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<SEC-DOCUMENT>0000004962-05-000131.txt : 20050503
<SEC-HEADER>0000004962-05-000131.hdr.sgml : 20050503
<ACCEPTANCE-DATETIME>20050503170447
ACCESSION NUMBER:		0000004962-05-000131
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20050331
FILED AS OF DATE:		20050503
DATE AS OF CHANGE:		20050503

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:		05795952

	BUSINESS ADDRESS:	
		STREET 1:		200 VESEY STREET
		STREET 2:		50TH FLOOR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10285
		BUSINESS PHONE:		2126402000

	MAIL ADDRESS:	
		STREET 1:		200 VESEY STREET
		STREET 2:		50TH FLOOR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10285
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>blue10q.txt
<DESCRIPTION>AMERICAN EXPRESS COMPANY'S 2005 1Q FORM 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, 2005

                                      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)

<Table>
<S>                                                         <C>
                       NEW YORK                                          13-4922250
- ------------------------------------------------------      ------------------------------------
            (State or other jurisdiction of                 (I.R.S. Employer Identification No.)
            incorporation or organization)

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.
</Table>

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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).            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.

<Table>
<S>                                                             <C>
                     Class                                      Outstanding at April 22, 2005
- ------------------------------------------------------          -----------------------------
       Common Shares (par value $.20 per share)                     1,245,899,187 shares
</Table>

<Page>

                           AMERICAN EXPRESS COMPANY

                                   FORM 10-Q

                                     INDEX

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

            Item 1. Financial Statements

                    Consolidated Statements of Income - Three months ended March 31,
                    2005 and 2004                                                                 1

                    Consolidated Balance Sheets - March 31, 2005 and December 31,
                    2004                                                                          2

                    Consolidated Statements of Cash Flows - Three months ended March
                    31, 2005 and 2004                                                             3

                    Notes to Consolidated Financial Statements                               4 - 10

            Item 2. Management's Discussion and Analysis of Financial Condition
                    and Results of Operations                                               11 - 34

            Item 4. Controls and Procedures                                                      34

Part II.    Other Information:                                                                   36

            Item 1. Legal Proceedings                                                            36

            Item 2. Unregistered Sales of Equity Securities and Use of
                    Proceeds                                                                     40

            Item 4. Submission of Matters to a Vote of Security Holders
                                                                                                 41

            Item 6. Exhibits                                                                     41

            Signatures                                                                           42

            Exhibit Index                                                                       E-1
</Table>

<Page>

PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                           AMERICAN EXPRESS COMPANY
                       CONSOLIDATED STATEMENTS OF INCOME
                     (millions, except per share amounts)
                                  (Unaudited)

<Table>
<Caption>
                                                                                  Three Months Ended
                                                                                      March 31,
                                                                         -------------------------------------
                                                                               2005                2004
                                                                         -----------------   -----------------
<S>                                                                      <C>                 <C>
Revenues:
  Discount revenue                                                       $           2,672   $           2,368
  Net investment income                                                                803                 741
  Management and distribution fees                                                     798                 779
  Cardmember lending net finance charge revenue                                        592                 541
  Net card fees                                                                        498                 472
  Travel commissions and fees                                                          422                 417
  Other commissions and fees                                                           577                 529
  Insurance and annuity revenues                                                       397                 364
  Securitization income, net                                                           316                 230
  Other                                                                                498                 469
                                                                         -----------------   -----------------
    Total                                                                            7,573               6,910
                                                                         -----------------   -----------------

Expenses:
  Human resources                                                                    1,993               1,779
  Marketing, promotion, rewards and cardmember services                              1,358               1,047
  Provisions for losses and benefits:
    Annuities and investment certificates                                              319                 300
    Life insurance, international banking and other                                    271                 237
    Charge card                                                                        215                 198
    Cardmember lending                                                                 295                 287
  Professional services                                                                580                 539
  Occupancy and equipment                                                              406                 390
  Interest                                                                             219                 203
  Communications                                                                       129                 133
  Other                                                                                413                 549
                                                                         -----------------   -----------------
    Total                                                                            6,198               5,662
                                                                         -----------------   -----------------

Pretax income before accounting change                                               1,375               1,248
Income tax provision                                                                   429                 383
                                                                         -----------------   -----------------
Income before accounting change                                                        946                 865
Cumulative effect of accounting change, net of tax (Note 1)                              -                 (71)
                                                                         -----------------   -----------------
Net income                                                               $             946   $             794
                                                                         =================   =================

Earnings per Common Share -- Basic:
  Income before accounting change                                        $            0.76   $            0.68
                                                                         =================   =================
  Net income                                                             $            0.76   $            0.62
                                                                         =================   =================

Earnings per Common Share -- Diluted:
  Income before accounting change                                        $            0.75   $            0.66
                                                                         =================   =================
  Net income                                                             $            0.75   $            0.61
                                                                         =================   =================

Average common shares outstanding for earnings per common share:
  Basic                                                                              1,239               1,277
                                                                         =================   =================
  Diluted                                                                            1,264               1,305
                                                                         =================   =================

Cash dividends declared per common share                                 $            0.12   $            0.10
                                                                         =================   =================
</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,
                                                                               2005                2004
                                                                         -----------------   -----------------
<S>                                                                      <C>                 <C>
ASSETS
Cash and cash equivalents                                                $           9,279   $           9,907
Accounts receivable and accrued interest:
  Cardmember receivables, less reserves: 2005, $831; 2004, $806                     29,179              30,270
  Other receivables, less reserves: 2005, $87; 2004, $90                             4,489               4,380
Investments                                                                         59,867              60,809
Loans:
  Cardmember lending, less reserves: 2005, $918; 2004, $972                         24,934              25,933
  International banking, less reserves: 2005, $83; 2004, $95                         6,880               6,790
  Other, less reserves: 2005, $60; 2004, $17                                         2,510               2,135
Separate account assets                                                             35,995              35,901
Deferred acquisition costs                                                           4,076               3,989
Land, buildings and equipment - at cost, less accumulated
  depreciation: 2005, $3,352; 2004, $3,297                                           2,989               3,083
Other assets                                                                         9,374               9,441
                                                                         -----------------   -----------------
  Total assets                                                           $         189,572   $         192,638
                                                                         =================   =================

LIABILITIES AND SHAREHOLDERS' EQUITY
Customers' deposits                                                      $          20,218   $          21,091
Travelers Cheques outstanding                                                        7,034               7,287
Accounts payable                                                                     8,938               8,291
Insurance and annuity reserves:
  Fixed annuities and variable annuity guarantees                                   26,848              27,012
  Life and health policies                                                           6,028               5,954
Investment certificate reserves                                                     11,980              11,332
Short-term debt                                                                     13,393              14,182
Long-term debt                                                                      31,240              33,061
Separate account liabilities                                                        35,995              35,901
Other liabilities                                                                   11,765              12,507
                                                                         -----------------   -----------------
  Total liabilities                                                                173,439             176,618
                                                                         -----------------   -----------------

Shareholders' equity:
  Common shares, $.20 par value, authorized 3.6 billion shares;
     issued and outstanding 1,245 million shares in 2005 and
     1,249 million shares in 2004                                                      249                 250
  Additional paid-in capital                                                         7,674               7,316
  Retained earnings                                                                  8,325               8,196
  Accumulated other comprehensive income (loss), net of tax:
     Net unrealized securities gains                                                   249                 760
     Net unrealized derivatives gains (losses)                                          13                (142)
     Foreign currency translation adjustments                                         (361)               (344)
     Minimum pension liability                                                         (16)                (16)
                                                                         -----------------   -----------------
  Total accumulated other comprehensive (loss) income                                 (115)                258
                                                                         -----------------   -----------------
     Total shareholders' equity                                                     16,133              16,020
                                                                         -----------------   -----------------
  Total liabilities and shareholders' equity                             $         189,572   $         192,638
                                                                         =================   =================
</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,
                                                                         -------------------------------------
                                                                               2005                2004
                                                                         -----------------   -----------------
<S>                                                                      <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                               $             946   $             794
Adjustments to reconcile net income
  to net cash provided by operating activities:
     Provisions for losses and benefits                                                605                 593
     Depreciation and amortization                                                     193                 188
     Deferred taxes, acquisition costs and other                                       283                 163
     Stock-based compensation                                                           89                  56
     Changes in operating assets and liabilities, net of
      effects of acquisitions and dispositions:
       Accounts receivable and accrued interest                                       (208)               (457)
       Other operating assets                                                           20                 (80)
       Accounts payable and other liabilities                                           86                 628
     Decrease in Travelers Cheques outstanding                                        (255)                (30)
     Increase in insurance reserves                                                     83                  46
     Cumulative effect of accounting change, net of tax (Note 1)                         -                  71
                                                                         -----------------   -----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                            1,842               1,972
                                                                         -----------------   -----------------

CASH FLOWS FROM INVESTING ACTIVITIES
Sale of investments                                                                    933                 545
Maturity and redemption of investments                                               2,170               1,927
Purchase of investments                                                             (3,281)             (6,063)
Net decrease in cardmember loans/receivables                                         1,721                 498
Cardmember receivables redeemed from trust                                            (750)                  -
Cardmember loans sold to trust                                                       1,196                 800
Cardmember loans redeemed from trust                                                (1,000)                  -
Loan operations and principal collections, net                                        (139)                 20
Purchase of land, buildings and equipment                                             (145)               (149)
Sale of land, buildings and equipment                                                  124                  10
Acquisitions, net of cash acquired                                                     (14)               (143)
                                                                         -----------------   -----------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                    815              (2,555)
                                                                         -----------------   -----------------

CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in customers' deposits                                        (719)                254
Sale of annuities and investment certificates                                        3,145               2,495
Redemption of annuities and investment certificates                                 (2,610)             (2,279)
Net decrease in debt with maturities of three months or less                        (1,222)             (3,446)
Issuance of debt                                                                     1,589               5,452
Principal payments on debt                                                          (2,937)             (2,094)
Issuance of American Express common shares                                             284                 458
Repurchase of American Express common shares                                          (662)             (1,033)
Dividends paid                                                                        (150)               (129)
                                                                         -----------------   -----------------
NET CASH USED IN FINANCING ACTIVITIES                                               (3,282)               (322)
                                                                         -----------------   -----------------

Effect of exchange rate changes on cash                                                 (3)                 (4)
                                                                         -----------------   -----------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                             (628)               (909)

Cash and cash equivalents at beginning of period                                     9,907               5,726
                                                                         -----------------   -----------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                               $           9,279   $           4,817
                                                                         =================   =================
</Table>

                See Notes to Consolidated Financial Statements.

                                       3
<Page>

                           AMERICAN EXPRESS COMPANY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

1.   BASIS OF PRESENTATION

     The accompanying Consolidated Financial Statements should be read in
     conjunction with the financial statements which are incorporated by
     reference in the Annual Report on Form 10-K of American Express Company
     (the Company or American Express) for the year ended December 31, 2004.
     Certain reclassifications of prior period amounts have been made to
     conform to the current presentation.

     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.

     On February 1, 2005, the Company announced plans to pursue a spin-off of
     American Express Financial Advisors (AEFA) to shareholders. Shareholders
     would receive 100 percent of the common shares of American Express
     Financial Corporation (AEFC), through which the financial advisors
     business is conducted. The transaction is intended to be tax-free to
     shareholders and is expected to be completed late in the third quarter of
     2005, subject to certain conditions, including necessary regulatory
     approvals and the receipt of a favorable tax ruling and/or opinion, as
     well as final board approval. See Note 23 in the Company's Annual Report
     on Form 10-K for the year ended December 31, 2004 for further discussion
     of the proposed spin-off. All discussions that follow describe the
     Company's business and organization as currently structured.

     Net investment income is presented net of interest expense of $71 million
     and $51 million for the first quarters of 2005 and 2004, respectively,
     related primarily to the Company's international banking operations.
     Cardmember lending net finance charge revenue is presented net of
     interest expense of $178 million and $127 million for the first quarters
     of 2005 and 2004, respectively.

     At both March 31, 2005 and December 31, 2004, cash and cash equivalents
     included $1.0 billion segregated in special bank accounts for the benefit
     of customers.

     The Company had securitized cardmember receivables totaling $1.1 billion
     and $1.9 billion at March 31, 2005 and December 31, 2004, respectively,
     which were included in cardmember receivables on the Consolidated Balance
     Sheets as they did not qualify for off-balance sheet treatment under
     Statement of Financial Accounting Standards (SFAS) No. 140, "Accounting
     for Transfers and Servicing of Financial Assets and Extinguishments of
     Liabilities;" likewise, an equal amount of debt was included in long-term
     debt.

     RECENTLY ISSUED ACCOUNTING STANDARDS

     In December 2004, the Financial Accounting Standards Board (FASB) issued
     SFAS No. 123 (revised 2004), "Share-Based Payment (SFAS No. 123(R))."
     Under a rule issued by the Securities and Exchange Commission (SEC) in
     April 2005, SFAS No. 123(R) is now effective for public companies for
     annual, rather than interim, periods that begin after June 15, 2005. SFAS
     No. 123(R) requires entities to measure and recognize the cost of
     employee services received in exchange for an award of equity instruments
     based on the grant-date fair value of the award (with limited
     exceptions). As noted in Note 2 below, the Company adopted, in January
     2003, the fair value recognition provisions of SFAS No. 123, "Accounting
     for Stock-Based Compensation" (SFAS No. 123), prospectively for all stock
     options granted after December 31, 2002. Substantially all stock options
     for which intrinsic value accounting was continued under Accounting
     Principles Board (APB) Opinion No. 25 will have vested by June 30, 2005.
     SFAS No. 123(R) also requires the benefits of tax deductions in excess of
     recognized compensation cost to be reported as a financing cash flow,
     rather than as an operating cash flow as required under current
     literature. The requirement will reduce net operating cash flows and
     increase net financing cash flows in periods after the effective date. In
     March 2005, the SEC also issued Staff Accounting Bulletin No. 107 (SAB
     No. 107), which summarizes the staff's views regarding share-based
     payment arrangements for public companies. The Company is currently
     evaluating the impact of SFAS No. 123(R) and

                                       4
<Page>

                           AMERICAN EXPRESS COMPANY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

     SAB No. 107 on the Company's results of operations and financial position
     but does not expect that the impact will be material.

     In December 2004, the FASB issued FASB Staff Position (FSP) FAS 109-2,
     "Accounting and Disclosure Guidance for the Foreign Earnings Repatriation
     Provision within the American Jobs Creation Act of 2004 (the Act)" (FSP
     FAS 109-2), which would allow additional time beyond the financial
     reporting period of enactment to evaluate the effect of the Act on the
     Company's plan for reinvestment or repatriation of foreign earnings for
     purposes of calculating the income tax provision. The Act contains a
     provision that permits an 85% dividends received deduction for qualified
     repatriations of earnings that would otherwise be permanently reinvested
     outside the United States. The Company does not plan to reinvest or
     repatriate any foreign earnings as a result of the Act.

     Effective January 1, 2004, the Company adopted the American Institute of
     Certified Public Accountants Statement of Position 03-1, "Accounting and
     Reporting by Insurance Enterprises for Certain Nontraditional
     Long-Duration Contracts and for Separate Accounts" (SOP 03-1). SOP 03-1
     provides guidance on: (i) the classification and valuation of
     long-duration contract liabilities; (ii) the accounting for sales
     inducements; and (iii) separate account presentation and valuation.

     The adoption of SOP 03-1 as of January 1, 2004 resulted in a cumulative
     effect of accounting change that reduced first quarter 2004 results by
     $71 million ($109 million pretax). The cumulative effect of accounting
     change consisted of: (i) $43 million pretax from establishing additional
     liabilities for certain variable annuity guaranteed benefits ($33
     million) and from considering these liabilities in valuing deferred
     acquisition costs (DAC) and deferred sales inducement costs associated
     with those contracts ($10 million) and (ii) $66 million pretax from
     establishing additional liabilities for certain variable universal life
     and single pay universal life insurance contracts under which contractual
     cost of insurance charges are expected to be less than future death
     benefits ($92 million) and from considering these liabilities in valuing
     DAC associated with those contracts ($26 million offset). Prior to the
     adoption of SOP 03-1, amounts paid in excess of contract value were
     expensed when payable. The Company's accounting for separate accounts was
     already consistent with the provisions of SOP 03-1 and, therefore, there
     was no impact related to this requirement.

     In November 2003, the FASB ratified a consensus on the disclosure
     provisions of Emerging Issues Task Force (EITF) Issue 03-1, "The Meaning
     of Other-Than-Temporary Impairment and Its Application to Certain
     Investments" (EITF 03-1). The Company complied with the disclosure
     provisions of this rule in the Consolidated Financial Statements included
     in its Annual Report on Form 10-K for the years ended December 31, 2004
     and 2003. In March 2004, the FASB reached a consensus regarding the
     application of a three-step impairment model to determine whether
     investments accounted for in accordance with SFAS No. 115, "Accounting
     for Certain Investments in Debt and Equity Securities" (SFAS No. 115),
     and other cost method investments are other-than-temporarily impaired.
     However, with the issuance of FSP EITF 03-1-1, "Effective Date of
     Paragraphs 10-20 of EITF 03-1," on September 30, 2004, the provisions of
     the consensus relating to the measurement and recognition of
     other-than-temporary impairments will be deferred pending further
     clarification from the FASB. The remaining provisions of this rule, which
     primarily relate to disclosure requirements, are required to be applied
     prospectively to all current and future investments accounted for in
     accordance with SFAS No. 115 and other cost method investments. The
     Company will evaluate the potential impact of EITF 03-1 after the FASB
     completes its reassessment.

2.   STOCK-BASED COMPENSATION

     At March 31, 2005, the Company has two stock-based employee compensation
     plans, which are described more fully in Note 15 of the Company's Annual
     Report on Form 10-K for the year ended December 31, 2004. Effective
     January 1, 2003, the Company adopted the fair value recognition
     provisions of SFAS No. 123 for all stock options granted after December
     31, 2002. For the three months ended March 31, 2005 and 2004, the Company
     expensed $23 million and $13 million after-tax, respectively, related to
     stock options granted January 1, 2003 or later.

                                       5
<Page>

                           AMERICAN EXPRESS COMPANY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

     In December 2002, the FASB issued SFAS No. 148, "Accounting for
     Stock-Based Compensation - Transition and Disclosure," which amended APB
     Opinion No. 28, "Interim Financial Reporting," to require disclosure
     about the pro forma effects of SFAS No. 123 on reported net income of
     stock-based compensation accounted for under APB Opinion No. 25,
     "Accounting for Stock Issued to Employees." The following table
     illustrates the effect on net income and earnings per common share (EPS)
     assuming the Company had followed the fair value recognition provisions
     of SFAS No. 123 for all outstanding and unvested stock options and other
     stock-based compensation for the three months ended March 31, 2005 and
     2004:

<Table>
<Caption>
                                                                                   Three Months Ended March 31,
                                                                              -------------------------------------
     (Millions, except per share amounts)                                            2005               2004
                                                                              -----------------   -----------------
     <S>                                                                      <C>                 <C>
     Net income as reported:                                                  $             946   $             794
       Add: Stock-based employee compensation included
          in reported net income, net of related tax effects                                 58                  36
       Deduct: Total stock-based employee compensation
          expense determined under fair value based method,
          net of related tax effects                                                        (66)                (82)
                                                                              -----------------   -----------------
     Pro forma net income                                                     $             938   $             748
                                                                              =================   =================
     Basic EPS:
       As reported                                                            $            0.76   $            0.62
       Pro forma                                                              $            0.76   $            0.59
     Diluted EPS:
       As reported                                                            $            0.75   $            0.61
       Pro forma                                                              $            0.74   $            0.57
</Table>

3.   INVESTMENTS

     The following is a summary of investments at March 31, 2005 and December
     31, 2004:

<Table>
<Caption>
                                                                                  March 31,         December 31,
     (Millions)                                                                     2005               2004
                                                                              -----------------   -----------------
     <S>                                                                      <C>                 <C>
     Available-for-Sale, at fair value
       (cost: 2005, $54,928; 2004, $54,878)                                   $          55,361   $          56,188
     Investment loans(a)
       (fair value: 2005, $3,723; 2004, $3,776)                                           3,522               3,523
     Trading, at fair value                                                                 984               1,098
                                                                              -----------------   -----------------
       Total                                                                  $          59,867   $          60,809
                                                                              =================   =================
</Table>

     (a) The carrying value of these assets is at amortized cost, net of
         reserves totaling $56 million at both March 31, 2005 and
         December 31, 2004.

     Gross realized gains and losses on sales and losses recognized for
     other-than-temporary impairments of securities classified as
     Available-for-Sale, using the specific identification method, were as
     follows for the three months ended March 31, 2005 and 2004:

<Table>
<Caption>
                                                                                   Three Months Ended March 31,
                                                                              -------------------------------------
     (Millions)                                                                      2005               2004
                                                                              -----------------   -----------------
     <S>                                                                      <C>                 <C>
     Gross realized gains on sales                                            $              15   $              21
     Gross realized (losses) on sales                                         $              (9)  $              (5)
     Gross other-than-temporary impairments                                   $              (1)  $               -
</Table>

                                       6
<Page>

                           AMERICAN EXPRESS COMPANY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

4.   GUARANTEES

     The Company, through its Travel Related Services (TRS) operating segment,
     provides cardmember protection plans that cover losses associated with
     purchased products, as well as certain other guarantees in the ordinary
     course of business that are within the scope of FASB Interpretation No.
     45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
     Including Indirect Guarantees of Indebtedness of Others" (FIN 45). In the
     hypothetical scenario that all claims occur within the next 12 months,
     the aggregate maximum amount of undiscounted future payments associated
     with such guarantees would not exceed $91 billion at both March 31, 2005
     and December 31, 2004. The total amount of related liability accrued at
     March 31, 2005 and December 31, 2004 for such programs was $239 million
     and $257 million, respectively, which management believes to be adequate
     based on actual experience. The Company generally has no collateral or
     other recourse provisions related to these guarantees. Expenses relating
     to actual claims under these guarantees were approximately $7 million
     and $6 million for the three months ended March 31, 2005 and 2004,
     respectively.

     The Company, through its American Express Bank (AEB) operating segment,
     provides various guarantees to its customers in the ordinary course of
     business that are also within the scope of FIN 45, including financial
     letters of credit, performance guarantees and financial guarantees.
     Generally, guarantees range in term from three months to one year. AEB
     receives a fee related to these guarantees, many of which help to
     facilitate customer cross-border transactions. At March 31, 2005, AEB
     held $790 million of collateral supporting these guarantees. The
     following table provides information related to such guarantees as of
     March 31, 2005 and December 31, 2004:

<Table>
<Caption>
                                                March 31, 2005                         December 31, 2004
                                     -------------------------------------    -------------------------------------
                                     Maximum amount                           Maximum amount
                                     of undiscounted         Amount of        of undiscounted         Amount of
     (Millions)                      future payments     related liability    future payments     related liability
                                     -----------------   -----------------    -----------------   -----------------
     <S>                             <C>                 <C>                  <C>                 <C>
     Type of Guarantee:
      Financial letters of credit    $             330   $             0.5    $             295   $             0.4
      Performance guarantees                       104                 0.7                   92                 1.1
      Financial guarantees                         529                 2.6                  554                 2.0
                                     -----------------   -----------------    -----------------   -----------------
        Total                        $             963   $             3.8    $             941   $             3.5
                                     =================   =================    =================   =================
</Table>

5.   COMPREHENSIVE INCOME

     Comprehensive income is defined as the aggregate change in shareholders'
     equity, excluding changes in ownership interests. 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, (iii) foreign currency translation adjustments and (iv)
     minimum pension liability adjustment. The components of comprehensive
     income, net of related tax, for the three months ended March 31, 2005 and
     2004 were as follows:

<Table>
<Caption>
                                                                                   Three Months Ended March 31,
                                                                              -------------------------------------
     (Millions)                                                                     2005                2004
                                                                              -----------------   -----------------
     <S>                                                                      <C>                 <C>
     Net income                                                               $             946   $             794
     Change in:
       Net unrealized securities (losses) gains                                            (511)                379
       Net unrealized derivative gains (losses)                                             155                 (33)
       Foreign currency translation adjustments                                             (17)                (53)
                                                                              -----------------   -----------------
     Total                                                                    $             573   $           1,087
                                                                              =================   =================
</Table>

                                       7
<Page>

                           AMERICAN EXPRESS COMPANY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

6.   RETIREMENT PLANS

     The components of the net pension cost for all defined benefit plans
     accounted for under SFAS No. 87, "Employers' Accounting for Pensions,"
     are as follows:

<Table>
<Caption>
                                                                                   Three Months Ended March 31,
                                                                              -------------------------------------
     (Millions)                                                                     2005                2004
                                                                              -----------------   -----------------
     <S>                                                                      <C>                 <C>
     Service cost                                                             $              36   $              34
     Interest cost                                                                           34                  31
     Expected return on plan assets                                                         (41)                (40)
     Amortization of prior service cost                                                       7                  (1)
     Recognized net actuarial loss                                                            -                   4
     Settlement/curtailment loss                                                              2                   3
                                                                              -----------------   -----------------
     Net periodic pension benefit cost                                        $              38   $              31
                                                                              =================   =================
</Table>

     The net periodic postretirement benefit expense recognized for the three
     months ended March 31, 2005 and 2004 was $10 million and $11 million,
     respectively.

7.   TAXES AND INTEREST

     Net income taxes paid by the Company during the three months ended March
     31, 2005 and 2004 were approximately $172 million and $55 million,
     respectively. The Company paid interest of approximately $429 million and
     $311 million during the three months ended March 31, 2005 and 2004,
     respectively.

8.   EARNINGS PER COMMON SHARE

     Basic EPS is computed using the average actual shares outstanding during
     the period. Diluted EPS is basic EPS adjusted for the dilutive effect of
     stock options, restricted stock awards and other financial instruments
     that may be converted into common shares. The computations of basic and
     diluted EPS for the three months ended March 31, 2005 and 2004 are as
     follows:

<Table>
<Caption>
                                                                                   Three Months Ended March 31,
                                                                              -------------------------------------
     (Millions, except per share amounts)                                            2005               2004
                                                                              -----------------   -----------------
     <S>                                                                      <C>                 <C>
     NUMERATOR:
       Income before accounting change                                        $             946   $             865
       Cumulative effect of accounting change, net of tax                                     -                 (71)
                                                                              -----------------   -----------------
       Net income                                                             $             946   $             794
                                                                              -----------------   -----------------

     DENOMINATOR:
       Basic:  Weighted-average shares outstanding during the period                      1,239               1,277
       Add:  Dilutive effect of stock options, restricted stock awards
             and other dilutive securities                                                   25                  28
                                                                              -----------------   -----------------
       Diluted                                                                            1,264               1,305
                                                                              -----------------   -----------------

     BASIC EPS:
       Income before accounting change                                        $            0.76   $            0.68
       Cumulative effect of accounting change, net of tax                                     -               (0.06)
                                                                              -----------------   -----------------
       Net income                                                             $            0.76   $            0.62
                                                                              -----------------   -----------------

     DILUTED EPS:
       Income before accounting change                                        $            0.75   $            0.66
       Cumulative effect of accounting change, net of tax                                     -               (0.05)
                                                                              -----------------   -----------------
       Net income                                                             $            0.75   $            0.61
                                                                              -----------------   -----------------
</Table>

                                       8
<Page>

                           AMERICAN EXPRESS COMPANY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

     For the three months ended March 31, 2005 and 2004, the dilutive effect
     of stock options excludes 18 million and 11 million options,
     respectively, from the computation of diluted EPS because to do so would
     have been antidilutive. As discussed in Footnote 1 in the Company's
     Annual Report on Form 10-K for the year ended December 31, 2004, the
     convertible debentures issued in November 2003 will not affect the
     computation of EPS unless the Company's common share price exceeds the
     base conversion price (currently $69.41 per share). In that scenario,
     the Company would reflect the additional common shares in the
     calculation of diluted earnings per share using the treasury stock
     method. The maximum number of shares issuable under the debentures is
     16.7 million.

9.   SEGMENT INFORMATION

     The Company is principally engaged in providing travel-related, financial
     services and international banking services throughout the world. TRS'
     products and services include, among others, charge cards, cardmember
     lending products, Travelers Cheques and corporate and consumer travel
     services. AEFA is comprised primarily of asset management and insurance
     businesses whose products are principally offered through its network of
     over 12,000 financial advisors. AEB's products and services include
     providing private, financial institution and corporate banking; personal
     financial services and global trading. The Company operates on a global
     basis, although the principal market for financial advisory services is
     the United States.

     The following table presents certain information regarding these
     operating segments, based on management's evaluation and internal
     reporting structure, for the three months ended March 31, 2005 and 2004.
     For certain income statement items that are affected by asset
     securitizations at TRS, data are provided on both a GAAP basis, as well
     as on a managed basis, which excludes the effect of securitizations.
     Pretax income and net income are the same under both a GAAP and managed
     basis. See TRS Results of Operations section of MD&A for further
     information regarding the effect of securitizations on the financial
     statements.

<Table>
<Caption>
                                                                                   Three Months Ended March 31,
                                                                              -------------------------------------
     (Millions)                                                                     2005                2004
                                                                              -----------------   -----------------
     <S>                                                                      <C>                 <C>
     REVENUES (GAAP BASIS):
     Travel Related Services                                                  $           5,582   $           5,050
     American Express Financial Advisors                                                  1,861               1,728
     American Express Bank                                                                  207                 210
     Corporate and Other                                                                    (77)                (78)
                                                                              -----------------   -----------------
     Total                                                                    $           7,573   $           6,910
                                                                              =================   =================

     REVENUES (MANAGED BASIS):
     Travel Related Services                                                  $           5,788   $           5,329
     American Express Financial Advisors                                                  1,861               1,728
     American Express Bank                                                                  207                 210
     Corporate and Other                                                                    (77)                (78)
                                                                              -----------------   -----------------
     Total                                                                    $           7,779   $           7,189
                                                                              =================   =================

     PRETAX INCOME (LOSS) BEFORE ACCOUNTING CHANGE:
     Travel Related Services                                                  $           1,172   $             973
     American Express Financial Advisors                                                    235                 317
     American Express Bank                                                                   46                  48
     Corporate and Other                                                                    (78)                (90)
                                                                              -----------------   -----------------
     Total                                                                    $           1,375   $           1,248
                                                                              =================   =================
</Table>

                                       9
<Page>

                           AMERICAN EXPRESS COMPANY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

<Table>
<Caption>
                                                                                   Three Months Ended March 31,
                                                                              -------------------------------------
     (Millions)                                                                     2005                2004
                                                                              -----------------   -----------------
     <S>                                                                      <C>                 <C>
     INCOME (LOSS) BEFORE ACCOUNTING CHANGE:
     Travel Related Services                                                  $             801   $             665
     American Express Financial Advisors                                                    166                 228
     American Express Bank                                                                   30                  30
     Corporate and Other                                                                    (51)                (58)
                                                                              -----------------   -----------------
     Total                                                                    $             946   $             865
                                                                              =================   =================

     NET INCOME (LOSS):
     Travel Related Services                                                  $             801   $             665
     American Express Financial Advisors *                                                  166                 157
     American Express Bank                                                                   30                  30
     Corporate and Other                                                                    (51)                (58)
                                                                              -----------------   -----------------
     Total *                                                                  $             946   $             794
                                                                              =================   =================
</Table>

     * RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2004 REFLECT A $109
       MILLION NON-CASH PRETAX CHARGE ($71 MILLION AFTER-TAX) RELATED TO THE
       JANUARY 1, 2004 ADOPTION OF SOP 03-1.

10.  RESTRUCTURING CHARGES

     As discussed in Note 22 to the Company's Annual Report on Form 10-K for
     the year ended December 31, 2004, the Company recorded aggregate
     restructuring charges of $102 million ($66 million after-tax) for
     initiatives executed during 2004. During the first quarter of 2005, the
     Company recorded additional charges of $10 million relating principally
     to the restructuring activities associated with its business travel
     operations. The following table summarizes by category the Company's
     aggregate restructuring charge activity for the three months ended March
     31, 2005:

<Table>
<Caption>
                                                 Liability
                                                 Balance at                                                  Liability
                                                December 31,                              Charges           Balance at
     (Millions)                                     2004             Cash paid          (reversals)       March 31, 2005
                                             -----------------   -----------------   -----------------   -----------------
     <S>                                     <C>                 <C>                 <C>                 <C>
     SEVERANCE
        Travel Related Services              $              36   $             (26)  $               9   $              19
        American Express Financial
              Advisors                                       2                  --                  (1)                  1
        American Express Bank                               30                  (1)                 --                  29
                                             -----------------   -----------------   -----------------   -----------------
     Total Severance                                        68                 (27)                  8                  49
                                             -----------------   -----------------   -----------------   -----------------
     OTHER
        Travel Related Services                              8                  (4)                  1                   5
        American Express Bank                                5                  --                  --                   5
                                             -----------------   -----------------   -----------------   -----------------
     Total Other                                            13                  (4)                  1                  10
                                             -----------------   -----------------   -----------------   -----------------
     Total Severance & Other                 $              81   $             (31)  $               9   $              59
                                             =================   =================   =================   =================
</Table>

                                      10
<Page>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

American Express Company is engaged in a variety of businesses comprising
three operating segments: Travel Related Services (TRS), American Express
Financial Advisors (AEFA) and American Express Bank (AEB).

TRS includes a broad range of products including charge and credit cards;
stored value products such as Travelers Cheques, Travelers Cheque funds cards
and gift cards; travel agency services and travel, entertainment and
purchasing expense management services; network services and merchant
acquisition and merchant processing for our network partners and proprietary
payments businesses. TRS' various products are sold globally to diverse
customer groups, including consumers, small businesses, mid-market companies,
large corporations and banking institutions. These products are sold through
various channels including direct mail, on-line applications, targeted
sales-forces and direct response advertising.

TRS generates revenue from a variety of sources including global payments,
such as charge and credit cards, travel services and stored value products,
including Travelers Cheques. Charge and credit cards generate revenue for the
Company primarily in three different ways:

- -    Discount revenue, the Company's largest single revenue source, which
     represents fees charged to merchants when cardmembers use their cards to
     purchase goods and services on our network,
- -    Finance charge revenue, which is earned on outstanding balances related
     to the cardmember lending portfolio, and
- -    Card fees, which are earned for annual membership, and other commissions
     and fees such as foreign exchange conversion fees and card-related fees
     and assessments.

In addition to operating costs associated with these activities, other major
expense categories are expenses related to marketing and reward programs that
add new cardmembers, promote cardmember loyalty and spending and provisions
for anticipated cardmember credit and fraud losses. During the first quarter
of 2005, the TRS segment accounted for approximately 74 percent and 85 percent
of the Company's total revenues and net income, respectively.

AEFA is comprised primarily of asset management and insurance businesses whose
products are principally offered through its network of over 12,000 financial
advisors.

AEFA earns management and distribution fees on mutual funds, wrap products,
assets managed for institutions and separate accounts. AEFA's insurance and
annuity products generate revenue through premiums and other charges collected
from policyholders and contractholders and through investment income earned on
owned assets supporting these products. AEFA incurs various operating costs,
principally provision for losses and benefits for annuities, investment
certificates and insurance products.

On February 1, 2005, the Company announced plans to pursue a spin-off of AEFA
to shareholders. Shareholders would receive 100 percent of the common shares
of American Express Financial Corporation (AEFC), through which the financial
advisors business is conducted. The transaction is intended to be tax-free to
shareholders and is expected to be completed late in the third quarter of
2005, subject to certain conditions, including necessary regulatory approvals
and the receipt of a favorable tax ruling and/or opinion, as well as final
board approval. Expenses related to this spin-off will be reflected in each
quarter as incurred. See Note 23 in the Company's Annual Report on Form 10-K
for the year ended December 31, 2004 for further discussion of the proposed
spin-off. All discussions that follow describe the Company's business and
organization as currently structured.

AEB offers financial products and services to retail customers, wealthy
individuals and financial institutions outside the United States that generate
interest income, commissions and fees, foreign exchange income and other
revenue. In addition to various operating costs, AEB recognizes provisions for
credit losses, mainly on its outstanding loans.

                                      11
<Page>

The Company follows accounting principles generally accepted in the United
States (GAAP). In addition to information provided on a GAAP basis, the
Company discloses certain data on a "managed basis." This information, which
should be read only as a supplement to GAAP information, assumes there have
been no securitization transactions at TRS, i.e., as if all securitized
cardmember loans and related income effects are reflected in the Company's
balance sheets and income statements. See the TRS Results of Operations
section for further discussion of this approach.

Certain of the statements below are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. See the
"Forward-Looking Statements" section below.

CONSOLIDATED RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2005
AND 2004

The Company's consolidated net income rose 19 percent to $946 million and
diluted earnings per share (EPS) rose 23 percent to $0.75 in the three-month
period ended March 31, 2005 as compared to a year ago. The Company's
consolidated income before the prior year's accounting change rose 9 percent
and diluted EPS before accounting change rose 14 percent. On a trailing
12-month basis, return on average shareholders' equity was 22.8 percent.

Net income and EPS for the three months ended March 31, 2004 reflect the $71
million ($109 million pretax) or $0.05 per diluted share impact of the
Company's adoption of the American Institute of Certified Public Accountants
(AICPA) Statement of Position 03-1, "Accounting and Reporting by Insurance
Enterprises for Certain Nontraditional Long-Duration Contracts and for
Separate Accounts" (SOP 03-1). SOP 03-1 requires insurance enterprises to
establish liabilities for benefits that may become payable under variable
annuity death benefit guarantees or other insurance or annuity contract
provisions. Previous to the adoption of SOP 03-1, these costs were expensed
when payable.

Both the Company's revenues and expenses are affected by changes in the
relative values of non-U.S. currencies to the U.S. dollar. The currency rate
changes increased both revenue and expense growth by approximately 1
percentage point for the three months ended March 31, 2005.

The following discussion is presented on a basis consistent with GAAP unless
otherwise noted.

REVENUES
Consolidated revenues for the three months ended March 31, 2005 were $7.6
billion, up 10 percent from $6.9 billion in the same period a year ago
reflecting 11 percent growth at TRS, 8 percent growth at AEFA and a 1 percent
decline at AEB. As discussed in further detail below, the increase in the
first quarter was due primarily to higher discount revenue, increased net
securitization income, higher net investment income and greater cardmember
lending net finance charge revenue.

Discount revenue at TRS rose 13 percent to $2.7 billion as compared to a year
ago as a result of a 15 percent increase in worldwide billed business,
reflecting a 10 percent increase in average cardmember spending per
proprietary basic card and 7 percent growth in cards-in-force, offset in part
by a lower discount rate.

Net investment income of $803 million increased 8 percent over the year ago
period primarily as a result of a 12 percent increase at AEFA that was
partially offset by lower net interest income at AEB. The increase at AEFA
reflects higher levels of invested assets and the effect of net investment
gains in 2005 compared to net investment losses in 2004.

Cardmember lending net finance charge revenue at TRS of $592 million rose 9
percent, reflecting 5 percent growth in the average balance of the owned
cardmember lending portfolio and a higher portfolio yield.

Net securitization income of $316 million increased 38 percent for the three
months ended March 31, 2005 versus the same period a year ago primarily due to
a greater average balance of securitized loans, a higher portfolio yield and a
decrease in portfolio write-offs, partially offset by greater interest expense
due to a higher coupon rate paid to certificate holders.

                                      12
<Page>

EXPENSES
Consolidated expenses for the three months ended March 31, 2005 were $6.2
billion, up 9 percent from $5.7 billion for the same period in 2004 reflecting
increases of 8 percent at TRS and 15 percent at AEFA and a decline of 1
percent at AEB. As discussed in further detail below, the increase in the
first quarter of 2005 was primarily driven by higher marketing, promotion,
rewards and cardmember services expenses, greater human resources costs,
greater provisions for losses and benefits and increased interest expense,
which were partially offset by lower other operating expenses. Consolidated
expenses include $22 million related to the AEFA spin-off. Also included in
consolidated expenses are $21 million of charges recorded in connection with
initiatives relating principally to the continuation of the restructuring of
the TRS' business travel operations and reengineering of certain functions
within the Company's finance group and banking operations.

Human resources expenses increased 12 percent to $2.0 billion due to increased
costs related to management incentives, including the impact of an additional
incremental year of higher stock-based compensation expenses, merit increases
and employee benefit expenses. The higher stock-based compensation expense
from stock options reflects the Company's decision to expense stock options
beginning in 2003, partially offset by the decision to issue fewer stock
options. Higher expense related to restricted stock awards reflects
the Company's decision to modify compensation practices and use restricted
stock awards in place of stock options for middle management. The increase
in human resources expenses also includes the first quarter 2004 impact of
the $44 million deferred acquisition cost (DAC) valuation benefit at AEFA
reflecting a portion of the benefit of the lengthening of amortization periods
for certain insurance and annuity products in conjunction with the adoption of
SOP 03-1. The total DAC valuation benefit of $66 million (including the $22
million benefit noted below) and the impact of the adoption of SOP 03-1 are
discussed in the AEFA Results of Operations section below.

Marketing, promotion, rewards and cardmember services expenses increased 30
percent to $1.4 billion versus a year ago primarily due to a 29 percent
increase at TRS, reflecting both higher marketing and promotion expenses and,
to a lesser extent, greater reward costs. The increase in marketing and
promotion expenses was primarily driven by the Company's recent global brand
advertising campaign and continued focus on business-building initiatives.
Rewards costs reflect strong volume growth, higher redemption rates and the
continued increase in cardmember loyalty program participation. Management
believes, based on historical experience, that cardmembers enrolled in rewards
and co-brand programs yield higher spend, better retention, stronger credit
performance and greater profit for the Company.

Total provisions for losses and benefits increased 8 percent to $1.1 billion
over last year, primarily resulting from increases in the charge card and
lending provisions at TRS and increased interest credited on investment
certificates at AEFA. Other expenses decreased 24 percent to $413 million
primarily reflecting decreased expenses at TRS as a result of the third
quarter 2004 sale of the ATM business, a positive change in reserves resulting
from various control improvements and reduced printing and supplies expenses.
These decreases were partially offset by $35 million (after tax) of expenses
related to securities industry regulatory matters at AEFA (see Mutual Fund
Industry Developments below for further discussion) and the impact of the $22
million DAC valuation benefit in the first quarter 2004 at AEFA.

The effective tax rate was 31 percent for both the three-month periods ended
March 31, 2005 and 2004.

As previously disclosed, the Company expects to incur expenses related to the
proposed tax-free spin-off of AEFA, which cumulatively will be significant.
The transaction is expected to occur late in the third quarter of this year.
Separately, the Company also continues to engage in various reengineering
activities, which are expected to result in significant expenses during the next
several quarters. In addition, the Company is working with tax authorities to
complete tax audits for certain prior years, the completion of which are
expected to result in the Company's recognizing significant benefits later this
year.

                                      13
<Page>

CONSOLIDATED LIQUIDITY AND CAPITAL RESOURCES

CAPITAL STRATEGY
The Company believes allocating capital to its growing businesses with a
return on risk-adjusted equity in excess of their cost of capital will
continue to build shareholder value. The Company's philosophy is to retain
earnings sufficient to enable it to meet its growth objectives, and, to the
extent capital exceeds investment opportunities, return excess capital to
shareholders. Assuming the Company achieves its financial objectives of 12 to
15 percent EPS growth, 18 to 20 percent return on equity and 8 percent revenue
growth, on average and over time, it will seek to return to shareholders an
average of 65 percent of capital generated, subject to business mix,
acquisitions and rating agency requirements. Assuming the completion of the
AEFA spin-off discussed above, the Company plans to raise its return on equity
target to 28 to 30 percent while maintaining a 65 percent payout of free
capital generated. During the quarter, the Company paid $150 million in
dividends and continued share repurchases as discussed below.


SHARE REPURCHASES
The Company has in place a share repurchase program to return equity capital
in excess of its business needs to shareholders. These share repurchases are
made to both offset the issuance of new shares as part of employee
compensation plans and to reduce shares outstanding. The Company repurchases
its common shares primarily by open market purchases using several brokers at
competitive commission and fee rates. In addition, common shares may also be
purchased from the Company-sponsored Incentive Savings Program (ISP) to
facilitate the ISP's required disposal of shares when employee-directed
activity results in an excess common share position. Such purchases are made
at market price without commissions or other fees. During the first quarter of
2005, the Company repurchased 12.3 million common shares at an average price
of $53.86. Since the inception of the share repurchase program in September
1994, 507.8 million shares have been acquired under total authorizations to
repurchase up to 570 million shares, including purchases made under past
agreements with third parties. The lower repurchase activity during the first
quarter 2005 compared to recent quarters reflects a more measured approach to
repurchases as the Company evaluates the capital implications of the
anticipated AEFA spin-off.

CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
The Company generated net cash provided by operating activities in amounts
greater than net income for both the three months ended March 31, 2005 and
2004 primarily due to provisions for losses and benefits, which represent
expenses in the Consolidated Statements of Income but do not require cash at
the time of provision. Similarly, depreciation and amortization represent
non-cash expenses. In addition, net cash was provided by fluctuations in other
operating assets and liabilities. These accounts vary significantly in the
normal course of business due to the amount and timing of various payments.

Management believes cash flows from operations, available cash balances and
short-term borrowings will be sufficient to fund the Company's operating
liquidity needs.

CASH FLOWS FROM INVESTING ACTIVITIES
The Company's investing activities primarily include funding TRS' cardmember
loans and receivables and AEFA's Available-for-Sale investment portfolio.

For the three months ended March 31, 2005, net cash was provided by investing
activities primarily due to the net decrease in cardmember receivables and
loans, partially offset by net maturities of cardmember loans within the
securitization trust. For the three months ended March 31, 2004, net cash was
used in investing activities primarily due to the cumulative benefit of sales
of annuities, insurance and certificate products at AEFA, partially offset by
decreases in cardmember receivables and loans.

CASH FLOWS FROM FINANCING ACTIVITIES
The Company's financing activities primarily include the issuance of debt and
AEFA's sale of annuities and investment certificates, in addition to taking
customer deposits. The Company also regularly repurchases its common shares.

                                      14
<Page>

Net cash used in financing activities for the three months ended March 31,
2005 was greater compared to the same period in 2004 primarily due to a larger
net decrease in total debt and a net decrease in customer deposits in 2005
versus a net increase in 2004, partially offset by increased net sales of
annuities and investment certificates and a reduced amount of share repurchase
activity.

PARENT COMPANY FUNDING
At March 31, 2005, the Parent Company had $4.3 billion of debt or equity
securities available for issuance under shelf registrations filed with the
Securities and Exchange Commission (SEC). In addition, TRS; American Express
Centurion Bank (Centurion Bank), a wholly-owned subsidiary of TRS; American
Express Credit Corporation (Credco), a wholly-owned subsidiary of TRS;
American Express Overseas Credit Corporation Limited, a wholly-owned
subsidiary of Credco; and AEB have established programs for the issuance,
outside the United States, of debt instruments to be listed on the Luxembourg
Stock Exchange. The maximum aggregate principal amount of debt instruments
outstanding at any one time under the program will not exceed $6.0 billion. At
March 31, 2005, $3.3 billion was outstanding under this program.

The Board of Directors authorized a Parent Company commercial paper program
supported by the multi-purpose committed bank credit facility discussed below.
There was no Parent Company commercial paper outstanding as of March 31, 2005
and no borrowings have been made under its bank credit facility. As of March
31, 2005, the Company maintained total committed bank lines of credit totaling
$13.9 billion, which included $1.96 billion allocated to the Parent Company.
During April 2005 the Company renewed and extended a total of $7 billion of
these committed credit line facilities. In connection with the renewal and
extension, the Company renegotiated the consolidated tangible net worth
covenant contained therein (as well as in the remaining credit facility
containing such covenant) to provide for an adjustment upon completion of
the proposed spin-off of the shares of AEFC. This covenant is applicable only
to the Parent Company's credit lines. Under the terms of this covenant, the
Parent Company's right to borrow under the credit facilities is subject to the
Company's maintaining consolidated tangible net worth (as defined under the
credit facilities) of not less than $9 billion until the completion of the
proposed spin-off. After completion of the proposed spin-off, the amount
required under the consolidated tangible net worth covenant would be reduced by
approximately 70% of AEFC's pre-spin-off contribution to the Company's
consolidated tangible net worth.

                                      15
<Page>

TRAVEL RELATED SERVICES

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004

                             STATEMENTS OF INCOME

<Table>
<Caption>
                                                                  Three Months Ended
                                                                       March 31,
                                                            -------------------------------     Percentage
(Dollars in millions)                                            2005             2004           Inc/(Dec)
                                                            --------------   --------------   --------------
<S>                                                         <C>              <C>                       <C>
Net revenues:
    Discount revenue                                        $        2,672   $        2,368             12.9%
    Lending:
        Finance charge revenue                                         770              668             15.1
        Interest expense                                               178              127             40.1
                                                            --------------   --------------
           Net finance charge revenue                                  592              541              9.3
    Net card fees                                                      498              472              5.6
    Travel commissions and fees                                        422              417              1.2
    Other commissions and fees                                         563              510             10.2
    Travelers Cheque investment income                                  94               93              1.3
    Securitization income, net                                         316              230             37.5
    Other revenues                                                     425              419              1.5
                                                            --------------   --------------
           Total net revenues                                        5,582            5,050             10.5
                                                            --------------   --------------

Expenses:
    Marketing, promotion, rewards and cardmember services            1,316            1,023             28.6
    Provision for losses and claims:
        Charge card                                                    215              198              8.8
        Lending                                                        295              287              2.9
        Other                                                           35               29             17.2
                                                            --------------   --------------
           Total                                                       545              514              6.0
    Charge card interest expense                                       176              168              5.1
    Human resources                                                  1,143            1,065              7.3
    Other operating expenses:
      Professional services                                            482              469              2.7
      Occupancy and equipment                                          323              308              4.8
      Communications                                                   115              121             (5.1)
      Other                                                            310              409            (23.9)
                                                            --------------   --------------
        Total other operating expenses                               1,230            1,307             (5.9)
                                                            --------------   --------------
           Total expenses                                            4,410            4,077              8.2
                                                            --------------   --------------
Pretax income                                                        1,172              973             20.4
Income tax provision                                                   371              308             20.3
                                                            --------------   --------------
Net income                                                  $          801   $          665             20.5
                                                            ==============   ==============
</Table>

TRS reported net income of $801 million for the three month period ended March
31, 2004, a 20 percent increase from $665 million for the same period a year
ago.

The following management discussion includes information on both a GAAP basis
and managed basis. The Company presents TRS information on a managed basis
because that is the way the Company's management views and manages the
business. It differs from the accompanying financial statements, which are
prepared in accordance with GAAP, as managed basis presentation assumes there
have been no securitization transactions, i.e., as if all securitized
cardmember loans and related income effects are reflected in the Company's
balance sheet and income statement, respectively. Management believes that the
trends in the Company's cardmember lending business are more accurately
portrayed by evaluating the performance of both securitized and
non-securitized cardmember loans. Asset securitization is just one of several
ways the Company funds cardmember loans. Use of a managed basis presentation,
including non-securitized and securitized cardmember loans, presents a more
accurate picture of the key dynamics of the cardmember lending business,
avoiding distortions due to the mix of funding sources at any particular point
in time. For example, irrespective of the mix, it is important for management
and investors to

                                      16
<Page>

see metrics, such as changes in delinquencies and write-off rates, for the
entire cardmember lending portfolio because it is more representative of the
economics of the aggregate cardmember relationships and ongoing business
performance and trends over time. It is also important for investors to see
the overall growth of cardmember loans and related revenue and changes in
market share, which are significant metrics in evaluating the Company's
performance and which can only be properly assessed when all non-securitized
and securitized cardmember loans are viewed together on a managed basis.

On a GAAP basis, results reflect finance charge revenue on the owned loan
portfolio as well as finance charge revenue on the retained seller's interest
from securitization activity. GAAP basis results also include investment
income on the Company's investments in other subordinated retained interests
from loan securitization issuances.

TRS' owned portfolio is primarily comprised of cardmember receivables
generated by the Company's charge card products and unsecuritized cardmember
loans. The Company securitizes cardmember loans as part of its financing
strategy; consequently, the level of unsecuritized cardmember loans is
primarily a function of the Company's financing requirements. As a portfolio,
unsecuritized cardmember loans tend to be less seasoned than securitized
loans, primarily because of the lead time required to designate and securitize
each loan. The Company does not currently securitize international loans.
Delinquency, reserve coverage and net write-off rates have historically been
broadly comparable between the Company's owned and managed portfolios.

On a GAAP basis, results reflect net securitization income, which is comprised
of the non-credit provision components of the net gains and charges from
securitization activities, the amortization and related impairment charges, if
any, of the interest-only strip, excess spread related to securitized loans,
net finance charge revenue on retained interests in securitized loans, and
servicing income, net of related discounts or fees. Excess spread, which is
the net positive cash flow from interest and fee collections allocated to the
investor's interests after deducting the interest paid on investor
certificates, credit losses, contractual servicing fees and other expenses is
recognized in securitization income as it is earned. Net securitization income
of $316 million increased 38 percent for the three months ended March 31, 2005
versus the same period a year ago primarily due to a greater average balance
of securitized loans, a higher portfolio yield and a decrease in the portfolio
write-offs, partially offset by greater interest expense due to a higher
coupon rate paid to certificate holders. See Selected Statistical Information
below for data relating to TRS' owned loan portfolio.

During the three months ended March 31, 2005 and 2004, TRS recognized net
gains, including the credit components, of $6 million ($4 million after-tax)
and $8 million ($5 million after-tax), respectively, from net securitization
activities. For the three months ended March 31, 2005, the net gains consisted
of $41 million of income from the securitization of $1.2 billion of cardmember
loans, including the impact of the related credit reserves on the sold loans.
This amount was partially offset by $35 million of charges related to the
maturity of $1.0 billion of previously outstanding issuances. For the three
months ended March 31, 2004, the net gains consisted of $39 million of income
from the securitization of $800 million of cardmember loans, including the
impact of the related credit reserves on the sold loans. This amount was
partially offset by $31 million of charges related to changes in interest-only
strip assumptions.

Management views any net gains from securitizations as discretionary benefits
to be used for card acquisition expenses, which are reflected in both
marketing, promotion, rewards and cardmember services and other operating
expenses. Consequently, the managed basis presentation for the three months
ended March 31, 2005 and 2004 assumes that the impact of this net activity was
offset by higher marketing, promotion, rewards and cardmember services
expenses of $4 million and $4 million, respectively, and other operating
expenses of $2 million and $4 million, respectively. Accordingly, the
incremental expenses, as well as the impact of this net activity, have been
eliminated. The following tables reconcile the GAAP basis for certain TRS
income statement line items to the managed basis information, where different.

                                      17
<Page>

GAAP BASIS TO MANAGED BASIS RECONCILIATION -- EFFECT OF SECURITIZATIONS

THREE MONTHS ENDED MARCH 31, (Dollars in millions)

<Table>
<Caption>
                                         GAAP Basis                 Securitization Effect        Managed Basis
                            ------------------------------------   ---------------------------------------------------------------
                                                      Percentage                                                       Percentage
                               2005         2004       Inc/(Dec)      2005         2004         2005         2004       Inc/(Dec)
                            ------------------------------------   ---------------------------------------------------------------
<S>                         <C>          <C>               <C>     <C>          <C>          <C>          <C>               <C>
Net revenues:
  Discount revenue
  Lending:                  $    2,672   $    2,368         12.9%
    Finance charge
      revenue                      770          668         15.1   $      609   $      539   $    1,379   $    1,207         14.2%
    Interest expense               178          127         40.1          140           83          318          210         51.2
                            -----------------------                -------------------------------------------------
      Net finance
        charge revenue             592          541          9.3          469          456        1,061          997          6.3
  Net card fees                    498          472          5.6
  Travel commissions
    and fees                       422          417          1.2
  Other commissions
    and fees                       563          510         10.2           53           53          616          563          9.2
  Travelers Cheque
    investment income               94           93          1.3
  Securitization
    income, net                    316          230         37.5         (316)        (230)           -            -            -
  Other revenues                   425          419          1.5
                            -----------------------                -------------------------------------------------
    Total net revenues           5,582        5,050         10.5          206          279        5,788        5,329          8.6
                            -----------------------                -------------------------------------------------
Expenses:
  Marketing, promotion,
    rewards and
    cardmember services          1,316        1,023         28.6           (4)          (4)       1,312        1,019         28.8
  Provision for losses
    and claims:
      Charge card                  215          198          8.8
      Lending                      295          287          2.9          212          287          507          574        (11.8)
      Other                         35           29         17.2
                            -----------------------                -------------------------------------------------
        Total                      545          514          6.0          212          287          757          801         (5.6)
                            -----------------------                -------------------------------------------------
  Charge card
    interest expense               176          168          5.1
  Human resources                1,143        1,065          7.3
  Other operating
    expenses:
    Professional services          482          469          2.7
    Occupancy and
      equipment                    323          308          4.8
    Communications                 115          121         (5.1)
    Other                          310          409        (23.9)          (2)          (4)         308          405        (23.9)
                            -----------------------                --------------------------------------------------------------
       Total                     1,230        1,307         (5.9)          (2)          (4)       1,228        1,303         (5.8)
                            -----------------------                --------------------------------------------------------------
         Total expenses          4,410        4,077          8.2   $      206   $      279   $    4,616   $    4,356          6.0
                            -----------------------                --------------------------------------------------------------
Pretax income                    1,172          973         20.4
Income tax provision               371          308         20.3
                            -----------------------
Net income                  $      801   $      665         20.5
                            -----------------------
</Table>

                                      18
<Page>

                       SELECTED STATISTICAL INFORMATION

<Table>
<Caption>
                                                                      Three Months Ended
                                                                            March 31,
                                                                 -------------------------------    Percentage
(Amounts in billions, except percentages and where indicated)        2005              2004          Inc/(Dec)
                                                                 --------------   --------------   --------------
<S>                                                              <C>              <C>                        <C>
Total cards-in-force (millions):*
  United States                                                            40.3             37.0              8.7%
  Outside the United States                                                25.8             24.6              5.1
                                                                 --------------   --------------
    Total                                                                  66.1             61.6              7.3
                                                                 ==============   ==============
Basic cards-in-force (millions):*
  United States                                                            30.6             28.1              8.7
  Outside the United States*                                               21.3             20.4              4.6
                                                                 --------------   --------------
    Total                                                                  51.9             48.5              7.0
                                                                 ==============   ==============
Card billed business:*
  United States                                                  $         79.6   $         70.1             13.6
  Outside the United States                                                29.7             25.3             17.5
                                                                 --------------   --------------
    Total                                                        $        109.3   $         95.4             14.6
                                                                 ==============   ==============

Average discount rate                                                      2.56%            2.59%
Average basic cardmember spending (dollars)*                     $        2,412   $        2,202              9.5
Average fee per card - managed (dollars)*                        $           35   $           35                -
Travel sales                                                     $          5.0   $          4.8              5.4
  Travel commissions and fees/sales                                         8.4%             8.7%
Travelers Cheque and prepaid products:
  Sales                                                          $          4.2   $          4.4             (3.7)
  Average outstanding                                            $          7.1   $          6.8              4.1
  Average investments                                            $          7.8   $          7.3              6.8
  Investment yield                                                          5.2%             5.4%
  Tax equivalent yield                                                      8.0%             8.3%
</Table>

*   Cards billed business and cards-in-force include activities related to
    proprietary cards and cards issued under network partnership agreements.
    Average basic cardmember spending and average fee per card are computed
    from proprietary card activities only.

                                      19
<Page>

                 SELECTED STATISTICAL INFORMATION (CONTINUED)

<Table>
<Caption>
                                                                       Three Months Ended
                                                                            March 31,
                                                                 --------------   --------------    Percentage
(Amounts in billions, except percentages and where indicated)         2005             2004          Inc/(Dec)
                                                                 -------------------------------   --------------
<S>                                                              <C>              <C>                        <C>
Worldwide cardmember receivables:
  Total receivables                                              $         30.0   $         27.9              7.7%
  90 days past due as a % of total                                          1.9%             2.0%
  Loss reserves (millions):                                      $          831   $          896             (7.3)
    % of receivables                                                        2.8%             3.2%
    % of 90 days past due                                                   147%             164%
  Net loss ratio as a % of charge volume                                   0.23%            0.26%

Worldwide cardmember lending - owned basis:
  Total loans                                                    $         25.9   $         24.5              5.6
  Past due loans as a % of total:
    30-89 days                                                              1.6%             1.7%
    90+ days                                                                1.0%             1.1%
  Loss reserves (millions):
    Beginning balance                                            $          972   $          998             (2.6)
      Provision                                                             266              257              3.4
      Net write-offs                                                       (267)            (264)            (1.1)
      Other                                                                 (53)               3                #
                                                                 --------------   --------------
    Ending balance                                               $          918   $          994             (7.6)
                                                                 ==============   ==============
    % of loans                                                              3.6%             4.1%
    % of past due                                                           134%             145%
  Average loans                                                  $         26.3   $         25.1              5.1
  Net write-off rate                                                        4.1%             4.2%
  Net interest yield                                                        8.6%             8.4%

Worldwide cardmember lending - managed basis:
  Total loans                                                    $         46.3   $         44.8              3.5
  Past due loans as a % of total:
    30-89 days                                                              1.6%             1.7%
    90+ days                                                                1.0%             1.0%
  Loss reserves (millions):
    Beginning balance                                            $        1,475   $        1,541             (4.3)
      Provision                                                             471              545            (13.6)
      Net write-offs                                                       (474)            (519)             8.7
      Other                                                                 (53)               3                #
                                                                 --------------   --------------
    Ending balance                                               $        1,419   $        1,570             (9.6)
                                                                 ==============   ==============
    % of loans                                                              3.1%             3.5%
    % of past due                                                           120%             128%
  Average loans                                                  $         46.4   $         44.8              3.7
  Net write-off rate                                                        4.1%             4.6%
  Net interest yield                                                        8.8%             8.7%
</Table>

# - Denotes a variance of more than 100%.

                                      20
<Page>

The following discussion of TRS' results is presented on a managed basis.

Revenues and expenses are affected by changes in the relative values of
non-U.S. currencies to the U.S. dollar. The currency rate changes increased
both revenue and expense growth by approximately 1 percentage point for the
three months ended March 31, 2005.

REVENUES
TRS' net revenues increased 9 percent to $5.8 billion primarily due to higher
discount revenue, increased cardmember lending net finance charge revenue and
greater other commissions and fees.

Discount revenue of $2.7 billion rose 13 percent compared to a year ago as a
result of a 15 percent increase in billed business partially offset by a lower
discount rate. The decrease in the discount rate primarily reflects changes in
the mix of spending between various merchant segments due to the cumulative
impact of stronger than average growth in the lower rate retail and other
"everyday spend" merchant categories (e.g., supermarkets, discounters, etc.).
As previously indicated, based on the Company's business strategy, it expects
to see continued changes in the mix of business. This, combined with
volume-related pricing discounts and selective repricing initiatives, will
probably continue to result in some discount rate erosion over time.

The 15 percent increase in billed business to $109.3 billion resulted from a
10 percent increase in spending per proprietary basic card worldwide and 7
percent growth in cards-in-force. U.S. billed business rose 14 percent to
$79.6 billion reflecting 13 percent growth within the consumer card business,
17 percent growth in small business services volume and a 7 percent increase
within corporate services. U.S. non-T&E related volume categories, which
represented approximately 66 percent of U.S. billed business during the first
three months of 2005, increased 17 percent over the same period a year ago
while U.S. T&E volumes rose 8 percent reflecting continued improvement in all
T&E industries during the quarter. Total billed business outside the United
States, excluding the impact of foreign exchange translation, was up 13
percent reflecting a growth rate in the mid-teens in Latin America and Canada
and high single-digit growth in Europe and Asia. Worldwide airline related
volumes, which represented 13 percent of total billed business volumes during
the quarter, rose 9 percent as a result of 14 percent growth in transaction
volumes, partially offset by a 5 percent decrease in the average airline
charge. Additionally, global network volumes grew over 35 percent as compared
to the year ago period.

U.S. cards-in-force rose 9 percent to 40.3 million reflecting the benefit of
continued strong card acquisition spending and an improved average customer
retention level within the proprietary issuing business, as well as growth in
U.S. network cards. Non-U.S. cards-in-force increased 5 percent to 25.8
million due to growth in both proprietary and network partnership cards.

Cardmember lending net finance charge revenue of $1.1 billion rose 6 percent
on 4 percent growth in average balance of the managed lending portfolio and a
higher portfolio yield. The net interest yield on the managed worldwide
lending portfolio increased to 8.8% from 8.7% in 2004 reflecting a lower
proportion of the U.S. portfolio on introductory or promotional rates,
increased finance charge rates, partially offset by rising funding costs.

Net card fees of $498 million increased 6 percent versus a year ago,
reflecting the growth in cards-in-force. The average annual fee per
proprietary card-in-force was $35 for both the three months ended March 31,
2005 and 2004. Other commissions and fees increased 9 percent to $616 million
on greater volume-related foreign exchange conversion fees and higher
card-related assessments and network partner-related fees.

EXPENSES
TRS' total expenses increased 6 percent to $4.6 billion primarily due to
higher marketing, promotion, rewards and cardmember services expenses and
greater human resources expenses, partially offset by reduced provisions for
losses and lower other operating expenses.

Marketing, promotion, rewards and cardmember services expenses of $1.3 billion
increased 29 percent compared to the prior year, reflecting substantially
higher marketing and promotion expenses and, to a lesser extent, greater
reward costs. The increase in marketing and promotion expenses is primarily
due to the Company's ongoing global

                                      21
<Page>

brand advertising campaign and continued focus on business building
initiatives. The growth in rewards costs is attributable to strong volume
growth, a higher redemption rate and the continued increase in cardmember
loyalty program participation.

The provision for losses on charge card products increased 9 percent to $215
million, which reflects the effect of higher volumes partially offset by a
lower provision rate. The lower provision rate is primarily due to strong
credit quality as reflected in an improved past due rate and net loss ratio.
The provision for losses on the worldwide lending portfolio decreased 12
percent to $507 million despite growth in loans outstanding due to
well-controlled credit practices. The net write-off rate for the worldwide
lending portfolio was 4.1% for the three months ended March 31, 2005 as
compared to 4.6% for the same period a year ago.

Human resources expenses of $1.1 billion increased 7 percent versus last year
due to greater management incentive expenses, increased employee benefit costs
and merit increases. Other operating expenses decreased 24 percent to $308
million reflecting lower expenses as a result of the third quarter 2004 sale
of the ATM business, a positive change in reserves resulting from various
control improvements and reduced printing and supplies expenses.

The effective tax rate was 32 percent for both the three-month periods ended
March 31, 2005 and 2004.

AIRLINE INDUSTRY MATTERS
Historically, the Company has not experienced significant revenue declines
resulting from a particular airline's scaling-back or closure of operations
due to bankruptcy or other financial challenges because the volumes generated
from the airline are typically shifted to other participants in the industry
that accept the Company's card products. Nonetheless, the Company is exposed
to business and credit risk in the airline industry primarily through business
arrangements where the Company has remitted payment to the airline for a
cardmember purchase of tickets that have not yet been used or "flown". This
creates a potential exposure for the Company in the event that the cardmember
is not able to use the ticket and the Company, based on the facts and
circumstances, credits the cardmember for the unused ticket. Historically,
this type of exposure has not generated any significant losses for the Company
because of the need for an airline that is operating under bankruptcy
protection to continue accepting credit and charge cards and honoring requests
for credits and refunds in the ordinary course in furtherance of its
reorganization and its formal assumption, with bankruptcy court approval, of
its card acceptance agreement, including approval of the Company's right to
hold cash to cover these potential exposures to provide credits to
cardmembers. Typically, as an airline's financial situation deteriorates the
Company increases cash held to protect itself in the event of an ultimate
liquidation of the airline. The Company's goal in these distressed situations
is to hold sufficient cash over time to ensure that upon liquidation the cash
held is equivalent to the credit exposure related to any unused tickets.

As previously disclosed, during the fourth quarter of 2004, the Company
announced that it signed agreements with Delta Air Lines to extend its
co-brand, Membership Rewards and merchant partnerships. The agreements will
extend these partnerships into the next decade. The prepayment has a
three-year term, is fully collateralized by a pool of assets and is subject to
certain conditions. The Company prepaid $250 million of Delta SkyMiles rewards
points in the fourth quarter of 2004 and prepaid the remaining $250 million of
Delta SkyMiles rewards points in the first quarter of 2005. In addition to the
prepayment, the Company has commitments to loan Delta up to an aggregate $75
million under a senior secured facility arranged by GE Commercial Finance, a
portion of which is in the form of a term loan and a portion of which is in
the form of a revolving line of credit. As of March 31, 2005, approximately $70
million was outstanding under this facility. Both the prepayment and the senior
secured facility have a three-year term, are fully collateralized by a pool of
assets and are subject to certain conditions.

                                      22
<Page>

LIQUIDITY AND CAPITAL RESOURCES

                      SELECTED BALANCE SHEET INFORMATION
                                 (GAAP Basis)

(Dollars in billions, except percentages)

<Table>
<Caption>
                                                   March 31,  December 31,  Percentage     March 31,   Percentage
                                                      2005        2004       Inc/(Dec)       2004       Inc/(Dec)
                                                  ----------  ------------  ----------    ----------   ----------
<S>                                               <C>         <C>                 <C>     <C>               <C>
Accounts receivable, net                          $     31.0  $       31.8        (2.5)%  $     29.9          3.8%
Travelers Cheque investments                      $      8.0  $        8.4        (4.3)   $      7.7          3.5
Cardmember loans                                  $     25.9  $       26.9        (3.9)   $     24.5          5.6
Total assets                                      $     84.4  $       87.8        (3.8)   $     79.7          5.9
Travelers Cheques outstanding                     $      7.0  $        7.3        (3.5)   $      6.8          3.6
Short-term debt                                   $     16.7  $       17.2        (2.9)   $     18.8        (11.3)
Long-term debt                                    $     26.4  $       28.3        (6.5)   $     19.9         32.6
Total liabilities                                 $     75.1  $       79.0        (4.9)   $     71.6          5.0
Total shareholder's equity                        $      9.3  $        8.8         5.9    $      8.1         14.1
Return on average total shareholder's equity*           33.9%         33.4%                     31.7%
Return on average total assets**                         3.6%          3.5%                      3.4%
</Table>

*   Computed on a trailing 12-month basis using total shareholder's equity as
    included in the Consolidated Financial Statements prepared in accordance
    with GAAP.
**  Computed on a trailing 12-month basis using total assets as included in
    the Consolidated Financial Statements prepared in accordance with GAAP.

Net accounts receivable and cardmember loans increased as compared to March
31, 2004, primarily as a result of higher average cardmember spending and an
increase in the number of cards-in-force, and decreased as compared to
December 31, 2004, primarily as a result of seasonal spending at year-end.

Total debt increased as compared to March 31, 2004 primarily as a result of
increased funding requirements due to increases in cardmember receivable and
loan balances as noted above. Similarly, total debt decreased from December
31, 2004 primarily as a result of the reduction in cardmember receivables and
loans from seasonal high levels.

TRS funds its cardmember receivables and loans using various funding sources,
such as short- and long-term debt, medium-term notes, and sales of cardmember
receivables and loans in securitizations. As of March 31, 2005, Credco had the
ability to issue approximately $7.2 billion of debt securities under shelf
registration statements filed with the SEC.

In April 2005, the Company renewed and extended a total of $7 billion of its
committed credit line facilities. The committed credit facilities, which total
$13.4 billion, include the U.S. $2.3 billion Australian Credit Facility
discussed below. As contemplated, in the second quarter of 2004, Credco
borrowed $1.47 billion under these facilities as part of a change in local
funding strategy for business in Canada. Of the $13.4 billion available for
borrowing, Credco may borrow a maximum amount of $12.6 billion (including
amounts outstanding), with a commensurate reduction in the amount available
to the Parent Company. Centurion Bank and American Express Bank, FSB (FSB),
both wholly-owned subsidiaries of TRS, may each borrow a maximum amount of
$400 million. These facilities expire as follows (billions): 2006, $2.0;
2009, $6.4; and 2010, $5.0. The availability of the credit lines to Credco,
Centurion Bank and the FSB is subject to their compliance with certain
financial covenants, which do not include the previously referenced tangible
net worth covenant that is applicable only to the Parent Company's borrowings
on its credit lines.

In the third quarter of 2004, Credco entered into a new 5-year multi-bank
credit facility for Australian $3.25 billion (approximately U.S. $2.3 billion)
and borrowed Australian $2.7 billion (approximately U.S. $1.9 billion) under
this credit facility to provide an alternate funding source for business in
Australia.

Credco's ability to borrow under its credit facilities is subject to its
maintenance of a 1.25 ratio of combined earnings and fixed charges to fixed
charges. These credit facilities do not condition borrowing on the absence
of a


                                      23
<Page>

material adverse change. The facilities may not be terminated should there
be a change in the Company's credit rating.

In the fourth quarter of 2003, the Company began a program to develop a
liquidity portfolio to provide back-up liquidity, primarily for the commercial
paper program at Credco, and also flexibility for other short-term funding
programs at Centurion Bank. These funds are invested in two to three year U.S.
Treasury securities. At March 31, 2005, the Company held $4.0 billion in U.S.
Treasury notes under this program.

Securitization of cardmember receivables generated under designated consumer
charge card accounts are accomplished through the transfer of cardmember
receivables to the American Express Master Trust (the Charge Trust).
Securitizations of these receivables are accounted for as secured borrowings
because the Charge Trust is not a qualifying special purpose entity (QSPE).
Accordingly, the related assets being securitized are not treated as sold and
the securities issued to third-party investors are reported as long-term debt
on the Company's Consolidated Balance Sheets. In the three months ended March
31, 2005, $0.8 billion of previously issued trust securities matured. During
the next 12 months, $1.1 billion of cardmember receivable trust securities
that were previously issued by the Charge Trust are scheduled to mature.

Securitization of cardmember loans arising from various portfolios of consumer
accounts are accomplished through the transfer of cardmembers loans to a QSPE,
the American Express Credit Account Master Trust (the Lending Trust). As of
March 31, 2005, the Lending Trust held total assets of $27.2 billion, of which
$20.5 billion had been sold. During the first quarter of 2005, the Company
sold $1.2 billion of cardmember loans. Additionally, during the first quarter
of 2005, $1.0 billion of securities issued to investors from the Lending Trust
matured. During the next 12 months, $5.3 billion of securities that were
previously issued to investors from the Lending Trust are scheduled to mature.
When securities mature, principal collections received from the Lending Trust
assets are used to redeem the securities.

                                      24
<Page>

AMERICAN EXPRESS FINANCIAL ADVISORS

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004

                             STATEMENTS OF INCOME

<Table>
<Caption>
                                                                   Three Months Ended
                                                                         March 31,
                                                             -------------------------------        Percentage
(Dollars in millions)                                             2005            2004              Inc/(Dec)
                                                             --------------   --------------      --------------
<S>                                                          <C>              <C>                           <C>
Revenues:
  Net investment income                                      $          622   $          556                11.8%
  Investment management and service fees                                450              429                 4.9
  Distribution fees                                                     351              352                (0.5)
  Variable life insurance and variable annuity charges*                 114              109                 4.7
  Life and health insurance premiums                                     89               86                 3.3
  Property-casualty insurance premiums                                  115               96                19.8
  Other                                                                 120              100                22.0
                                                             --------------   --------------
    Total revenues                                                    1,861            1,728                 7.7
                                                             --------------   --------------
Expenses:
  Provision for losses and benefits:
    Interest credited on annuities and universal life-type
       Contracts                                                        273              283                (3.5)
    Benefits on insurance and annuities                                 112               99                12.5
    Interest credited on investment certificates                         76               45                71.6
    Losses and expenses on property-casualty insurance                   88               74                18.8
                                                             --------------   --------------
      Total                                                             549              501                 9.7
  Human resources - Field                                               376              348                 8.0
  Human resources - Non-field                                           272              221                22.3
  Amortization of deferred acquisition costs                            128               64                   #
  Other                                                                 301              277                 9.3
                                                             --------------   --------------
    Total expenses                                                    1,626            1,411                15.3
                                                             --------------   --------------
Pretax income before accounting change                                  235              317               (25.9)
Income tax provision                                                     69               89               (22.4)
                                                             --------------   --------------
Income before accounting change                                         166              228               (27.3)
Cumulative effect of accounting change, net of tax                        -              (71)**                #
                                                             --------------   --------------
Net income                                                   $          166   $          157                 5.3
                                                             ==============   ==============
</Table>

# - Denotes a variance of more than 100%

*  INCLUDES VARIABLE UNIVERSAL LIFE AND UNIVERSAL LIFE INSURANCE CHARGES.
** REFLECTS A $109 MILLION NON-CASH PRETAX CHARGE ($71 MILLION AFTER-TAX)
   RELATED TO THE JANUARY 1, 2004 ADOPTION OF SOP 03-1.

                                      25
<Page>

                       SELECTED STATISTICAL INFORMATION

<Table>
<Caption>
                                                                     Three Months Ended
                                                                           March 31,
                                                                -------------------------------       Percentage
(Amounts in millions, except percentages and where indicated)        2005             2004             Inc/(Dec)
                                                                --------------   --------------     ---------------
<S>                                                             <C>              <C>                          <C>
Life insurance inforce (billions)                               $        150.0   $        135.0                11.1%
Deferred annuities inforce (billions)                           $         53.1   $         49.3                 7.6
Assets owned, managed or administered (billions):
  Assets managed for institutions                               $        134.4   $        123.4                 8.9
  Assets owned, managed or administered for individuals:
    Owned assets:
      Separate account assets                                             36.0             32.4                11.0
      Other owned assets                                                  61.9             58.9                 5.1
                                                                --------------   --------------
        Total owned assets                                                97.9             91.3                 7.2
    Managed assets                                                       115.8            109.3                 5.9
    Administered assets                                                   57.4             54.4                 5.6
                                                                --------------   --------------
        Total                                                   $        405.5   $        378.4                 7.2
                                                                ==============   ==============
Market appreciation (depreciation) and foreign currency
 translation during the period:
  Owned assets:
    Separate account assets                                     $         (573)  $          756                   #
    Other owned assets                                          $         (778)  $          713                   #
  Managed assets                                                $       (3,844)  $        5,453                   #
Cash sales:
  Mutual funds                                                  $        9,830   $        9,799                 0.3
  Annuities                                                              2,016            2,186                (7.8)
  Investment certificates                                                2,226            1,324                68.2
  Life and other insurance products                                        236              218                 8.4
  Institutional                                                          1,758            1,415                24.3
  Other                                                                    925            1,292               (28.4)
                                                                --------------   --------------
    Total cash sales                                            $       16,991   $       16,234                 4.7
                                                                ==============   ==============
Number of financial advisors                                            12,356           12,070                 2.4
Fees from financial plans and advice services                   $         39.1   $         33.2                17.6
Percentage of total sales from financial plans
  and advice services                                                     76.6%            75.3%
</Table>

# - Denotes a variance of more than 100%.

AEFA reported net income of $166 million for the three months ended March 31,
2005, up 5 percent from $157 million in the same period a year ago. Income
before accounting change was down 27 percent from $228 million a year ago.
AEFA's first quarter 2004 results reflect the $71 million ($109 million
pretax) impact of the January 1, 2004 adoption of SOP 03-1. SOP 03-1 required
insurance enterprises to establish liabilities for benefits that may become
payable under variable annuity death benefit guarantees or other insurance or
annuity contract provisions. First quarter 2004 results also include a $66
million ($43 million after-tax) deferred acquisition cost valuation benefit
reflecting the lengthening of the amortization periods for certain insurance
and annuity products in conjunction with the adoption of SOP 03-1.

REVENUES
Total revenues increased 8 percent to $1.9 billion primarily due to increased
net investment income, greater investment management and service fees, higher
property-casualty insurance revenues and increased other revenues.

                                      26
<Page>

Net investment income increased 12 percent to $622 million reflecting higher
levels of invested assets and the effect of net investment gains in 2005
compared to net investment losses in 2004. For the three months ended March
31, 2005, $20 million of gross investment gains were partially offset by $10
million of gross investment losses and impairments. Included in these gross
investment gains and losses are $13 million of gross realized gains and $9
million of gross realized losses from sales, as well as $1 million of
other-than-temporary impairment losses, on investments classified as
Available-for-Sale. For the three months ended March 31, 2004, $20 million of
gross investment gains were more than offset by $58 million of impairments and
losses, which included a $49 million charge resulting from management's
decision to further improve the investment portfolio's risk profile through
the early liquidation of a secured loan trust (SLT) managed by AEFA. Included
in these total investment gains and losses were $18 million of gross realized
gains and $5 million of gross realized losses from sales of securities
classified as Available-for-Sale.

Investment management and service fees of $450 million increased 5 percent due
to higher average assets under management, reflecting improved equity market
valuations and net asset inflow. Distribution fees declined one percent to
$351 million as lower limited partnership and brokerage-related fees were
partially offset by greater fees earned on wrap accounts. Total mutual fund
cash sales were flat as proprietary sales declined, while non-proprietary
sales rose versus last year. A significant portion of non-proprietary sales
continued to occur in wrap accounts (which are included in assets managed).

Property-casualty insurance premiums increased 20 percent to $115 million,
reflecting a 17 percent increase in the average number of policies inforce
generated, most notably, from the Costco relationship. Other revenues
increased 22 percent to $120 million principally as a result of higher fees
earned on non-proprietary funds and growth in financial planning and advice
services fees.

EXPENSES
Total expense increased 15 percent to $1.6 billion primarily due to increased
human resources expenses, higher amortization of deferred acquisition costs,
increased provisions for losses and benefits as well as higher other operating
expenses. As noted previously, the Company incurred a total of $22 million of
expenses related to AEFA spin-off activities during the first quarter of 2005,
of which $20 million was recorded at AEFA.

Total provision for losses and benefits increased 10 percent to $549 million
as a result of significantly higher interest credited on investment
certificates, increased benefits on insurance and annuities and higher losses
and expenses on property-casualty insurance, partially offset by decreased
interest credited on annuities and universal life-type contracts. Interest
credited on investment certificates rose 72% to $76 million due to higher
average reserves and higher interest crediting rates.

During the three months ended March 31, 2005, field force human resources
expense increased 8 percent to $376 million reflecting $14 million of the $20
million in spin-off related costs noted above, higher assets per advisor and
growth in the advisor force. The total advisor force grew 2 percent to 12,356.
Non-field human resources costs rose 22 percent to $272 million reflecting
performance related incentives at Threadneedle Asset Management Holdings LTD,
higher benefit and management incentive costs and merit increases. The average
number of non-field employees was relatively unchanged from year ago levels.

DAC amortization expense of $128 million increased significantly primarily due
to the impact of the first quarter 2004 $66 million DAC valuation benefit
noted earlier. See the DAC section below for further discussion of DAC and
related adjustments. Other operating expenses increased 9 percent to $301
million primarily reflecting higher advertising and promotion expenses and
increased expenses of $35 million (after tax) related to securities industry
regulatory matters. See Mutual Fund Industry Developments below for further
discussion.

The effective tax rate was 29 percent and 28 percent for the three-month
periods ended March 31, 2005 and 2004, respectively.

                                      27
<Page>

DEFERRED ACQUISITION COSTS

Deferred acquisition costs represent the costs of acquiring new business,
principally direct sales commissions and other distribution and underwriting
costs that have been deferred on the sale of annuity, life and health
insurance and, to a lesser extent, property/casualty and certain mutual fund
products. These costs are deferred to the extent they are recoverable from
future profits. For annuity and insurance products, DAC are amortized over
periods approximating the lives of the business, generally as a percentage of
premiums or estimated gross profits or as a portion of the interest margins
depending on the products' characteristics. For certain mutual fund products,
DAC are generally amortized over fixed periods on a straight-line basis.

For annuity and insurance products, the projections underlying the
amortization of DAC require the use of certain assumptions, including interest
margins, mortality rates, persistency rates, maintenance expense levels and
customer asset value growth rates for variable products. Management routinely
monitors a wide variety of trends in the business, including comparisons of
actual and assumed experience. The customer asset value growth rate is the
rate at which contract values are assumed to appreciate in the future. The
rate is net of asset fees and anticipates a blend of equity and fixed income
investments. Management reviews and, where appropriate, adjusts its
assumptions with respect to customer asset value growth rates on a quarterly
basis.

Management monitors other principal DAC assumptions, such as persistency,
mortality rates, interest margin and maintenance expense level assumptions,
each quarter. Unless management identifies a material deviation over the
course of the quarterly monitoring, management reviews and updates these DAC
assumptions annually in the third quarter of each year. When assumptions are
changed, the percentage of estimated gross profits or portion of interest
margins used to amortize DAC might also change. A change in the required
amortization percentage is applied retrospectively; an increase in
amortization percentage will result in an increase in DAC amortization expense
while a decrease in amortization percentage will result in a decrease in DAC
amortization expense. The impact on results of operations of changing
assumptions with respect to the amortization of DAC can be either positive or
negative in any particular period and is reflected in the period in which such
changes are made.

During the first quarter of 2004 and in conjunction with the adoption of SOP
03-1, AEFA (1) established additional liabilities for insurance benefits that
may become payable under variable annuity death benefit guarantees or on
single pay universal life contracts, which prior to January 1, 2004, were
expensed when payable; and (2) extended the time periods over which DAC
associated with certain insurance and annuity products are amortized to
coincide with the liability funding periods in order to establish the proper
relationships between these liabilities and DAC associated with the same
contracts. As a result, AEFA recognized a $109 million charge ($71 million
after-tax) due to the accounting change on establishing the future liability
under death benefit guarantees and recognized a $66 million ($43 million
after-tax) reduction in DAC amortization expense to reflect the lengthening of
the amortization periods for certain products impacted by SOP 03-1.

DAC balances for various insurance, annuity and other products sold by AEFA
are set forth below:

<Table>
<Caption>
                                                   March 31,       December 31,
(Millions)                                           2005             2004
                                                --------------   --------------
<S>                                             <C>              <C>
Annuities                                       $        1,948   $        1,872
Life and health insurance                                1,792            1,766
Other                                                      187              200
                                                --------------   --------------
  Total                                         $        3,927   $        3,838
                                                ==============   ==============
</Table>

                                      28
<Page>

IMPACT OF MARKET VOLATILITY ON RESULTS OF OPERATIONS

Various aspects of AEFA's business are impacted by equity market levels and
other market-based events. Several areas in particular involve DAC and
deferred sales inducements, recognition of guaranteed minimum death benefits
(GMDB) and certain other variable annuity benefits, asset management fees and
structured investments. The direction and magnitude of the changes in equity
markets can increase or decrease amortization of DAC and deferred sales
inducement benefits, incurred amounts under GMDB and other variable annuity
benefit provisions and asset management fees and correspondingly affect
results of operations in any particular period. Similarly, the value of AEFA's
structured investment portfolio is impacted by various market factors.
Persistency of, or increases in, bond and loan default rates, among other
factors, could result in negative adjustments to the market values of these
investments in the future, which would adversely impact results of operations.
See AEFA's Liquidity and Capital Resources section for a further discussion of
structured investments and consolidated derivatives.

MUTUAL FUND INDUSTRY DEVELOPMENTS

As has been widely reported, the SEC, the National Association of Securities
Dealers, Inc. (NASD) and several state attorneys general have brought
proceedings challenging several mutual fund industry practices, including late
trading, market timing, disclosure of revenue sharing arrangements and
inappropriate sales of B shares. AEFA has received requests for information
concerning its practices and is providing information and cooperating fully
with these inquiries.

On March 21, 2005, AEFA's broker-dealer subsidiary entered into an agreement
with the NASD to settle alleged violations of NASD rules arising from the sale
to AEFA customers of Class B (i.e., no front end load) mutual fund shares
between January 1, 2002 and July 31, 2003. AEFA's agreement with the NASD is
one of several that the NASD entered into with certain brokerage firms
regarding allegedly inappropriate sales of Class B shares. Under the terms of
the settlement, AEFA consented to the payment of a fine to the NASD in the
amount of $13 million. The Company established reserves in prior quarters to
cover the payment of the fine. AEFA also agreed to offer certain customers who
purchased Class B shares in any fund family from January 1, 2002 through the
date of the settlement and continue to hold such shares the option of
converting their Class B shares into a number of Class A shares equal to (x)
the number of Class A shares that the customer could have purchased on the
date(s) that they purchased their Class B shares plus (y) any shares
reflecting reinvestment of dividends. AEFA agreed to pay cash to certain
customers who have sold a portion or all of their Class B shares in order to
put them into substantially the same financial position (based on actual fund
performance and redemption value) in which such customers would have been had
the customers purchased Class A shares instead of Class B shares.

In May 2004, the Company reported that the broker-dealer subsidiary of AEFA
had received notification from the staff of the NASD indicating that it had
made a preliminary determination to recommend that the NASD bring an action
against AEFA for potential violations of federal securities laws and the rules
and regulations of the SEC and the NASD. The notice received by AEFA comes in
the context of a broader industry-wide review of the mutual fund and brokerage
industries that is being conducted by various regulators. The NASD staff's
allegations relate to AEFA's practices with respect to various revenue sharing
arrangements pursuant to which AEFA receives payments from certain
non-proprietary mutual funds for agreeing to make their products available
through AEFA's national distribution network. In particular, the NASD has
alleged that AEFA: (i) failed to properly disclose such revenue sharing
arrangements from January 2001 until May 2003; (ii) failed to properly
disclose such revenue sharing arrangements in its brokerage confirmations; and
(iii) received directed brokerage from January 2001 until December 2003. The
notice from the NASD staff is intended to give AEFA an opportunity to discuss
the issues it has raised. AEFA has been availing itself of this opportunity
and continues to cooperate fully with the NASD's inquiry regarding this
matter, as well as all other regulatory inquiries.

Congress has also proposed legislation and the SEC has proposed and, in some
instances, adopted rules relating to the mutual fund industry, including
expenses and fees, mutual fund corporate governance and disclosures to
customers. For example, during the past year, mutual fund and investment
advisors were required by the SEC to adopt and implement written policies and
procedures designed to prevent violation of the federal securities laws and to
designate a chief compliance officer responsible for administering these
policies and procedures. While there

                                      29
<Page>

remains a significant amount of uncertainty as to what legislative and
regulatory initiatives may ultimately be adopted, these initiatives could
negatively impact mutual fund industry participants' results, including
AEFA's, in future periods.


LIQUIDITY AND CAPITAL RESOURCES

                      SELECTED BALANCE SHEET INFORMATION

(Dollars in billions, except percentages)

<Table>
<Caption>
                                   March 31,      December 31,      Percentage        March 31,       Percentage
                                     2005             2004           Inc/(Dec)          2004           Inc/(Dec)
                                --------------   --------------   --------------   --------------   --------------
<S>                             <C>              <C>                        <C>    <C>                       <C>
Accounts receivable, net        $          6.6   $          5.9             12.6%  $          5.3             24.8%
Investments                     $         44.6   $         44.9             (0.7)  $         43.4              2.6
Separate account assets         $         36.0   $         35.9              0.3   $         32.4             11.0
Deferred acquisition costs      $          3.9   $          3.8              2.3   $          3.6              8.4
Total assets                    $         97.9   $         97.1              0.8   $         91.3              7.3
Customers' deposits             $          5.9   $          5.6              5.5   $          4.7             27.7
Client contract reserves        $         44.9   $         44.3              1.3   $         41.6              8.0
Separate account liabilities    $         36.0   $         35.9              0.3   $         32.4             11.0
Total liabilities               $         91.7   $         90.7              1.2   $         83.9              9.4
Total shareholder's equity      $          6.2   $          6.4             (4.2)  $          7.4            (16.9)
Return on average total
  shareholder's equity before
  accounting change*                      11.2%            11.8%                             11.5%
Return on average total
  shareholder's equity*                   11.2%            10.8%                             10.2%
</Table>

*   Computed on a trailing 12-month basis using total shareholder's equity as
    included in the Consolidated Financial Statements prepared in accordance
    with GAAP.

AEFA's total assets and liabilities increased from a year ago levels primarily
due to higher investments, client contract reserves and separate account
assets and liabilities, which increased as a result of new client inflows and
market appreciation. The increase in managed assets, including separate
accounts, to $286.2 million since March 31, 2004 resulted from market
appreciation and foreign currency translation of $16.0 billion and net inflows
of $5.1 billion. The $6.5 billion decrease in managed assets, including
separate accounts, since December 31, 2004 reflects net outflows of $2.0
billion and market depreciation and foreign currency translation of $4.5
billion. In addition, accounts receivable and customers' deposits
increased due to increased Membership Banking activity, which was transferred
into the AEFA operating segment (from TRS) during 2004.

Investments include $3.0 billion of below investment grade securities
(excluding net unrealized appreciation and depreciation) at March 31, 2005 and
$3.1 billion at both December 31, 2004 and March 31, 2004. These investments
represent 7 percent of AEFA's investment portfolio at March 31, 2005, December
31, 2004 and March 31, 2004. Non-performing assets relative to invested assets
(excluding short-term cash positions) were 0.05%, 0.02% and 0.07% at March 31,
2005, December 31, 2004 and March 31, 2004, respectively. Management believes
a more relevant measure of exposure of AEFA's below investment grade
securities and non-performing assets should exclude $228 million, $230 million
and $231 million, at March 31, 2005, December 31, 2004 and March 31, 2004,
respectively, of below investment grade securities (excluding net unrealized
appreciation and depreciation), which were recorded as a result of the
adoption of the Financial Accounting Standards Board (FASB) Interpretation No.
46 (revised December 2003), "Consolidation of Variable Interest Entities,"
(FIN 46). These assets are not available for AEFA's general use as they are
for the benefit of the collateralized debt obligation (CDO) debt holders, and
reductions in value of such investments will be fully absorbed by the third
party investors. Excluding the impacts of FIN 46, investments include $2.8
billion at March 31, 2005 and $2.9 billion at both December 31, 2004 and March
31, 2004 of below investment grade securities (excluding net unrealized
appreciation and



                                      30
<Page>

depreciation). They represent 6 percent of AEFA's investment
portfolio at March 31, 2005 down from 7 percent at both December 31, 2004 and
March 31, 2004. Non-performing assets (excluding short-term cash positions)
were less than 0.03% at March 31, 2005 and 0.01% at both December 31, 2004 and
March 31, 2004.

As of March 31, 2005, AEFA continued to hold investments in CDOs managed by
AEFA that were not consolidated pursuant to the adoption of FIN 46 as the
Company was not considered the primary beneficiary. As a condition to its
managing certain CDOs, AEFA is generally required to invest in the residual
or "equity" tranche of the CDO, which is typically the most subordinated
tranche of securities issued by the CDO entity. AEFA's exposure as an
investor is limited solely to its aggregate investment in the CDOs, and
it has no obligations or commitments, contingent or otherwise, that could
require any further funding of such investments. As of March 31, 2005, the
carrying values of the CDO residual tranches managed by AEFA were $33 million,
a net increase of $6 million from December 31, 2004 primarily as a result of
the placement of new CDO products with clients. AEFA also has a retained
interest in a CDO-related securitization trust with a carrying value of $653
million, of which $471 million is considered investment grade. One of the
results of this transaction is that increases and decreases in future cash
flows of the individual CDOs are combined into one overall cash flow for
purposes of determining the carrying value of the retained interests and
related impact on results of operations. CDOs are illiquid investments. As an
investor in the residual tranche of CDOs, AEFA's return correlates to the
performance of portfolios of high-yield bonds and/or bank loans comprising the
CDOs.

The carrying value of the CDOs, as well as derivatives recorded on the balance
sheet as a result of consolidating certain SLTs which are in the process of
being liquidated, and AEFA's projected return are based on discounted cash
flow projections that require a significant degree of management judgment as
to assumptions primarily related to default and recovery rates of the
high-yield bonds and/or bank loans either held directly by the CDOs or in the
reference portfolio of the SLTs and, as such, are subject to change. Although
the exposure associated with AEFA's investment in CDOs is limited to the
carrying value of such investments, they have significant volatility
associated with them because the amount of the initial value of the loans
and/or other debt obligations in the related portfolios is significantly
greater than AEFA's exposure. In the event of significant deterioration of a
portfolio, the relevant CDO may be subject to early liquidation, which could
result in further deterioration of the investment return or, in severe cases,
loss of the CDO carrying amount. The derivatives recorded as a result of
consolidating certain SLTs under FIN 46 are primarily valued based on the
expected gains and losses from liquidating a reference portfolio of high-yield
loans. The overall exposure to loss related to these derivatives is
represented by the pretax net assets of the SLTs, which is $465 million at
March 31, 2005. However, because the portfolio has been substantially
liquidated, a significant portion of the net assets within the structure is
cash and cash equivalents and, as a result, the overall market exposure has
been reduced to approximately $20 million.

                                      31
<Page>

AMERICAN EXPRESS BANK

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004

                             STATEMENTS OF INCOME

<Table>
<Caption>
                                                   Three Months Ended
                                                        March 31,
                                               ---------------------------    Percentage
(Dollars in millions)                              2005           2004         Inc/(Dec)
                                               ------------   ------------   ------------
<S>                                            <C>            <C>                   <C>
Net revenues:
  Interest income                              $        148   $        134           10.3%
  Interest expense                                       74             53           40.2
                                               ------------   ------------
    Net interest income                                  74             81           (9.2)
  Commissions and fees                                   73             70            4.8
  Foreign exchange income and other revenues             60             59            2.5
                                               ------------   ------------
    Total net revenues                                  207            210           (1.3)
                                               ------------   ------------
Expenses:
  Human resources                                        81             75            7.6
  Other operating expenses                               75             72            4.5
  Provision for losses                                    5              6          (19.1)
  Restructuring charges                                   -              9              #
                                               ------------   ------------
    Total expenses                                      161            162           (0.5)
                                               ------------   ------------
Pretax income                                            46             48           (3.8)
Income tax provision                                     16             18           (8.8)
                                               ------------   ------------
Net income                                     $         30   $         30           (0.8)
                                               ============   ============
</Table>

# - Denotes a variance of more than 100%.

AEB reported net income of $30 million for the first quarter of 2005, down 1
percent from the same period a year ago. 2004 results included $11 million ($8
million after-tax) of reengineering costs, $9 million of which reflected a
restructuring charge related to the exit of businesses in Pakistan and
Bangladesh and $2 million of which was related to ongoing reengineering
activities. First quarter 2005 results included $3 million ($2 million
after-tax) of costs related to ongoing reengineering activities.

Net interest income of $74 million decreased 9 percent as lower spreads in the
investment portfolio were partially offset by higher Private Banking volumes.
Commissions and fees of $73 million increased 5 percent primarily due to
higher volumes in the Financial Institutions Group (FIG) and Private Banking.
Foreign exchange income and other revenues rose 3 percent to $60 million due
to a small gain on the sale of the Luxembourg Private Banking business.

Human resources expenses rose 8 percent to $81 million reflecting merit
increases and higher management incentive costs, partially offset by the
benefits of reengineering initiatives. Other operating expenses rose 5 percent
reflecting increased business volume-related expenses, partially offset by the
benefits of reengineering initiatives.

Provision for losses decreased 19 percent to $5 million due to a Corporate
Banking recovery.

The effective tax rate was 35 percent and 38 percent for the three-month
periods ended March 31, 2005 and 2004, respectively.

                                      32
<Page>

LIQUIDITY AND CAPITAL RESOURCES

                SELECTED BALANCE SHEET INFORMATION (GAAP BASIS)

<Table>
<Caption>
                                                    March 31,    December 31,    Percentage      March 31,     Percentage
(Dollars in billions, except where indicated)          2005          2004         Inc/(Dec)        2004        Inc/(Dec)
                                                  ------------   ------------    -----------   ------------    -----------
<S>                                               <C>            <C>                   <C>     <C>                   <C>
Total loans                                       $        7.0   $        6.9            1.1%  $        6.4            9.2%
Total Non-CFS loans                               $        5.6   $        5.5            1.3   $        5.1           10.9
   Non-CFS loan loss reserves (millions):
      Beginning balance                           $         58   $         57            1.6   $         59           (0.8)
         Provision                                           -              1              #              -              -
         Net charge-offs                                    (3)             -              #              2              #
         Other                                              (7)             -              #              -              #
                                                  ------------   ------------                  ------------
      Ending balance                              $         48   $         58          (16.3)  $         61          (20.0)
                                                  ------------   ------------                  ------------
      % of Non-CFS loans                                   0.9%           1.0%                          1.2%
   Total non-performing loans (millions)          $         28   $         37          (24.7)  $         69          (59.3)
Total CFS loans                                   $        1.4   $        1.4            0.6   $        1.3            2.9
   Past due as a % of total CFS loans:
      30-89 days past due                                  3.6%           3.8%                          4.6%
      90+ days past due                                    0.7%           0.7%                          0.9%
   CFS loan reserves (millions):
      Beginning balance                           $         37   $         39           (3.8)  $         54          (31.3)
         Provision                                           6              7          (14.0)             7          (11.4)
         Net charge-offs                                   (11)           (10)           4.5            (16)         (35.4)
         Other                                               3              1           55.4              -              #
                                                  ------------   ------------                  ------------
      Ending balance                              $         35   $         37           (5.8)  $         45          (21.9)
                                                  ------------   ------------                  ------------
      % of CFS loans                                       2.6%           2.7%                          3.4%
      % of 30 days past due CFS loans                       59%            61%                           62%
   Net write-off rate                                      3.0%           3.0%                          4.9%
Assets owned, managed*/administered
   Owned                                          $       13.4   $       13.4            0.6   $       13.8           (2.9)
   Managed/administered                                   19.5           19.2            1.5           16.8           16.1
                                                  ------------   ------------                  ------------
      Total                                       $       32.9   $       32.6            1.1   $       30.6            7.5
                                                  ------------   ------------                  ------------
Assets of non-consolidated joint ventures**       $        1.8   $        1.8            3.6   $        1.8            5.1
Deposits                                          $       10.7   $       10.4            2.3   $       10.7           (0.4)
Total liabilities                                 $       12.5   $       12.4            0.7   $       12.9           (2.4)
Total shareholder's equity (millions)             $        905   $        924           (2.0)  $        992           (8.8)
Return on average total assets                            0.71%          0.70%                         0.81%
Return on average total shareholder's equity              10.0%          10.0%                         11.9%
Risk-based capital ratios:
   Tier 1                                                 11.0%          11.0%                         11.7%
   Total                                                  10.7%          10.1%                         11.5%
Leverage ratio                                             5.8%           5.8%                          5.7%
</Table>

*   Includes assets managed by AEFA.
**  Excludes American Express International Deposit Company's total assets
    (which are 100% consolidated at AEFA).
# - Denotes a variance of more than 100%.

AEB had worldwide loans outstanding at March 31, 2005 of approximately $7.0
billion, up from $6.9 billion at December 31, 2004 and $6.4 billion at March
31, 2004. The following table summarizes the composition of AEB's loan
portfolio by business line as of March 31, 2005, December 31, 2004 and March
31, 2004.

<Table>
<Caption>
                                                              Percentage of total loans
                                                ------------------------------------------------------
                                                 March 31, 2005   December 31, 2004    March 31, 2004
                                                ----------------  -----------------   ----------------
<S>                                                           <C>                <C>                <C>
Private Banking                                               48%                48%                47%
Consumer                                                      23                 22                 23
Financial Institution                                         28                 29                 28
Corporate Banking                                              1                  1                  2
</Table>

In addition to the loan portfolio, other banking activities, such as
securities, unrealized gains on foreign exchange and derivatives contracts,
various contingencies and market placements added approximately $7.2 billion
to AEB's credit exposures at both March 31, 2005 and December 31, 2004 and
$7.4 billion at March 31, 2004. Included in

                                      33
<Page>

the $7.2 billion of additional exposures at March 31, 2005 were cash and
securities-related balances totaling $4.7 billion.

CORPORATE AND OTHER

Corporate and Other reported net expenses of $51 million and $58 million for
the three months ended March 31, 2005 and 2004, respectively. Net expenses
decreased primarily due to lower net interest expense, partially offset by $3
million of AEFA spin-off related expenses.

OTHER REPORTING MATTERS
ACCOUNTING DEVELOPMENTS

See "Recently Issued Accounting Standards" section of Note 1 to the
Consolidated Financial Statements.

ITEM 4.  CONTROLS AND PROCEDURES

The Company's management, with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of the Company's disclosure controls and procedures (as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) as of the end of the period covered by this
report. Based on such evaluation, the Company's Chief Executive Officer and
Chief Financial Officer have concluded that, as of the end of such period, the
Company's disclosure controls and procedures are effective. There have not
been any changes in the Company's internal control over financial reporting
(as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) during the fiscal quarter to which this report relates that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements, which are subject to risks
and uncertainties. The words "believe," "expect," "anticipate," "optimistic,"
"intend," "plan," "aim," "will," "may," "should," "could," "would," "likely,"
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
following: the Company's ability to complete the planned spin-off of its AEFA
business unit, which is subject to final approval by the Company's Board of
Directors, the receipt of necessary regulatory approvals and a favorable tax
ruling and/or opinion, and in connection with the proposed spin-off, the
Company's ability to capitalize AEFA consistent with rating agency
requirements and to manage transition costs and implement effective transition
arrangements with AEFA on a post-completion basis; the Company's ability to
grow its business and meet or exceed its return on shareholders' equity target
by reinvesting approximately 35% of annually-generated capital, and returning
approximately 65% of such capital to shareholders, over time, which will
depend on the Company's ability to manage its capital needs and the effect of
business mix, acquisitions and rating agency requirements; consumer and
business spending on the Company's travel related services products,
particularly credit and charge cards and Travelers Cheques and other prepaid
products and growth in card lending balances, which depend in part on the
ability to issue new and enhanced card and prepaid products, services and
rewards programs, and increase revenues from such products, attract new
cardmembers, reduce cardmember attrition, capture a greater share of existing
cardmembers' spending, sustain premium discount rates on its card products in
light of regulatory and market pressures, increase merchant coverage, retain
cardmembers after low introductory lending rates have expired, and expand the
global network services (GNS) business; the Company's ability to introduce new
product, reward program enhancements and service enhancements on a timely
basis during the latter half of 2005 and the first half of 2006; the success
of the GNS business in partnering with banks in the United States, which will
depend in part on the extent to which such business further enhances the
Company's brand, allows the Company to leverage its significant processing
scale, expands merchant coverage of the network, provides U.S. GNS bank

                                      34
<Page>

partners the benefits of greater cardmember loyalty and higher spend per
customer, and merchant benefits such as greater transaction volume and
additional higher spending customers; the continuation of favorable trends,
including increased travel and entertainment spending and the overall level of
consumer confidence; successfully cross-selling financial, travel, card and
other products and services to the Company's customer base, both in the United
States and abroad; the Company's ability to generate sufficient revenues for
expanded investment spending, and the ability to capitalize on such
investments to improve business metrics; the costs and integration of
acquisitions; the success, timeliness and financial impact (including costs,
cost savings and other benefits including increased revenues), and beneficial
effect on the Company's operating expense to revenue ratio, both in the
short-term and over time, 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, and planned staff reductions
relating to certain of such reengineering actions; the ability to control and
manage operating, infrastructure, advertising and promotion expenses as
business expands or changes, including the ability to accurately estimate the
provision for the cost of the Membership Rewards program; the Company's
ability to manage credit risk related to consumer debt, business loans,
merchant bankruptcies and other 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; bankruptcies, restructurings
or similar events affecting the airline or any other industry representing a
significant portion of TRS' billed business, including any potential negative
effect on particular card products and services and billed business generally
that could result from the actual or perceived weakness of key business
partners in such industries; the triggering of obligations to make payments to
certain co-brand partners, merchants, vendors and customers under contractual
arrangements with such parties under certain circumstances; 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; risks associated
with the Company's agreements with Delta Air Lines to prepay $500 million for
the future purchases of Delta SkyMiles rewards points and to loan up to $75
million to Delta; AEFA's ability to improve investment performance, including
attracting and retaining high-quality personnel, and reduce outflows of
invested funds; AEFA's ability to develop and introduce new and attractive
products to clients in a timely manner and effectively manage the economics in
selling a growing volume of non-proprietary mutual funds and other retail
financial products to clients; fluctuation in the equity and fixed income
markets, which can affect the amount and types of investment products sold by
AEFA, the market value of its managed assets, and management, distribution and
other fees received based on the value of those assets; AEFA's ability to
recover deferred acquisition costs (DAC), as well as the timing of such DAC
amortization, in connection with the sale of annuity, insurance and certain
mutual fund products, and the level of guaranteed minimum death benefits paid
to clients; changes in assumptions relating to DAC, which could impact the
amount of DAC amortization; changes in federal securities laws affecting the
mutual fund industry, including possible enforcement proceedings and the
adoption of rules and regulations designed to prevent trading abuses, restrict
or eliminate certain types of fees, change mutual fund governance and mandate
additional disclosures, and the ability to make the required investment to
upgrade compliance systems and procedures in response to these changes; AEFA's
ability to avoid deterioration in its high-yield portfolio in order to
mitigate losses in its investment portfolio; fluctuations in foreign currency
exchange rates; fluctuations in interest rates, which impact the Company's
borrowing costs, return on lending products and spreads in the insurance,
annuity and investment certificate products; accuracy of estimates for the
fair value of the assets in the Company's investment portfolio and, in
particular, those investments that are not readily marketable, including the
valuation of the interest-only strip relating to TRS' lending securitizations;
the amount of recovery under the Company's insurance policies for losses
resulting from the September 11th terrorist attacks; the potential negative
effect on the Company's businesses and infrastructure, including information
technology, of terrorist attacks, disasters or other catastrophic events in
the future; political or economic instability in certain regions or countries,
which could affect lending and other commercial activities, among other
businesses, or restrictions on convertibility of certain currencies; changes
in laws or government regulations, including changes in tax laws or
regulations that could result in the elimination of certain tax benefits;
outcomes and costs associated with litigation and compliance and regulatory
matters; deficiencies and inadequacies in the Company's internal control over
financial reporting, which could result in inaccurate or incomplete financial
reporting; and competitive pressures in all of the Company's major businesses.
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,
2004, and its other reports filed with the SEC.

                                      35
<Page>

PART II. OTHER INFORMATION

AMERICAN EXPRESS COMPANY

Item 1.  Legal Proceedings

     The Company and its subsidiaries are involved in a number of legal and
     arbitration proceedings, including class actions, concerning matters
     arising in connection with the conduct of their respective business
     activities. The Company believes it has meritorious defenses to each of
     these actions and intends to defend them vigorously. The Company believes
     that it is not a party to, nor are any of its properties the subject of,
     any pending legal or arbitration proceedings that would have a material
     adverse effect on the Company's consolidated financial condition, results
     of operation or liquidity. However, it is possible that the outcome of
     any such proceedings could have a material impact on results of
     operations in any particular reporting period as the proceedings are
     resolved. Certain legal proceedings involving the Company are set forth
     below. For a discussion of certain other legal proceedings involving the
     Company and its subsidiaries, please refer to the Company's Annual Report
     on Form 10-K for the year ended December 31, 2004.

     TRS PROCEEDINGS

     The Company has been named in several purported class actions in various
     state courts alleging that the Company violated the respective state's
     laws by wrongfully collecting amounts assessed on converting transactions
     made in foreign currencies to U.S. dollars and/or failing to properly
     disclose the existence of such amounts in its Cardmember agreements and
     billing statements. The plaintiffs in the actions seek, among other
     remedies, injunctive relief, money damages and/or attorneys' fees on
     their own behalf and on behalf of the putative class of persons similarly
     situated. On October 15, 2004, the U.S. District Court for the Southern
     District of Florida granted preliminary approval of a nationwide class
     action settlement to resolve all lawsuits and allegations with respect to
     the Company's collection and disclosure of fees assessed on transactions
     made in foreign currencies in the case captioned Lipuma v. American
     Express Bank, American Express Travel Related Services Company, Inc. and
     American Express Centurion Bank (filed in August 2003). The settlement
     that has been preliminarily approved by the Court contemplates that the
     Company would (a) deposit $75 million into a fund that would be
     established to reimburse class members with valid claims, make certain
     contributions to charitable organizations to be identified later and pay
     attorneys' fees and (b) make certain changes to the disclosures in its
     Cardmember agreements and billing statements regarding its foreign
     currency conversion practices. The Company has established reserves to
     cover the proposed payment that would be made to reimburse class members
     and pay attorneys' fees. The preliminary approval order enjoins all other
     proceedings that make related allegations pending a final approval
     hearing including, but not limited to the following cases: (i)
     Environmental Law Foundation, et al. v. American Express Company, et al.,
     Superior Court of Alameda County, California (filed March 2003); (ii)
     Rubin v. American Express Company and American Express Travel Related
     Services Company, Inc., Circuit Court of Madison County, Illinois (filed
     April 2003); (iii) Angie Arambula, et al. v. American Express Company, et
     al., District Court of Cameron County, Texas, 103rd Judicial District
     (filed May 2003); (iv) Fuentes v. American Express Travel Related
     Services Company, Inc. and American Express Company, District Court of
     Hidalgo County, Texas (filed May 2003); (v) Wick v. American Express
     Company, et al., Circuit Court of Cook County, Illinois (filed May 2003);
     (vi) Bernd Bildstein v. American Express Company, et al., Supreme Court
     of Queens County, New York (filed June 2003); (vii) Janowitz v. American
     Express Company, et al., Circuit Court of Cook County, Illinois (filed
     September 2003); (viii) Paul v. American Express Company, et al.,
     Superior Court of Orange County, California (filed January 2004); and
     (ix) Ball v. American Express, et al., Superior Court of San Joaquin,
     California (filed August 2004). A final approval hearing was held in
     March 2005, and the Company is awaiting the Court's decision.

                                      36
<Page>

     In July 2004, a purported class action captioned Ross, et al. v. American
     Express Company, American Express Travel Related Services and American
     Express Centurion Bank was filed in the United States District Court for
     the Southern District of New York. The complaint alleges that AMEX
     conspired with Visa, MasterCard and Diners Club in the setting of foreign
     conversion rates and in the inclusion of arbitration clauses in certain
     of their cardmember agreements. The basis for these allegations is the
     presence of an American Express lawyer at a seminar where legal issues
     common to the financial services industry were discussed. Those meetings
     were attended by in-house lawyers of financial institutions including
     American Express. The suit seeks injunctive relief and unspecified
     damages. The class is defined as "all Visa, MasterCard and Diners Club
     general purpose cardholders who used cards issued by any of the MDL
     Defendant Banks...." American Express cardholders are not part of the
     class. The Company has filed a motion to dismiss the complaint as to
     American Express.

     The Company has been named in a number of purported class actions in
     which the plaintiffs allege an unlawful antitrust tying arrangement
     between the Company's charge cards, credit cards and debit cards in
     violation of various state and federal laws, including the following: (i)
     Cohen Rese Gallery et al. v. American Express Company et al., U.S.
     District Court for the Northern District of California (filed July 2003);
     (ii) Italian Colors Restaurant v. American Express Company et al., U.S.
     District Court for the Northern District of California (filed August
     2003); (iii) DRF Jeweler Corp. v. American Express Company et al., U.S.
     District Court for the Southern District of New York (filed December
     2003); (iv) Hayama Inc. v. American Express Company et al., Superior
     Court of California, Los Angeles County (filed December 2003); (v) Chez
     Noelle Restaurant v. American Express Company et al., U.S. District Court
     for the Southern District of New York (filed January 2004); (vi) Mascari
     Enterprises d/b/a Sound Stations v. American Express Company et al., U.S.
     District Court for the Southern District of New York (filed January
     2004); (vii) Mims Restaurant v. American Express Company et al., U.S.
     District Court for the Southern District of New York (filed February
     2004); and (viii) The Marcus Corporation v. American Express Company et
     al., U.S. District Court for the Southern District of New York (filed
     July 2004). The plaintiffs in these actions seek injunctive relief and an
     unspecified amount of damages. Upon motion to the Court by the Company,
     the venue of the Cohen Rese and Italian Colors actions was moved to the
     U.S. District Court for the Southern District of New York in December
     2003. Each of the above-listed actions (except for Hayama) is now pending
     in the U.S. District Court for the Southern District of New York. On
     April 30, 2004, the Company filed a motion to dismiss all the actions
     filed prior to such date that were pending in the U.S. District Court for
     the Southern District of New York. A decision on that motion is pending.
     In addition, the Company has asked the Court in the Hayama action to stay
     that action pending resolution of the motion in the Southern District of
     New York. The Company has also filed a motion to dismiss the action filed
     by The Marcus Corporation.

     In December 2004, a purported class action captioned National
     Supermarkets Association, Inc., Mascari Enterprises, Inc. d/b/a Sound
     Stations, and Bunda Starr Corp. d/b/a Brite Wines and Spirits v. MBNA
     America Bank, N.A., MBNA Corp., Citibank (South Dakota) N.A. and
     Citigroup, Incorporated, was filed in the United States District Court
     for the Southern District of New York. The action is a lawsuit related to
     the antitrust tying actions described in the preceding paragraph.
     Although the Company is not named as a defendant, the plaintiffs in this
     action are also plaintiffs in the direct actions against American Express
     described in the preceding paragraph. This lawsuit alleges that, by
     agreeing to issue American Express-branded cards, MBNA and Citibank have
     conspired with the Company in the alleged wrongful tying arrangement
     described in the preceding paragraph. The Company believes this lawsuit
     is without merit and is contrary to the Department of Justice's
     successful efforts to render unenforceable Visa's and MasterCard's rules
     that prevented banks from issuing American Express-branded cards in the
     United States. The Company also believes that this lawsuit is susceptible
     to the same defenses available to the Company in the direct actions filed
     against it, which are described in the

                                      37
<Page>

     preceding paragraph. The Company has intervened in this action and has
     filed a motion to have the case dismissed.

     AEFA PROCEEDINGS

     In November 2002, a suit, captioned Haritos et al. v. American Express
     Financial Corporation and IDS Life Insurance Company, was filed in the
     United States District Court for the District of Arizona. The suit is
     filed by plaintiffs who purport to represent a class of all persons that
     have purchased financial plans from AEFA advisors from November 1997
     through July 2004. Plaintiffs allege that the sale of the plans violates
     the Investment Advisers Act of 1940 (the "IAA"). The suit seeks an
     unspecified amount of damages, rescission of the investment advisor plans
     and restitution of monies paid for such plans. In June 2004, the Court
     denied the Company's motion to dismiss the action as a matter of law. In
     February 2005, the Court denied the Company's motion to dismiss the
     plaintiffs' Second Amended Complaint. Notwithstanding the Court's denial
     of the Company's motions to dismiss, the Company believes that the
     plaintiffs' case suffers from various factual and legal weaknesses and it
     intends to continue to defend the case vigorously.

     The SEC, NASD and several state attorneys general have brought numerous
     enforcement proceedings against individuals and firms challenging several
     mutual fund industry practices including late trading (allowing mutual
     fund customers to receive 4:00 p.m. ET prices for orders placed or
     confirmed after 4:00 p.m. ET), market timing (abusive rapid trading in
     mutual fund shares), disclosure of revenue sharing arrangements, which
     are paid by fund advisers or companies to brokerage firms who agree to
     sell those funds, and inappropriate sales of Class B (i.e., no front end
     load) shares. AEFA has received requests for information and has been
     contacted by regulatory authorities concerning its practices and is
     cooperating fully with these inquiries.

     On March 21, 2005, AEFA's broker-dealer subsidiary entered into an
     agreement with the NASD to settle alleged violations of NASD rules
     arising from the sale to AEFA customers of Class B (i.e., no front end
     load) mutual fund shares between January 1, 2002 and July 31, 2003.
     AEFA's agreement with the NASD is one of several that the NASD entered
     into with certain brokerage firms regarding allegedly inappropriate sales
     of Class B shares. Under the terms of the settlement, AEFA consented to
     the payment of a fine to the NASD in the amount of $13 million. The
     Company established reserves in prior quarters to cover the payment of
     the fine. AEFA also agreed to offer certain customers who purchased Class
     B shares in any fund family from January 1, 2002 through the date of the
     settlement and continue to hold such shares the option of converting
     their Class B shares into a number of Class A shares equal to (x) the
     number of Class A shares that the customer could have purchased on the
     date(s) that they purchased their Class B shares plus (y) any shares
     reflecting reinvestment of dividends. AEFA agreed to pay cash to certain
     customers who have sold a portion or all of their Class B shares in order
     to put them into substantially the same financial position (based on
     actual fund performance and redemption value) in which such customers
     would have been had the customers purchased Class A shares instead of
     Class B shares.

     In May 2004, the Company reported that the broker-dealer subsidiary of
     AEFA had received notification from the staff of the NASD indicating that
     it had made a preliminary determination to recommend that the NASD bring
     an action against AEFA for potential violations of federal securities
     laws and the rules and regulations of the SEC and the NASD. The notice
     received by AEFA comes in the context of a broader industry-wide review
     of the mutual fund and brokerage industries that is being conducted by
     various regulators. The NASD staff's allegations relate to AEFA's
     practices with respect to various revenue sharing arrangements pursuant
     to which AEFA receives payments from certain non-proprietary mutual funds
     for agreeing to make their products available through AEFA's national
     distribution network. In particular, the NASD has alleged that AEFA (i)
     failed to properly disclose such revenue sharing arrangements from
     January 2001 until

                                      38
<Page>

     May 2003, (ii) failed to properly disclose such revenue sharing
     arrangements in its brokerage confirmations and (iii) received directed
     brokerage from January 2001 until December 2003. The notice from the NASD
     staff is intended to give AEFA an opportunity to discuss the issues it
     has raised. AEFA has been availing itself of this opportunity and
     continues to cooperate fully with the NASD's inquiry regarding this
     matter, as well as with all other regulatory inquiries.

     On February 17, 2005, the New Hampshire Bureau of Securities Regulation
     filed a petition against AEFA. The petition alleges that AEFA violated
     New Hampshire and federal securities laws by failing to disclose revenue
     sharing and directed brokerage payments received from non-proprietary
     mutual funds for agreeing to make their products available through AEFA's
     national distribution network. The petition also alleges that AEFA failed
     to disclose incentives for advisors to sell proprietary products and
     other alleged conflicts of interest. The petition seeks, among other
     things, an order to show cause why AEFA's broker-dealer license should
     not be denied, suspended or revoked, a proposed fine and restitution of
     financial planning fees during the relevant period (principally 1999 to
     2003) in the amount of $17.5 million, and disgorgement of revenue sharing
     and directed brokerage payments and other relief. AEFA intends to
     cooperate fully in this matter.

     In June 2004, an action captioned John E. Gallus et al. v. American
     Express Financial Corp. and American Express Financial Advisors, Inc. was
     filed in the United States District Court for the District of Arizona.
     The plaintiffs allege that they are investors in several "AXP" mutual
     funds and they purport to bring the action derivatively on behalf of
     those funds under the Investment Company Act of 1940. The plaintiffs
     allege that fees allegedly paid to the defendants by the funds for
     investment advisory and administrative services are excessive. The
     plaintiffs seek remedies including restitution and rescission of
     investment advisory and distribution agreements. The plaintiffs
     voluntarily agreed to transfer this case to the United States District
     Court for the District of Minnesota. In March 2005, the Court, in a
     ruling on the motion to change venue, dismissed one count of the
     complaint that fund directors breached their fiduciary duties. The
     Company also filed a motion to dismiss the complaint. The Court denied
     the motion to dismiss the remaining counts, but granted plaintiffs only
     limited discovery after which time the Company will be permitted to renew
     its motion to dismiss.

                                      39
<Page>

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
        (c) Issuer Purchases of Securities

     The table below sets forth the information with respect to purchases of
     the Company's common stock made by or on behalf of the Company during the
     quarter ended March 31, 2005.

<Table>
<Caption>
                                                                          Total Number       Maximum
                                                                            of Shares       Number of
                                                                          Purchased as     Shares that
                                                                             Part of        May Yet Be
                                                                            Publicly        Purchased
                                        Total Number                       Announced          Under
                                          of Shares     Average Price       Plans or       the Plans or
     Period                               Purchased     Paid Per Share    Programs (3)       Programs
     -------------------------------   -------------   ---------------   --------------   --------------
     <S>                                 <C>               <C>             <C>              <C>
     January 1-31, 2005
       Repurchase program (1)                -                -                -            74,496,423
       Employee transactions (2)            525,013        $ 54.67             N/A              N/A

     February 1-28, 2005
       Repurchase program (1)             4,761,600        $ 54.20          4,761,600       69,734,823
       Employee transactions (2)            347,853        $ 54.18             N/A              N/A

     March 1-31, 2005
       Repurchase program (1)             7,535,100        $ 53.65          7,535,100       62,199,723
       Employee transactions (2)            575,453        $ 54.01             N/A              N/A
                                       -------------                     --------------
     Total
       Repurchase program (1)            12,296,700        $ 53.86         12,296,700
       Employee transactions (2)          1,448,319        $ 54.29             N/A
</Table>

     (1)  The Board of Directors of the Company authorized the repurchase of
          120 million shares of common stock in November 2002. At present,
          there are approximately 62.2 million shares remaining under such
          authorization. Such authorization does not have an expiration date,
          and at present, there is no intention to modify or otherwise rescind
          such authorization. Since September 1994, the Company has acquired
          507.8 million shares of common stock under various Board
          authorizations to repurchase up to an aggregate of 570 million
          shares, including purchases made under agreements with third
          parties.

     (2)  Includes: (1) shares delivered by or deducted from holders of
          employee stock options who exercised options (granted under the
          Company's incentive compensation plans) in satisfaction of the
          exercise price and/or tax withholding obligation of such holders and
          (2) restricted shares withheld (under the terms of grants under the
          Company's incentive compensation plans) to offset tax withholding
          obligations that occur upon vesting and release of restricted
          shares. The Company's incentive compensation plans provide that the
          value of the shares delivered or attested to, or withheld, shall be
          the average of the high and low price of the Company's common stock
          on the date the relevant transaction occurs.

     (3)  Share purchases under publicly announced programs are made pursuant
          to open market purchases or privately negotiated transactions
          (including with employee benefit plans) as market conditions warrant
          and at prices the Company deems appropriate.

                                      40
<Page>

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

     The Company's annual meeting of shareholders was held on April 27, 2005.
     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 PricewaterhouseCoopers
 LLP's selection as independent registered
 public accountants                          1,094,741,372       3,161,212               -      12,163,268               -

Shareholder proposal requesting that no
  new stock options be awarded                  27,548,903     923,011,241               -      23,948,951     135,556,757

Shareholder proposal requesting a separate
 annual report describing the Company's
 political contributions                        61,012,949     830,077,958               -      83,418,189     135,556,756

Election of Directors:
D.F. Akerson                                 1,079,921,983               -      30,143,869               -               -
C. Barshefsky                                1,046,160,840               -      63,905,012               -               -
W.G. Bowen                                   1,072,558,858               -      37,506,994               -               -
U.M. Burns                                   1,082,129,363               -      27,936,489               -               -
K.I. Chenault                                1,072,995,282               -      37,070,570               -               -
P.R. Dolan                                   1,082,309,581               -      27,756,271               -               -
V.E. Jordan, Jr.                             1,041,498,265               -      68,567,587               -               -
J. Leschly                                   1,081,411,095               -      28,654,754               -               -
R.A. McGinn                                  1,081,059,915               -      29,005,937               -               -
E.D. Miller                                  1,082,136,845               -      27,929,007               -               -
F.P. Popoff                                  1,053,212,677               -      56,853,175               -               -
R.D. Walter                                  1,082,529,705               -      27,536,147               -               -
</Table>

Item 6.  Exhibits

     The list of exhibits required to be filed as exhibits to this report are
     listed on page E-1 hereof, under "Exhibit Index," which is incorporated
     herein by reference.

                                      41
<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 3, 2005                           By /s/ Gary L. Crittenden
                                                --------------------------------
                                                Gary L. Crittenden
                                                Executive Vice President and
                                                Chief Financial Officer





Date:  May 3, 2005                           By /s/ Joan C. Amble
                                                --------------------------------
                                                Joan C. Amble
                                                Executive Vice President and
                                                Comptroller
                                                (Principal Accounting Officer)

                                      42
<Page>

                                 EXHIBIT INDEX

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

<Table>
<Caption>
Exhibit                                 Description
- ------                                  -----------
<S>       <C>
 10.1     Form of award agreement for executive officers in connection with
          Performance Grant awards (a/k/a Incentive Award) under the American
          Express Company 1998 Incentive Compensation Plan, as amended.

 10.2     Form of award agreement for executive officers in connection with
          Portfolio Grants under the American Express Company 1998 Incentive
          Compensation Plan, as amended.

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

31.1      Certification of Kenneth I. Chenault pursuant to Rule 13a-14(a)
          promulgated under the Securities Exchange Act of 1934, as amended.

31.2      Certification of Gary L. Crittenden pursuant to Rule 13a-14(a)
          promulgated under the Securities Exchange Act of 1934, as amended.

32.1      Certification of Kenneth I. Chenault and Gary L. Crittenden pursuant
          to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002.
</Table>

                                      E-1
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>ext101.txt
<DESCRIPTION>EXHIBIT 10.1 - PERFORMANCE GRANT DOCUMENT
<TEXT>
                                                                  EXHIBIT 10.1


                            AMERICAN EXPRESS COMPANY
                        1998 INCENTIVE COMPENSATION PLAN
                                PERFORMANCE GRANT
                    (ALSO KNOWN AS THE 20__ INCENTIVE AWARD)
                                       TO



           ----------------------------------------------------------
                                Name of Employee


     ________   , 2005                         December 31, 20__
- -----------------------             ---------------------------------------
       Award Date                   Expiration Date of Performance Period
                                    (See Paragraphs 2,4,5,6, et. al. for
                                         payment and vesting date)




         We are pleased to inform you that, pursuant to the Company's 1998
Incentive Compensation Plan, as amended (the "Plan"), the Compensation and
Benefits Committee (the "Committee") of the Board of Directors (the "Board") of
American Express Company (the "Company"), made an award of a performance grant
(also known as the 20__ Incentive Award) to you as hereinafter set forth (the
"Award") under the Plan as of the award date specified above (the "Award Date").

1.       GENERAL. You have been granted the Award subject to the provisions of
the Plan and the terms, conditions and restrictions set forth herein. The period
beginning on the first day of the fiscal year of the Company in which the Award
Date occurs and ending on the Expiration Date specified above being the "Award
Period." The Schedule A Value (as that term is defined below in Subparagraph
3(b)), if any, will be determined as specified in Paragraph 3.

2.       REQUIREMENT OF EMPLOYMENT. Your rights to the Cash Value and the
Number of Restricted Shares, if any (as those terms are defined below) under
Subparagraph 4(b) hereof, shall be provisional and shall be canceled if your
continuous employment with the Company and its Affiliates or your Related
Employment (as defined in the Plan) (as that term is defined in the Plan)
(hereinafter collectively referred to as "employment with the American Express
companies"), terminates for any reason on or before the payment date as set
forth in Subparagraph 4(b). Whether and as of what date your employment with the
American Express companies shall terminate if you are granted a leave of absence
or commence any other break in employment intended by the Company to be
temporary, shall be determined by the Committee.


                                                                               1


<PAGE>


3.       DETERMINATION OF THE SCHEDULE A VALUE, CASH VALUE AND THE NUMBER OF
RESTRICTED SHARES.

(a)      Except as otherwise provided below in this Paragraph 3 and in
Paragraphs 2 and 5 hereof, there shall be paid to you in accordance with
Paragraph 4 hereof, the Schedule A Value (the "Schedule A Value") as of the
last day of the Award Period, if any, as provided in Subparagraph 3(b).

(b)      SCHEDULE A VALUE.

(i)      Except as otherwise provided in this Paragraph 3, the Schedule A Value
as of the last day of the Award Period will be equal to the amount, if any,
determined by the Committee based on the performance (i.e., 20__ Return on
Equity, and 20__ Earnings Per Share) of the Company, pursuant to Schedule A to
this Agreement. However, in no event will the Schedule A Value be greater than
the maximum value as set forth in Schedule A to this Agreement.

(ii)     In the application of Schedule A to this Agreement after the end of the
Award Period for purposes of determining the Schedule A Value pursuant to this
Subparagraph 3(b), (A) if the 20__ Return on Equity or the 2005 Earnings Per
Share is less than the level needed to have some Schedule A Value, there shall
be no Schedule A Value, and (B) if the 20__ Return on Equity and the 20__
Earnings Per Share are equal to or greater than those levels needed to have some
Schedule A Value and less than or equal to the maximum specified levels and are
not represented on the table, the Schedule A Value shall be determined by
straight-line interpolation from the amounts specified in such table immediately
less than and greater than the amounts actually attained.

(iii)    The Committee shall determine in its own discretion what portion of the
Schedule A Value, if any (as adjusted in accordance with Subparagraph 3(c)
below), shall be payable in cash (the "Cash Value"), and what portion shall be
denominated in restricted shares of the Company ("the RSA"), in accordance with
Paragraph 4 below.  The RSA shall have the terms substantially as set forth in
the form of restricted stock award granted generally under the Plan, or its
successor, except that the RSA shall vest pursuant to a period determined in the
Committee's discretion, except that such vesting period shall not be less than
one year from date of grant, and (B) be forfeitable only if your employment with
the American Express companies terminates by reason of voluntary resignation or
terminates for cause (that is, violation of the Code of Conduct as in effect
from time to time) prior to the applicable vesting dates.  The number of
restricted shares of the Company comprising the RSA (the "Number of Restricted
Shares") shall be determined by dividing such portion of the Schedule A Value
so designated by the Committee, if any, by the average of the high and low
market value of the shares on _________ __, 20__, or such other date that the
Committee approves payout of the Awards, and shall be payable in the form of an
RSA in accordance with Paragraph 4 below.


                                                                               2


<PAGE>


(iv)     For purposes of this Award, all accounting terms are defined in
accordance with generally accepted accounting principles as set forth in the
Company's annual audited financial statements, except as otherwise provided
below (which will take into account, in each case, the expenses and other
financial effect for the applicable year(s) of performance grants under the
Plan):

(A)      "Net Income" means, for any given year, the after-tax net income (or
loss) of the Company or of a segment or other part of the Company, as the case
may be, for such year as adjusted below, as determined by the Company in
accordance with generally accepted accounting principles applied on a basis
comparable to that used for the purpose of reporting industry segment data in
the Company's annual audited financial statements. The calculation of Net
Income, for any given year, will be adjusted to exclude:

         o    reported cumulative effect of accounting changes,

         o    reported income and losses from discontinued operations, and

         o    reported  extraordinary  gains  and  losses as  determined  under
              generally accepted accounting principles.

(B)      "Average Annual Shareholders' Equity" means, for any given year, the
sum of the total shareholders' equity of the Company or of a segment or other
part of the Company, as the case may be, as of the first day of such year and
as of the end of each month during such period (each as determined by the
Company in accordance with generally accepted accounting principles but
excluding the effect of Statement of Financial Accounting Standards Nos. 115 and
133 (relating to market-to-market treatment of certain investments and
accounting for derivatives, respectively) divided by 13).

(C)      "Return on Equity" means, for any given year, the Net Income for such
year divided by the Average Annual Shareholders' Equity for such year.

(D)      "Earnings Per Share" means, for any given year, the diluted earnings
(or loss) per share of the Company for such year, as determined by the Company
in accordance with generally accepted accounting principles for inclusion in
the Company's annual audited financial statements. The calculation of Earnings
Per Share, for any given year, will be adjusted in the same fashion as Net
Income for such year.

(v)      In the event of the sale, disposition, restructuring, discontinuance of
operations or other extraordinary corporate event in respect of a material
business during the Award Period or any of the events discussed in Subparagraph
3(d) during the Award Period, if the Committee shall determine that such an
event equitably requires an adjustment in the calculation or terms of Return on
Equity and/or Earnings Per Share, on the grounds that any such event would
produce an


                                                                               3
<PAGE>


unreasonable value, such equitable adjustment will be made by the Committee. Any
such determination by the Committee under this subparagraph 3(b)(v) shall be
final, binding and conclusive.

         As soon as practicable after the last day of the Award Period, the
Committee may determine, in its sole discretion, that the Schedule A Value, if
any (as determined above in Subparagraph 3(b)), may be adjusted downward, but in
no event upward, by a percentage from 0-100% (that is, to a value of zero). In
no event may the Committee amend any provision hereof so as to increase or
otherwise adjust upward the Schedule A Value. In exercising its discretion to
make a downward adjustment, the Committee may take into account factors such as
the increase in shareholder value (as indicated, for example, by shareholder
return, earnings growth and return on equity), customer satisfaction (as
indicated, for example, by customer satisfaction measures, client retention and
growth in products and services), employee satisfaction (as indicated, for
example, by the employee values survey results), implementation of AEQL
initiatives (as indicated, for example, by process changes that achieve
significant results), achievement of reengineering initiatives (as indicated,
for example, by cost savings), and such other factors deemed relevant by the
Committee; provided that any such determination by the Committee need not be
made in a uniform manner and may be made selectively among holders of awards of
performance grants, whether or not such award holders are similarly situated.

(c)      The Committee's determinations as to the Schedule A Value, the Cash
Value and the Number of Restricted Shares pursuant to this Agreement shall be
final, binding and conclusive upon you and all persons claiming under or through
you.

         (d) In the event of any change in the corporate capitalization of the
Company, such as by reason of any stock split, or a material corporate
transaction, such as any merger of the Company into another corporation, any
consolidation of the Company and one or more corporations into another
corporation, any separation of the Company (including a spin-off or other
distribution of stock or property by the Company), any reorganization of the
Company (whether or not such reorganization comes within the definition of such
term in Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code")), or any partial or complete liquidation by the Company, other than a
normal cash dividend, if the Committee shall determine that such a change
equitably requires an adjustment in the calculation or terms of the Schedule A
Value under this Award, on the grounds that any such change would produce an
unreasonable value, such equitable adjustment will be made by the Committee. Any
such determination by the Committee under this subparagraph 3(d) shall be final,
binding and conclusive.

4.       PAYMENT OF AWARD.

(a)      As soon as practicable after the last day of the Award Period, the
Committee shall determine whether the conditions of Paragraphs 2 and 3 hereof
have been met and, if so, shall ascertain the Cash Value and the Number of
Restricted Shares, if any, in accordance with Paragraph 3.

(b)      If the Committee determines that there is no Schedule A Value, this
Award will be canceled. If the Committee determines that there is some Schedule
A Value, however, the Cash Value as determined pursuant to Paragraph 3 shall
become payable to you in cash, and the


                                                                               4


<PAGE>


Number of Restricted Shares shall be issued to you in the form of a restricted
stock award under the Plan, within fifteen business days following the regularly
scheduled payroll payment date of the applicable pay period beginning after
January 31 of the year following the Award Period (or at such other time or
times as the Committee shall determine as provided in Paragraph 6 below).

5.       TERMINATION OF EMPLOYMENT AFTER THE AWARD PERIOD BUT ON OR BEFORE THE
PAYMENT DATE. If, after the last day of the Award Period and on or before the
date specified above in Subparagraph 4(b), but during a period when you have
been in continuous employment with the American Express companies since the
Award Date, you terminate your employment with the American Express companies
for any reason, then you and all others claiming under or through you shall not
be entitled to receive any amounts or awards under this Award, except as
otherwise determined by the Committee in its sole discretion.

6.       DEFERRAL OR ACCELERATION OF PAYMENT OF AWARD. Subject to satisfying
applicable requirements under Section 409A of the Internal Revenue Code of 1986,
as amended, any payments to be made under this Award may be deferred or
accelerated in such manner as the Committee shall determine in its sole
discretion; provided that as to such a deferral of payment, any such payment in
excess of the amount that was originally payable to you under this Agreement
will be based on a reasonable interest rate or on one or more predetermined
actual investments (whether or not assets associated with the amount are
actually invested therein) as determined by the Committee, and provided,
further, that as to such an acceleration of payment to you under this Agreement,
any such payment will be discounted to reasonably reflect the time value of
money as determined by the Committee.

7.       CHANGE IN CONTROL. Notwithstanding anything in this Award to the
contrary, if you have not received payment under this Award as discussed in
Subparagraph 4(b) above, and within two years following a Change in Control, as
that term is defined in the Company's Senior Executive Severance Plan, you
experience a termination of employment that would otherwise entitle you to
receive the payment of severance benefits under the provisions of the severance
plan that you participate in as of the date of such termination of employment,
then you shall be paid under this Award, within five days after the date of such
termination of employment, a cash payment under this Award equal to the value of
(i) (A) the average award paid or payable to you under the 2003 and 2004 Annual
Incentive Award or such other annual incentive award program of the Company or
one of its subsidiaries that you participated in at the time of such prior
payment for the two years prior to the Change in Control, or (B) if you have not
received two such awards, the most recent award paid or payable (or guideline
amount payable, if you have not previously received any such award) to you under
the applicable annual incentive award program of the Company or one of its
subsidiaries at the time of such prior payment), multiplied by (ii) the number
of full or partial months that have elapsed during the Award Period at the time
of such termination of employment divided by 12.

         The Committee reserves the right to amend or delete this Section 7 in
whole or in part at any time and from time to time; provided, that upon and
following the occurrence of a Change in Control, the Committee may not amend
this Section 7 in a manner that is detrimental to your rights without your
express written consent. Any amendment of the definition of 'Change in Control'
in the Senior Executive Severance Plan will be deemed to be an amendment
permitted under this Section.


                                                                               5


<PAGE>


8.       TAX WITHHOLDING AND FURNISHING OF INFORMATION. There shall be withheld
from any payment of cash or vesting of any restricted shares under this Award,
such amount, if any, as the Company determines is required by law, including,
but not limited to, U.S. federal, state, local or foreign income, employment or
other taxes incurred by reason of making of the Award or of such payment. It
shall be a condition precedent to the obligation of the Company to make payments
under this Award that you (or those claiming under or through you) promptly
provide the Company with all forms, documents or other information reasonably
required by the Company in connection with the Award.

9.       RIGHTS NOT ASSIGNABLE. Your rights and interests under the Award and
the Plan may not be sold, assigned, transferred, or otherwise disposed of, or
made subject to any encumbrance, pledge, hypothecation or charge of any nature,
except that you may designate a beneficiary pursuant to Paragraph 10 hereof. If
you (or those claiming under or through you) attempt to violate this Paragraph
9, such attempted violation shall be null and void and without effect, and the
Company's obligation to make any further payments to you (or those claiming
under or through you) hereunder shall terminate.

10.      BENEFICIARY DESIGNATION. Subject to the provisions of the Plan, you
may, by completing a form that is acceptable to the Company and returning it
immediately to the Secretary of the Company, at American Express Tower, World
Financial Center, New York, New York 10285-5005, name a beneficiary or
beneficiaries to receive any payment to which you may become entitled under this
Agreement in the event of your death. You may change your beneficiary or
beneficiaries from time to time by submitting a new form to the Secretary of the
Company at the same address. If you do not designate a beneficiary, or if no
designated beneficiary is living on the date any amount or award becomes payable
under this Agreement, such payment will be made to the legal representatives of
your estate, which will be deemed to be your designated beneficiary under this
Agreement.

11.      ADMINISTRATION. Any action taken or decision made by the Company, the
Board or the Committee or its delegates arising out of or in connection with the
construction, administration, interpretation or effect of the Plan or this
Agreement shall be within its sole and absolute discretion, as the case may be,
and shall be final, conclusive and binding upon you and all persons claiming
under or through you. In receiving this Award or other benefit under the Plan,
you and each person claiming under or through you shall be conclusively deemed
to have indicated acceptance and ratification of, and consent to, any action
taken or decision made under the Plan by the Company, the Board or the Committee
or its delegates.

12.      MAJOR TRANSACTION.  This Section shall apply in the event of a Major
Transaction (as defined in the American Express Senior Executive Severance Plan,
as amended from time to time).

         If all or any portion of the payments or benefits to which the
Participant will be entitled under the Plan, either alone or together with other
payments or benefits which the Participant receives or is entitled to receive
directly or indirectly from the Company or any of its subsidiaries or any other
person or entity that would be treated as a payor of parachute payments as
hereinafter defined, under any other plan, agreement or arrangement, would
constitute a


                                                                               6


<PAGE>


"parachute payment" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code") or any successor provision thereto and
regulations or other guidance thereunder (except that "2.95" shall be used
instead of "3" under Section 280G(b)(2)(A)(ii) of the Code or any successor
provision thereto), such payment or benefits provided to the Participant under
this Plan, and any other payments or benefits which the Participant receives or
is entitled to receive directly or indirectly from the Company or any of its
subsidiaries or any other person or entity that would be treated as a payor of
parachute payments as hereinafter defined, under any other plan, agreement or
arrangement which would constitute a parachute payment, shall be reduced (but
not below zero) as described below to the extent necessary so that no portion
thereof would constitute such a parachute payment as previously defined (except
that "2.95" shall be used instead of "3" under Section 280G(b)(2)(A)(ii) of the
Code or any successor provision thereto). Whether payments or benefits to the
Participant would constitute a "parachute payment", whether such payments or
benefits are to be reduced pursuant to the first sentence of this paragraph, and
the extent to which they are to be so reduced, will be determined by the firm
serving, immediately prior to the Major Transaction, as the Company's
independent auditors, or if that firm refuses to serve, by another qualified
firm, whether or not serving as independent auditors, designated by the
Administration Committee under the American Express Senior Executive Severance
Plan (the "Firm"). The Firm will be paid reasonable compensation by the Company
for such services. If the Firm concludes that its determination is inconsistent
with a final determination of a court or the Internal Revenue Service, the Firm
shall, based on such final determination, redetermine whether the amount payable
to the Participant should have been reduced and, if applicable, the amount of
any such reduction. If the Firm determines that a lesser payment should have
been made to the Participant, then an amount equal to the amount of the excess
of the earlier payment over the redetermined amount (the "Excess Amount") will
be deemed for all purposes to be a loan to the Participant made on the date of
the Participant's receipt of such Excess Amount, which the Participant will have
an obligation to repay to the Company on the fifth business day after demand,
together with interest on such amount at the lowest applicable Federal rate (as
defined in Section 1274(d) of the Code or any successor provision thereto),
compounded semi-annually (the "Section 1274 Rate") from the date of the
Participant's receipt of such Excess Amount until the date of such repayment (or
such lesser rate (including zero) as may be designated by the Firm such that the
Excess Amount and such interest will not be treated as a parachute payment as
previously defined). If the Firm determines that a greater payment should have
been made to the Participant, within five business days of such determination,
the Company will pay to the Participant the amount of the deficiency, together
with interest thereon from the date such amount should have been paid to the
date of such payment, at the Section 1274 Rate (or such lesser rate (including
zero) as may be designated by the Firm such that the amount of such deficiency
and such interest will not be treated as a parachute payment as previously
defined). If a reduction is to be made pursuant to this paragraph, the Firm will
have the right to determine which payments and benefits will be reduced, either
those under this Plan alone or such other payments or benefits which the
Participant receives or is entitled to receive directly or indirectly from the
Company or any of its subsidiaries or any other person or entity that would be
treated as a payor of parachute payments as previously defined, under any other
plan, agreement or arrangement.

13.      CHANGE IN CONTROL PAYMENTS. This Paragraph shall apply in the event of
Change in Control (as defined in the American Express Senior Executive Severance
Plan).


                                                                               7


<PAGE>


         (a)    In the event that any payment or benefit received or to be
received by you hereunder in connection with a Change in Control or termination
of your employment (such payments and benefits, excluding Gross-Up Payment (as
hereinafter defined), being hereinafter referred to collectively as the
"Payments"), will be subject to the excise tax referred to in Section 4999 of
the Code (the "Excise Tax"), then (i) if you are classified in Band 70 (or its
equivalent) or above immediately prior to such Change in Control (a "Tier 1
Employee"), the Company shall pay to such Tier 1 Employee, within five days
after receipt by such Tier 1 Employee of the written statement referred to in
paragraph (e) below, an additional amount (the "Gross-Up Payment") such that the
net amount retained by such Tier 1 Employee, after deduction of any Excise Tax
on the Payments and any federal, state and local income and employment taxes and
Excise Tax upon the Gross-Up Payment, shall be equal to the Payments and (ii) is
you are other than a Tier 1 Employee, the Payments shall be reduced to the
extent necessary so that no portion of the Payments is subject to the Excise Tax
but only if (A) the net amount of all Total Payments (as hereinafter defined),
as so reduced (and after subtracting the net amount of federal, state and local
income and employment taxes on such reduced Total Payments), is greater than or
equal to (B) the net amount of such Total Payments without any such reduction
(but after subtracting the net amount of federal, state and local income and
employment taxes on such Total Payments and the amount of Excise Tax to which
you would be subject in respect of such unreduced Total Payments); provided,
however, that you may elect in writing to have other components of your Total
Payments reduced prior to any reduction in the Payments hereunder.

         (b) For purposes of determining whether the Payments will be subject to
the Excise Tax, the amount of such Excise Tax and whether any Payments
are to be reduced hereunder: (i) all payments and benefits received or to be
received by you in connection with such Change in Control or the termination
of your employment, whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any Person (as such
term is defined in Subparagraph 2 above) whose actions result in such Change
in Control or any Person affiliated with the Company or such Person (all such
payments and benefits, excluding the Gross-Up Payment and any similar gross-up
payment to which a Tier 1 Employee may be entitled under any such other plan,
arrangement or agreement, being hereinafter referred to as the "Total
Payments"), shall be treated as "parachute payments" (within the meaning of
section 280G(b)(2) of the Code) unless, in the opinion of the Firm, such
payments or benefits (in whole or in part) do not constitute parachute
payments, including by reason of section 280G(b)(2)(A) or section
280G(b)(4)(A) of the Code; (ii) no portion of the Total Payments the receipt
or enjoyment of which you shall have waived at such time and in such manner as
not to constitute a "payment" within the meaning of section 280G(b) of the
Code shall be taken into account; (iii) all "excess parachute payments" within
the meaning of section 280G(b)(l) of the Code shall be treated as subject to
the Excise Tax unless, in the opinion of the Firm, such excess parachute
payments (in whole or in part) represent reasonable compensation for services
actually rendered (within the meaning of section 280G(b)(4)(B) of the Code) in
excess of the Base Amount (within the meaning of section 280G(b)(3) of the
Code) allocable to such reasonable compensation, or are otherwise not subject
to the Excise Tax; and (iv) the value of any noncash benefits or any deferred
payment or benefit shall be determined by the Firm in accordance with the
principles of sections 280G(d)(3) and (4) of the Code and regulations or other
guidance thereunder. For purposes of determining the amount of the Gross-Up
Payment in respect of a Tier 1 Employee and whether any Payments in respect of
a participant (other than a Tier 1 Employee) shall be reduced, shall be deemed
to pay federal income tax at the highest marginal rate of federal income
taxation (and state and local income taxes at the highest marginal rate of
taxation in the state and

                                                                               8


<PAGE>


locality of your residence, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes) in the
calendar year in which the Gross-Up Payment is to be made (in the case of a Tier
1 Employee) or in which the Payments are made (if you are other than a Tier 1
Employee). The Firm will be paid reasonable compensation by the Company for its
services.

         (c)    In the event that the Excise Tax is finally determined to be
less than the amount taken into account hereunder in calculating the Gross-Up
Payment,  then an amount equal to the amount of the excess of the earlier
payment over the redetermined amount (the "Excess Amount") will be deemed for
all purposes to be a loan to the Tier 1 Employee made on the date of the Tier 1
Employee's receipt of such Excess Amount, which the Tier 1 Employee will have an
obligation to repay to the Company on the fifth business day after demand,
together with interest on such amount at the lowest applicable Federal rate (as
defined in Section 1274(d) of the Code or any successor provision thereto),
compounded semi-annually (the "Section 1274 Rate") from the date of the Tier 1
Employee's receipt of such Excess Amount until the date of such repayment (or
such lesser rate (including zero) as may be designated by the Firm such that
the Excess Amount and such interest will not be treated as a parachute payment
as previously defined). In the event that the Excise Tax is finally determined
to exceed the amount taken into account hereunder in calculating the Gross-Up
Payment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), within five business
days of such determination, the Company will pay to the Tier 1 Employee an
additional amount, together with interest thereon from the date such additional
amount should have been paid to the date of such payment, at the Section 1274
Rate (or such lesser rate (including zero) as may be designated by the Firm such
that the amount of such deficiency and such interest will not be treated as a
parachute payment as previously defined). The Tier 1 Employee and the Company
shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the amount of any Gross-Up
Payment.

         (d)    As soon as practicable following a Change in Control, the
Company shall provide to each Tier 1 Employee and to each other participant with
respect to whom it is proposed that Payments be reduced, a written statement
setting forth the manner in which the Total Payments in respect of such Tier 1
Employee or other participant were calculated and the basis for such
calculations, including, without limitation, any opinions or other advice the
Company has received from the Firm or other advisors or consultants (and any
such opinions or advice which are in writing shall be attached to the
statement).

14.      MISCELLANEOUS. Neither you nor any person claiming under or through you
shall have any right or interest, whether vested or otherwise, in the Plan or
the Award, unless and until all of the terms, conditions and provisions of the
Plan and this Agreement shall have been complied with. In addition, neither the
adoption of the Plan nor the execution of this Agreement shall in any way affect
the rights and powers of any person to dismiss or discharge you at any time from
employment with the American Express companies. Notwithstanding anything herein
to the contrary, neither the Company nor any of its Affiliates (as that term is
defined in the Plan) nor their respective officers, directors, employees or
agents shall have any liability to you (or those claiming under or through you)
under the Plan, this Agreement or otherwise on account of any action taken, or
decision not to take any action made, by any of the foregoing persons with
respect to the business or operations of the Company or any of its Affiliates
(as that term is


<PAGE>

defined in the Plan), despite the fact that any such action or decision may
adversely affect in any way whatsoever Average Annual Shareholders' Equity,
Earnings Per Share, Net Income or other financial measures or amounts which are
accrued or payable or any of your other rights or interests under this
Agreement.

15.      GOVERNING LAW. The validity, construction, interpretation,
administration and effect of this Agreement shall be governed by the substantive
laws, but not the choice of law rules, of the State of New York.

                                 AMERICAN EXPRESS COMPANY
                                 By the Compensation and Benefits
                                 Committee of the Board of Directors:





                                 By
                                    --------------------------



                                                                              10
<PAGE>


                                                                      SCHEDULE A


       20__ INCENTIVE AWARDS: AXP EARNINGS PER SHARE/RETURN ON EQUITY GRID
                      FOR DETERMINING MAXIMUM AWARD VALUES
     -----------------------------------------------------------------------
       (subject to award agreement and discretionary downward adjustment)

<TABLE>
<CAPTION>
                 ------------------------------------------------------------------------------------------------------------------
                                                              20__ AXP EARNINGS PER SHARE (DILUTED)
                 ------------------------------------------------------------------------------------------------------------------
<S>               <C>                  <C>              <C>               <C>               <C>                  <C>
                   Less Than $__             $__              $__              $__                $__                   $__ Or More
                 ------------------------------------------------------------------------------------------------------------------
 20__ AXP
RETURN ON EQUITY       Value (a)         Max. Value (a)    Max. Value (a)   Max. Value (a)    Max. Value (a)        Max. Value (a)
- -----------------------------------------------------------------------------------------------------------------------------------
  __% Or More           $0                   $                $                 $                 $                     $
- -----------------------------------------------------------------------------------------------------------------------------------
      __%               $0                   $                $                 $                 $                     $
- -----------------------------------------------------------------------------------------------------------------------------------
      __%               $0                   $                $                 $                 $                     $
- -----------------------------------------------------------------------------------------------------------------------------------
      __%               $0                   $                $                 $                 $                     $
- -----------------------------------------------------------------------------------------------------------------------------------
      __%               $0                   $                $                 $                 $                     $
- -----------------------------------------------------------------------------------------------------------------------------------
      Less              $0                   $0               $0                $0                $0                    $0
    Than __%
 ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a)  Straight-line  interpolation  would apply for any actual  performance level
     that falls between two performance levels shown on the grid.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ext102.txt
<DESCRIPTION>EXHIBIT 10.2 - PORTFOLIO GRANT DOCUMENT
<TEXT>
                                                                  EXHIBIT 10.2

                            AMERICAN EXPRESS COMPANY
                        1998 INCENTIVE COMPENSATION PLAN
                               PORTFOLIO GRANT-___
                                       TO



           ----------------------------------------------------------


    _____  __, 20__                              December 31, 20__
 ----------------------                  -------------------------------------
        Award Date                       Expiration Date of Performance
                                         Period (See Paragraphs 2, 5, 6, 7, et
                                         al. for payment and vesting date)


                                        $
           ----------------------------------------------------------
                               Total Target Value

         $                                              $
- -----------------------                  -------------------------------------
  Target Value of the                           Target Value of the
  Financial Incentive                             Stock Incentive
      Component                                     Component



         We are pleased to inform you that, pursuant to the Company's 1998
Incentive Compensation Plan, as amended (the "Plan"), the Compensation and
Benefits Committee (the "Committee") of the Board of Directors (the "Board") of
American Express Company (the "Company"), made an award of a portfolio grant to
you as hereinafter set forth (the "Award") under the Plan as of the award date
specified above (the "Award Date"). The Plan is incorporated by reference in
this Agreement and made a part hereof. This Award is subject to the Detrimental
Conduct Provisions established by the Committee, and as from time to time
amended.

1.       GENERAL. You have been granted the Award subject to the provisions of
the Plan and the terms, conditions and restrictions set forth herein.  The Total
Target Value of the Award consists of two components: the Target Value of the
Financial Incentive Component as specified above, representing 60% of the Total
Target Value (the "Financial Target Value") and the Target Value of the Stock
Incentive Component as specified above, representing 40% of the Total Target
Value (the "Stock Target Value"). The period beginning January 1, 20__ and
ending on the expiration date specified above (the "Expiration Date") being the
"Award Period." The Total Target Value, or either of its components may be
reduced by the Committee in its sole discretion, which may include but need not
be limited to, situations where on the last day of the Award Period you are
engaged in Related Employment, as that term is defined in the Plan. The Schedule
A Value (as that term is defined below in Subparagraph 3(b)), if any, and the
Stock


<PAGE>


Incentive Value (as that term is defined below in Subparagraph 3(c)), if any,
will be determined as specified in Paragraph 3 or 4 hereof, as the case may be.

2.       REQUIREMENT OF EMPLOYMENT. Except as otherwise provided in Paragraphs 4
and 6 hereof, your rights to the Final Value (as that term is defined below)
under Subparagraph 5(b) hereof, shall be provisional and shall be canceled in
whole or in part, as determined by the Committee in its sole discretion if your
continuous employment with the Company and its Affiliates (as that term is
defined in the Plan) or your Related Employment as that term is defined in the
Plan (hereinafter collectively referred to as "employment with the American
Express companies"), terminates for any reason on or before the Payment Date as
set forth in Subparagraph 5(b). Whether and as of what date your employment with
the American Express companies shall terminate if you are granted a leave of
absence or commence any other break in employment intended by your employer to
be temporary, shall be determined by the Committee in its sole discretion.

3.       DETERMINATION OF THE SCHEDULE A VALUE OF THE FINANCIAL INCENTIVE, STOCK
INCENTIVE VALUE, INITIAL VALUE AND FINAL VALUE.

(a)      Except as otherwise provided below in this Paragraph 3 and in
Paragraphs 2, 4 and 6 hereof, there shall be paid to you in accordance with
Paragraph 5 hereof, the sum, as may be adjusted by the Committee pursuant to
Paragraph 3(d), of the Schedule A Value of the Financial Incentive (the
"Schedule A Value") as of the last day of the Award Period, if any, as provided
in Subparagraph 3(b), plus the Stock Incentive Value (as that term is defined
below) after the end of the Award Period, if any, as provided in Subparagraph
3(c)(i).

(b)      SCHEDULE A VALUE OF THE FINANCIAL INCENTIVE.

         (i)      Except as otherwise provided in this Paragraph 3, the Schedule
         A Value as of the last day of the Award Period will be equal to (X)
         times (Y), where (X) equals the Financial Incentive Payout Percentage,
         if any, determined by the Committee based on the performance (i.e.,
         Average Annual Return on Equity, Net Revenue, and Earnings Per Share,
         as the case may be) of the Company or of a unit of the Company, as the
         case may be, pursuant to the formula provided in Schedule A to this
         Agreement and (Y) is the Financial Target Value. However, in no event
         will (X) be greater than the Maximum Value as set forth in Schedule A
         to this Agreement.

         (ii)     In the application of Schedule A to this Agreement after the
         end of the Award Period for purposes of determining the Schedule A
         Value pursuant to this Subparagraph 3(b), (A) if the Average Annual
         Return on Equity, Net Revenue, and Earnings Per Share, as the case may
         be, are less than those levels needed to have some Schedule A Value,
         there shall be no Schedule A Value, and (B) if the Average Annual
         Return on Equity,  Net Revenue, and Earnings Per Share, as the case may
         be, are equal to or greater than those levels needed to have some
         Schedule A Value and less than or equal to the maximum specified levels
         and are not represented on the table, the Schedule A Value shall be
         determined by


                                                                               2


<PAGE>


         straight-line interpolation from the amounts specified in such table
         immediately less than and greater than the amounts actually attained.

         (iii)    For purposes of this Award, the following terms shall have the
         following meanings (which will take into account, in each case, the
         expenses and other financial effect for the applicable year(s) of
         portfolio grants under the Plan except as adjusted by the application
         of Subparagraph 3(b)(iv)).

         (A)      "Net Revenue (managed basis)" means, for any given year, the
         total revenues of the Company or of a segment or other part of the
         Company, as the case may be, for such year, as reported by the Company
         under generally accepted accounting principles, net of American Express
         Financial Advisors' provisions for annuities, insurance and investment
         certificates products, and exclude the effect of TRS' asset
         securitizations.

         (B)      "Average Annual Net Revenue" means, for the Award Period, the
         sum of the Net Revenue (managed basis) for every year during the Award
         Period, divided by 3.

         (C)      "Net Income" means, for any given year, the after-tax net
         income (or loss) of the Company or of a segment or other part of the
         Company, as the case may be, for such year as adjusted below, as
         determined by the Company in accordance with generally accepted
         accounting principles applied on a basis comparable to that used for
         the purpose of reporting industry segment data in the Company's annual
         audited financial statements. The calculation of Net Income, for any
         given year, will be adjusted to exclude:

                  o    reported cumulative effect of accounting changes,

                  o    reported income and losses from discontinued operations,
                       and

                  o    reported  extraordinary  gains and losses as determined
                       under generally accepted accounting principles.

         (D)      "Earnings Per Share" means, for any given year, the diluted
         earnings (or loss) per share of the Company for such year, as
         determined by the Company in accordance with generally accepted
         accounting principles for inclusion in the Company's annual audited
         financial statements. The calculation of Earnings Per Share, for any
         given year, will be adjusted in the same fashion as Net Income for such
         year.

         (E)      "Average Annual Earnings Per Share" means, for the Award
         Period, the sum of the Earnings Per Share for every year during the
         Award Period, divided by 3.


                                                                              3


<PAGE>


         (F)      "Average Annual Shareholders' Equity" means, for any given
         year, the sum of the total shareholders' equity of the Company or of a
         segment or other part of the Company, as the case may be, as of the
         first day of such year and as of the end of each month during such
         period (each as determined by the Company in accordance with generally
         accepted accounting principles but excluding the effect of Statement of
         Financial Accounting Standards Nos. 115 and 133 (relating to
         mark-to-market treatment of certain investments and accounting for
         derivatives, respectively) divided by 13.

         (G)      "Annual Return on Equity" means, for any given year, the Net
         Income for such year divided by the Average Annual Shareholders' Equity
         for such year.

         (H)      "Average Annual Return on Equity" means, for the Award Period,
         the sum of the Annual Return on Equity for every year during the Award
         Period, divided by 3.

         (I)      "Amex Total Shareholder Return (Amex TSR)" means the compound
         annual growth rate, expressed as a percentage with one decimal point,
         in the value of a share of common stock in the Company due to stock
         appreciation and dividends, assuming dividends are reinvested, during
         the Award Period. For this purpose, the "Beginning Stock Price" shall
         mean the average closing sales prices on the New York Stock Exchange
         Composite Transaction Tape for the trading days in the month of
         December immediately preceding the beginning of the Award Period; and,
         the "Ending Stock Price" shall mean the average closing sales prices on
         the New York Stock Exchange Composite Transaction Tape for the trading
         days in the month of December immediately preceding the Expiration
         Date. The Amex TSR is calculated as follows:


(Ending Stock Price + value of dividends paid and reinvested during the Award
Period)(1/3)
- -------------------------------------------------------------------------------
                         Beginning Stock Price    -1


         (J)      "S&P Financial Index Total Shareholder Return (S&P Financial
         TSR)" means the compound annual growth rate, expressed as a percentage
         with one decimal point, in the value of the S&P Financial Index during
         the Award Period. It is calculated in a manner consistent with
         Subparagraph 3(b)(iii)(I) above from information publicly reported by
         Standard & Poors Company (or the entity that publishes such other
         index, as the case may be).

         (iv)     In the event of the sale, disposition, restructuring,
         discontinuance of operations or other extraordinary corporate event in
         respect of a material business during the Performance Period or any of
         the events discussed in subparagraph 3(c)(ii) during the Performance
         Period, if the Committee shall determine that such an event equitably
         requires an adjustment in the calculation or terms of the Financial
         Incentive Component under this Award, including Average Annual Return
         on Equity, Net Revenue, and Earnings Per Share, on the grounds


                                                                               4


<PAGE>


         that any such event would produce an unreasonable value, such equitable
         adjustment will be made by the Committee. Any such determination by the
         Committee under this subparagraph 3(b)(iv) shall be final, binding and
         conclusive.


(c)          STOCK INCENTIVE VALUE.

         (i)      Except as otherwise provided in this Paragraph 3 and in
         Paragraph 1 above, the Stock Incentive Value, as determined by the
         Committee after the last day of the Award Period (the "Stock Incentive
         Value"), will be an amount equal to (A) times (B), where (A) is the
         Stock Incentive Payout Percentage, if any, determined by the Committee
         based on a comparison of the Amex TSR and the S&P Financial TSR
         pursuant to the formula and (B) is the Stock Target Value, both
         provided in Schedule A to this Agreement. However, in no event will (A)
         be greater than the Maximum Value of the Stock Incentive Value as set
         forth in Schedule A to this Agreement.

         (ii)     In the event of any change in the corporate capitalization of
         the Company, such as by reason of any stock split, or a material
         corporate transaction, such as any merger of the Company into another
         corporation, any consolidation of the Company and one or more
         corporations into another corporation, any separation of the Company
         (including a spin-off or other distribution of stock or property by the
         Company), any reorganization of the Company (whether or not such
         reorganization comes within the definition of such term in Section 368
         of the Internal Revenue Code of 1986, as amended (the "Code")), or any
         partial or complete liquidation by the Company, other than a normal
         cash dividend, if the Committee shall determine that such a change
         equitably requires an adjustment in the calculation or terms of the
         Stock Incentive Component under this Award, on the grounds that any
         such change would produce an unreasonable value, such equitable
         adjustment will be made by the Committee.  Any such determination by
         the Committee under this Subparagraph 3(c)(ii) shall be final, binding
         and conclusive.

(d)      As soon as reasonable after the last day of the Award Period, the
Committee may determine, in its sole discretion, that the sum of the Schedule A
Value and the Stock Incentive Value (as initially determined above in
Subparagraphs 3(b) and (c), respectively) may be adjusted downward (that is, to
a value of zero), but in no event upward, as follows:

         (i)      YOUR UNIT'S RESULTS. Downward by a percentage (ranging from
         0-100%) of such initially-determined sum, based on such criteria as the
         Committee shall deem appropriate relating to your unit's results, with
         such resultant sum being the "Initial Value"; provided that any such
         determination by the Committee need not be made in a uniform manner and
         may be made selectively among holders of awards of portfolio grants in
         your unit, whether or not such award holders are similarly situated.


                                                                               5


<PAGE>


         (ii)     YOUR INDIVIDUAL RESULTS. The Initial Value may be adjusted
         further downward by a percentage (ranging from 0-100%) of such Initial
         Value after the application of Subparagraph 3(d)(i), based on such
         criteria as the Committee shall deem appropriate relating to your
         individual results, with such final resultant sum being the "Final
         Value";  provided that any such determination by the Committee need not
         be made in a uniform manner and may be made selectively among holders
         of awards of portfolio grants, whether or not such award holders are
         similarly situated.

In no event may the Committee amend any provision hereof so as increase or
otherwise adjust upward the Schedule A Value or any component thereof or the
Stock Incentive Value.


(e)          The Committee shall determine the Schedule A Value, the Stock
Incentive Value, the Initial Value and the Final Value pursuant to this
Agreement, and such determinations by the Committee shall be final, binding and
conclusive upon you and all persons claiming under or through you.

4.           DEATH, DISABILITY OR RETIREMENT.

(a)          If, on or before the Payment Date set forth in Subparagraph 5(b)
but during a period when you have been in continuous employment with the
American Express companies since the Award Date, you terminate your employment
with the American Express companies by reason of disability at any time
following the Award Date (as that term is defined in the Plan) or you die at any
time following the Award Date, you will be entitled to that proportion of the
Final Value as the number of full months which have elapsed between January 1,
2005 and the end of the month in which your termination of employment by reason
of death or such disability occurs (not to exceed 38) bears to 38, and for this
purpose, to the extent not otherwise previously determined by the Committee, in
the event of your disability or death, the Final Value shall be calculated by
applying the rate at which the expense for the Award was being accrued for
purposes of the Company's annual audited financial statement at the end of the
last completed calendar quarter prior to your disability or death, as
applicable.

Such amount, if any, shall be payable as soon as practicable thereafter, unless
otherwise determined by the Committee, in cash, common shares of the Company, or
other property, or any combination thereof, and you and all others claiming
under or through you shall not be entitled to receive any other amounts under
this Award.

(b)          If, on or before the Payment Date set forth in Subparagraph 5(b)
but during a period when you have been in continuous employment with the
American Express companies since the Award Date, you terminate your employment
with the American Express companies by reason of retirement (as that term is
defined by the Committee), and such event occurs more than one year after the
Award Date, you will be entitled to receive an amount under this Award as
provided in this Subparagraph 4(b). Generally, in such event you will be
entitled to that proportion of the Final Value as the number of full months
which have elapsed between January


                                                                               6


<PAGE>


1, 20__ and the end of the month in which your termination of employment by
reason of such retirement occurs (not to exceed 38) bears to 38, unless such
termination occurs following the attainment of age 60, in which case you will be
entitled to receive 50% of the Final Value he would otherwise forfeit under the
above formula, or, unless such termination occurs following attainment of age
62, in which case you will be entitled to 100% of the Final Value. The Final
Value for this purpose shall be determined after the last day of the Award
Period in the normal course in accordance with Paragraph 3 hereof. Such amount,
if any, shall be payable in cash, common shares of the Company, or other
property, or any combination thereof, after the Award Period in accordance with
Paragraphs 5 and 6 hereof, and you and all others claiming under or through you
shall not be entitled to receive any other amounts under this Award.

5.           PAYMENT OF AWARD.

(a)          As soon as reasonable after the last day of the Award Period, or
the earlier date your continuous employment with American Express companies
terminates by reason of disability or death in accordance with Paragraph 4
above, but prior to payment in respect of the Award, the Committee shall
determine whether the conditions of Paragraph 2, and Paragraph 3 or 4 hereof
have been met and, if so, shall ascertain the Final Value in accordance with
Paragraph 3 or 4, as the case may be.

(b)          If the Committee determines that there is no Schedule A Value, the
Financial Incentive part of this Award will be canceled, and the Stock Incentive
Value, if any, as determined in accordance with Paragraph 3 or 4 shall become
payable to you in the form provided below in this Subparagraph 5(b). If the
Committee determines that there is some Schedule A Value, however, the Final
Value as determined pursuant to Paragraph 3 or 4, if any, shall become payable
to you in cash, common shares of the Company, restricted shares of the Company
("RSA")(where such RSA shall have the terms substantially as set forth in the
form of restricted stock award granted generally under the Plan, or its
successor, except that the RSA shall vest pursuant to a period determined in the
Committee's discretion, except that such vesting period shall not be less than
one year from date of grant), or other property, or any combination thereof as
soon as practicable following February 1, 2008 (or at such other time or times
as the Committee shall determine as provided in Paragraph 7 below) (the "Payment
Date").

6.           TERMINATION OF EMPLOYMENT AFTER THE AWARD PERIOD BUT ON OR BEFORE
THE PAYMENT DATE. If, after the last day of the Award Period and on or before
the Payment Date specified above in Subparagraph 5(b), but during a period when
you have been in continuous employment with the American Express companies since
the Award Date, your employment terminates with the American Express companies
for any reason other than death, disability or retirement as set forth in
Paragraph 4, then, you and all others claiming under or through you shall not be
entitled to receive any amounts under this Award, except as otherwise determined
by the Committee in its sole discretion.

7.           DEFERRAL OR ACCELERATION OF PAYMENT OF AWARD. Notwithstanding
anything in this Agreement to the contrary, subject to satisfying applicable
requirements under Section 409A of the Internal Revenue Code of 1986, as
amended, any payments to be made under this Award may be deferred or accelerated
in such manner as the Committee shall determine in its sole


                                                                               7


<PAGE>


discretion; provided that as to such a deferral of payment, any amount paid in
excess of the amount that was originally payable to you under this Agreement
will be based on a reasonable interest rate as determined by the Committee, and
provided, further, that as to such an acceleration of payment to you under this
Agreement, any amount so paid will be discounted to reasonably reflect the time
value of money as determined by the Committee.

8.           CHANGE IN CONTROL. Notwithstanding anything in this Agreement to
the contrary (except for the provision dealing with a limitation under Section
280G of the Internal Revenue Code of 1986, as amended), if you have not received
payment under the Agreement and, within two years after the date of a Change in
Control (as defined below), you experience a termination of employment that
would otherwise entitle you to receive the payment of severance benefits under
the provisions of the severance plan that are in effect and that you participate
in as of the date of such Change in Control, (i) you shall immediately be 100%
vested in the Award; (ii) the Committee shall determine the Schedule A Value and
Stock Incentive Value as of the date of such termination of employment as if the
Award Period had just ended, based on results against the financial performance
measures for the Schedule A Value or the Amex TSR in comparison to the S&P
Financial TSR for the Stock Incentive Value up to the last day of the calendar
quarter ending on or immediately prior to such date, but prorated based on (a)
the total number of full and partial months of the Award Period which have
elapsed between (X) January 1, 20__, and (Y) the date of such termination of
employment (not to exceed 36), divided by (b) the total number of months in the
Award Period; provided, however, the Committee shall adjust the resulting
Schedule A value downward by thirty-three percent (33%) and (iii) such value of
the Award shall be paid to you in cash within five days after the date of such
termination of employment. The Committee may not amend or delete this Paragraph
8 of this Agreement in a manner that is detrimental to you, without your written
consent. A "Change in Control" has that meaning as defined in American Express
Senior Executive Severance Plan, as amended from time to time.

9.           TAX WITHHOLDING AND FURNISHING OF INFORMATION. There shall be
withheld from any payment under this Award, such amount, if any, as the Company
and/or your employer determines is required by law, including, but not limited
to, U.S. federal, state, local or foreign income, employment or other taxes
incurred by reason of making of the Award or of such payment. It shall be a
condition to the obligation of the Company to make payments under this Award
that you (or those claiming under or through you) promptly provide the Company
and/or your employer with all forms, documents or other information reasonably
required by the Company and/or your employer in connection with the Award.

10.          RIGHTS NOT ASSIGNABLE. Except as otherwise determined by the
Committee in its sole discretion, your rights and interests under the Award and
the Plan may not be sold, assigned, transferred, or otherwise disposed of, or
made subject to any encumbrance, pledge, hypothecation or charge of any nature,
except that you may designate a beneficiary pursuant to Paragraph 11 hereof. If
you (or those claiming under or through you) attempt to violate this Paragraph
10, such attempted violation shall be null and void and without effect, and the
Company's obligation to make any further payments to you (or those claiming
under or through you) hereunder shall terminate.


                                                                               8

<PAGE>


11.          BENEFICIARY DESIGNATION. Subject to the provisions of the Plan, you
may, by completing a form acceptable to the Company and returning it to the
Corporate Secretary's Office, at American Express Tower, World Financial Center,
New York, New York 10285-5005, name a beneficiary or beneficiaries to receive
any payment to which you may become entitled under this Agreement in the event
of your death. You may change your beneficiary or beneficiaries from time to
time by submitting a new form to the Corporate Secretary's Office at the same
address. If you do not designate a beneficiary, or if no designated beneficiary
is living on the date any amount becomes payable under this Agreement, such
payment will be made to the legal representatives of your estate, which will be
deemed to be your designated beneficiary under this Agreement.

12.          ADMINISTRATION. Any action taken or decision made by the Company,
the Board or the Committee or its delegates arising out of or in connection with
the construction, administration, interpretation or effect of the Plan or this
Agreement shall lie within its sole and absolute discretion, as the case may be,
and shall be final, conclusive and binding upon you and all persons claiming
under or through you. By accepting this Award or other benefit under the Plan,
you and each person claiming under or through you shall be conclusively deemed
to have indicated acceptance and ratification of, and consent to, any action
taken or decision made under the Plan by the Company, the Board or the Committee
or its delegates.

13.          MAJOR TRANSACTION. This Section shall apply in the event of a Major
Transaction (as defined in the American Express Senior Executive Severance Plan,
as amended from time to time).

             If all or any portion of the payments or benefits to which the
Participant will be entitled under the Plan, either alone or together with other
payments or benefits which the Participant receives or is entitled to receive
directly or indirectly from the Company or any of its subsidiaries or any other
person or entity that would be treated as a payor of parachute payments as
hereinafter defined, under any other plan, agreement or arrangement, would
constitute a "parachute payment" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") or any successor
provision thereto and regulations or other guidance thereunder (except that
"2.95" shall be used instead of "3" under Section 280G(b)(2)(A)(ii) of the Code
or any successor provision thereto), such payment or benefits provided to the
Participant under this Plan, and any other payments or benefits which the
Participant receives or is entitled to receive directly or indirectly from the
Company or any of its subsidiaries or any other person or entity that would be
treated as a payor of parachute payments as hereinafter defined, under any other
plan, agreement or arrangement which would constitute a parachute payment, shall
be reduced (but not below zero) as described below to the extent necessary so
that no portion thereof would constitute such a parachute payment as previously
defined (except that "2.95" shall be used instead of "3" under Section
280G(b)(2)(A)(ii) of the Code or any successor provision thereto). Whether
payments or benefits to the Participant would constitute a "parachute payment",
whether such payments or benefits are to be reduced pursuant to the first
sentence of this paragraph, and the extent to which they are to be so reduced,
will be determined by the firm serving, immediately prior to the Major
Transaction, as the Company's independent auditors, or if that firm refuses to
serve, by another qualified firm, whether or not serving as independent
auditors, designated by the Administration Committee under the American Express


                                                                               9


<PAGE>


Senior Executive Severance Plan (the "Firm"). The Firm will be paid reasonable
compensation by the Company for such services. If the Firm concludes that its
determination is inconsistent with a final determination of a court or the
Internal Revenue Service, the Firm shall, based on such final determination,
redetermine whether the amount payable to the Participant should have been
reduced and, if applicable, the amount of any such reduction. If the Firm
determines that a lesser payment should have been made to the Participant, then
an amount equal to the amount of the excess of the earlier payment over the
redetermined amount (the "Excess Amount") will be deemed for all purposes to be
a loan to the Participant made on the date of the Participant's receipt of such
Excess Amount, which the Participant will have an obligation to repay to the
Company on the fifth business day after demand, together with interest on such
amount at the lowest applicable Federal rate (as defined in Section 1274(d) of
the Code or any successor provision thereto), compounded semi-annually (the
"Section 1274 Rate") from the date of the Participant's receipt of such Excess
Amount until the date of such repayment (or such lesser rate (including zero) as
may be designated by the Firm such that the Excess Amount and such interest will
not be treated as a parachute payment as previously defined). If the Firm
determines that a greater payment should have been made to the Participant,
within five business days of such determination, the Company will pay to the
Participant the amount of the deficiency, together with interest thereon from
the date such amount should have been paid to the date of such payment, at the
Section 1274 Rate (or such lesser rate (including zero) as may be designated by
the Firm such that the amount of such deficiency and such interest will not be
treated as a parachute payment as previously defined). If a reduction is to be
made pursuant to this paragraph, the Firm will have the right to determine which
payments and benefits will be reduced, either those under this Plan alone or
such other payments or benefits which the Participant receives or is entitled to
receive directly or indirectly from the Company or any of its subsidiaries or
any other person or entity that would be treated as a payor of parachute
payments as previously defined, under any other plan, agreement or arrangement.

14.          CHANGE IN CONTROL PAYMENTS. This Paragraph shall apply in the event
of Change in Control (as defined in the American Express Senior Executive
Severance Plan, as amended from time to time).

(a)          In the event that any payment or benefit received or to be received
by you hereunder in connection with a Change in Control or termination of your
Participant's employment (such payments and benefits, excluding Gross-Up Payment
(as hereinafter defined), being hereinafter referred to collectively as the
"Payments"), will be subject to the excise tax referred to in Section 4999 of
the Code (the "Excise Tax"), then (i) in the case of a Participant who is
classified in Band 70 (or its equivalent) or above immediately prior to such
Change in Control (a "Tier 1 Employee"), the Company shall pay to such Tier 1
Employee, within five days after receipt by such Tier 1 Employee of the written
statement referred to in paragraph (e) below, an additional amount (the
"Gross-Up Payment") such that the net amount retained by such Tier 1 Employee,
after deduction of any Excise Tax on the Payments and any federal, state and
local income and employment taxes and Excise Tax upon the Gross-Up Payment,
shall be equal to the Payments and (ii) in the case of a Participant other than
a Tier 1 Employee, the Payments shall be reduced to the extent necessary so that
no portion of the Payments is subject to the Excise Tax but only if (A) the net
amount of all Total Payments (as hereinafter defined), as so reduced (and after
subtracting the net amount of federal, state and local income and employment
taxes on such


                                                                              10


<PAGE>


reduced Total Payments), is greater than or equal to (B) the net amount of such
Total Payments without any such reduction (but after subtracting the net amount
of federal, state and local income and employment taxes on such Total Payments
and the amount of Excise Tax to which the Participant would be subject in
respect of such unreduced Total Payments); provided, however, that the
Participant may elect in writing to have other components of his or her Total
Payments reduced prior to any reduction in the Payments hereunder.

(b)          For purposes of determining whether the Payments will be subject to
the Excise Tax, the amount of such Excise Tax and whether any Payments are to be
reduced hereunder: (i) all payments and benefits received or to be received by
the Participant in connection with such Change in Control or the termination of
such Participant's employment, whether pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company, any Person (as
such term is defined in Subparagraph 2 above) whose actions result in such
Change in Control or any Person affiliated with the Company or such Person (all
such payments and benefits, excluding the Gross-Up Payment and any similar
gross-up payment to which a Tier 1 Employee may be entitled under any such other
plan, arrangement or agreement, being hereinafter referred to as the "Total
Payments"), shall be treated as "parachute payments" (within the meaning of
section 280G(b)(2) of the Code) unless, in the opinion of the Firm, such
payments or benefits (in whole or in part) do not constitute parachute payments,
including by reason of section 280G(b)(2)(A) or section 280G(b)(4)(A) of the
Code; (ii) no portion of the Total Payments the receipt or enjoyment of which
the Participant shall have waived at such time and in such manner as not to
constitute a "payment" within the meaning of section 280G(b) of the Code shall
be taken into account; (iii) all "excess parachute payments" within the meaning
of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax
unless, in the opinion of the Firm, such excess parachute payments (in whole or
in part) represent reasonable compensation for services actually rendered
(within the meaning of section 280G(b)(4)(B) of the Code) in excess of the Base
Amount (within the meaning of section 280G(b)(3) of the Code) allocable to such
reasonable compensation, or are otherwise not subject to the Excise Tax; and
(iv) the value of any noncash benefits or any deferred payment or benefit shall
be determined by the Firm in accordance with the principles of sections
280G(d)(3) and (4) of the Code and regulations or other guidance thereunder. For
purposes of determining the amount of the Gross-Up Payment in respect of a Tier
1 Employee and whether any Payments in respect of a Participant (other than a
Tier 1 Employee) shall be reduced, a Participant shall be deemed to pay federal
income tax at the highest marginal rate of federal income taxation (and state
and local income taxes at the highest marginal rate of taxation in the state and
locality of such Participant's residence, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes) in the calendar year in which the Gross-Up Payment is to be made
(in the case of a Tier 1 Employee) or in which the Payments are made (in the
case of a Participant other than a Tier 1 Employee). The Firm will be paid
reasonable compensation by the Company for its services.

(c)          In the event that the Excise Tax is finally determined to be less
than the amount taken into account hereunder in calculating the Gross-Up
Payment, then an amount equal to the amount of the excess of the earlier payment
over the redetermined amount (the "Excess Amount") will be deemed for all
purposes to be a loan to the Tier 1 Employee made on the date of the Tier 1
Employee's receipt of such Excess Amount, which the Tier 1 Employee will have


                                                                              11


<PAGE>


an obligation to repay to the Company on the fifth business day after demand,
together with interest on such amount at the lowest applicable Federal rate (as
defined in Section 1274(d) of the Code or any successor provision thereto),
compounded semi-annually (the "Section 1274 Rate") from the date of the Tier 1
Employee's receipt of such Excess Amount until the date of such repayment (or
such lesser rate (including zero) as may be designated by the Firm such that the
Excess Amount and such interest will not be treated as a parachute payment as
previously defined). In the event that the Excise Tax is finally determined to
exceed the amount taken into account hereunder in calculating the Gross-Up
Payment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), within five business
days of such determination, the Company will pay to the Tier 1 Employee an
additional amount, together with interest thereon from the date such additional
amount should have been paid to the date of such payment, at the Section 1274
Rate (or such lesser rate (including zero) as may be designated by the Firm such
that the amount of such deficiency and such interest will not be treated as a
parachute payment as previously defined). The Tier 1 Employee and the Company
shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the amount of any Gross-Up
Payment.

(d)          As soon as practicable following a Change in Control, the Company
shall provide to each Tier 1 Employee and to each other Participant with respect
to whom it is proposed that Payments be reduced, a written statement setting
forth the manner in which the Total Payments in respect of such Tier 1 Employee
or other Participant were calculated and the basis for such calculations,
including, without limitation, any opinions or other advice the Company has
received from the Firm or other advisors or consultants (and any such opinions
or advice which are in writing shall be attached to the statement).

15.          MISCELLANEOUS. Neither you nor any person claiming under or through
you shall have any right or interest, whether vested or otherwise, in the Plan
or the Award, unless and until all of the terms, conditions and provisions of
the Plan and this Agreement shall have been complied with. In addition, neither
the adoption of the Plan nor the execution of this Agreement shall in any way
affect the rights and powers of any person to dismiss or discharge you at any
time from employment with the American Express companies. Notwithstanding
anything herein to the contrary, neither the Company nor any of its Affiliates
(as that term is defined in the Plan) nor their respective officers, directors,
employees or agents shall have any liability to you (or those claiming under or
through you) under the Plan, this Agreement or otherwise on account of any
action taken, or decision not to take any action made, by any of the foregoing
persons with respect to the business or operations of the Company or any of its
Affiliates (as that term is defined in the Plan), despite the fact that any such
action or decision may adversely affect in any way whatsoever Average Annual
Shareholders' Equity, Earnings Per Share, Net Income or other financial measures
or amounts which are accrued or payable or any of your other rights or interests
under this Agreement.

16.          GOVERNING LAW. The validity, construction, interpretation,
administration and effect of this Agreement shall be governed by the substantive
laws, but not the choice of law rules, of the State of New York.


                                                                              12


<PAGE>


                                 AMERICAN EXPRESS COMPANY
                                 By the Compensation and Benefits
                                 Committee of the Board of Directors:







                                 By
                                    --------------------------------
































                                                                              13


<PAGE>


                                                                      SCHEDULE A


              AXP PG-____ FINANCIAL INCENTIVE COMPONENT (FIC) GRID
    -------------------------------------------------------------------------
       (subject to award agreement and discretionary downward adjustment)


<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
                                              AXP FINANCIAL INCENTIVE COMPONENT (FIC)
                                               (ALLOCATED 60% OF TOTAL TARGET VALUE)
- -------------------------------------------------------------------------------------------------------------------------------
                AXP Average Annual $     /      AXP Average Annual $ Net Revenue    /       AXP Average Annual Return
            Earnings Per Share (diluted) /          (managed basis) ($ billion)     /              on Equity
                    (40% weight)         /                 (30% weight)             /             (30% weight)
- -------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>                   <C>                  <C>                 <C>                   <C>
    20__ - 20__     /    Max. Value %    /     20__ - 20__     /    Max. Value %    /     20__ - 20__      /    Max. Value %
 Performance Period /      (a)(b)        / Performance Period  /      (a)(b)        / Performance Period   /        (a)(b)
- -------------------------------------------------------------------------------------------------------------------------------
    $___ Or More    /       ___%         /     $___ Or More    /        ___%        /     ___% Or More     /        ___%
                    /                    /                     /                    /                      /
- -------------------------------------------------------------------------------------------------------------------------------
    $___            /       ___%         /     $___            /        ___%        /     ___%             /        ___%
                    /                    /                     /                    /                      /
- -------------------------------------------------------------------------------------------------------------------------------
    $___            /       ___%         /     $___            /        ___%        /     ___%             /        ___%
- -------------------------------------------------------------------------------------------------------------------------------
    $___            /       ___%         /     $___            /        ___%        /     ___%             /        ___%
                    /                    /                     /                    /                      /
- -------------------------------------------------------------------------------------------------------------------------------
    $___            /       ___%         /     $___            /        ___%        /     ___%             /        ___%
                    /                    /                     /                    /                      /
- -------------------------------------------------------------------------------------------------------------------------------
    Less Than $__   /       -0-         /     Less Than $___  /         -0-         /     Less Than ___%   /        -0-
                    /                    /                     /                    /                      /
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a)  "%" = percent of the  executive's  dollar  Target  Value  allocated  to the
     applicable performance factor.

(b)  Straight-line  interpolation  would apply for any actual  performance level
     that falls between two performance levels shown on the grid.

AXP  = Consolidated American Express Company


<PAGE>


                                                                     Schedule A


                 AXP PG-___ STOCK INCENTIVE COMPONENT (SIC) GRID
       (subject to award agreement and discretionary downward adjustment)


- ------------------------------------------------------------------------
                  AXP STOCK INCENTIVE COMPONENT (SIC)
                 (allocated 40% of Total Target Value)
- ------------------------------------------------------------------------
                 AXP Total Shareholder Return (TSR) %
                          vs. S&P Financials
- ------------------------------------------------------------------------
   20__ - 20__ Perormance Period                     Max. Value %
     (percentage points AXP is                        (a) (b)
         higher or lower)
- ------------------------------------------------------------------------
              +__% Or Higher                            ___%
              +__%                                      ___%
              +__%                                      ___%
              +__%                                      ___%
              +__%                                      ___%
              +__%                                      ___%
              +__%                                      ___%
              +__%                                      ___%
              +__%                                      ___%
              +__%                                      ___%
              +__%                                      ___%
              +__%                                      ___%
              +__%                                      ___%
                0%                                      ___%
              -__%                                      ___%
              -__%                                      ___%
              -__%                                      ___%
              -__%                                      ___%
              -__%                                      ___%
              -__%                                      ___%
              -__%                                      ___%
              -__%                                      ___%
              -__%                                      ___%
  Lower Than  -__%                                      -0-
- ------------------------------------------------------------------------

(a)  = %  percent  of the  executive's  dollar  Target  Value  allocated  to the
     applicable performance factor

(b)  Straight-line  interpolation  would apply for any actual  performance level
     that falls between two performance levels shown on the grid.


AXP = Consolidated American Express Company
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>4
<FILENAME>ext12.txt
<DESCRIPTION>EXHIBIT 12 - RATIO OF EARNINGS TO FIXED CHARGES
<TEXT>
                                                                    EXHIBIT 12

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

<Table>
<Caption>
                               Three Months                          Years Ended December 31,
                              Ended March 31,  --------------------------------------------------------------
                                   2005           2004         2003         2002         2001         2000
                              --------------   ----------   ----------   ----------   ----------   ----------
<S>                           <C>              <C>          <C>          <C>          <C>          <C>
Earnings:
    Pretax income from
     continuing operations    $        1,375   $    4,951   $    4,247   $    3,727   $    1,596   $    3,908
    Interest expense                     468        1,659        1,606        1,832        2,856        2,922
    Other adjustments                     37          154          157          174          175          163
                              --------------   ----------   ----------   ----------   ----------   ----------
Total earnings (a)            $        1,880   $    6,764   $    6,010   $    5,733   $    4,627   $    6,993
                              --------------   ----------   ----------   ----------   ----------   ----------


Fixed Charges:
    Interest expense          $          468   $    1,659   $    1,606   $    1,832   $    2,856   $    2,922
    Other adjustments                     37          145          140          151          170          165
                              --------------   ----------   ----------   ----------   ----------   ----------
Total fixed charges (b)       $          505   $    1,804   $    1,746   $    1,983   $    3,026   $    3,087
                              --------------   ----------   ----------   ----------   ----------   ----------


Ratio of earnings to
    fixed charges (a/b)                 3.72         3.75         3.44         2.89         1.53         2.27
</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 net investment income 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 under the equity method 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 under the equity method.

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-31
<SEQUENCE>5
<FILENAME>ext311.txt
<DESCRIPTION>EXHIBIT 31.1 - CEO CERTIFICATION
<TEXT>
                                                                  EXHIBIT 31.1

                                 CERTIFICATION
                                 -------------

     I, Kenneth I. Chenault, certify that:

     1.   I have reviewed this quarterly report on Form 10-Q of American
          Express Company;

     2.   Based on my knowledge, this report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect
          to the period covered by this report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this report, fairly present in all material
          respects the financial condition, results of operations and cash
          flows of the registrant as of, and for, the periods presented in
          this report;

     4.   The registrant's other certifying officer(s) and I are responsible
          for establishing and maintaining disclosure controls and procedures
          (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
          internal control over financial reporting (as defined in Exchange
          Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

          (a)  Designed such disclosure controls and procedures, or caused
               such disclosure controls and procedures to be designed under
               our supervision, to ensure that material information relating
               to the registrant, including its consolidated subsidiaries, is
               made known to us by others within those entities, particularly
               during the period in which this report is being prepared;

          (b)  Designed such internal control over financial reporting, or
               caused such internal control over financial reporting to be
               designed under our supervision, to provide reasonable assurance
               regarding the reliability of financial reporting and the
               preparation of financial statements for external purposes in
               accordance with generally accepted accounting principles;

          (c)  Evaluated the effectiveness of the registrant's disclosure
               controls and procedures and presented in this report our
               conclusions about the effectiveness of the disclosure controls
               and procedures, as of the end of the period covered by this
               report based on such evaluation; and

          (d)  Disclosed in this report any change in the registrant's
               internal control over financial reporting that occurred during
               the registrant's most recent fiscal quarter (the registrant's
               fourth fiscal quarter in the case of an annual report) that has
               materially affected, or is reasonably likely to materially
               affect, the registrant's internal control over financial
               reporting; and

<Page>

     5.   The registrant's other certifying officer(s) and I have disclosed,
          based on our most recent evaluation of internal control over
          financial reporting, to the registrant's auditors and the audit
          committee of the registrant's board of directors (or persons
          performing the equivalent functions):

          (a)  All significant deficiencies and material weaknesses in the
               design or operation of internal control over financial
               reporting which are reasonably likely to adversely affect the
               registrant's ability to record, process, summarize and report
               financial information; and

          (b)  Any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal control over financial reporting.

     Date:  May 3, 2005

                                   /s/ Kenneth I. Chenault
                                   -----------------------
                                   Kenneth I. Chenault
                                   Chief Executive Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>6
<FILENAME>ext312.txt
<DESCRIPTION>EXHIBIT 31.2 - CFO CERTIFICATION
<TEXT>
                                                                  EXHIBIT 31.2

                                 CERTIFICATION
                                 -------------

     I, Gary L. Crittenden, certify that:

     1.   I have reviewed this quarterly report on Form 10-Q of American
          Express Company;

     2.   Based on my knowledge, this report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect
          to the period covered by this report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this report, fairly present in all material
          respects the financial condition, results of operations and cash
          flows of the registrant as of, and for, the periods presented in
          this report;

     4.   The registrant's other certifying officer(s) and I are responsible
          for establishing and maintaining disclosure controls and procedures
          (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
          internal control over financial reporting (as defined in Exchange
          Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

          (a)  Designed such disclosure controls and procedures, or caused
               such disclosure controls and procedures to be designed under
               our supervision, to ensure that material information relating
               to the registrant, including its consolidated subsidiaries, is
               made known to us by others within those entities, particularly
               during the period in which this report is being prepared;

          (b)  Designed such internal control over financial reporting, or
               caused such internal control over financial reporting to be
               designed under our supervision, to provide reasonable assurance
               regarding the reliability of financial reporting and the
               preparation of financial statements for external purposes in
               accordance with generally accepted accounting principles;

          (c)  Evaluated the effectiveness of the registrant's disclosure
               controls and procedures and presented in this report our
               conclusions about the effectiveness of the disclosure controls
               and procedures, as of the end of the period covered by this
               report based on such evaluation; and

          (d)  Disclosed in this report any change in the registrant's
               internal control over financial reporting that occurred during
               the registrant's most recent fiscal quarter (the registrant's
               fourth fiscal quarter in the case of an annual report) that has
               materially affected, or is reasonably likely to materially
               affect, the registrant's internal control over financial
               reporting; and

<Page>

     5.   The registrant's other certifying officer(s) and I have disclosed,
          based on our most recent evaluation of internal control over
          financial reporting, to the registrant's auditors and the audit
          committee of the registrant's board of directors (or persons
          performing the equivalent functions):

          (a)  All significant deficiencies and material weaknesses in the
               design or operation of internal control over financial
               reporting which are reasonably likely to adversely affect the
               registrant's ability to record, process, summarize and report
               financial information; and

          (b)  Any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal control over financial reporting.

     Date:  May 3, 2005
                                   /s/ Gary L. Crittenden
                                   ----------------------
                                   Gary L. Crittenden
                                   Chief Financial Officer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>7
<FILENAME>ext321.txt
<DESCRIPTION>EXHIBIT 32 - 906 CERTIFICATION
<TEXT>
                                                                  EXHIBIT 32.1

                           CERTIFICATION PURSUANT TO
                            18 U.S.C. SECTION 1350,
                            AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of American Express
Company (the "Company") for the quarterly period ended March 31, 2005, as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), Kenneth I. Chenault, as Chief Executive Officer of the Company, and
Gary L. Crittenden as Chief Financial Officer of the Company, each hereby
certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully complies with the requirements of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.

/s/ Kenneth I. Chenault
- -----------------------
Name:  Kenneth I. Chenault
Title: Chief Executive Officer
Date:  May 3, 2005



/s/ Gary L. Crittenden
- ----------------------
Name:  Gary L. Crittenden
Title: Chief Financial Officer
Date:  May 3, 2005


The foregoing certification is being furnished solely pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, and is not being "filed" as part of the Form 10-Q or as a separate
disclosure document for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or otherwise subject to liability
under that section. This certification shall not be deemed to be incorporated
by reference into any filing under the Securities Act of 1933, as amended, or
the Exchange Act except to the extent that this Exhibit 32.1 is expressly and
specifically incorporated by reference in any such filing.

A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to
the Securities and Exchange Commission or its staff upon request.
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
