Summary
American Express Company (AXP) reported a significant decline in net income for the third quarter of 2001, down 60% year-over-year to $298 million ($0.22 per diluted share), primarily due to substantial restructuring and disaster recovery charges. For the nine months ended September 30, 2001, net income fell 52% to $1.014 billion ($0.76 per diluted share). The company incurred a $352 million pretax restructuring charge related to job eliminations, business unit consolidation, and scaling back certain lending activities, and a $90 million pretax disaster recovery charge stemming from the September 11th terrorist attacks. Excluding these significant items, adjusted net income decline for the three-month period was 19% and for the nine-month period was 39%. Revenues across segments showed mixed performance. Travel Related Services (TRS) saw a slight increase in managed net revenues driven by lending, while American Express Financial Advisors (AEFA) experienced a revenue decline, impacted by market volatility and a repositioning of its investment portfolio. American Express Bank (AEB) also incurred losses due to restructuring efforts. The company faces a challenging outlook for the remainder of 2001 due to a weak economic environment and ongoing uncertainty.
Key Highlights
- 1Net income for the three months ended September 30, 2001, decreased by 60% to $298 million, or $0.22 per diluted share, compared to $737 million, or $0.54 per diluted share, in the prior year period.
- 2Nine-month net income decreased by 52% to $1.014 billion, or $0.76 per diluted share, compared to $2.133 billion, or $1.57 per diluted share, in the prior year period.
- 3The company recorded a $352 million pretax restructuring charge in the third quarter of 2001, impacting the Travel Related Services, American Express Financial Advisors, and American Express Bank segments.
- 4A $90 million pretax disaster recovery charge was incurred in the third quarter of 2001 due to the September 11th terrorist attacks, primarily impacting the Travel Related Services segment.
- 5Total assets decreased to $145.557 billion as of September 30, 2001, from $154.423 billion as of December 31, 2000, mainly due to decreases in cardmember receivables and separate account assets.
- 6Total liabilities also decreased to $132.829 billion as of September 30, 2001, from $142.239 billion as of December 31, 2000.
- 7The company's outlook for the remainder of 2001 anticipates continued weak business volumes and potential adverse impacts on revenues and net income due to the weak economic environment and post-September 11th uncertainties.