American Express 2001 Annual Report Download - page 43

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axp_41
FINANCIAL REVIEW
Further, with respect to both the American Express Credit Account Master Trust and the American Express Master Trust, a decline
in the actual or implied short-term credit rating of TRS below A-1/P-1 will trigger a requirement that TRS, as servicer, transfer col-
lections on the securitized assets to investors on a daily, rather than a monthly, basis or make alternative arrangements with the
rating agencies so as to allow TRS to continue to transfer collections on a monthly basis. Examples of such alternative arrange-
ments include obtaining appropriate guaranties for the performance of the payment and deposit obligations of TRS, as servicer.
TRS also securitizes equipment lease receivables. At December 31, 2001 and 2000, the amount sold and outstanding to third party
investors was $675 million and $242 million, respectively. These sales result in a reduction of interest expense and provisions for
losses, as well as servicing revenue, all of which are insignificant to the company’s results of operations.
In 2000, Credco called $150 million 1.125% Cash Exchangeable Notes due 2003. The notes were exchangeable for an amount in
cash which was linked to the price of the common shares of the company. Credco had entered into agreements to fully hedge its
obligations. Accordingly, the related hedging agreements were called at the same time.
TRS, primarily through Credco, maintained commercial paper outstanding of approximately $18.0 billion at an average interest
rate of 1.9% and approximately $20.4 billion at an average interest rate of 6.4% at December 31,2001 and 2000,respectively. Unused
lines of credit of approximately $10.4 billion, which expire in increments from 2002 through 2006, were available at December 31,
2001 to support a portion of TRS’ commercial paper borrowings.
Borrowings under bank lines of credit totaled $1.3 billion and $1.4 billion at December 31, 2001 and 2000, respectively.
In early 2002, Credco issued an aggregate of $1.4 billion of medium-term notes at fixed and floating rates with maturities of one to
three years.
AMERICAN EXPRESS FINANCIAL ADVISORS
RESULTS OF OPERATIONS
Statements of Income
Years Ended December 31, (Millions) 2001 2000 1999
Revenues:
Investment income $ 1,162 $ 2,292 $ 2,443
Management and distribution fees 2,458 2,812 2,270
Other revenues 1,171 1,026 923
Total revenues 4,791 6,130 5,636
Provision for losses and benefits:
Annuities 989 1,018 1,071
Insurance 648 556 522
Investment certificates 329 337 306
Total 1,966 1,911 1,899
Net revenues 2,825 4,219 3,737
Expenses:
Human resources 1,969 2,093 1,744
Other operating expenses 762 643 630
Restructuring charges 107
——
Disaster recovery charge 11
——
Total expenses 2,849 2,736 2,374
Pretax (loss) income (24) 1,483 1,363
Income tax (benefit) provision (76) 451 428
Net income $ 52 $ 1,032 $ 935