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<SEC-DOCUMENT>0000004962-02-000029.txt : 20020514
<SEC-HEADER>0000004962-02-000029.hdr.sgml : 20020514
ACCESSION NUMBER:		0000004962-02-000029
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20020331
FILED AS OF DATE:		20020514

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			AMERICAN EXPRESS CO
		CENTRAL INDEX KEY:			0000004962
		STANDARD INDUSTRIAL CLASSIFICATION:	FINANCE SERVICES [6199]
		IRS NUMBER:				134922250
		STATE OF INCORPORATION:			NY
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-07657
		FILM NUMBER:		02647240

	BUSINESS ADDRESS:	
		STREET 1:		AMERICAN EXPRESS TWR WORLD FINANCIAL CN
		STREET 2:		200 VESEY ST 49TH FLOOR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10285
		BUSINESS PHONE:		2126402000

	MAIL ADDRESS:	
		STREET 1:		AMERICAN EXPRESS TOWER
		STREET 2:		200 VESEY ST 49TH FLOOR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10285
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>q.txt
<DESCRIPTION>AMERICAN EXPRESS 10-Q
<TEXT>
<Page>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-Q

/X/    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

                                       or

/ /    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _____________ to _____________

                          Commission file number 1-7657

                            AMERICAN EXPRESS COMPANY
                            ------------------------
             (Exact name of registrant as specified in its charter)

          New York                                             13-4922250
- -------------------------------                           ------------------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                            Identification No.)

World Financial Center, 200 Vesey Street, New York, NY            10285
- -----------------------------------------------------------------------------
(Address of principal executive offices)                        (Zip Code)

Registrant's telephone number, including area code            (212) 640-2000
                                                            -----------------

                                      None
- -----------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

                                                    Yes  /X/        No  / /

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

              Class                           Outstanding at April 30, 2002
Common Shares (par value $.20 per share)            1,329,924,155 shares

<Page>

                            AMERICAN EXPRESS COMPANY

                                    FORM 10-Q

                                      INDEX

<Table>
<Caption>
                                                                   Page No.
<S>          <C>                                                     <C>
Part I.      Financial Information:

             Consolidated Statements of Income - Three
             months ended March 31, 2002 and 2001                       1

             Consolidated Balance Sheets - March 31, 2002
             and December 31, 2001                                      2

             Consolidated Statements of Cash Flows - Three
             months ended March 31, 2002 and 2001                       3

             Notes to Consolidated Financial Statements               4-7

             Independent Accountants' Review Report                     8

             Management's Discussion and Analysis of
             Financial Condition and Results of Operations           9-24

Part II.     Other Information                                         25
</Table>

<Page>

                          PART I--FINANCIAL INFORMATION

                            AMERICAN EXPRESS COMPANY

                        CONSOLIDATED STATEMENTS OF INCOME
                 (dollars in millions, except per share amounts)
                                   (Unaudited)

<Table>
<Caption>
                                                               Three Months Ended
                                                                    March 31,
                                                             -----------------------
                                                                2002         2001
                                                             ----------   ----------
<S>                                                          <C>          <C>
Revenues:
     Discount revenue                                        $    1,845   $    1,925
     Interest and dividends, net                                    758          611
     Management and distribution fees                               597          638
     Net card fees                                                  423          422
     Travel commissions and fees                                    328          418
     Other commissions and fees                                     497          521
     Cardmember lending net finance charge revenue                  405          331
     Life and other insurance premiums                              186          156
     Securitization income                                          383          294
     Other                                                          337          403
                                                             ----------   ----------
         Total                                                    5,759        5,719
                                                             ----------   ----------

Expenses:
     Human resources                                              1,478        1,668
     Provisions for losses and benefits:
         Annuities and investment certificates                      299          319
         Life insurance, international banking and other            262          198
         Charge card                                                252          249
         Cardmember lending                                         346          287
     Interest                                                       271          361
     Marketing and promotion                                        362          338
     Occupancy and equipment                                        369          371
     Professional services                                          392          375
     Communications                                                 124          130
     Restructuring charge                                           (13)           -
     Other                                                          759          682
                                                             ----------   ----------
         Total                                                    4,901        4,978
                                                             ----------   ----------

Pretax income                                                       858          741
Income tax provision                                                240          203
                                                             ----------   ----------

Net income                                                   $      618   $      538
                                                             ==========   ==========

Earnings Per Common Share:
     Basic                                                   $     0.47   $     0.41
                                                             ==========   ==========
     Diluted                                                 $     0.46   $     0.40
                                                             ==========   ==========
Average common shares outstanding for earnings per
 common share (millions):
     Basic                                                        1,325        1,323
                                                             ==========   ==========
     Diluted                                                      1,335        1,344
                                                             ==========   ==========

Cash dividends declared per common share                     $     0.08   $     0.08
                                                             ==========   ==========
</Table>

                 See notes to Consolidated Financial Statements.

                                        1
<Page>

                            AMERICAN EXPRESS COMPANY

                           CONSOLIDATED BALANCE SHEETS
                          (millions, except share data)
                                   (Unaudited)

<Table>
<Caption>
                                                           March 31,   December 31,
                                                             2002          2001
                                                          ----------   ------------
<S>                                                       <C>           <C>
ASSETS
Cash and cash equivalents                                 $    7,503    $    7,222
Accounts receivable and accrued interest:
     Cardmember receivables, less reserves:
         2002, $1,031; 2001, $1,032                           23,144        25,212
     Other receivables, less reserves:
         2002, $117; 2001, $134                                4,084         4,286
Investments                                                   45,539        46,488
Loans:
     Cardmember lending, less reserves:
         2002, $842; 2001, $831                               19,096        20,131
     International banking, less reserves:
         2002, $130; 2001, $130                                5,139         5,155
     Other, net                                                  729         1,154
Separate account assets                                       27,215        27,334
Deferred acquisition costs                                     3,792         3,737
Land, buildings and equipment - at cost, less
     accumulated depreciation: 2002, $2,529;
     2001, $2,507                                              2,796         2,811
Other assets                                                   7,746         7,570
                                                          ----------    ----------
     Total assets                                         $  146,783    $  151,100
                                                          ==========    ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Customers' deposits                                       $   13,784    $   14,557
Travelers Cheques outstanding                                  6,172         6,190
Accounts payable                                               7,167         6,820
Insurance and annuity reserves:
     Fixed annuities                                          19,909        19,592
     Life and disability policies                              5,012         4,944
Investment certificate reserves                                8,020         8,227
Short-term debt                                               24,889        31,569
Long-term debt                                                10,822         7,788
Separate account liabilities                                  27,215        27,334
Other liabilities                                             10,798        11,542
                                                          ----------    ----------
     Total liabilities                                       133,788       138,563
                                                          ----------    ----------
Guaranteed preferred beneficial interests in
 the company's junior subordinated deferrable
 interest debentures                                             500           500

Shareholders' equity:
     Common shares, $.20 par value, authorized
         3.6 billion shares; issued and outstanding
         1,329 million shares in 2002 and 1,331
         million shares in 2001                                  266           266
     Capital surplus                                           5,611         5,527
     Retained earnings                                         6,906         6,421
     Other comprehensive (loss) income, net of tax:
         Net unrealized securities gains                         150           334
         Net unrealized derivatives losses                      (220)         (296)
         Foreign currency translation adjustments               (115)         (112)
         Minimum pension liability                              (103)         (103)
                                                          ----------    ----------
     Accumulated other comprehensive loss                       (288)         (177)
                                                          ----------    ----------
         Total shareholders' equity                           12,495        12,037
                                                          ----------    ----------
     Total liabilities and shareholders' equity           $  146,783    $  151,100
                                                          ==========    ==========
</Table>

                 See notes to Consolidated Financial Statements.

                                        2
<Page>

                            AMERICAN EXPRESS COMPANY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (millions)
                                   (Unaudited)

<Table>
<Caption>
                                                               Three Months Ended
                                                                   March 31,
                                                             -----------------------
                                                                 2002        2001
                                                             ----------   ----------
<S>                                                          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                   $      618   $      538
Adjustments to reconcile net income
     to net cash provided by operating activities:
         Provisions for losses and benefits                         817          726
         Depreciation, amortization, deferred taxes and
          other                                                      89          141
         Restructuring charge                                       (13)           -
         Changes in operating assets and liabilities,
          net of effects of acquisitions and dispositions:
           Accounts receivable and accrued interest                  61           25
           Other assets                                             (48)          70
           Accounts payable and other liabilities                   (26)         343
         Decrease in Travelers Cheques outstanding                 (130)        (133)
         Increase in insurance reserves                              69           35
                                                             ----------   ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES                         1,437        1,745
                                                             ----------   ----------

CASH FLOWS FROM INVESTING ACTIVITIES
Sale of investments                                               3,006        1,305
Maturity and redemption of investments                            2,435        1,880
Purchase of investments                                          (4,868)      (2,768)
Net decrease in Cardmember loans/receivables                      1,077        1,722
Cardmember loans/receivables sold to trust, net                   1,670          998
Proceeds from repayment of loans                                  5,469        7,884
Issuance of loans                                                (5,382)      (7,656)
Purchase of land, buildings and equipment                          (196)        (175)
Sale of land, buildings and equipment                                62            3
Acquisitions, net of cash acquired                                  (10)        (154)
                                                             ----------   ----------
NET CASH PROVIDED BY INVESTING ACTIVITIES                         3,263        3,039
                                                             ----------   ----------

CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in customers' deposits                                (848)        (550)
Sale of annuities and investment certificates                     1,332        1,967
Redemption of annuities and investment certificates              (1,263)      (1,855)
Net decrease in debt with maturities of three
     months or less                                              (5,667)      (3,764)
Issuance of debt                                                  6,570        2,451
Principal payments on debt                                       (4,538)      (3,336)
Issuance of American Express common shares                           55           28
Repurchase of American Express common shares                         --          (72)
Dividends paid                                                     (109)        (106)
                                                             ----------   ----------
NET CASH USED IN FINANCING ACTIVITIES                            (4,468)      (5,237)
                                                             ----------   ----------

Effect of exchange rate changes on cash                              49           30
                                                             ----------   ----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                281         (423)

Cash and cash equivalents at beginning of period                  7,222        8,487

                                                             ----------   ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                   $    7,503   $    8,064
                                                             ==========   ==========
</Table>

                 See notes to Consolidated Financial Statements.

                                        3
<Page>

                            AMERICAN EXPRESS COMPANY
                              NOTES TO CONSOLIDATED
                              FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

     The consolidated financial statements should be read in conjunction with
     the financial statements in the Annual Report on Form 10-K of American
     Express Company (the company or American Express) for the year ended
     December 31, 2001. Certain reclassifications of prior period amounts have
     been made to conform to the current presentation.

     Cardmember lending net finance charge revenue is presented net of
     interest expense of $127 million and $277 million for the first quarter
     of 2002 and 2001, respectively. Interest and dividends is presented net
     of interest expense of $61 million and $139 million for the first quarter
     of 2002 and 2001, respectively, related primarily to the company's
     international banking operations.

     At both March 31, 2002 and December 31, 2001, cash and cash equivalents
     included $1.0 billion segregated in special bank accounts for the benefit
     of customers.

     The interim financial information in this report has not been audited. In
     the opinion of management, all adjustments necessary for a fair
     presentation of the consolidated financial position and the consolidated
     results of operations for the interim periods have been made. All
     adjustments made were of a normal, recurring nature. Results of
     operations reported for interim periods are not necessarily indicative of
     results for the entire year.

2.   RESTRUCTURING CHARGES

     During the third and fourth quarters of 2001, the company recorded
     aggregate restructuring charges of $631 million ($411 million after-tax).
     Excluding balance sheet charge-offs ($120 million) and cash payments
     made during 2001 ($51 million), the company's liability at December 31,
     2001 was $460 million.

     During the first quarter of 2002, the company adjusted the prior year's
     aggregate restructuring charge liability by taking back into income a net
     pretax amount of $13 million ($8 million after-tax). This includes the
     reversal of severance and related benefits of $17 million, primarily
     caused by voluntary attrition or redeployment into open jobs, of
     approximately 1,700 employees whose jobs were eliminated. This was offset
     in part by additional net exit costs of $4 million.  These exit costs
     include $12 million related to the exit of office facilities, including
     the effect of the company's decision to exit its Jersey City, New Jersey
     office space and instead utilize all of its owned space in its World
     Financial Center headquarters building, reduced by a decreased liability
     of $8 million due to revisions to plans relating to certain travel office
     locations. This first quarter activity was recorded at Travel Related
     Services (TRS). As of March 31, 2002, other liabilities include $369
     million for the expected future cash outlays related to last year's
     aggregate restructuring charges.  In addition to employees who have
     attrited or been redeployed, approximately 6,600 employees have been
     terminated since inception of the restructuring plan.

                                        4
<Page>

     The following table summarizes the company's first quarter 2002 cash
     payments, additional charges and liability reductions by category:

<Table>
<Caption>
     (in millions)                               Severance       Other         Total
                                                ----------    ----------    ----------
     <S>                                        <C>           <C>           <C>
     Liability balance at December 31, 2001     $      332    $      128    $      460
     Cash paid                                         (57)          (21)          (78)
     Additional charges                                  -            12            12
     Reductions                                        (17)           (8)          (25)
                                                ----------    ----------    ----------
     Liability balance at March 31, 2002        $      258    $      111    $      369
                                                ==========    ==========    ==========
</Table>

3.   INVESTMENT SECURITIES

     The following is a summary of investments at March 31, 2002 and December
     31, 2001:

<Table>
<Caption>
                                                                March 31,   December 31,
     (in millions)                                                 2002        2001
                                                               ----------   -----------
     <S>                                                       <C>          <C>
     Available-for-Sale, at fair value
       (cost: 2002, $40,987; 2001, $41,650)                    $   41,213    $   42,225
     Investment mortgage loans
       (fair value: 2002, $4,248; 2001, $4,195)                     4,123         4,024
     Trading                                                          203           239
                                                               ----------   -----------
       Total                                                   $   45,539    $   46,488
                                                               ==========   ===========
</Table>

     During the first quarter of 2001, the company recognized pretax losses of
     $182 million from the write-down and sale of certain high-yield
     securities. These losses are included in "Interest and dividends" on the
     Consolidated Statements of Income.

4.   GOODWILL AND OTHER INTANGIBLE ASSETS

     Effective January 1, 2002, the company adopted SFAS No. 142, "Goodwill
     and Other Intangible Assets," which established new accounting and
     reporting standards for goodwill and other intangible assets. Under the
     new rules, goodwill and other intangible assets deemed to have indefinite
     lives are no longer amortized but are instead subject to annual
     impairment tests. Management has completed goodwill impairment tests as of
     the date of adoption; such tests did not indicate impairment.

     As of March 31, 2002, the company had acquired identifiable intangible
     assets with definite lives of $128 million (net of accumulated
     amortization of $29 million). These intangible assets have a
     weighted-average remaining useful life of six years, and mainly reflect
     purchased credit card relationships and certain automated teller machine
     merchant contracts. The aggregate amortization expense for these intangible
     assets during the quarter was $5 million. Amortization expense associated
     with these intangible assets is estimated to be approximately $21 million
     for each of the next five years.

                                        5
<Page>

     At both December 31, 2001 and March 31, 2002, the company had $1.2
     billion of net goodwill on its consolidated balance sheets. At both
     dates, this consisted of $1.0 billion at TRS and $0.2 billion at
     American Express Financial Advisors (AEFA).

     The following table presents the impact to first quarter 2001 net income
     and earnings per common share (EPS) of goodwill amortization:

<Table>
<Caption>
     (in millions, except per share amounts)           Net        Basic       Diluted
                                                     Income        EPS          EPS
                                                   ----------   ----------   ----------
     <S>                                           <C>          <C>          <C>
     Reported                                      $      538   $     0.41   $     0.40
     Add back: Goodwill amortization (after-tax)           19         0.01         0.01
                                                   ----------   ----------   ----------
     Adjusted                                      $      557   $     0.42   $     0.41
                                                   ==========   ==========   ==========
</Table>

5.   COMPREHENSIVE INCOME

     Comprehensive income is defined as the aggregate change in shareholders'
     equity, excluding changes in ownership interests. For the company, it is
     the sum of net income and changes in (i) unrealized gains or losses on
     available-for-sale securities, (ii) unrealized gains or losses on
     derivatives, and (iii) foreign currency translation adjustments. The
     components of comprehensive income, net of related tax, for the three
     months ended March 31, 2002 and 2001 were as follows:

<Table>
<Caption>
                                                                 Three Months Ended
                                                                       March 31,
                                                               ------------------------
     (in millions)                                                2002          2001
                                                               ----------    ----------
     <S>                                                       <C>           <C>
     Net income                                                $      618    $      538
     Change in:
       Net unrealized securities gains                               (184)          416
       Net unrealized derivative losses                                76          (160)
       Foreign currency translation adjustments                        (3)           12
                                                               ----------    ----------
     Total                                                     $      507    $      806
                                                               ==========    ==========
</Table>

6.   TAXES AND INTEREST

     Net income taxes paid during the three months ended March 31, 2002 and
     2001 were approximately $188 million and $63 million, respectively.
     Interest paid during the three months ended March 31, 2002 and 2001 was
     approximately $397 million and $757 million, respectively.

7.   EARNINGS PER SHARE

     The computations of basic and diluted EPS for the three months ended
     March 31, 2002 and 2001 are as follows:

                                        6
<Page>

<Table>
<Caption>
                                                            Three Months Ended
                                                                  March 31,
                                                          -----------------------
    (in millions, except per share amounts)                  2002         2001
                                                          ----------   ----------
    <S>                                                   <C>          <C>
    Numerator:  Net income                                $      618   $      538

    Denominator:
      Basic:  Weighted-average shares outstanding
        during the period                                      1,325        1,323
      Add:  Dilutive effect of Stock Options,
        Restricted Stock Awards, and other
        dilutive securities                                       10           21
                                                          ----------   ----------
      Diluted                                                  1,335        1,344
                                                          ----------   ----------
    Basic EPS                                             $     0.47   $     0.41
                                                          ----------   ----------
    Diluted EPS                                           $     0.46   $     0.40
                                                          ----------   ----------
</Table>

8.   SEGMENT INFORMATION

     The following tables present the first quarter results for the company's
     operating segments, based on management's internal reporting structure.
     Net revenues (managed basis) exclude the effect of securitizations at
     TRS, and include provisions for losses and benefits for annuities,
     insurance and investment certificate products of AEFA. AEFA's revenues
     for the first quarter of 2001 include the effect of $182 million of
     losses from the write down and sale of certain high-yield securities.

<Table>
<Caption>
                                                            Three Months Ended
     REVENUES (GAAP BASIS)                                       March 31,
                                                          ------------------------
     (in millions)                                           2002          2001
                                                          ----------    ----------
     <S>                                                  <C>           <C>
     Travel Related Services                              $    4,199    $    4,326
     American Express Financial Advisors                       1,434         1,283
     American Express Bank                                       178           158
     Corporate and Other                                         (52)          (48)
                                                          ----------    ----------
       Total                                              $    5,759    $    5,719
                                                          ==========    ==========

<Caption>
                                                            Three Months Ended
     NET REVENUES (MANAGED BASIS)                               March 31,
                                                          -----------------------
     (in millions)                                              2002         2001
                                                          ----------   ----------
     <S>                                                  <C>          <C>
     Travel Related Services                              $    4,452   $    4,465
     American Express Financial Advisors                         964          806
     American Express Bank                                       178          158
     Corporate and Other                                         (52)         (48)
                                                          ----------   ----------
       Total                                              $    5,542   $    5,381
                                                          ==========   ==========

<Caption>
                                                            Three Months Ended
     NET INCOME                                                  March 31,
                                                          ------------------------
     (in millions)                                              2002         2001
                                                          ----------    ----------
     <S>                                                  <C>           <C>
     Travel Related Services                              $      467    $      522
     American Express Financial Advisors                         182            51
     American Express Bank                                        13             9
     Corporate and Other                                         (44)          (44)
                                                          ----------    ----------
       Total                                              $      618    $      538
                                                          ==========    ==========
</Table>

                                        7
<Page>

     INDEPENDENT ACCOUNTANTS' REVIEW REPORT

     The Shareholders and Board of Directors
     American Express Company

     We have reviewed the accompanying consolidated balance sheet of American
     Express Company (the "Company") as of March 31, 2002 and the related
     consolidated statements of income and cash flows for the three-month
     periods ended March 31, 2002 and 2001. These financial statements are the
     responsibility of the Company's management.

     We conducted our reviews in accordance with standards established by the
     American Institute of Certified Public Accountants. A review of interim
     financial information consists principally of applying analytical
     procedures to financial data, and making inquiries of persons responsible
     for financial and accounting matters. It is substantially less in scope
     than an audit conducted in accordance with auditing standards generally
     accepted in the United States, which will be performed for the full year
     with the objective of expressing an opinion regarding the consolidated
     financial statements taken as a whole. Accordingly, we do not express
     such an opinion.

     Based on our reviews, we are not aware of any material modifications that
     should be made to the accompanying consolidated financial statements
     referred to above for them to be in conformity with accounting principles
     generally accepted in the United States.

     We have previously audited, in accordance with auditing standards
     generally accepted in the United States, the consolidated balance sheet
     of the Company as of December 31, 2001, and the related consolidated
     statements of income, shareholders' equity, and cash flows for the year
     then ended (not presented herein), and in our report dated January 28,
     2002, we expressed an unqualified opinion on those consolidated financial
     statements. In our opinion, the information set forth in the accompanying
     consolidated balance sheet as of December 31, 2001 is fairly stated, in
     all material respects, in relation to the consolidated balance sheet from
     which it has been derived.

                                       /s/ Ernst & Young LLP

     New York, New York
     May 14, 2002

                                        8
<Page>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

CONSOLIDATED RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2002

The company's consolidated net income and diluted earnings per share (EPS)
rose 15 percent in the three-month period ended March 31, 2002 as compared to
a year ago. The company's return on equity was 11.5 percent.

Due to the adoption of Statement of Financial Accounting Standards (SFAS) No.
142, "Goodwill and Other Intangible Assets," in 2002, no goodwill amortization
occurred in the first quarter of 2002. First quarter 2001 results included
goodwill amortization of $25 million ($19 million after-tax) or $0.01 per
share. Below is a summary of the impact of goodwill amortization on both 2001
Net Income and Diluted EPS for each quarter and the full year:

 2001

<Table>
<Caption>
 (in millions, except per share amounts)                  Net        Diluted
                                                        Income         EPS
                                                      ----------   ----------
 <S>                                                  <C>          <C>
 FIRST QUARTER:
 Reported                                             $      538   $     0.40
 Add back: Goodwill amortization (after-tax)                  19         0.01
                                                      ----------   ----------
 Adjusted                                             $      557   $     0.41
                                                      ==========   ==========

 SECOND QUARTER:
 Reported                                             $      178   $     0.13
 Add back: Goodwill amortization (after-tax)                  20         0.02
                                                      ----------   ----------
 Adjusted                                             $      198   $     0.15
                                                      ==========   ==========

 THIRD QUARTER:
 Reported                                             $      298   $     0.22
 Add back: Goodwill amortization (after-tax)                  19         0.02
                                                      ----------   ----------
 Adjusted                                             $      317   $     0.24
                                                      ==========   ==========

 FOURTH QUARTER:
 Reported                                             $      297   $     0.22
 Add back: Goodwill amortization (after-tax)                  24         0.02
                                                      ----------   ----------
 Adjusted                                             $      321   $     0.24
                                                      ==========   ==========

 FULL YEAR:
 Reported                                             $    1,311   $     0.98
 Add back: Goodwill amortization (after-tax)                  82         0.06
                                                      ----------   ----------
 Adjusted                                             $    1,393   $     1.04
                                                      ==========   ==========
</Table>


Consolidated net revenues on a managed basis rose three percent for the three
months ended March 31, 2002, due to higher Cardmember lending spreads and loan
balances, greater insurance revenues, and higher revenues related to American
Express Financial Advisors' (AEFA) investment portfolio. Consolidated net
revenues on a GAAP basis rose one percent in the first quarter of 2002
compared to the prior year.

AEFA's revenues and pretax income for the first quarter of 2001 include the
effect of $182 million of losses from the write down and sale of certain
high-yield securities. Also included in the first quarter of 2001 was a $67
million expense increase due to an adjustment of Deferred Acquisition Costs
for variable insurance and annuity products.

                                        9
<Page>



In addition, in the first quarter of 2002, the company recognized a net
benefit of $13 million ($8 million after-tax) to adjust the restructuring
charge reserve established during the second half of 2001. Excluding the
effect of the adoption of SFAS No. 142, AEFA's high-yield write down and the
restructuring charge adjustment, the company's net income would have been down
double digits and revenues would have been flat for the first quarter of 2002
compared to 2001.

Consolidated expenses on a managed basis increased due to larger provisions
for losses, higher other operating expenses and increased marketing costs.
These increases were partially offset by lower charge card funding costs, a
decline in human resource expenses and the benefits of other reengineering
activities and expense control initiatives. On a GAAP basis, consolidated
expenses decreased slightly.

As a result of the impact of the company's reengineering efforts, reduced
overall risk position and opportunities to grow core businesses, the company
believes it is in a stronger position than a year ago to perform in a weak
economic environment. Early indications of certain economic factors,
particularly unemployment, are somewhat better than the company expected.
Additionally, savings from reengineering efforts and improving spreads are
providing the opportunity for the company to invest in future revenue growth.
For the full year 2002, the company expects to realize over $1 billion in
reengineering related benefits, including approximately $605 million of
savings from restructuring plans initiated in the second half of 2001.
A portion of these benefits will flow through to earnings in the form
of improved operating margins; the remainder is expected to be reinvested
back into business areas with high-growth potential. To the extent that the
economy and the company's businesses improve more than anticipated during
the remainder of the year, the company expects to invest further in growth
opportunities.

As of March 31, 2002, the company has incurred costs of approximately $100
million related to the terrorist attacks of September 11th, which are expected
to be covered by insurance and, consequently, did not impact results. These
include the cost of duplicate facilities and equipment associated with the
relocation of the company's offices from lower Manhattan and certain other
business recovery expenses. Costs associated with the damage to the company's
offices, extra operating expenses and business interruption losses continue
to be evaluated. As of March 2002, approximately $30 million of such costs
relating to the company's portion of the repair of its headquarters building
have been identified. The company expects that a substantial portion of these
losses will be covered by insurance.

This financial review is presented on the basis used by management to evaluate
operations. It differs in two respects from the accompanying financial
statements, which are prepared in accordance with U.S. Generally Accepted
Accounting Principles (GAAP). First, results are presented as if there had
been no asset securitizations at TRS. This format is generally termed on a
"managed basis." Second, revenues are shown net of AEFA's provisions for
annuities, insurance and investment certificate products, which are
essentially spread businesses.

                                       10
<Page>

CONSOLIDATED LIQUIDITY AND CAPITAL RESOURCES

In August 1999 and March 2000, the company entered into agreements under
which a third party purchased an aggregate 29 million company common shares
at an average purchase price of $50.41 per share. In the first quarter of
2001, the company elected to prepay $350 million of the aggregate outstanding
amount. These agreements, which partially offset the company's exposure to the
effect on diluted earnings per share of outstanding in-the-money stock options
issued under the company's stock option program, are separate from the
company's previously authorized share repurchase program. During the term of
these agreements, the company, on a monthly basis, issues shares to or
receives shares from the third party so that the value of the shares held by
the third party equals the original purchase price for the shares. Each of the
agreements terminates after five years, at which time the company is required
to deliver to the third party an amount equal to such original purchase price.
The company may elect to settle this amount (i) physically, by paying cash
against delivery of the shares held by the third party or (ii) on a net cash
or net share basis. The company may also prepay outstanding amounts at any
time prior to the end of the five-year term. To the extent that the price of
the company's common stock declines to levels substantially lower than current
levels for a sustained period of time, thereby resulting in significant net
issuances of shares under these agreements, there could be an adverse impact
on diluted earnings per share.

There were no share repurchases during the first quarter of 2002; the decision
to curtail share repurchases during the second half of 2001 was previously
announced as a result of the negative impact of the second quarter 2001
charges related to AEFA's investment portfolio on book equity. The company has
disclosed that it plans to restart its share repurchase program at the end of
the second quarter 2002.

Subsequent to the terrorist attacks of September 11th, the company's A+ and
its subsidiaries' credit ratings were affirmed by Standard & Poor's and Fitch,
two credit rating agencies. At the same time, however, each agency revised its
respective rating outlook on the company and its subsidiaries from stable to
negative in light of the ensuing weak climate for business and consumer travel
and spending and weaker capital markets. On April 19th, 2002, Fitch affirmed
the company's A+ and its subsidiaries' credit ratings and revised its ratings
outlook to stable from negative citing the company's diversified financial
services franchise, steady operating cash flows, recurring profitability, good
capitalization, and strong balance sheet liquidity.

In April 2002, the company and two subsidiaries, American Express Centurion
Bank and American Express Credit Corporation (Credco), renegotiated their
committed credit line facilities. Total available credit lines are $11.45
billion, including $1.5 billion allocated to the company and $9.35 billion
allocated to Credco. As of April 30, 2002, Credco's allocated committed bank
line coverage of its net short-term debt was 76%. Credco has the right to
borrow up to a maximum amount of $10.85 billion, with a commensurate reduction
in the amount available to the company. Based on this maximum amount of
available borrowing, Credco's committed bank line coverage of its net short-
term debt was 89% as of April 30, 2002.   These facilities expire in
increments from 2003 through 2007.

                                       11
<Page>

TRAVEL RELATED SERVICES

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001

                              STATEMENTS OF INCOME
                           (Unaudited, Managed Basis)

<Table>
<Caption>
(Dollars in millions)                          Three Months Ended
                                                   March 31,
                                           ------------------------     Percentage
                                              2002          2001        Inc/(Dec)
                                           ----------    ----------    ----------
<S>                                        <C>           <C>               <C>
Net Revenues:
  Discount Revenue                         $    1,845    $    1,925         (4.2)%
  Net Card Fees                                   423           422          0.1
  Lending:
    Finance Charge Revenue                      1,099         1,120         (1.9)
    Interest Expense                              207           429        (51.7)
                                           ----------    ----------
      Net Finance Charge Revenue                  892           691         29.1
  Travel Commissions and Fees                     328           418        (21.6)
  Travelers Cheque Investment Income               90            98         (7.8)
  Other Revenues                                  874           911         (4.1)
                                           ----------    ----------
        Total Net Revenues                      4,452         4,465         (0.3)
                                           ----------    ----------

Expenses:
  Marketing and Promotion                         301           296          1.4
  Provision for Losses and Claims:
    Charge Card                                   252           285        (11.7)
    Lending                                       644           501         28.6
    Other                                          48            24            #
                                           ----------    ----------
      Total                                       944           810         16.6
  Charge Card Interest Expense                    241           393        (38.7)
  Human Resources                                 901         1,034        (12.9)
  Other Operating Expenses                      1,412         1,195         18.2
  Restructuring Charge                            (13)            -            #
                                           ----------    ----------
        Total Expenses                          3,786         3,728          1.6
                                           ----------    ----------
Pretax Income                                     666           737         (9.7)
Income Tax Provision                              199           215         (7.4)
                                           ----------    ----------
Net Income                                 $      467    $      522        (10.6)
                                           ==========    ==========
</Table>

# - Denotes a variance of more than 100%.

The above managed Statements of Income assume that gains of $42 million from
lending securitizations in both the periods ended March 31, 2002 and 2001 were
offset by higher marketing and promotion and other operating expense, and,
accordingly, the incremental expenses, as well as the gains, have been
eliminated.

                                       12
<Page>

TRAVEL RELATED SERVICES

                        SELECTED STATISTICAL INFORMATION
                                   (Unaudited)

(Amounts in billions, except percentages and where indicated)

<Table>
<Caption>
                                               Three Months Ended
                                                    March 31,
                                           ------------------------    Percentage
                                               2002          2001       Inc/(Dec)
                                           ----------    ----------    ----------
<S>                                        <C>           <C>               <C>
Total Cards in Force (millions):
  United States                                  34.8          34.2          1.7%
  Outside the United States                      20.8          19.0          9.5
                                           ----------    ----------
    Total                                        55.6          53.2          4.5
                                           ==========    ==========
Basic Cards in Force (millions):
  United States                                  26.9          26.9         (0.1)
  Outside the United States                      15.8          14.4          9.7
                                           ----------    ----------
    Total                                        42.7          41.3          3.3
                                           ==========    ==========
Card Billed Business:
  United States                            $     54.3    $     55.6         (2.3)
  Outside the United States                      17.3          18.4         (5.9)
                                           ----------    ----------
    Total                                  $     71.6    $     74.0         (3.2)
                                           ==========    ==========
Average Discount Rate (A)                        2.66%         2.68%           -
Average Basic Cardmember
  Spending (dollars) (A)                   $    1,825    $    1,933         (5.6)
Average Fee per Card -
  Managed (dollars) (A)                    $       33    $       35         (5.7)
Non-Amex Brand (B):
  Cards in Force (millions)                       0.7           0.6          2.1
  Billed Business                          $      0.9    $      0.8         12.8
Travel Sales                               $      3.7    $      5.0        (26.1)
Travel Commissions and Fees/Sales (C)             8.8%          8.4%           -
Travelers Cheque:
  Sales                                    $      4.6    $      5.0         (9.2)
  Average Outstanding                      $      6.2    $      6.1          1.4
  Average Investments                      $      6.6    $      6.3          4.4
  Tax Equivalent Yield                            8.8%          9.1%           -
Managed Charge Card Receivables:
  Total Receivables                        $     24.2    $     26.4         (8.3)
  90 Days Past Due as a % of Total                3.1%          2.7%           -
  Loss Reserves (millions)                 $    1,031    $    1,004          2.7
    % of Receivables                              4.3%          3.8%           -
    % of 90 Days Past Due                         138%          139%           -
  Net Loss Ratio                                 0.39%         0.35%           -
Managed U.S. Lending:
  Total Loans                              $     31.3    $     30.2          3.6
  Past Due Loans as a % of Total:
    30-89 Days                                    2.1%          2.0%           -
    90+ Days                                      1.3%          0.9%           -
  Loss Reserves (millions):
    Beginning Balance                      $    1,077    $      820         31.4
      Provision                                   541           426         26.9
      Net Charge-Offs/Other                      (474)         (339)        39.6
                                           ----------    ----------
    Ending Balance                         $    1,144    $      907         26.2
                                           ==========    ==========
    % of Loans                                    3.7%          3.0%           -
    % of Past Due                                 107%          103%           -
  Average Loans                            $     31.5    $     28.9          9.3
  Net Write-Off Rate                              6.5%          5.1%           -
  Net Interest Yield                              9.6%          8.3%           -
</Table>

(A) Computed from proprietary card activities only.
(B) This data relates to Visa and Eurocards issued in connection with joint
    venture activities.
(C) Computed from information provided herein.

                                       13
<Page>

TRAVEL RELATED SERVICES

Travel Related Services' (TRS) net income decreased 11 percent in the first
quarter of 2002 as compared to a year ago. Excluding the benefit from the
elimination of goodwill amortization and the restructuring reserve write-back,
net income declined 15 percent. Net revenues on a managed basis declined
slightly as lower discount revenue and travel commissions and fees, reflecting
continued weakness in the economy, particularly within the Corporate travel
sector, were partially offset by growth in Cardmember loans outstanding. Net
revenues on a GAAP basis also declined slightly compared to last year.

Discount revenue declined 4 percent as a result of lower billed business and a
lower discount rate. The 3 percent decline in billed business for the
three-month period ended March 31, 2002 resulted from lower spending per basic
Cardmember worldwide, which was partially offset by a 4 percent increase in
worldwide cards in force. For the first quarter of 2002, the decrease in volumes
over the prior year improved compared to the year-over-year decrease in the
fourth quarter of 2001, but was comparable to the month of December 2001. U.S.
billed business decreased 2 percent reflecting 4 percent growth within the
consumer card business on 10 percent higher transaction volume, a 2 percent
decrease within small business services and a 16 percent decline within
corporate services. U.S. non-T&E related volume categories, representing
approximately 60 percent of first quarter 2002 U.S. billed business, increased
7 percent over the prior year. U.S. T&E volumes declined 13 percent for the
first quarter of 2002. In the U.S., cards in force increased slightly during
the quarter reflecting more selective consumer card and small business services
acquisition activities during the past year in light of weakening economic
conditions. Outside the U.S., cards in force rose 10 percent over the prior
year on continued network card growth. Net finance charge revenue rose 29
percent on 11 percent growth in average worldwide lending balances. The yield
on the U.S. portfolio increased significantly versus the prior year reflecting
a decrease in the proportion of the portfolio on introductory rates and the
benefit of lower funding costs, which were partially offset by the evolving
mix of products toward more lower-rate offerings. Travel commissions and fees
declined 22 percent on a 26 percent contraction in travel sales due to the
continued effects of the weak corporate travel environment. Other revenues
decreased 4 percent as somewhat higher card-related fees and larger insurance
premiums were offset by significantly lower interest income on investment
and liquidity pools held within card funding vehicles.

The provision for losses on the lending portfolio grew as compared to the
first quarter of 2001 as a result of the growth in outstanding loan balances
and an increase in the U.S. lending write-off and delinquency rates. Other
provision from losses increased primarily due to reserve additions related to
credit exposures to travel industry service establishments. Charge card
interest expense was down 39 percent due to a lower effective cost of funds
and lower billed business volumes. Human resources expenses decreased 13
percent as a result of a 13 percent decline in the number of employees compared
to last year, resulting primarily from reengineering efforts. Other operating
expenses were up 18 percent over last year as higher costs related to Cardmember
loyalty programs and the effect of investment gains in the prior year were
partially offset by reengineering initiatives and cost containment efforts.

                                       14
<Page>

TRAVEL RELATED SERVICES

EFFECT OF SECURITIZATIONS

The preceding statements of income and related discussion present TRS results
on a managed basis, as if there had been no securitization transactions. On a
GAAP reporting basis, TRS' results included Cardmember lending securitization
gains of $42 million ($27 million after-tax) for both three-month periods
ended March 31, 2002 and 2001. The managed basis statements of income assume
that gains were offset by higher marketing and promotion and other operating
expenses, and accordingly, the incremental expenses, as well as the gains,
have been eliminated. The following tables reconcile TRS' income statements
from a managed basis to a GAAP basis. These tables are not complete statements
of income, as they include only those items that are effected by
securitizations. Additionally, beginning in the first quarter of 2002, TRS
revised its GAAP reporting of revenues to include a separate securitization
income line item.

<Table>
<Caption>
                                                     Three Months Ended                       Three Months Ended
                                                       March 31, 2002                           March 31, 2001
                                           --------------------------------------   -------------------------------------
(Dollars in millions)                       Managed      Securitization    GAAP      Managed     Securitization   GAAP
                                             Basis           Effect        Basis      Basis          Effect       Basis
                                           --------------------------------------   -------------------------------------
<S>                                         <C>              <C>         <C>         <C>           <C>           <C>
Net Revenues:
  Lending Net Finance Charge Revenue        $   892          $   (487)   $   405     $   691       $     (360)   $   331
  Securitization Income                           -               383        383           -              294        294
  Other Revenues                                874              (149)       725         911              (73)       838
  Total Net Revenues                          4,452              (253)     4,199       4,465             (139)     4,326
Expenses:
  Marketing and Promotion                       301                25        326         296               25        321
  Provision for Losses and Claims:
    Charge Card                                 252                 -        252         285              (36)       249
    Lending                                     644              (298)       346         501             (214)       287
  Charge Card Interest Expense                  241                 3        244         393              (44)       349
  Net Discount Expense                            -                 -          -           -              113        113
  Other Operating Expenses                    1,412                17      1,429       1,195               17      1,212
  Total Expenses                              3,786              (253)     3,533       3,728             (139)     3,589
Pretax Income                               $   666          $      -    $   666     $   737       $        -    $   737
                                           --------------------------------------   -------------------------------------
</Table>

                                       15
<Page>

TRAVEL RELATED SERVICES

LIQUIDITY AND CAPITAL RESOURCES

                       SELECTED BALANCE SHEET INFORMATION
                             (Unaudited, GAAP Basis)

(Dollars in billions, except percentages)

<Table>
<Caption>
                                            March 31,    December 31,     Percentage     March 31,      Percentage
                                              2002           2001          Inc/(Dec)       2001          Inc/(Dec)
                                           ----------   --------------   ------------   -----------    -----------
<S>                                         <C>          <C>                  <C>        <C>                 <C>
Accounts Receivable, net                    $    26.2    $       28.5          (8.1)%    $     26.9           (2.9)%
Travelers Cheque Investments                $     6.8    $        6.8          (0.5)     $      6.5            4.0
U.S. Cardmember Loans                       $    15.6    $       16.9          (7.8)     $     17.5          (10.8)
Total Assets                                $    66.4    $       69.4          (4.3)     $     67.5           (1.7)
Travelers Cheques Outstanding               $     6.2    $        6.2          (0.3)     $      6.0            3.0
Short-term Debt                             $    25.3    $       31.8         (20.5)     $     32.0          (21.1)
Long-term Debt                              $     9.2    $        6.0          53.0      $      3.5              #
Total Liabilities                           $    59.4    $       62.7          (5.2)     $     60.8           (2.3)
Total Shareholder's Equity                  $     7.0    $        6.7           3.7      $      6.7            4.1
Return on Average Equity*                        20.6%           21.9%            -           33.0%              -
Return on Average Assets**                        2.1%            2.1%            -            3.1%              -
</Table>

#    - Denotes a variance of more than 100%

*    Computed based on the past twelve months of net income and excludes the
     effect on Shareholder's Equity of SFAS No. 115 and SFAS No. 133.
**   Computed based on the past twelve months of net income and excludes the
     effect on Total Assets of SFAS No. 115 and SFAS No. 133 to the extent
     that they directly affect Shareholder's Equity.

In light of the current market environment, and as part of the company's
ongoing funding activities, during the three months ended March 31, 2002,
American Express Credit Corporation (Credco), a wholly-owned subsidiary of
TRS, issued approximately $2 billion of medium-term notes at fixed and
floating rates with maturities of one to three years. Proceeds from the sale
of these securities have contributed toward an overall reduction in total
commercial paper outstanding from $18 billion at December 31, 2001 to $14
billion at March 31, 2002 and an increase in committed bank line coverage of
net short-term debt from 58% to 78%. As of March 31, 2002, Credco had the
ability to issue approximately $8.0 billion of debt securities and warrants to
purchase debt securities available for issuance under a shelf registration
statement filed with the Securities and Exchange Commission. From March 31, 2002
through May 10, 2002, Credco issued an additional $2.1 billion of medium-term
notes at floating rates with maturities of twelve to eighteen months.
In addition, American Express Centurion Bank, a wholly-owned subsidiary of
TRS, issued approximately $340 million of medium term notes at floating rates
during the first quarter of 2002.

In the first quarter of 2002, the American Express Credit Account Master Trust
(the Trust) securitized $920 million of loans through the public issuance of
investor certificates. The securitized assets consist primarily of loans
arising in a portfolio of Credit and Sign & Travel/Extended Payment Option
revolving credit accounts or features and, in the future, may include other
charge or credit accounts or features or products. Additionally, in April
2002, the Trust securitized an additional $940 million of loans. The Trust
expects to securitize an additional $920 million of loans in May 2002.

In the first quarter of 2002, the American Express Master Trust (the Master
Trust) securitized $750 million of Charge Card receivables which remain on the
balance sheet.

Travelers Cheque Investments increased 4 percent over the prior year primarily
reflecting unrealized appreciation as a result of declining interest rates.

Short-term debt declined from March 31, 2001 and December 31, 2001, mainly
reflecting lower billed business and the issuance of medium-term notes, as
previously discussed.

                                       16
<Page>

AMERICAN EXPRESS FINANCIAL ADVISORS

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001

                              STATEMENTS OF INCOME
                                   (Unaudited)

<Table>
<Caption>
                                             Three Months Ended
(Dollars in millions)                             March 31,
                                           -----------------------    Percentage
                                              2002         2001       Inc/(Dec)
                                           ----------   ----------    ----------
<S>                                        <C>          <C>               <C>
Net Revenues:
  Investment Income                        $      529   $      368         43.9
  Management and Distribution Fees                597          638         (6.5)
  Other Revenues                                  308          277         11.2
                                           ----------   ----------
    Total Revenues                              1,434        1,283         11.8
  Provision for Losses and Benefits:
    Annuities                                     247          238          4.3
    Insurance                                     171          157          8.7
    Investment Certificates                        52           82        (36.8)
                                           ----------   ----------
      Total                                       470          477         (1.3)
                                           ----------   ----------
    Net Revenues                                  964          806         19.5
                                           ----------   ----------
Expenses:
  Human Resources                                 499          548         (9.0)
  Other Operating Expenses                        213          188         13.0
                                           ----------   ----------
    Total Expenses                                712          736         (3.4)
                                           ----------   ----------
Pretax Income                                     252           70            #
Income Tax Provision                               70           19            #
                                           ----------   ----------
Net Income                                 $      182   $       51            #
                                           ==========   ==========
</Table>

# - Denotes a variance of more than 100%.

Note:  2001 results include charges of $182 million pretax ($132 million
       after-tax) reflecting losses associated with high-yield securities and
       $67 million pretax of additional expense reflecting an adjustment to
       the amortization of Deferred Acquisition Costs* (DACs) for variable
       insurance and annuity products.

* DACs are the costs of acquiring new business, which are deferred and
amortized according to a schedule that reflects a number of factors, the most
significant of which are the anticipated profits and persistency of the
product. The amortization schedule must be adjusted periodically to reflect
changes in those factors.

                                       17
<Page>

AMERICAN EXPRESS FINANCIAL ADVISORS

                        SELECTED STATISTICAL INFORMATION
                                   (Unaudited)

(Dollars in millions, except where indicated)

<Table>
<Caption>
                                              Three Months Ended
                                                   March 31,
                                            ------------------------     Percentage
                                               2002          2001         Inc/(Dec)
                                            ----------    ----------     ----------
<S>                                         <C>           <C>               <C>
Life Insurance in Force (billions)          $    110.9    $    100.0         11.0
Deferred Annuities in Force (billions)      $     40.4    $     43.4         (7.0)
Assets Owned, Managed or
  Administered (billions):
  Assets Managed for Institutions           $     49.2    $     53.7         (8.3)
  Assets Owned, Managed or Administered
    for Individuals:
    Owned Assets:
      Separate Account Assets                     27.2          27.4         (0.6)
      Other Owned Assets                          42.8          42.0          1.9
                                            ----------    ----------
        Total Owned Assets                        70.0          69.4          0.9
    Managed Assets                                98.6          99.8         (1.2)
    Administered Assets                           36.4          30.8         18.1
                                            ----------    ----------
      Total                                 $    254.2    $    253.7          0.2
                                            ==========    ==========
Market Appreciation (Depreciation)
 During the Period:
  Owned Assets:
    Separate Account Assets                 $     (279)   $   (5,204)           -
    Other Owned Assets                      $     (278)   $      608            -
  Total Managed Assets                      $       14    $  (16,657)           -
Cash Sales:
  Mutual Funds                              $    8,749    $    9,889        (11.5)
  Annuities                                      1,548         1,427          8.5
  Investment Certificates                          643           954        (32.5)
  Life and Other Insurance Products                184           244        (24.9)
  Institutional                                  1,815         2,506        (27.6)
  Other                                          1,028         1,955        (47.4)
                                            ----------    ----------
Total Cash Sales                            $   13,967    $   16,975        (17.7)
                                            ==========    ==========
Number of Financial Advisors                    11,502        12,052         (4.6)
Fees from Financial Plans and
  Advice Services                           $     29.7    $     27.6          7.7
Percentage of Total Sales from Financial
  Plans and Advice Services                       73.2%         73.0%           -
</Table>

                                       18
<Page>

AMERICAN EXPRESS FINANCIAL ADVISORS

American Express Financial Advisors' (AEFA) reported net income of $182
million for the first quarter of 2002, up substantially from the same period a
year ago. Net revenues increased 20 percent. These increases primarily reflect
the effect of the first quarter 2001 $182 million pretax loss from the
write-down and sale of certain high-yield securities. Investment income
increased 44 percent. Excluding the effect of the 2001 high-yield related
losses, investment income declined as higher invested assets were more than
offset by a lower average yield, mostly due to the repositioning of the
investment portfolio. Also included in investment income in 2001 was a decline
in revenues resulting from the effect of higher depreciation in the S&P 500
on the value of options used by AEFA to hedge outstanding stock market
certificates and equity indexed annuities issued to customers and linked to
the S&P 500, which was offset by lower provisions. Management and distribution
fees decreased 6 percent due to lower average assets under management
reflecting the negative impact of weak equity market conditions.  Assets
managed for individuals declined one percent from prior year levels while
assets managed for institutions declined eight percent for the same period.
The declines reflect market depreciation and positive net inflows within the
retail channel while market depreciation and net outflows are reflected in the
institutional business. Total gross cash sales were down 18 percent versus
prior year as generally weak sales conditions persisted throughout the quarter.
Other revenues increased 11 percent primarily due to higher life and property-
casualty insurance premiums and charges and greater financial planning and
advice services fees. Annuity product provisions increased due to the impact
of a higher inforce level and the effect described above of depreciation in the
S&P 500 on equity indexed annuities in the prior year, partially offset by a
lower accrual rate. Insurance provisions rose due to higher inforce levels,
partially offset by lower accrual rates. Certificate provisions decreased as
higher inforce levels and the effect in the prior year on the stock market
certificate product of depreciation in the S&P 500 were offset by significantly
lower accrual rates.

Total expenses decreased $24 million (or 3 percent) from a year ago. Included
in 2001 is a $67 million adjustment to the amortization of DACs for variable
insurance and annuity products due to a steep decline in equity markets. Human
resource expenses declined 9 percent reflecting lower field force compensation
related costs due to fewer advisors (11,502 versus 12,052 last year) and from
the benefits of reengineering and cost containment initiatives within
the home office where the average number of employees was down 16 percent,
partially offset by higher incentive compensation accruals. $39 million of
expenses from the DAC adjustment is included in human resource expenses in the
prior year. The decrease in the number of advisors versus last year reflects
reduced recruiting activities over the year as AEFA worked to improve the
advisor platform economics, from higher termination rates due to the weaker
environment and continued efforts to eliminate unproductive advisors. New
advisor additions in the coming quarters will continue to be carefully managed
to ensure overall field force costs are appropriately controlled and advisor
production is maximized. Other operating expenses increased 13 percent due to
a higher level of investment activities related to various strategic,
reengineering, technology and product development projects, and a higher
minority interest related to premium deposits (this is related to a joint
venture with AEB). Prior year other operating expenses include $28 million of
the DAC adjustment.

                                       19
<Page>

AMERICAN EXPRESS FINANCIAL ADVISORS

LIQUIDITY AND CAPITAL RESOURCE

                       SELECTED BALANCE SHEET INFORMATION
                                   (Unaudited)

(Dollars in billions, except percentages)

<Table>
<Caption>
                                 March 31,     December 31,       Percentage      March 31,      Percentage
                                   2002           2001             Inc/(Dec)        2001          Inc/(Dec)
                                -----------   --------------     ------------   ------------    ------------
<S>                              <C>              <C>                 <C>       <C>                   <C>
Investments*                     $    33.1         $   33.6            (1.5)%    $     31.2             5.9%
Separate Account Assets          $    27.2         $   27.3            (0.4)     $     27.4            (0.6)
Total Owned Assets               $    70.0         $   71.5            (2.1)     $     69.4             0.9
Client Contract Reserves         $    32.9         $   32.8             0.5      $     31.7             4.0
Total Liabilities                $    64.7         $   66.1            (2.2)     $     64.7               -
Total Shareholder's Equity       $     5.3         $    5.4            (1.0)     $      4.7            13.1
Return on Average Equity**             3.6%             1.0%              -            17.8%              -
</Table>

*    Excludes cash, derivatives, short term and other investments.
**   Computed based on the past twelve months of net income and excludes the
     effect of SFAS No. 115 and SFAS No. 133.

Investments increased compared to March 31, 2001 primarily as a result of
positive net cash flows and in part due to unrealized appreciation. High-yield
investments are 5 percent of the portfolio, up from 4 percent at December 31,
2001, but down from 11 percent at March 31, 2001. Going forward, AEFA targets
a level more in line with industry averages of approximately 7 percent.

Separate account assets decreased slightly from last year mainly due to market
depreciation.

                                       20
<Page>

AMERICAN EXPRESS BANK

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001

                              STATEMENTS OF INCOME
                                   (Unaudited)

(Dollars in millions)

<Table>
<Caption>
                                              Three Months Ended
                                                   March 31,
                                            -----------------------    Percentage
                                               2002         2001        Inc/(Dec)
                                            ----------   ----------    ----------
<S>                                         <C>          <C>              <C>
Net Revenues:
  Interest Income                           $      143   $      187       (24.0)%
  Interest Expense                                  58          122       (52.7)
                                            ----------   ----------
    Net Interest Income                             85           65        30.5
  Commissions and Fees                              50           52        (3.1)
  Foreign Exchange Income & Other Revenue           43           41         3.5
                                            ----------   ----------
    Total Net Revenues                             178          158        12.4
                                            ----------   ----------
Expenses:
  Human Resources                                   55           62       (11.3)
  Other Operating Expenses                          62           66        (6.0)
  Provision for Losses                              41           16           #
                                            ----------   ----------
    Total Expenses                                 158          144         9.9
                                            ----------   ----------
Pretax Income                                       20           14        38.2
Income Tax Provision                                 7            5        33.7
                                            ----------   ----------
Net Income                                  $       13   $        9        40.8
                                            ==========   ==========
</Table>

# - Denotes a variance of more than 100%.

                        SELECTED STATISTICAL INFORMATION
                                   (Unaudited)

<Table>
<Caption>
(Dollars in billions)                        Three Months Ended
                                                  March 31,
                                           -----------------------    Percentage
                                             2002         2001         Inc/(Dec)
                                           ----------   ----------    ----------
<S>                                        <C>          <C>              <C>
Assets Managed **/ Administered            $     11.8   $     10.7         9.7%
Assets of Non-Consolidated Joint
    Ventures                               $      1.9   $      2.1       (11.5)%
</Table>

**  Includes assets managed by American Express Financial Advisors.

American Express Bank (AEB) reported net income of $13 million for the first
quarter of 2002, up 41 percent from the same period a year ago. Net interest
income rose 31 percent primarily due to lower funding costs. Commissions and
fees were down 3 percent due to lower results in Corporate Banking. Human
resources expenses fell 11 percent and other operating expenses fell 6 percent
primarily as a result of AEB's reengineering efforts. These benefits were
partially offset by higher provisions for losses, which were primarily due to
higher write-offs in AEB's consumer lending portfolio in Hong Kong.

                                       21
<Page>

AMERICAN EXPRESS BANK

LIQUIDITY AND CAPITAL RESOURCES

                       SELECTED BALANCE SHEET INFORMATION
                                   (Unaudited)

(Dollars in billions, except where indicated)

<Table>
<Caption>
                                            March 31,    December 31,    Percentage     March 31,    Percentage
                                              2002          2001          Inc/(Dec)       2001        Inc/(Dec)
                                           -----------  --------------  ------------  ------------  ------------
<S>                                         <C>            <C>              <C>        <C>               <C>
Total Assets                                $    11.9      $    11.9          0.2%     $    12.4          (4.3)%
Total Liabilities                           $    11.1      $    11.1          0.1      $    11.7          (4.5)
Total Shareholder's Equity (millions)       $     767      $     761          0.8      $     774          (0.8)
Return on Average Common Equity (A)              (1.4)%        (2.0)%           -            4.6%            -
Return on Average Assets (B)                    (0.08)%        (0.11)%          -           0.26%            -
Total Loans                                 $     5.3      $     5.3         (0.3)     $     5.4          (2.8)
Total Non-performing Loans (millions) (C)   $     128      $     123          4.4      $     187         (31.4)
Other Non-performing Assets (millions)      $       2      $      22        (91.2)     $      24         (91.8)
Reserve for Credit Losses (millions) (D)    $     160      $     148          8.2      $     164          (2.0)
Loan Loss Reserves as a
   Percentage of Total Loans                      2.9%           2.4%           -            2.8%            -
Deposits                                    $     8.2      $     8.4         (2.3)     $     8.5          (3.9)
Risk-Based Capital Ratios:
   Tier 1                                        10.7%          11.1%           -           10.7%            -
   Total                                         11.0%          12.2%           -           11.4%            -
Leverage Ratio                                    5.2%           5.3%           -            5.8%            -
</Table>

(A) Computed based on the past twelve months of net (loss)/ income and
    excludes the effect on Shareholder's Equity of SFAS No. 115 and SFAS
    No. 133.
(B) Computed based on the past twelve months of net (loss)/ income and
    excludes the effect on total assets of SFAS No. 115 and SFAS No. 133 to
    the extent that they affect Shareholder's Equity.
(C) AEB defines non-performing loans as loans (other than smaller-balance
    homogeneous loans which may include, but are not limited to, consumer
    installment and residential mortgage loans) on which the accrual of
    interest is discontinued because the contractual payment of principal or
    interest has become 90 days past due or if, in management's opinion, the
    borrower is unlikely to meet its contractual obligations. For
    smaller-balance consumer loans, management establishes reserves it
    believes to be adequate to absorb credit losses inherent in the portfolio.
    Generally, these loans are written off in full when they are determined to
    be non-performing.
(D) Allocation (millions):

<Table>
<S>                                        <C>        <C>       <C>
     Loans                                 $   154    $   128   $   149
     Other Assets, primarily derivatives         5          4        12
     Other Liabilities                           1         16         3
                                           -------    -------   -------
       Total Reserve for Credit Losses     $   160    $   148   $   164
                                           =======    =======   =======
</Table>

AEB had loans outstanding of $5.3 billion at March 31, 2002, comparable to
loans outstanding at December 31, 2001 and down from $5.4 billion at March 31,
2001. The decrease since the first quarter of 2001 resulted from an $800
million decrease in corporate banking loans and a $100 million decrease in
financial institution loans, which were partially offset by a $800 million
increase in consumer and private banking loans. Since December 31, 2001
corporate banking loans decreased by $250 million and financial institution
loans were essentially flat, while consumer and private banking loans
increased by $250 million. As of March 31, 2002 consumer and private banking
loans comprised 66% of total loans versus 60% at December 31, 2001 and 50% at
March 31, 2001.

Total non-performing loans of $128 million at March 31, 2002 were up from $123
million at December 31, 2001, but down from $187 million at March 31, 2001.
The decrease from last year is primarily due to loan payments and write-offs,
mainly in Indonesia, partially offset by net downgrades of the risk status of
various loans. During the first quarter of 2002, loan payments and write-offs
were more than offset by downgrades.

Other banking activities, such as securities, unrealized gains on foreign
exchange and derivatives contracts, various contingencies and market
placements added approximately $7.3 and $8.1 billion to AEB's credit exposures
at March 31, 2002 and 2001, respectively. In December 2001 and January 2002,
the Argentine government mandated the conversion of dollar denominated assets
into pesos and simultaneously devalued the peso. AEB's credit exposures to
Argentina at March 31, 2002 were $50 million, which includes loans of $37
million.

                                       22
<Page>

CORPORATE AND OTHER

Corporate and Other reported net expenses of $44 million for the three months
ended March 31, 2002 which is essentially unchanged from a year ago. Included
in the results for both years is a $46 million ($39 million after-tax)
preferred stock dividend based on earnings from Lehman Brothers which was offset
by expenses related to business building initiatives in both years. The final
dividend under the terms of this security, based on Lehman's results for the
six-months ended May 31, 2002, is expected to be received in July 2002.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements, which are subject to risks
and uncertainties. The words "believe", "expect", "anticipate", "optimistic",
"intend", "plan", "aim", "will", "should", "could" and similar expressions are
intended to identify forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as
of the date on which they are made. The company undertakes no obligation to
update or revise any forward-looking statements.

Factors that could cause actual results to differ materially from these
forward-looking statements include, but are not limited to: the company's
ability to successfully implement a business model that allows for significant
earnings growth based on revenue growth that is lower than historical levels;
fluctuation in the equity markets, which can affect the amount and types of
investment products sold by AEFA, the market value of its managed assets, and
management and distribution fees received based on those assets; potential
deterioration in the high-yield sector and other investment areas, which could
result in further losses in AEFA's investment portfolio; the ability of AEFA
to sell certain high-yield investments at expected values and within
anticipated timeframes and to maintain its high-yield portfolio at certain
levels in the future; developments relating to AEFA's platform structure for
financial advisors, including the ability to increase advisor productivity,
increase the growth of productive new advisors and create efficiencies in the
infrastructure; AEFA's ability to roll out new and attractive products in a
timely manner and effectively manage the economics in selling a growing volume
of non-proprietary products; investment performance in AEFA's businesses; the
success, timeliness and financial impact, including costs, cost savings and
other benefits, of reengineering initiatives being implemented or considered
by the company, including cost management, structural and strategic measures
such as vendor, process, facilities and operations consolidation, outsourcing
(including, among others, technologies operations), relocating certain
functions to lower cost overseas locations, moving internal and external
functions to the Internet to save costs, the scale-back of corporate lending
in certain regions, and planned staff reductions relating to certain of such
reengineering actions; the ability to control and manage operating,
infrastructure, advertising and promotion and other expenses as business
expands or changes, including balancing the need for longer-term investment
spending; the impact on the company's businesses and uncertainty created by
the September 11th terrorist attacks, and the potential negative effect on the
company of any such attacks in the future; the company's ability to recover
under its insurance policies for losses resulting from the September 11th
terrorist attacks; consumer and business spending on the company's travel
related services products, particularly credit and charge

                                       23
<Page>

cards and growth in card lending balances, which depend in part on the ability
to issue new and enhanced card products and increase revenues from such
products, attract new Cardholders, capture a greater share of existing
Cardholders' spending, sustain premium discount rates, increase merchant
coverage, retain Cardmembers after low introductory lending rates have
expired, and expand the global network services business; the ability to
execute the company's global corporate services strategy, including greater
penetration of middle market companies, increasing capture of non-T&E spending
through greater use of the company's purchasing card and other means, and
further globalizing business capabilities; the ability to manage and expand
Cardmember benefits, including Membership Rewards(R), in a cost effective
manner; the triggering of obligations to make payments to certain co-brand
partners under contractual arrangements with such parties under certain
circumstances; successfully expanding the company's on-line and off-line
distribution channels and cross-selling financial, travel, card and other
products and services to its customer base, both in the U.S. and abroad;
effectively leveraging the company's assets, such as its brand, customers and
international presence, in the Internet environment; investing in and
competing at the leading edge of technology across all businesses; a downturn
in the company's businesses and/or negative changes in the company's and its
subsidiaries' credit ratings, which could result in contingent payments under
contracts, decreased liquidity and higher borrowing costs; the company's
ability to restart its share repurchase program in mid-2002; increasing
competition in all of the company's major businesses; fluctuations in interest
rates, which impact the company's borrowing costs, return on lending products
and spreads in the investment and insurance businesses; credit trends and the
rate of bankruptcies, which can affect spending on card products, debt
payments by individual and corporate customers and businesses that accept the
company's card products and returns on the company's investment portfolios;
foreign currency exchange rates; political or economic instability in certain
regions or countries, which could affect lending activities, among other
businesses; legal and regulatory developments, such as in the areas of
consumer privacy and data protection; acquisitions; and outcomes in
litigation. A further description of these and other risks and uncertainties
can be found in the company's Annual Report on Form 10-K for the year ended
December 31, 2001, and its other reports filed with the SEC.

                                       24
<Page>

                           PART II. OTHER INFORMATION

                            AMERICAN EXPRESS COMPANY



Item 4. Submission of Matters to a Vote of Security Holders

        The Company's annual meeting of shareholders was held on April 22,
        2002. The matters that were voted upon at the meeting, and the number
        of votes cast for, against or withheld, as well as the number of
        abstentions and broker non-votes, as to each such matter, where
        applicable, are set forth below.

<Table>
<Caption>
                                                Votes           Votes           Votes                         Broker
                                                 For           Against         Withheld      Abstentions     Non-Votes
                                           --------------    ------------    ------------    -----------    -----------
<S>                                         <C>               <C>              <C>            <C>           <C>
Ratification of Ernst & Young LLP's
  selection as independent auditors         1,123,174,391      31,431,326               -      7,801,554              -

Proposal relating to an amendment to
  the American Express Company 1998
  Incentive Compensation Plan, and the
  continuation of the deduction for tax
  purposes of certain compensation
  under the Plan                              679,734,209     470,376,361               -     12,276,701         20,000

Shareholder proposal relating to
  rotating the location of the annual
  meeting of shareholders                      54,630,163     893,466,781               -     17,591,785    196,718,542

Election of Directors:
D.F. Akerson                                1,142,673,167               -      19,734,104              -              -
E.L. Artzt                                  1,141,862,810               -      20,544,461              -              -
C. Barshefsky                               1,147,618,891               -      14,788,380              -              -
W.G. Bowen                                  1,142,566,606               -      19,840,665              -              -
K.I. Chenault                               1,147,852,150               -      14,555,121              -              -
P.R. Dolan                                  1,148,246,474               -      14,160,797              -              -
F.R. Johnson                                1,142,222,668               -      20,184,603              -              -
V.E. Jordan, Jr.                            1,142,674,190               -      19,733,081              -              -
J. Leschly                                  1,148,434,120               -      13,973,151              -              -
R.A. McGinn                                 1,141,258,127               -      21,149,144              -              -
F.P. Popoff                                 1,148,043,435               -      14,363,836              -              -
</Table>

                                       25
<Page>

Item 6. Exhibits and Reports on Form 8-K

        (a) Exhibits

            See Exhibit Index on page E-1 hereof.

        (b) Reports on Form 8-K:

            Form 8-K, filed January 28, 2002, Items 5 and 7, 1) reporting the
            Company's earnings for the quarter and year ended December 31,
            2001 and including a Fourth Quarter/Full Year Earnings Supplement
            and 2) reporting on amendments to the By-Laws of the Company
            effective November 26, 2001.

            Form 8-K, dated February 6, 2002, Item 9, reporting on
            presentations delivered to the financial community by Kenneth I.
            Chenault, Chairman and Chief Executive Officer of the Company,
            and Edward P. Gilligan, Group President, Global Corporate
            Services.

            Form 8-K, dated April 18, 2002, Items 5 and 7, 1) reporting the
            Company's earnings for the quarter ended March 31, 2002 and
            including a First Quarter Earnings Supplement and 2) reporting
            restated financial information relating to the years 1999, 2000
            and 2001, for the Company and its Travel Related Services (TRS)
            segment revising its GAAP reporting of revenues to include a
            separate Securitization Income line item.

            Form 8-K, dated April 23, 2002, Item 5, announcing the Company's
            (and two of its subsidiaries') renegotiation of their committed
            credit line facilities.

                                       26
<Page>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                                  AMERICAN EXPRESS COMPANY
                                               ------------------------------
                                                         (Registrant)

Date: May 14, 2002                          By /s/ Gary L. Crittenden
                                               ------------------------------
                                               Gary L. Crittenden
                                               Executive Vice President and
                                               Chief Financial Officer

Date: May 14, 2002                          By /s/ Thomas A. Iseghohi
                                               ------------------------------
                                               Thomas A. Iseghohi
                                               Senior Vice President and
                                               Comptroller
                                               (Principal Accounting Officer)

                                       27
<Page>

                                  EXHIBIT INDEX

The following exhibits are filed as part of this Quarterly Report:

EXHIBIT                            DESCRIPTION

10.1    American Express 1998 Incentive Compensation Plan, as amended on
        April 22, 2002.

  12    Computation in Support of Ratio of Earnings to Fixed Charges.

  15    Letter re Unaudited Interim Financial Information.


                                     E-1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>ex_101.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
                                                                   EXHIBIT 10.1

                           AMERICAN EXPRESS COMPANY
                       1998 INCENTIVE COMPENSATION PLAN
                          (as amended April 22, 2002)

    1. PURPOSE. The purpose of the 1998 Incentive Compensation Plan (the
"Plan") is to promote shareholder value by providing appropriate incentives to
employees of American Express Company (the "Company") and its affiliates and
certain other individuals who perform services for the Company and its
affiliates.

    2. ADMINISTRATION. The Plan shall be administered solely by the
Compensation and Benefits Committee (the "Committee") of the Board of
Directors (the "Board") of the Company, as such Committee is from time to time
constituted, or any successor committee the Board may designate to administer
the Plan. The Committee may delegate any of its powers and duties to
appropriate officer(s) of the Company in accordance with guidelines
established by the Committee from time to time.

    The Committee has all the powers vested in it by the terms of the Plan set
forth herein, such powers to include exclusive authority (except as may be
delegated as permitted herein) to select the employees and other individuals
to be granted awards under the Plan ("Awards"), to determine the type, size
and terms of the Award to be made to each individual selected, to modify the
terms of any Award that has been granted, to determine the time when Awards
will be granted, to establish performance objectives, to make any adjustments
necessary or desirable as a result of the granting of Awards to eligible
individuals located outside the United States and to prescribe the form of the
instruments embodying Awards made under the Plan. The Committee is authorized
to interpret the Plan and the Awards granted under the Plan, to establish,
amend and rescind any rules and regulations relating to the Plan, and to make
any other determinations which it deems necessary or desirable for the
administration of the Plan. The Committee (or its delegate as permitted
herein) may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Award in the manner and to the extent the
Committee deems necessary or desirable to carry it into effect. Any decision
of the Committee (or its delegate as permitted herein) in the interpretation
and administration of the Plan, as described herein, shall lie within its sole
and absolute discretion and shall be final, conclusive and binding on all
parties concerned. The Committee may act only by a majority of its members in
office, except that the members thereof may authorize any one or more of their
members or any officer of the Company to execute and deliver documents or to
take any other action on behalf of the Committee with respect to Awards made
or to be made to Plan participants. No member of the Committee and no officer
of the Company shall be liable for anything done or omitted to be done by him,
by any other member of the Committee or by any officer of the Company in
connection with the performance of duties under the Plan, except for his own
willful misconduct or as expressly provided by statute.

    3. PARTICIPATION. (a) AFFILIATES. If an Affiliate (as hereinafter defined)
of the Company wishes to participate in the Plan and its participation shall
have been approved by the Committee, the board of directors or other governing
body of the Affiliate shall adopt a resolution in form and substance
satisfactory to the Committee authorizing participation by the Affiliate in
the Plan with respect to its employees or other individuals performing
services for it. As used herein, the term "Affiliate" means any entity in
which the Company has a substantial direct or indirect equity interest, as
determined by the Committee in its discretion.

    An Affiliate participating in the Plan may cease to be a participating
company at any time by action of the Board or by action of the board of
directors or other governing body of such Affiliate, which latter action shall
be effective not earlier than the date of delivery to the Secretary of the
Company of a certified copy of a resolution of the Affiliate's board of
directors or other governing body taking such action. If the participation in
the Plan of an Affiliate shall terminate, such termination shall not relieve
it of any obligations theretofore incurred by it under the Plan, except as may
be approved by the Committee.

    (b) PARTICIPANTS. Consistent with the purposes of the Plan, the Committee
shall have exclusive power (except as may be delegated as permitted herein) to
select the employees and other individuals performing services for the Company
and its Affiliates who may participate in the Plan and be granted Awards under

                                     -1-
<PAGE>
the Plan. Eligible individuals may be selected individually or by groups or
categories, as determined by the Committee in its discretion. No non-employee
director of the Company or any of its Affiliates shall be eligible to receive
an Award under the Plan.

    4. AWARDS UNDER THE PLAN. (a) TYPES OF AWARDS. Awards under the Plan may
include one or more of the following types, either alone or in any combination
thereof: (i) "Stock Options," (ii) "Stock Appreciation Rights," (iii)
"Restricted Stock," (iv) "Performance Grants" and (v) any Award providing
benefits similar to (i) through (iv) designed to meet the requirements of
non-US jurisdictions. Stock Options, which include "Nonqualified Stock
Options" and "Incentive Stock Options" or combinations thereof, are rights to
purchase common shares of the Company having a par value of $.20 per share and
stock of any other class into which such shares may thereafter be changed (the
"Common Shares"). Nonqualified Stock Options and Incentive Stock Options are
subject to the terms, conditions and restrictions specified in Paragraph 5.
Stock Appreciation Rights are rights to receive (without payment to the
Company) cash, Common Shares, other Company securities (which may include, but
need not be limited to, any equity or debt security of the Company or an
Affiliate, or any combination thereof ("Other Company Securities")) or
property, or other forms of payment, or any combination thereof, as determined
by the Committee, based on the increase in the value of the number of Common
Shares specified in the Stock Appreciation Right. Stock Appreciation Rights
are subject to the terms, conditions and restrictions specified in Paragraph
6. Shares of Restricted Stock are Common Shares which are issued subject to
certain restrictions pursuant to Paragraph 7.

    Performance Grants are contingent awards subject to the terms, conditions
and restrictions described in Paragraph 8, pursuant to which the participant
may become entitled to receive cash, Common Shares, Other Company Securities
or property, or other forms of payment, or any combination thereof, as
determined by the Committee.

    (b) MAXIMUM NUMBER OF SHARES THAT MAY BE ISSUED. The maximum number of
Common Shares and other equity securities of the Company that may be issued
under the Plan is 170,000,000, plus the number of shares remaining available
for new awards under the 1989 Plan on April 27, 1998, which number will not
exceed 53,910,000. In addition, commencing April 27, 1998, Common Shares or
other equity securities of the Company subject to awards outstanding under the
1989 Plan or granted under the 1998 Plan which are recovered or not issued by
the Company will be available for issuance under the 1998 Plan, as follows:
(i) shares related to Awards issued under the 1998 Plan or the 1989 Plan that
are forfeited, terminated, canceled, acquired by the Company or expire
unexercised; (ii) shares surrendered or withheld to pay the exercise price of
Awards issued under the 1998 Plan or the 1989 Plan or to satisfy the tax
withholding obligations under these Awards; and (iii) shares originally linked
to Awards that are actually settled in cash or consideration other than Common
Shares or other equity securities. Limits on the number of Restricted Stock
Award grants are described in Paragraph 7(d).

    For purposes of counting shares against the share reserve under the 1998
Plan on the date of grant, Awards denominated solely in common shares (such as
Stock Options and Restricted Stock) and other Awards or securities that may be
exercised for or convertible into common shares will be counted against the
1998 Plan reserve on the date of grant of the Award based on the maximum
number of shares underlying the Award, as determined by the Committee. Equity
securities other than Common Shares issued pursuant to the 1998 Plan which are
not exercisable for or convertible into Common Shares will be counted based on
the number of shares issued. Common Shares and other equity securities of the
Company issued pursuant to the Plan may be either authorized but unissued
shares, treasury shares, reacquired shares or any combination thereof.

    (c) RIGHTS WITH RESPECT TO COMMON SHARES AND OTHER SECURITIES.

        (i) Unless otherwise determined by the Committee in its discretion, a
    participant to whom an Award of Restricted Stock has been made (and any
    person succeeding to such a participant's rights pursuant to the Plan)
    shall have, after issuance of a certificate or the entry on behalf of a
    participant of an uncertificated book position on the records of the
    Company's transfer agent and registrar for the number of Common Shares
    awarded and prior to the expiration of the Restricted Period or the
    earlier cancellation or repurchase of such Common Shares as herein
    provided, ownership of such Common Shares, including the right to vote the
    same and to receive dividends or other distributions made or paid with
    respect to such Common Shares (provided that such Common Shares, and any
    new,

                                     -2-
<PAGE>
    additional or different shares, or Other Company Securities or property,
    or other forms of consideration which the participant may be entitled to
    receive with respect to such Common Shares as a result of a stock split,
    stock dividend or any other change in the corporate or capital structure
    of the Company, shall be subject to the restrictions hereinafter described
    as determined by the Committee in its discretion), subject, however, to
    the options, restrictions and limitations imposed thereon pursuant to the
    Plan. Notwithstanding the foregoing, a participant with whom an Award
    agreement is made to issue Common Shares in the future shall have no
    rights as a shareholder with respect to Common Shares related to such
    agreement until the book entry is made, or the certificate is issued on
    his behalf.

        (ii) Unless otherwise determined by the Committee in its discretion, a
    participant to whom a grant of Stock Options, Stock Appreciation Rights,
    Performance Grants or any other Award is made (and any person succeeding
    to such a participant's rights pursuant to the Plan) shall have no rights
    as a shareholder with respect to any Common Shares or as a holder with
    respect to other securities, if any, issuable pursuant to any such Award
    until the date of the issuance of a stock certificate to him or the entry
    on his behalf of an uncertificated book position on the records of the
    Company's transfer agent and registrar for such Common Shares or other
    instrument of ownership, if any. Except as provided in Paragraph 16, no
    adjustment shall be made for dividends, distributions or other rights
    (whether ordinary or extraordinary, and whether in cash, securities, other
    property or other forms of consideration, or any combination thereof) for
    which the record date is prior to the date such book entry is made or a
    stock certificate or other instrument of ownership, if any, is issued.

        (iii) The Committee may, in its discretion, subject any Award and the
    economic value derived by a participant therefrom, to forfeiture by the
    participant upon the occurrence of certain events as determined by the
    Committee.

    5. STOCK OPTIONS. The Committee may grant Stock Options either alone, or
in conjunction with Stock Appreciation Rights, Performance Grants or other
Awards, either at the time of grant or by amendment thereafter. The Committee
may grant Incentive Stock Options to any employee provided the terms of such
grants comply with the provisions of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), or any successor provision, and the
regulations thereunder, and that any ambiguities in construction shall be
interpreted in order to effectuate that intent. Each Stock Option (referred to
herein as an 'Option') granted under the Plan shall be evidenced by an
instrument in such form as the Committee shall prescribe from time to time in
accordance with the Plan and shall comply with the following terms and
conditions, and with such other terms and conditions, including, but not
limited to, restrictions upon the Option or the Common Shares issuable upon
exercise thereof, as the Committee, in its discretion, shall establish:

    (a) The option price shall be equal to or greater than the fair market
value of the Common Shares subject to such Option at the time the Option is
granted, as determined by the Committee; but in no event will such option
price be less than the par value of such Common Shares. The Committee in its
discretion shall establish the expiration date of an Option provided that,
except as provided in Subparagraph (c)(iii)(B) below, in no event shall the
expiration date be later than ten years from the date of grant of the Option.

    (b) The Committee shall determine the number of Common Shares to be
subject to each Option. The number of Common Shares subject to an outstanding
Option may be reduced on a share-for-share or other appropriate basis, as
determined by the Committee, to the extent that Common Shares under such
Option are used to calculate the cash, Common Shares, Other Company Securities
or property, or other forms of payment, or any combination thereof, received
pursuant to exercise of a Stock Appreciation Right attached to such Option, or
to the extent that any other Award granted in conjunction with such Option is
paid.

    (c) The Option shall not be exercisable:

        (i) for at least six months after the date of grant, except as the
    Committee may otherwise determine in the event of death, disability,
    retirement or in connection with a corporate transaction, which includes
    but is not limited to a change in control of the Company, a divestiture,
    spin-off, split-off, asset transfer, outsourcing or joint venture
    formation, (each, a "Defined Event"), and only at such times and in such
    installments as the Committee may establish;

                                     -3-
<PAGE>
        (ii) unless payment in full for the shares being acquired thereunder
    at the time of exercise is made in such form as the Committee may
    determine in its discretion, including, but not limited to (A) cash, (B)
    Common Shares, (C) if permitted by the Committee, by authorizing a third
    party to sell, on behalf of the participant, the appropriate number of
    Common Shares otherwise issuable to the participant upon the exercise of
    the Option and to remit to the Company a sufficient portion of the sale
    proceeds to pay the entire exercise price and any tax withholding
    resulting from such exercise, or (D) any combination thereof; and

        (iii) unless the participant has been, at all times during the period
    beginning with the date of the grant of the Option and ending on the date
    of such exercise, employed by (in the case of an Incentive Stock Option)
    or otherwise performing services for the Company or an Affiliate, or a
    corporation, or a parent or subsidiary of a corporation, substituting or
    assuming the Option in a transaction to which Section 424(a) of the Code
    or any successor statutory provision thereto, is applicable, except that

           (A) in the case of any Nonqualified Stock Option, if such person
       shall cease to be employed by or otherwise performing services for the
       Company or an Affiliate solely by reason of a period of Related
       Employment, he may, during such period of Related Employment, exercise
       the Nonqualified Stock Option as if he continued such employment or
       performance of service; or

           (B) the Committee may establish, in its discretion, the extent to
       which a person may continue to exercise an Option, which has not
       expired and has not been fully exercised, in the event he terminates
       employment or the performance of services by reason of a Defined Event;
       and in the event of death, the Committee may provide a decedent's
       executors, heirs or distributors a minimum period to exercise an Option
       with respect to any shares as to which the decedent could have
       exercised the Option at the time of his death, or such greater amount
       as the Committee may determine, which period may extend beyond the
       original expiration date of the Option.

    (d) The Committee has the discretion to grant Options at any time it deems
appropriate including the discretion to grant or provide for the automatic
grant of an Option to restore the number of Common Shares a participant
tendered or had withheld to pay, or the share equivalency of the cash tendered
to pay, the exercise price or tax withholding obligation upon the exercise of
an outstanding Option.

    6. STOCK APPRECIATION RIGHTS. The Committee may grant Stock Appreciation
Rights either alone, or in conjunction with Stock Options, Performance Grants
or other Awards, either at the time of grant or by amendment thereafter. Each
Award of Stock Appreciation Rights granted under the Plan shall be evidenced
by an instrument in such form as the Committee shall prescribe from time to
time in accordance with the Plan and shall comply with the following terms and
conditions, and with such other terms and conditions, including, but not
limited to, restrictions upon the Award of Stock Appreciation Rights or the
Common Shares issuable upon exercise thereof, as the Committee, in its
discretion, shall establish:

    (a) The Committee shall determine the number of Common Shares to be
subject to each Award of Stock Appreciation Rights. The number of Common
Shares subject to an outstanding Award of Stock Appreciation Rights may be
reduced on a share-for-share or other appropriate basis, as determined by the
Committee, to the extent that Common Shares under such Award of Stock
Appreciation Rights are used to calculate the cash, Common Shares, Other
Company Securities or property or other forms of payment, or any combination
thereof, received pursuant to exercise of an Option attached to such Award of
Stock Appreciation Rights, or to the extent that any other Award granted in
conjunction with such Award of Stock Appreciation Rights is paid.

    (b) The Award of Stock Appreciation Rights shall not be exercisable for at
least six months after the date of grant except as the Committee may otherwise
determine in the event of a Defined Event.

    (c) The Award of Stock Appreciation Rights shall not be exercisable:

        (i) unless the Option or other Award to which the Award of Stock
    Appreciation Rights is attached is at the time exercisable; and

                                     -4-
<PAGE>
        (ii) unless the person exercising the Award of Stock Appreciation
    Rights has been at all times during the period beginning with the date of
    the grant thereof and ending on the date of such exercise, employed by or
    otherwise performing services for the Company or an Affiliate, except that

           (A) in the case of any Award of Stock Appreciation Rights (other
       than those attached to an Incentive Stock Option), if such person shall
       cease to be employed by or otherwise performing services for the
       Company or an Affiliate solely by reason of a period of Related
       Employment as defined in Paragraph 14, he may, during such period of
       Related Employment, exercise the Award of Stock Appreciation Rights as
       if he continued such employment or performance of services; or

           (B) the Committee shall establish, in its discretion, the extent to
       which a person may continue to exercise an Award of Stock Appreciation
       Rights, which has not expired and has not been fully exercised, in the
       event he terminates employment or the performance of services by reason
       of a Defined Event; provided, that in the event of death, the Committee
       may provide his executors, heirs or distributors a minimum period to
       exercise an Award of Stock Appreciation Rights with respect to any
       shares as to which the decedent could have exercised the Award of Stock
       Appreciation Rights, or such greater amount as the Committee may
       determine, which period may extend beyond the original expiration date
       of the underlying Option.

    (d) An Award of Stock Appreciation Rights shall entitle the holder (or any
person entitled to act under the provisions of subparagraph 6(c)(ii)(B)
hereof) to exercise such Award or to surrender unexercised the Option (or
other Award) to which the Stock Appreciation Right is attached (or any portion
of such Option or other Award) to the Company and to receive from the Company
in exchange therefor, without payment to the Company, that number of Common
Shares having an aggregate value equal to (or, in the discretion of the
Committee, less than) the excess of the fair market value of one share, at the
time of such exercise, over the exercise price (or Option Price, as the case
may be) per share, times the number of shares subject to the Award or the
Option (or other Award), or portion thereof, which is so exercised or
surrendered, as the case may be. The Committee shall be entitled in its
discretion to elect to settle the obligation arising out of the exercise of a
Stock Appreciation Right by the payment of cash or Other Company Securities or
property, or other forms of payment, or any combination thereof, as determined
by the Committee, equal to the aggregate value of the Common Shares it would
otherwise be obligated to deliver. Any such election by the Committee shall be
made as soon as practicable after the receipt by the Committee of written
notice of the exercise of the Stock Appreciation Right. The value of a Common
Share, Other Company Securities or property, or other forms of payment
determined by the Committee for this purpose shall be the fair market value
thereof on the last business day next preceding the date of the election to
exercise the Stock Appreciation Right, unless the Committee, in its
discretion, determines otherwise.

    (e) A Stock Appreciation Right may provide that it shall be deemed to have
been exercised at the close of business on the business day preceding the
expiration date of the Stock Appreciation Right or of the related Option (or
other Award), or such other date as specified by the Committee, if at such
time such Stock Appreciation Right has a positive value. Such deemed exercise
shall be settled or paid in the same manner as a regular exercise thereof as
provided in subparagraph 6(d) hereof.

    (f) No fractional shares may be delivered under this Paragraph 6, but in
lieu thereof a cash or other adjustment shall be made as determined by the
Committee in its discretion.

    7. RESTRICTED STOCK. Each Award of Restricted Stock under the Plan shall
be evidenced by an instrument in such form as the Committee shall prescribe
from time to time in accordance with the Plan and shall comply with the
following terms and conditions, and with such other terms and conditions as
the Committee, in its discretion, shall establish:

    (a) The Committee shall determine the number of Common Shares to be issued
to a participant pursuant to the Award, and the extent, if any, to which they
shall be issued in exchange for cash, other consideration, or both.

    (b) Common Shares issued to a participant in accordance with the Award may
not be sold, assigned, transferred, pledged, hypothecated or otherwise
disposed of, except by will or the laws of descent and distribution, or as
otherwise determined by the Committee, for such period as the Committee shall
determine, from the date on which the Award is granted (the "Restricted
Period"). The Company will

                                     -5-
<PAGE>
have the option to cancel or repurchase the shares subject to the Award at
such price, if any, as the Committee shall have fixed, in its discretion, when
the Award was made or amended thereafter, which option will be exercisable on
such terms, in such manner and during such period as shall be determined by
the Committee when the Award is made or as amended thereafter. Common Shares
may be issued in certificate form or through the entry of an uncertificated
book position on the records of the Company's transfer agent and registrar.
The Company may impose appropriate restrictions on the transfer of such Common
Shares which shall be evidenced in the manner permitted by law as determined
by the Committee in its discretion. Any attempt to dispose of any such Common
Shares in contravention of the foregoing repurchase or cancellation option and
other restrictions shall be null and void and without effect. If Common Shares
issued pursuant to a Restricted Stock Award shall be repurchased or canceled
pursuant to the option described above, the participant, or in the event of
his death, his personal representative, shall forthwith deliver to the
Secretary of the Company any certificates for the Common Shares awarded to the
participant, accompanied by such instrument of transfer, if any, as may
reasonably be required by the Secretary of the Company. If the option
described above is not exercised by the Company, either by the terms of the
Award or action by the Company, such option and the restrictions imposed
pursuant to the first sentence of this subparagraph 7(b) shall terminate and
be of no further force and effect.

    (c) The vesting of a Restricted Stock Award may be conditioned upon the
attainment of specific performance objectives as the Committee may determine,
including but not limited to such performance objectives described in
subparagraph 8(b). The Restricted Period shall be for a minimum of three years
except as the Committee may determine in the event of a Defined Event, a
participant's promotion, or Restricted Stock Awards issued to any employee
newly employed by the Company or issued subject to performance objectives, or
as payment pursuant to a Performance Grant or Qualifying Award.

    (d) No more than 31,782,000 of the Common Shares that may be issued under
the Plan may be granted as Restricted Stock Awards, and no more than an
additional 15,891,000 may be granted as Restricted Stock Awards subject to
performance objectives as described above. Restricted Stock Awards repurchased
or canceled by the Company pursuant to subparagraph 7(b) shall again become
available for issuance pursuant to these limitations.

    8. PERFORMANCE GRANTS. The Award of a Performance Grant ("Performance
Grant") to a participant will entitle the participant to receive a specified
amount determined by the Committee (the "Actual Value"), if the terms and
conditions specified herein and in the Awards are satisfied. Each Award of a
Performance Grant shall be subject to the following terms and conditions, and
to such other terms and conditions, including but not limited to, restrictions
upon any cash, Common Shares, Other Company Securities or property, or other
forms of payment, or any combination thereof, issued in respect of the
Performance Grant, as the Committee, in its discretion, shall establish, and
shall be embodied in an instrument in such form and substance as is determined
by the Committee:

    (a) The Committee shall determine the value or range of values of a
Performance Grant to be awarded to each participant selected for an Award and
whether or not such a Performance Grant is granted in conjunction with an
Award of Options, Stock Appreciation Rights, Restricted Stock or other Award,
or any combination thereof, under the Plan (which may include, but need not be
limited to, deferred Awards) concurrently or subsequently granted to the
participant (the "Associated Award"). As determined by the Committee, the
maximum value of each Performance Grant (the "Maximum Value") shall be: (i) an
amount fixed by the Committee at the time the Award is made or amended
thereafter, (ii) an amount which varies from time to time based in whole or in
part on the then current value of a Common Share, Other Company Securities or
property, or other securities or property, or any combination thereof or (iii)
an amount that is determinable from criteria specified by the Committee.
Performance Grants may be issued in different classes or series having
different names, terms and conditions. In the case of a Performance Grant
awarded in conjunction with an Associated Award, the Performance Grant may be
reduced on an appropriate basis to the extent that the Associated Award has
been exercised, paid to or otherwise received by the participant, as
determined by the Committee.

    (b) The award period ("Award Period") in respect of any Performance Grant
shall be a period determined by the Committee. At the time each Award is made,
the Committee shall establish performance objectives to be attained within the
Award Period as the means of determining the Actual Value of such a
Performance Grant. The performance objectives shall be based on such measure
or

                                     -6-
<PAGE>
measures of performance, which may include, but need not be limited to, the
performance of the participant, the Company, one or more of its subsidiaries
or one or more of their divisions or units, or any combination of the
foregoing, as the Committee shall determine, and may be applied on an absolute
basis or be relative to industry or other indices, or any combination thereof.
The Actual Value of a Performance Grant shall be equal to its Maximum Value
only if the performance objectives are attained in full, but the Committee
shall specify the manner in which the Actual Value of Performance Grants shall
be determined if the performance objectives are met in part. Such performance
measures, the Actual Value or the Maximum Value, or any combination thereof,
may be adjusted in any manner by the Committee in its discretion at any time
and from time to time during or as soon as practicable after the Award Period,
if it determines that such performance measures, the Actual Value or the
Maximum Value, or any combination thereof, are not appropriate under the
circumstances.

    (c) The rights of a participant in Performance Grants awarded to him shall
be provisional and may be canceled or paid in whole or in part, all as
determined by the Committee.

    (d) The Committee shall determine whether the conditions of subparagraph
8(b) or 8(c) hereof have been met and, if so, shall ascertain the Actual Value
of the Performance Grants. If the Performance Grants have no Actual Value, the
Award and such Performance Grants shall be deemed to have been canceled and
the Associated Award, if any, may be canceled or permitted to continue in
effect in accordance with its terms. If the Performance Grants have an Actual
Value and:

        (i) were not awarded in conjunction with an Associated Award, the
    Committee shall cause an amount equal to the Actual Value of the
    Performance Grants earned by the participant to be paid to him or his
    beneficiary as provided below; or

        (ii) were awarded in conjunction with an Associated Award, the
    Committee shall determine, in accordance with criteria specified by the
    Committee (A) to cancel the Performance Grants, in which event no amount
    in respect thereof shall be paid to the participant or his beneficiary,
    and the Associated Award may be permitted to continue in effect in
    accordance with its terms, (B) to pay the Actual Value of the Performance
    Grants to the participant or his beneficiary as provided below, in which
    event the Associated Award may be canceled or (C) to pay to the
    participant or his beneficiary as provided below, the Actual Value of only
    a portion of the Performance Grants, in which event all or a portion of
    the Associated Award may be permitted to continue in effect in accordance
    with its terms or be canceled, as determined by the Committee.

    Such determination by the Committee shall be made as promptly as
practicable following the end of the Award Period or upon the earlier
termination of employment or performance of services, or at such other time or
times as the Committee shall determine, and shall be made pursuant to criteria
specified by the Committee.

    Payment of any amount in respect of the Performance Grants which the
Committee determines to pay as provided above shall be made by the Company, as
promptly as practicable after the end of the Award Period or at such other
time or times as the Committee shall determine, and may be made in cash,
Common Shares, Other Company Securities or property, or other forms of
payment, or any combination thereof or in such other manner, as determined by
the Committee in its discretion. Notwithstanding anything in this Paragraph 8
to the contrary, the Committee may, in its discretion, determine and pay out
the Actual Value of the Performance Grants at any time during the Award
Period, including but not limited to, upon a Defined Event.

    9. DEFERRAL OF COMPENSATION. The Committee shall determine whether or not an
Award shall be made in conjunction with deferral of the participant's salary,
bonus or other compensation, or any combination thereof, and whether or not such
deferred amounts may be

    (a) forfeited to the Company or to other participants, or any combination
thereof, under certain circumstances (which may include, but need not be
limited to, certain types of termination of employment or performance of
services for the Company and its Affiliates),

    (b) credited with income equivalents (which may include, but need not be
limited to, interest, dividends or other rates of return) until the date or
dates of payment of the Award, if any,

                                     -7-
<PAGE>
    (c) subject to increase or decrease in value based upon the attainment of
or failure to attain, respectively, certain performance measures and/or

    (d) any other terms and conditions the Committee deems necessary.

    10. QUALIFYING AWARDS. The Committee may, in its sole discretion, grant an
Award (a "Qualifying Award") to any key employee with the intent that such
Award qualifies as "performance-based compensation" under Section 162(m) of
the Code, or any successor provision thereto, and the regulations thereunder
("Section 162(m)"). The provisions of this Paragraph 10 as well as all other
applicable provisions of the Plan not inconsistent with this Paragraph 10
shall apply to all Qualifying Awards issued under the Plan, and any
ambiguities in construction shall be interpreted to effectuate that intent.
Qualifying Awards shall be of the type set forth in subparagraph (a) or (b)
below.

    (a) Qualifying Awards may be issued as Stock Options and Stock
Appreciation Rights. Commencing with calendar year 1998, the number of Common
Shares underlying all Options and Stock Appreciation Rights that may be
granted to any participant within any three consecutive calendar years shall
be limited to 9,000,000 (inclusive of Options or Stock Appreciation Rights
granted under the 1989 Plan during 1998), subject to adjustment as provided in
Paragraph 16. The foregoing limitation shall be subject to the limitation set
forth in Paragraph 4(b).

    (b)(i) Qualifying Awards (other than Stock Options and Stock Appreciation
Rights) may be issued as Performance Grants and any other Award whose payment
is conditioned upon the achievement of the performance objectives described in
this subparagraph. Amounts earned under such Awards shall be based upon the
attainment of performance objectives established by the Committee in
accordance with Section 162(m). Such performance objectives may vary by
participant and by Award and shall be based upon the attainment of specific
amounts of, or changes in one or more of the following: revenues, earnings,
shareholders' equity, return on equity, assets, return on assets, capital,
return on capital, book value, economic value added, operating margins, cash
flow, shareholder return, expenses or market share. The Committee may provide
that in measuring the achievement of the performance objectives, an Award may
include or exclude items such as realized investment gains and losses,
extraordinary, unusual or non- recurring items, asset write-downs, effects of
accounting charges, currency fluctuations, acquisitions, divestitures,
reserve-strengthening and other non-operating items. The foregoing objectives
may be applicable to the Company as a whole, one or more of its subsidiaries,
divisions, business units or business lines, or any combination of the
foregoing, and may be applied on an absolute basis or be relative to other
companies, industries or indices or be based upon any combination of the
foregoing. In addition to the performance objectives, the Committee may also
condition payment of any such Award upon the attainment of conditions, such as
completion of a period of service, notwithstanding that the performance
objective or objectives specified in the Award are satisfied. The Committee
shall have the discretion, by participant and by Award, to reduce (but not to
increase) some or all of the amount that would otherwise be payable under the
Award by reason of the satisfaction of the performance objectives set forth in
the Award. In making any such determination, the Committee is authorized to
take into account any such factor or factors it determines are appropriate,
including but not limited to Company, business unit and individual
performance.

    (ii) Under all Awards granted pursuant to this subparagraph (b), in any
one calendar year: (A) no participant may be paid cash, Common Shares, Other
Company Securities or other property (other than shares of Restricted Stock)
or any combination of the foregoing with a value (as determined by the
Committee) in excess of $6.5 million and (B) in addition, no participant may
receive more than 300,000 shares of Restricted Stock, subject to adjustment to
the extent provided in Paragraph 16. For purposes of the foregoing sentence,
the calendar year or years in which amounts under Qualifying Awards are deemed
paid or received shall be as determined by the Committee.

    11. PAYMENT OF AWARDS. The Committee may, in its discretion, settle any
Award through the payment of cash, the delivery of Common Shares or Other
Company Securities, the granting of Awards or a combination thereof. Any Award
settlement, including payment deferrals, may be subject to conditions,
restrictions and contingencies as the Committee shall determine. The Committee
may permit or require the deferral of any Award payment, subject to such
terms, rules and procedures as the Committee may establish, which may include
provisions for the payment or crediting of interest, or dividend equivalents,
including converting such credits into deferred Common Share equivalents.

                                     -8-
<PAGE>
    12. AMENDMENT OF THE PLAN OR AWARDS. The Plan may be amended in whole or
in part at any time and from time to time by the Board, and the terms of any
outstanding Award under the Plan may be amended from time to time by the
Committee in its discretion in any manner that it deems, provided however,
that no amendment may be made without shareholder approval if such amendment
(a) would increase the number of shares available for grant specified in
Paragraphs 4(b) or 10, (b) would decrease the minimum Option exercise price
set forth in Paragraph 5(a) (other than changes made pursuant to Paragraph 16
hereof), (c) reduce the minimum vesting periods set forth in Paragraphs
5(c)(i), 6(b) or 7(c) or (iv) would, in the absence of shareholder approval,
adversely affect compliance of the Plan with applicable laws, rules and
regulations. No such amendment shall adversely affect in a material manner any
right of a participant under the Award without his written consent, unless the
Committee determines in its discretion that there have occurred or are about
to occur significant changes in the participant's position, duties or
responsibilities, or significant changes in economic, legislative, regulatory,
tax, accounting or cost/benefit conditions which are determined by the
Committee in its discretion to have or to be expected to have a significant
effect on the performance of the Company, or any subsidiary, affiliate,
division or department thereof, on the Plan or on any Award under the Plan.
Any shareholder approval requirement under the Plan will be met if such
approval is obtained in accordance with applicable law.

    13. DISABILITY. For the purposes of this Plan, a participant shall be
deemed to have terminated his employment or performance of services for the
Company and its Affiliates by reason of disability, if the Committee shall
determine that the physical or mental condition of the participant by reason
of which such employment or performance of services terminated was such at
that time as would entitle him to payment of monthly disability benefits under
the Company's Long Term Disability Benefit Plan, or, if the participant is not
eligible for benefits under such plan, under any similar disability plan of
the Company or an Affiliate in which he is a participant. If the participant
is not eligible for benefits under any disability plan of the Company or an
Affiliate, he shall be deemed to have terminated such employment or
performance of services by reason of disability if the Committee shall
determine that his physical or mental condition would entitle him to benefits
under the Company's Long Term Disability Benefit Plan if he were eligible
therefor. Notwithstanding the above, the Committee may determine a
participant's disability based upon any other criteria specified by the
Committee.

    14. TERMINATION OF A PARTICIPANT. For all purposes under the Plan, the
Committee shall determine whether a participant has terminated employment by
or the performance of services for the Company and its Affiliates; provided,
however, that transfers between the Company and an Affiliate or between
Affiliates, and approved leaves of absence shall not be deemed such a
termination.

    15. RELATED EMPLOYMENT. For the purposes of this Plan, Related Employment
shall mean the employment or performance of services by an individual for an
employer that is neither the Company nor an Affiliate, provided that (a) such
employment or performance of services is undertaken by the individual at the
request of the Company or an Affiliate, (b) immediately prior to undertaking
such employment or performance of services, the individual was employed by or
performing services for the Company or an Affiliate or was engaged in Related
Employment as herein defined and (c) such employment or performance of
services is in the best interests of the Company and is recognized by the
Committee, in its discretion, as Related Employment for purposes of this
Paragraph 15. The death or disability of an individual during a period of
Related Employment as herein defined shall be treated, for purposes of this
Plan, as if the death or onset of disability had occurred while the individual
was employed by or performing services for the Company or an Affiliate.

    16. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the
outstanding Common Shares of the Company by reason of any stock split, stock
dividend, split-up, split-off, spin-off, recapitalization, merger,
consolidation, rights offering, reorganization, combination, subdivision or
exchange of shares, a sale by the Company of all or part of its assets, any
distribution to shareholders other than a normal cash dividend, or other
extraordinary or unusual event, if the Committee shall determine, in its
discretion, that such change equitably requires an adjustment in the terms of
any Award or the maximum number of Common Shares that may be issued as Awards
pursuant to the Plan, such adjustment may be made by the Committee and shall
be final, conclusive and binding for all purposes of the Plan. The Committee
may also provide for the adjustment and settlement of outstanding Awards as it
deems appropriate and consistent with the Plan's purpose in the event of a
"change in control" of the Company, as that term is defined in the Company's
Senior Executive Severance Plan.

                                     -9-
<PAGE>
    17. DESIGNATION OF BENEFICIARY BY PARTICIPANT. A participant may name a
beneficiary to receive any payment in which he may be entitled in respect of
any Award under the Plan in the event of his death, on a written form to be
provided by and filed with the Secretary, and in a manner determined by the
Committee in its discretion. The Committee reserves the right to review and
approve beneficiary designations. A participant may change his beneficiary
from time to time in the same manner, unless such participant has made an
irrevocable designation. Any designation of beneficiary under the Plan (to the
extent it is valid and enforceable under the applicable law) shall be
controlling over any other disposition, testamentary, or otherwise, as
determined by the Committee in its discretion. If no designated beneficiary
survives the participant and is living on the date on which any amount becomes
payable to such participant's beneficiary, such payment will be made to the
legal representatives of the participant's estate, and the term "beneficiary"
as used in the Plan shall be deemed to include such person or persons. If
there is any question as to the legal right of any beneficiary to receive a
distribution under the Plan, the Committee in its discretion may determine
that the amount in question be paid to the legal representatives of the estate
of the participant, in which event the Company, the Board and the Committee
and the members thereof will have no further liability to anyone with respect
to such amount.

    18. FINANCIAL ASSISTANCE. If the Committee determines that such action is
advisable, the Company may assist any person to whom an Award has been granted
in obtaining financing from the Company under the American Express 1983 Stock
Purchase Assistance Plan (or other program of the Company, or one of its
Affiliates approved pursuant to applicable law), or from a bank or other third
party, on such terms as are determined by the Committee, and in such amount as
is required to accomplish the purposes of the Plan, including, but not limited
to, to permit the exercise of an Award, the participation therein, and/or the
payment of any taxes in respect thereof. Such assistance may take any form
that the Committee deems appropriate, including, but not limited to, a direct
loan from the Company or an Affiliate, a guarantee of the obligation by the
Company or an Affiliate, or the maintenance by the Company or an Affiliate of
deposits with such bank or third party.

    19. MISCELLANEOUS PROVISIONS. (a) No employee or other person shall have
any claim or right to be granted an Award under the Plan. Determinations made
by the Committee under the Plan need not be uniform and may be made
selectively among eligible individuals under the Plan, whether or not such
eligible individuals are similarly situated. Neither the Plan nor any action
taken hereunder shall be construed as giving any employee or other person any
right to continue to be employed by or perform services for the Company or any
Affiliate, and the right to terminate the employment of or performance of
services by any participant at any time and for any reason is specifically
reserved.

    (b) No participant or other person shall have any right with respect to
the Plan, the Common Shares reserved for issuance under the Plan or in any
Award, contingent or otherwise, until written evidence of the Award shall have
been delivered to the recipient and all the terms, conditions and provisions
of the Plan and the Award applicable to such recipient (and each person
claiming under or through him) have been met.

    (c) Except as may be approved by the Committee, an Award or a
participant's rights and interest under the Plan may not be sold, assigned or
transferred, hypothecated or encumbered in whole or in part either directly or
by operation of law or otherwise (except in the event of a participant's
death) including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner. Not by way of
limitation, the Committee may allow for a participant to transfer an Award to
one or more members of his immediate family, to a partnership of which the
only partners are members of the participant's immediate family, or to a trust
established by the participant for the benefit of one or more members of his
immediate family.

    (d) No Common Shares, Other Company Securities or property, other
securities or property, or other forms of payment shall be issued hereunder
with respect to any Award unless counsel for the Company shall be satisfied
that such issuance will be in compliance with applicable federal, state, local
and foreign legal, securities exchange and other applicable requirements.

    (e) The Company and its Affiliates shall have the right to deduct from any
payment made under the Plan any federal, state, local or foreign income or
other taxes required by law to be withheld with respect to such payment. It
shall be a condition to the obligation of the Company to issue Common Shares,
Other Company Securities or property, other securities or property, or other
forms of payment, or any

                                     -10-
<PAGE>
combination thereof, upon exercise, settlement or payment of any Award under
the Plan, that the participant (or any beneficiary or person entitled to act)
pay to the Company, upon its demand, such amount as may be requested by the
Company for the purpose of satisfying any liability to withhold federal,
state, local or foreign income or other taxes. If the amount requested is not
paid, the Company may refuse to issue Common Shares, Other Company Securities
or property, other securities or property, or other forms of payment, or any
combination thereof. Notwithstanding anything in the Plan to the contrary, the
Committee may, in its discretion, permit an eligible participant (or any
beneficiary or person entitled to act) to elect to pay a portion or all of the
amount requested by the Company for such taxes with respect to such Award, at
such time and in such manner as the Committee shall deem to be appropriate
(including, but not limited to, by authorizing the Company to withhold, or
agreeing to surrender to the Company on or about the date such tax liability
is determinable, Common Shares, Other Company Securities or property, other
securities or property, or other forms of payment, that would otherwise be
distributed, or have been distributed, as the case may be, pursuant to such
Award to such person, having a fair market value equal to the amount of such
taxes).

    (f) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Award under the Plan, and the rights to
the payment of Awards shall be no greater than the rights of the Company's
general creditors.

    (g) By accepting any Award or other benefit under the Plan, each
participant and each person claiming under or through him shall be
conclusively deemed to have indicated his acceptance and ratification of, and
consent to, any action taken under the Plan by the Company, the Board or the
Committee or its delegates.

    (h) Fair market value in relation to Common Shares, Other Company
Securities or property, other securities or property or other forms of payment
of Awards under the Plan, or any combination thereof, as of any specific time
shall mean such value as determined by the Committee in accordance with
applicable law.

    (i) The masculine pronoun includes the feminine and the singular includes
the plural wherever appropriate.

    (j) The appropriate officers of the Company shall cause to be filed any
reports, returns or other information regarding Awards hereunder or any Common
Shares issued pursuant hereto as may be required by Section 13 or 15(d) of the
Exchange Act (or any successor provision) or any other applicable statute,
rule or regulation.

    (k) The validity, construction, interpretation, administration and effect
of the Plan, and of its rules and regulations, and rights relating to the Plan
and to Awards granted under the Plan, shall be governed by the substantive
laws, but not the choice of law rules, of the State of New York.

    20. PLAN TERMINATION. The Plan may be suspended in whole or in part at any
time and from time to time by the Board. This Plan shall terminate upon the
earlier of the following dates or events to occur:

    (a) upon the adoption of a resolution of the Board terminating the Plan; or

    (b) ten years from the date the Plan is initially approved and adopted by
the shareholders of the Company in accordance with Paragraph 21 hereof,
provided, however, that the Board may, prior to the expiration of such
ten-year period, extend the term of the Plan for an additional period of up to
five years for the grant of Awards other than Incentive Stock Options. No
termination of the Plan shall materially alter or impair any of the rights or
obligations of any person, without his consent, under any Award theretofore
granted under the Plan, except that subsequent to termination of the Plan, the
Committee may make amendments permitted under Paragraph 12.

    21. SHAREHOLDER ADOPTION. The Plan shall be submitted to the shareholders
of the Company for their approval and adoption at a meeting to be held on or
before April 27, 1998, or at any adjournment thereof. The Plan shall not be
effective and no Award shall be made hereunder unless and until the Plan has
been so approved and adopted. The shareholders shall be deemed to have
approved and adopted the Plan only if it is approved and adopted at a meeting
of the shareholders duly held by vote taken in the manner required by the laws
of the State of New York.




                                     -11-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>3
<FILENAME>ex_12.txt
<DESCRIPTION>EXHIBIT 12
<TEXT>
<Page>

EXHIBIT 12

                            AMERICAN EXPRESS COMPANY
          COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES
                              (Dollars in millions)

<Table>
<Caption>
                               Three Months
                              Ended March 31,                     Years Ended December 31,
                                   2002          --------------------------------------------------------
                                (Unaudited)        2001        2000        1999        1998        1997
                              ---------------    --------    --------    --------    --------    --------
<S>                           <C>                <C>         <C>         <C>         <C>         <C>
Earnings:
    Pretax income from
      continuing operations   $           858    $  1,596    $  3,908    $  3,438    $  2,925    $  2,750
    Interest expense                      459       2,888       2,952       2,178       2,224       2,122
    Other adjustments                      48         175         163         151         124         127
                              ---------------    --------    --------    --------    --------    --------
Total earnings (a)            $         1,365    $  4,659    $  7,023    $  5,767    $  5,273    $  4,999
                              ---------------    --------    --------    --------    --------    --------

Fixed Charges:
    Interest expense          $           459    $  2,888    $  2,952    $  2,178    $  2,224    $  2,122
    Other adjustments                      40         170         165         152         129         129
                              ---------------    --------    --------    --------    --------    --------
Total fixed charges (b)       $           499    $  3,058    $  3,117    $  2,330    $  2,353    $  2,251
                              ---------------    --------    --------    --------    --------    --------

Ratio of earnings to
    fixed charges (a/b)                  2.74        1.52        2.25        2.48        2.24        2.22
</Table>


Included in interest expense in the above computation is interest expense
related to the international banking operations of American Express Company
(the company) and Travel Related Services' Cardmember lending activities,
which is netted against interest and dividends and Cardmember lending net
finance charge revenue, respectively, in the Consolidated Statements of
Income.

For purposes of the "earnings" computation, other adjustments include adding
the amortization of capitalized interest, the net loss of affiliates accounted
for at equity whose debt is not guaranteed by the company, the minority
interest in the earnings of majority-owned subsidiaries with fixed charges,
and the interest component of rental expense and subtracting undistributed net
income of affiliates accounted for at equity.

For purposes of the "fixed charges" computation, other adjustments include
capitalized interest costs and the interest component of rental expense.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-15
<SEQUENCE>4
<FILENAME>ex_15.txt
<DESCRIPTION>EXHIBIT 15
<TEXT>
<Page>

EXHIBIT 15

May 14, 2002

The Shareholders and Board of Directors
American Express Company

We are aware of the incorporation by reference in the Registration Statements
(Form S-8 No. 2-46918, No. 2-59230, No. 2-64285, No. 2-73954, No. 2-89680, No.
33-01771, No. 33-02980, No. 33-28721, No. 33-33552, No. 33-36422, No.
33-48629, No. 33-62124, No. 33-65008, No. 33-53801, No. 333-12683, No.
333-41779, No. 333-52699, No. 333-73111 and No. 333-38238; Form S-3 No.
2-89469, No. 33-43268, No. 33-50997, No. 333-32525, No. 333-45445, No.
333-47085, No. 333-55761 and No. 333-51828) of American Express Company of our
report dated May 14, 2002 relating to the unaudited consolidated interim
financial statements of American Express Company which are included in its
Form 10-Q for the three-month period ended March 31, 2002.

Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a
part of the registration statement prepared or certified by accountants within
the meaning of Section 7 or 11 of the Securities Act of 1933.



                                  /s/ Ernst & Young LLP

New York, New York

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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