American Express 2002 Annual Report Download - page 37

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I35 AXP IFINANCIAL REVIEW
Managed net revenues increased 7 percent in 2002 to $22.8 billion, compared with $21.4 billion in 2001 which was 3 percent
lower than 2000. Managed net revenues rose in 2002 due to greater discount revenues, higher lending spreads and loan
balances, and higher revenues related to AEFA’s investment portfolio. These items were partially offset by lower management
fees and weaker travel revenues. 2001 net revenues declined due to lower spreads on AEFA’s investment portfolio, weaker travel
revenues as well as lower management and distribution fees. These items were partially offset by an increase in cards-in-force,
larger loan balances and greater insurance revenues.
See TRS and AEFA segments for a discussion of why a managed basis presentation at TRS and net revenues at AEFA is used by
management and is important to investors.
TRAVEL RELATED SERVICES
Results of Operations
STATEMENTS OF INCOME
Years Ended December 31, (Millions) 2002 2001 2000
Net revenues:
Discount revenue $ 7,931 $ 7,714 $ 7,779
Net card fees 1,726 1,675 1,651
Lending:
Finance charge revenue 1,995 2,363 2,280
Interest expense 510 939 1,025
Net finance charge revenue 1,485 1,424 1,255
Travel commissions and fees 1,408 1,537 1,821
Travelers Cheque investment income 375 394 387
Securitization income 1,941 1,432 1,012
Other revenues 2,855 3,183 3,215
Total net revenues 17,721 17,359 17,120
Expenses:
Marketing and promotion 1,456 1,237 1,434
Provision for losses and claims:
Charge card 960 1,195 1,006
Lending 1,369 1,318 891
Other 149 164 105
Total 2,478 2,677 2,002
Charge card interest expense 1,001 1,443 1,202
Net discount expense —96 489
Human resources 3,503 3,992 4,126
Other operating expenses 6,207 5,442 5,154
Restructuring charges (4) 414 —
Disaster recovery charge —79 —
Total expenses 14,641 15,380 14,407
Pretax income 3,080 1,979 2,713
Income tax provision 945 520 784
Net income $ 2,135 $ 1,459 $ 1,929