American Express 2002 Annual Report Download - page 39

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I37 AXP IFINANCIAL REVIEW
GAAP Basis to Managed Basis Reconciliation — Effect of Securitizations
Years Ended December 31, (Millions)
Effect of Securitizations
GAAP Basis Securitization Effect Managed Basis
2002 2001 2000 2002 2001 2000 2002 2001 2000
Net revenues:
Discount revenue $ 7,931 $ 7,714 $ 7,779
Net card fees 1,726 1,675 1,651 $—$16$ 2$ 1,726 $ 1,691 $ 1,653
Lending:
Finance charge revenue 1,995 2,363 2,280 2,509 2,259 1,697 4,504 4,622 3,977
Interest expense 510 939 1,025 340 545 569 850 1,484 1,594
Net finance
charge revenue 1,485 1,424 1,255 2,169 1,714 1,128 3,654 3,138 2,383
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 (1,941) (1,432) (1,012) ———
Other revenues 2,855 3,183 3,215 720 445 203 3,575 3,628 3,418
Total net revenues 17,721 17,359 17,120 948 743 321 18,669 18,102 17,441
Expenses:
Marketing and promotion 1,456 1,237 1,434 (81) (92) (86) 1,375 1,145 1,348
Provision for losses
and claims:
Charge card 960 1,195 1,006 —36 151 960 1,231 1,157
Lending 1,369 1,318 891 1,098 925 595 2,467 2,243 1,486
Other 149 164 105
Total 2,478 2,677 2,002 1,098 961 746 3,576 3,638 2,748
Charge card
interest expense 1,001 1,443 1,202 (14) 33 206 987 1,476 1,408
Net discount expense —96 489 —(96) (489) ———
Human resources 3,503 3,992 4,126
Other operating
expenses 6,207 5,442 5,154 (55) (63) (56) 6,152 5,379 5,098
Restructuring charges (4) 414 —
Disaster recovery charge —79 —
Total expenses 14,641 15,380 14,407 $ 948 $ 743 $ 321 $ 15,589 $ 16,123 $ 14,728
Pretax income 3,080 1,979 2,713
Income tax provision 945 520 784
Net income $ 2,135 $ 1,459 $ 1,929
The following discussion of TRS’ results is presented on a managed basis.
In 2002, TRS’ net revenues rose 3 percent as a result of greater net finance charge revenue, higher cardmember spending and
increased cards-in-force, partially offset by lower travel commissions and fees, Travelers Cheque investment income and other
revenues. These increases reflect the benefits of higher net finance charge revenue from the cardmember lending portfolio due
to higher loan balances and improved spreads and growth in worldwide billed business. 2001 net revenues were 4 percent
higher than 2000 as increased cards-in-force, growth in cardmember loans outstanding and higher fee revenue were partially
offset by relatively flat worldwide billed business and lower travel commissions and fees. The 2001 performance reflected over-
all weakness in the economy, especially within the travel and entertainment sectors.