American Express 2004 Annual Report Download - page 29

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ment to GAAP information, assumes there have been
no securitization transactions at TRS, i.e., as if all secu-
ritized cardmember loans and related income effects
are reflected in the Company’s balance sheets and
income statements. See the TRS Results of Operations
section for further discussion of this approach.
Certain reclassifications of prior period amounts have
been made to conform to the current presentation
throughout this Annual Report.
Summary of the Company’s Financial Performance
Years Ended December 31,
(Millions, except per share
amounts and ratio data) 2004 2003
Percent
Increase
Revenues $ 29,115 $ 25,836 13%
Expenses $ 24,164 $ 21,589 12
Income before
accounting change $ 3,516 $ 3,000 17
Net income $ 3,445 $ 2,987 15
Earnings per common
share before
accounting change —
diluted $ 2.74 $ 2.31 19
Earnings per common
share — diluted $ 2.68 $ 2.30 17
Return on average
shareholders’ equity 22.0% 20.6%
The Company’s 2004 consolidated income before
accounting change rose 17 percent to $3.5 billion and
diluted earnings per share (EPS) before accounting
change rose 19 percent to $2.74 as compared to a year
ago. The Company’s consolidated net income for 2004
rose 15 percent to $3.4 billion and EPS rose 17 percent
to $2.68 per share.
Consolidated revenues totaled $29.1 billion for 2004,
an increase of 13 percent from 2003. Record cardmem-
ber billings, reflecting increased cards-in-force and
higher average cardmember spending, greater lending
balances, strong travel sales and higher client assets
under management all played a major role in this strong
performance. Revenue growth for the TRS segment
comprised 73 percent of the Company’s revenue
growth, with TRS reporting total revenues of
$21.6 billion, an increase of 12 percent from 2003.
Total consolidated expenses for 2004 rose 12 percent
to $24.2 billion compared to a year ago. The TRS seg-
ment accounted for 72 percent of this increase reflect-
ing higher costs for marketing, promotion, rewards and
cardmember services and human resources. The suc-
cess of the Company’s ongoing reengineering efforts,
which yielded in excess of $1 billion in benefits during
2004, contributed significantly to these results.
Summary of Segment Results
Years Ended December 31, (Millions) 2004 2003
Percent
Increase
(Decrease)
Revenues
Travel Related Services $ 21,578 $ 19,189 12%
American Express
Financial Advisors 7,035 6,142 15
American Express Bank 825 801 3
Corporate and Other,
including adjustments
and eliminations (323) (296) (9)
Total revenues $ 29,115 $ 25,836 13
Expenses
Travel Related Services $ 17,461 $ 15,618 12
American Express
Financial Advisors 5,949 5,283 13
American Express Bank 679 650 4
Corporate and Other,
including adjustments
and eliminations 75 38 97
Total expenses $ 24,164 $ 21,589 12
Pretax income (loss)
before accounting
change
Travel Related Services $ 4,117 $ 3,571 15
American Express
Financial Advisors 1,086 859 26
American Express Bank 146 151 (3)
Corporate and Other (398) (334) (19)
Total pretax income
before accounting
change $ 4,951 $ 4,247 17
Income (loss) before
accounting change
Travel Related Services $ 2,852 $ 2,430 17
American Express
Financial Advisors 806 682 18
American Express Bank 96 102 (6)
Corporate and Other (238) (214) (11)
Total income before
accounting change $ 3,516 $ 3,000 17
Net income
Travel Related Services $ 2,852 $ 2,430 17
American Express
Financial Advisors 735 669 10
American Express Bank 96 102 (6)
Corporate and Other (238) (214) (11)
Total net income $ 3,445 $ 2,987 15
AXP
AR.04
27
Financial Review