBER 30, DECEMBER 31,
2006 2005
------------- ------------
Assets
Cash and cash equivalents $ 8 $ 7
Accounts receivable 36 35
Investments 22 21
Loans 46 41
Other assets 9 10
---- ----
Total assets $121 $114
==== ====
Liabilities and Shareholders' Equity
Short-term debt $ 15 $ 16
Long-term debt 39 31
Other liabilities 56 56
---- ----
Total liabilities 110 103
---- ----
Shareholders' equity 11 11
---- ----
Total liabilities and shareholders' equity $121 $114
==== ====
</Table>
8
<Page>
(Preliminary)
American Express Company
Financial Summary
(Millions)
<Table>
<Caption>
QUARTERS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------- PERCENTAGE ------------------- PERCENTAGE
2006 2005 INC/(DEC) 2006 2005 INC/(DEC)
------- ------- ---------- -------- -------- ----------
Net Revenues
U.S. Card Services $3,534 $3,044 16% $10,199 $ 8,797 16%
International Card & Global Commercial Services 2,287 2,212 3 7,031 6,606 6
Global Network & Merchant Services 798 693 15 2,292 2,022 13
------ ------ ------- -------
6,619 5,949 11 19,522 17,425 12
Corporate & Other,
including adjustments and eliminations 140 79 77 406 263 54
------ ------ ------- -------
CONSOLIDATED NET REVENUES $6,759 $6,028 12 $19,928 $17,688 13
====== ====== ======= =======
Pretax Income (Loss) From Continuing Operations
U.S. Card Services $ 819 $ 633 29 $ 2,535 $ 2,033 25
International Card & Global Commercial Services 281 317 (11) 886 803 10
Global Network & Merchant Services 314 214 47 891 630 41
------ ------ ------- -------
1,414 1,164 21 4,312 3,466 24
Corporate & Other (76) (84) (10) (207) (177) 17
------ ------ ------- -------
PRETAX INCOME FROM CONTINUING OPERATIONS $1,338 $1,080 24 $ 4,105 $ 3,289 25
====== ====== ======= =======
Net Income (Loss)
U.S. Card Services $ 580 $ 443 31 $ 1,742 $ 1,402 24
International Card & Global Commercial Services 216 249 (13) 654 666 (2)
Global Network & Merchant Services 212 141 50 578 407 42
------ ------ ------- -------
1,008 833 21 2,974 2,475 20
Corporate & Other (52) 32 # (170) (5) #
------ ------ ------- -------
Income from continuing operations 956 865 11 2,804 2,470 14
Income/(Loss) from discontinued operations, net of tax 11 165 (93) (19) 519 #
------ ------ ------- -------
NET INCOME $ 967 $1,030 (6) $ 2,785 $ 2,989 (7)
====== ====== ======= =======
</Table>
# - Denotes a variance of more than 100%.
9
<Page>
(Preliminary)
American Express Company
Financial Summary (continued)
<Table>
<Caption>
QUARTERS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------- PERCENTAGE ----------------- PERCENTAGE
2006 2005 INC/(DEC) 2006 2005 INC/(DEC)
------ ------ ---------- ------ ------ ----------
EARNINGS PER COMMON SHARE
BASIC
Income from continuing operations $ 0.79 $ 0.70 13% $ 2.30 $ 2.00 15%
Income/(Loss) from discontinued operations 0.01 0.14 (93) (0.01) 0.42 #
------ ------ ------ ------
Net income $ 0.80 $ 0.84 (5)% $ 2.29 $ 2.42 (5)%
====== ====== ====== ======
Average common shares outstanding (millions) 1,202 1,229 (2)% 1,217 1,233 (1)%
====== ====== ====== ======
DILUTED
Income from continuing operations $ 0.78 $ 0.69 13% $ 2.26 $ 1.96 15%
Income/(Loss) from discontinued operations 0.01 0.13 (92) (0.02) 0.42 #
------ ------ ------ ------
Net income $ 0.79 $ 0.82 (4)% $ 2.24 $ 2.38 (6)%
====== ====== ====== ======
Average common shares outstanding (millions) 1,227 1,254 (2)% 1,242 1,257 (1)%
====== ====== ====== ======
Cash dividends declared per common share $ 0.15 $ 0.12 25% $ 0.42 $ 0.36 17%
====== ====== ====== ======
</Table>
Selected Statistical Information
<Table>
<Caption>
QUARTERS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------- PERCENTAGE ----------------- PERCENTAGE
2006 2005 INC/(DEC) 2006 2005 INC/(DEC)
------ ------ ---------- ------ ------ ----------
Return on average total shareholders' equity (A) 33.6% 24.2% 33.6% 24.2%
Common shares outstanding (millions) 1,204 1,239 (3)% 1,204 1,239 (3)%
Book value per common share $ 8.93 $ 7.99 12% $ 8.93 $ 7.99 12%
Shareholders' equity (billions) $ 10.8 $ 9.9 9% $ 10.8 $ 9.9 9%
</Table>
# - Denotes a variance of more than 100%.
(A) Computed on a trailing 12-month basis using net income over average total
shareholders' equity (including discontinued operations) as included in the
Consolidated Financial Statements prepared in accordance with GAAP.
10