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American Express Credit Corp – ‘10-Q’ for 6/30/05

On: Thursday, 8/11/05, at 5:23pm ET · For: 6/30/05 · Accession #: 950117-5-3253 · File #: 1-06908

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/11/05  American Express Credit Corp      10-Q        6/30/05    7:57K                                    Command F… Self-Filer/FA

Quarterly Report — Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        American Express Credit Corp                          18     79K 
 2: EX-12       Exhibit 12.1                                           1      6K 
 3: EX-12       Exhibit 12.2                                           1      9K 
 4: EX-31       Exhibit 31.1                                           2±     9K 
 5: EX-31       Exhibit 31.2                                           2±     9K 
 6: EX-32       Exhibit 32.1                                           1      8K 
 7: EX-32       Exhibit 32.2                                           1      8K

10-Q — American Express Credit Corp
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Controls and Procedures Exhibits Financial Statements Management's Discussion and Analysis of Financial Condition and Results of Operations Recently Issued Accounting Standards
1	1st Page - Filing Submission
2	Item 1. Financial Statements
6	Recently Issued Accounting Standards
9	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
15	Item 4. Controls and Procedures
16	Item 6. Exhibits

10-Q 1st Page of 18 TOC ↑Top Previous Next ↓Bottom Just 1st
 
 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 June 30, 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 No. 1-6908

 AMERICAN EXPRESS CREDIT CORPORATION
(Exact name of registrant as specified in its charter)

                                                                [Download Table]
                                                                                   
            Delaware                                        11-1988350             
(State or other jurisdiction of                (I.R.S. Employer Identification No.)
 incorporation or organization)                                                    

One Christina Centre, 301 North Walnut Street                   19801-2919         
       Suite 1002, Wilmington, Delaware                         (Zip Code)         
   (Address of principal executive offices)                                        


Registrant's telephone number including area code: (302) 594-3350               
                                   ---------------

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

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND
(b) OF FORM 10-Q AND HAS THEREFORE OMITTED CERTAIN ITEMS FROM THIS REPORT IN    
ACCORDANCE WITH THE REDUCED DISCLOSURE FORMAT PERMITTED UNDER GENERAL           
INSTRUCTIONS H(2).                                                              

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        NO  X                                                                
-----     -----                                                           

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

Class                                         Outstanding at August 11, 2005    
------------------------------------          ----------------------------------
Common Stock, $.10 par value                  1,504,938 Shares                  

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 AMERICAN EXPRESS CREDIT CORPORATION

 FORM 10-Q

 INDEX

                                                                [Download Table]


                                                                     Page No.
                                                                     --------
PART I.  FINANCIAL INFORMATION                                               

                                                                             
         Item 1.     Financial Statements                                    

                     Consolidated Statements of Income and Retained          
                     Earnings - Three and six months ended June 30,          
                     2005 and 2004                                      3    

                     Consolidated Balance Sheets -                           
                     June 30, 2005 and December 31, 2004                4    

                     Consolidated Statements of Cash Flows -                 
                     Six months ended June 30, 2005 and 2004            5    

                     Notes to Consolidated Financial Statements         6    

         Item 2.     Management's Discussion and Analysis                    
                     of Financial Condition and Results                      
                     of Operations                                      9    

         Item 4.     Controls and Procedures                            15   

PART II. OTHER INFORMATION                                                   

         Item 6.     Exhibits                                           16   

                     Signatures                                         17   

                     Exhibit Index                                     E-1   


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 AMERICAN EXPRESS CREDIT CORPORATION

PART I. FINANCIAL INFORMATION                                                   

Item 1.   Financial Statements                                                  

 CONSOLIDATED STATEMENTS OF INCOME
 AND RETAINED EARNINGS
(Millions)
 (Unaudited)

                                                        [Enlarge/Download Table]

                                                  Three Months Ended               Six Months Ended       
                                                       June 30                          June 30           
                                                2005              2004           2005            2004     
----------------------------------------------------------------------------------------------------------
                                                                                                          
Revenues                                                                                                  

Discount revenue earned from purchased                                                                    
  cardmember receivables and loans              $  433          $  338          $  781        $  635      
Finance charge revenue                              18             100              36           202      
Interest income from investments                    29              26              65            52      
Interest income from affiliates                     94               8             186            16      
Other                                                1               -               2             1      
----------------------------------------------------------------------------------------------------------
       Total revenues                              575             472           1,070           906      
----------------------------------------------------------------------------------------------------------

Expenses                                                                                                  

Provision for losses, net of recoveries (1)        156             159             284           298      
Interest expense                                   233             182             458           357      
Interest expense - affiliates                       39              24              75            49      
Other                                                8               8              10            16      
----------------------------------------------------------------------------------------------------------
       Total expenses                              436             373             827           720      
----------------------------------------------------------------------------------------------------------

Pretax income                                      139              99             243           186      
Income tax provision                                35              33              44            63      
----------------------------------------------------------------------------------------------------------
Net income                                         104              66             199           123      

Retained earnings at beginning of period         2,960           2,813           2,865         2,756      

----------------------------------------------------------------------------------------------------------
Retained earnings at end of period             $ 3,064          $2,879          $3,064        $2,879      
----------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.                                                           

         (1) Provision for losses are shown net of recoveries of $34 and $51 for
          the three-months ended June 30, 2005 and 2004, respectively, and
       $73 and $101 for the six-months ended June 30, 2005 and 2004,
respectively.                                       

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 AMERICAN EXPRESS CREDIT CORPORATION
 CONSOLIDATED BALANCE SHEETS
 (Millions, except share data)
 (Unaudited)

                                                        [Enlarge/Download Table]

                                                                             June 30,       December 31,  
                                                                                 2005               2004  
----------------------------------------------------------------------------------------------------------

                                                                                                          
Assets                                                                                                    

Cash and cash equivalents                                                    $  1,532      $  3,802       
Investments                                                                     2,997         3,183       
Cardmember receivables, less reserves:                                                                    
    2005, $651; 2004, $555                                                     22,148        21,333       
Cardmember loans, less reserves:                                                                          
    2005, $25; 2004, $55                                                          545           567       
Loans and deposits with affiliates                                              7,199         7,039       
Due from affiliates                                                               631             -       
Deferred charges and other assets                                                 354           336       
------------------------------------------------------------------------------------------------------    
Total assets                                                                 $ 35,406      $ 36,260       
------------------------------------------------------------------------------------------------------    

Liabilities and Shareholder's Equity                                                                      

Short-term debt                                                              $  8,264      $  7,780       
Short-term debt with affiliates                                                 7,220         5,465       
Current portion of long-term debt                                               5,001         5,734       
Long-term debt                                                                 11,405        12,880       
                                                                               ------        ------       
    Total debt                                                                 31,890        31,859       
Due to affiliates                                                                   -         1,148       
Accrued interest and other liabilities                                            292           260       
------------------------------------------------------------------------------------------------------    
    Total liabilities                                                          32,182        33,267       
------------------------------------------------------------------------------------------------------    

Shareholder's Equity                                                                                      

Common stock-authorized 3 million shares of $.10 par value;                                               
    issued and outstanding 1.5 million shares                                       1             1       
Capital surplus                                                                   161           161       
Retained earnings                                                               3,064         2,865       
Accumulated other comprehensive income (loss), net of tax:                                                
    Net unrealized securities losses                                              (24)          (25)      
    Net unrealized derivatives gains (losses)                                      24           (11)      
    Foreign currency translation adjustments                                       (2)            2       
------------------------------------------------------------------------------------------------------    
Total accumulated other comprehensive income (loss)                                (2)          (34)      
------------------------------------------------------------------------------------------------------    
    Total shareholder's equity                                                  3,224         2,993       
------------------------------------------------------------------------------------------------------    
Total liabilities and shareholder's equity                                   $ 35,406      $ 36,260       
------------------------------------------------------------------------------------------------------    
See Notes to Consolidated Financial Statements.                                                           


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 AMERICAN EXPRESS CREDIT CORPORATION
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions)
 (Unaudited)

                                                        [Enlarge/Download Table]

                                                                                Six Months Ended          
                                                                                    June 30,              
                                                                             2005               2004      
----------------------------------------------------------------------------------------------------------
                                                                                                          
Cash Flows from Operating Activities                                                                      
Net income                                                                $   199            $    123     
Adjustments to reconcile net income to net cash                                                           
    provided by operating activities:                                                                     
       Provision for losses                                                   357                 399     
       Amortization and other                                                   7                   7     
       Changes in operating assets and liabilities:                                                       
          Deferred tax assets                                                 (23)                (14)    
          Due to affiliates                                                    62                 356     
          Other operating assets and liabilities                               62                (146)    
----------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                     664                 725     
----------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities                                                                      
Decrease in cardmember receivables and loans                                  759                 401     
Purchase of participation interests in seller's interest in                                               
  cardmember receivables and loans from affiliate                          (4,437)                  -     
Purchase of cardmember receivables and loans from affiliate                   (40)               (284)    
Sale of cardmember receivables and loans to affiliate                       2,568                   -     
Purchase of investments                                                         -              (2,237)    
Sale and maturity of investments                                              179               1,452     
Loans and deposits due from affiliates                                       (316)                 26     
Decrease in due to affiliates                                              (1,844)               (127)    
----------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                      (3,131)               (769)    
----------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities                                                                      
Net increase in short-term debt with affiliates with maturities of                                        
  ninety days or less                                                       1,755                  50     
Net decrease in short-term debt - other with maturities of                                                
  ninety days or less                                                        (266)             (1,178)    
Issuance of debt with affiliates                                                -                  22     
Issuance of debt - other                                                      975               3,240     
Redemption of debt with affiliates                                              -                (910)    
Redemption of debt - other                                                 (2,267)             (2,149)    
----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities                           197                (925)    
----------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents                                  (2,270)               (969)    
Cash and cash equivalents at beginning of period                            3,802               1,528     
----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                $ 1,532            $    559     
----------------------------------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.                                                           

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 AMERICAN EXPRESS CREDIT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)

1.   Basis of Presentation                                                      

The accompanying Consolidated Financial Statements should be read in  
     conjunction with the financial statements in the Annual Report on Form 10-K
  of American Express Credit Corporation, including its subsidiaries where
 appropriate (Credco), for the year ended December 31, 2004. Significant
accounting policies disclosed therein have not changed. Credco is a   
wholly-owned subsidiary of American Express Travel Related Services   
     Company, Inc. (TRS), which is a wholly-owned subsidiary of American Express
  Company (American Express). American Express Overseas Credit Corporation
Limited together with its subsidiaries (AEOCC), Credco Receivables    
Corporation (CRC), Credco Finance, Inc. together with its subsidiaries
(CFI), American Express Canada Credit Corporation (AECCC) and American
  Express Canada Finance Limited (AECFL), are wholly-owned subsidiaries of
Credco.                                                               

 In August 2004, Credco established a 99.9 percent ownership interest in
   American Express Capital Australia (AECA), with the remaining 0.1 percent
     interest held by American Express International Inc. (AEII), a wholly-owned
subsidiary of American Express Limited (AEL), which is a wholly-owned 
subsidiary of TRS. AECA was established as part of a change in local  
funding strategy for business in Australia.                           

In October 2004, Credco established two additional 99.9 percent owned 
     entities, American Express Sterling Funding Limited Partnership (AESLP) and
 American Express Euro Funding Limited Partnership (AEELP) in connection
   with the implementation of alternate receivable funding strategies in the
United Kingdom and Germany. AESLP in turn established a wholly-owned  
subsidiary, American Express Funding (Luxembourg) SARL (SARL). The    
remaining 0.1 percent interests in AESLP and AEELP are held by AEII.  

   The interim financial information in this report has not been audited. In
   the opinion of management, all adjustments necessary for a fair statement
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. Certain prior year amounts have been reclassified to conform to the
current year presentation.                                            

Recently Issued Accounting Standards                                  

  In December 2004, the Financial Accounting Standards Board (FASB) issued
    FASB Staff Position 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 Credco'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 of the United States. Credco does not plan to repatriate
any foreign earnings as a result of the Act.                          

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). Credco 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 FASB Staff
 Position (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                                

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 AMERICAN EXPRESS CREDIT CORPORATION

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. Credco will evaluate the   
  potential impact of EITF 03-1 after the FASB completes its reassessment.

2.   Investment Securities                                                      

The following is a summary of investments at June 30, 2005 and 2004:  

                                                        [Enlarge/Download Table]

                                             2005                                              2004                      
-------------------------------------------------------------------------------------------------------------------------
                                       Gross        Gross                                 Gross        Gross             
                                  Unrealized   Unrealized                            Unrealized   Unrealized             
(Millions)                  Cost       Gains       Losses    Fair Value      Cost         Gains       Losses   Fair Value
-------------------------------------------------------------------------------------------------------------------------
                                                                                                                         
American Express                                                                                                         
  Master Trust Class                                                                                                     
  B Notes                $     -   $       -   $        -      $     -    $   220   $         1         $  -      $   221
American Express                                                                                                         
  Credit Account                                                                                                         
  Master Trust Class                                                                                                     
  C Notes                     19           -            -           19        104             -            -          104
U.S. Treasury Notes        3,015           -           37        2,978      3,030             -           46        2,984
-------------------------------------------------------------------------------------------------------------------------
  Total                  $ 3,034   $       -   $       37      $ 2,997    $ 3,354   $         1         $ 46      $ 3,309
-------------------------------------------------------------------------------------------------------------------------

 During 2004, CRC sold $1.2 billion of Class C Notes to American Express
 Receivables Financing Corporation II, a wholly-owned subsidiary of TRS.
  During the six months ended June 30, 2005, $38 million and $142 million,
  respectively, of Class C Notes and Class B Notes, respectively, matured.
     All of Credco's investment securities are Available-for-Sale. There were no
   realized gains or losses for the six-month period ended June 30, 2005 and
2004.                                                                 

3.   Comprehensive Income                                                       

  Comprehensive income is defined as the aggregate change in shareholder's
     equity, excluding changes in ownership interests. For Credco, it is the sum
of net income and changes in i) unrealized gains or losses on         
Available-for-Sale securities, ii) unrealized gains or losses on      
derivatives and iii) foreign currency translation adjustments. The    
   components of comprehensive income, net of related tax, for the three and
six months ended June 30, 2005 and 2004 were as follows:              

                                                        [Enlarge/Download Table]

                                                     Three Months Ended                 Six Months Ended        
(Millions)                                                June 30,                           June 30,           
                                               --------------------------------  -------------------------------
                                                       2005              2004            2005             2004  
                                               --------------    --------------  --------------    -------------
                                                                                                                
Net income                                         $    104          $     66        $    199          $   123  
Change in:                                                                                                      
    Net unrealized securities gains(losses)               9               (54)              1              (41) 
    Net unrealized derivatives (losses) gains           (32)              188              35              162  
    Foreign currency translation adjustments             (4)                -              (4)               -  
                                               --------------    --------------  --------------    -------------
Total comprehensive income                         $     77          $    200        $    231          $   244  
                                               ==============    ==============  ==============    =============

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 AMERICAN EXPRESS CREDIT CORPORATION

4.   Taxes and Interest                                                         

   The taxable income of Credco is included in the consolidated U.S. federal
   income tax return of American Express. Under an agreement with TRS, taxes
   are recognized on a stand-alone basis, which resulted in a tax net refund
  to TRS of $12 million and taxes paid of $27 million respectively for the
six-months ended June 30, 2005 and 2004. Interest paid during the     
     six-months ended June 30, 2005 and 2004 were approximately $433 million and
$352 million, respectively.                                           

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 AMERICAN EXPRESS CREDIT CORPORATION

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

American Express Credit Corporation (Credco) was incorporated in Delaware in    
1962 and was acquired by American Express Company (American Express) in December
1965. On January 1, 1983, Credco became a wholly-owned subsidiary of American   
Express Travel Related Services Company, Inc. (TRS), a wholly-owned subsidiary  
of American Express. Credco is primarily engaged in the business of financing   
most non-interest-bearing cardmember receivables arising from the use of the    
American Express'r' card, the American Express'r' Gold card, Platinum card'r',  
ultra-premium Centurion 'r' card and Corporate card issued in the United States,
and in designated currencies outside the United States. Credco also purchases   
certain interest-bearing and discounted revolving loans and extended payment    
plan receivables comprised of American Express credit cards, Sign & Travel'r'   
and Extended Payment Option receivables and lines of credit and loans to        
American Express Bank Ltd. customers. American Express cards and American       
Express credit cards are collectively referred to herein as the card.           

Results of Operations for the Six Months Ended June 30, 2005 and 2004           

Revenues and Expenses                                                           

As compared to a year ago, Credco's consolidated net income rose $76 million, or
62%, to $199 million for the six month period ended June 30, 2005. The increase 
was driven primarily by growth in total revenues of $164 million and a decrease 
in the income tax provision of $19 million, which were partially offset by      
higher total expenses of $107 million. The following is an analysis of the      
changes attributable to the increase (decrease) in key revenue and expense      
accounts for the six-month period ended June 30, 2005, compared with the        
six-month period ended June 30, 2004 (millions):                                

                                                                [Download Table]
                                                                             
Discount revenue earned on purchased accounts receivable:                    
     Volume of receivables purchased                         $        45     
     Discount rates                                                  101     
                                                           ------------------
         Total                                               $       146     
                                                           ==================

Finance charge revenue:                                                      
     Volume of loans purchased                               $      (177)    
     Interest rates                                                   11     
                                                           ------------------
         Total                                               $      (166)    
                                                           ==================

Interest income from investments:                                            
     Volume of average investments outstanding               $        (3)    
     Interest rates                                                   16     
                                                           ------------------
         Total                                               $        13     
                                                           ==================

Interest income from affiliates:                                             
     Volume of average investments outstanding               $        41     
     Interest rates                                                  129     
                                                           ------------------
         Total                                               $       170     
                                                           ==================

Provision for losses, net of recoveries:                                     
     Volume of receivables purchased                         $        10     
     Provision rates and volume of recoveries                        (24)    
                                                           ------------------
         Total                                               $       (14)    
                                                           ==================

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                                                                [Download Table]
                                                            
Interest expense:                                           
     Volume of average debt outstanding     $        36     
     Interest rates                                  65     
                                          ------------------
         Total                              $       101     
                                          ==================

Interest expense to affiliates:                             
      Volume of average debt outstanding    $        (4)    
      Interest rates                                 30     
                                          ------------------
         Total                              $        26     
                                          ==================

The increase in discount revenue earned on purchased accounts receivable is     
attributable to higher discount rates and volume of cardmember receivables      
purchased. Finance charge revenue decreased primarily as a result of lower      
volume of average interest-bearing cardmember loans outstanding partially offset
by higher gross yields. Interest income from investments increased primarily due
to higher yields. Interest income from affiliates increased as a result of      
higher interest rates and volumes of average investments outstanding. Provision 
for losses decreased reflecting lower provision rates due to improved credit    
quality, partially offset by higher volume of cardmember receivables purchased. 
Interest expense increased as a result of higher interest rates and volume of   
average debt outstanding. The increase in interest expense to affiliates is     
attributable to higher interest rates, partially offset by lower volume of      
average debt outstanding.                                                       

Credco's effective tax rate for the six month period ended June 30, 2005 was 18%
compared with 33% during the six-month period ended June 30, 2004. The effective
tax rate was lower in 2005 as compared to 2004 primarily as a result of ongoing 
benefits related to changes in international funding strategy during 2004. The  
shifts in international funding strategy, which diversify funding sources and   
increase liquidity, are expected also to benefit Credco's effective tax rate and
net income in future periods despite somewhat higher related funding costs.     

Cardmember Receivables                                                          

At June 30, 2005 and 2004, Credco owned $22.8 billion and $20.5 billion,        
respectively, of cardmember receivables and participation interests in          
cardmember receivables, representing 98 percent and 80 percent of the total     
cardmember receivables and loans owned by Credco. Cardmember receivables are    
generally purchased without recourse from Card Issuers throughout the world.    
During the six months ended June 30, 2005 and 2004, Credco purchased $122.7     
billion and $114.2 billion, respectively, of cardmember receivables.            

Prior to June 2005, Credco Receivables Corporation (CRC) purchased participation
interests in cardmember receivables from American Express Receivables Financing 
Corporation (RFC), a wholly-owned subsidiary of TRS. Such participation         
interests represent undivided interests in non-interest-bearing cardmember      
receivables and are purchased without recourse in conjunction with TRS'         
securitization program. During June, the final certificates issued through the  
existing TRS cardmember receivables securitization program matured, and no new  
activity is planned. Therefore, prospectively, no additional participation      
interest will be purchased from RFC. TRS anticipates dissolving RFC and the     
related existing cardmember receivables securitization trust, the American      
Express Master Trust, during the third quarter. In conjunction therewith, in    
mid-July 2005, CRC sold its $6.3 billion of participation interest outstanding  
as of June 30, 2005 back to RFC. During May, TRS established a new cardmember   
receivables securitization program and related trust, the American Express      
Issuance Trust, a non-qualifying special purpose entity that is consolidated by 
American Express Receivables Finance Corporation V LLC (RFC V), which will be   
used to securitize cardmember receivables prospectively. Beginning in May, in   
conjunction with the new TRS cardmember receivables securitization program, CRC 
purchases participation interests from RFC V, a wholly-owned subsidiary of TRS. 
Such participation interests also represent undivided interests in              
non-interest-bearing cardmember receivables and are purchased without recourse. 
During the six months ended June 30, 2005, RFC and RFC V participated to CRC    
undivided interests totaling $1.9 billion and $2.6 billion.                     

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 AMERICAN EXPRESS CREDIT CORPORATION

At June 30, 2005 and 2004, CRC owned approximately $8.9 billion and $4.0        
billion, respectively, of participation interests owned by Credco.              

The following table summarizes selected information related to the cardmember   
receivable portfolio:                                                           

                                                        [Enlarge/Download Table]

Six months ended June 30, (Millions, except percentages and where indicated)          2005               2004  
---------------------------------------------------------------------------------------------------------------
                                                                                                               
Total cardmember receivables                                                      $22,799           $ 20,514   
90 days past due as a % of total                                                      1.9%               2.1%  
Loss reserves                                                                     $   651           $    504   
    as a % of receivables                                                             2.8%               2.4%  
    as a % of 90 days past due                                                      148.8%             117.0%  
Write-offs, net of recoveries                                                     $   258           $    229   
Net loss ratio (1)                                                                    .21%               .20%  
Average life of cardmember receivables (in days) (2)                                   33                 32   

(1)  Credco's write-offs, net of recoveries, expressed as a percentage of the   
     volume of cardmember receivables purchased by Credco in each of the periods
indicated.                                                            
(2)  Represents the average life of cardmember receivables owned by Credco,     
based upon the ratio of the average amount of both billed and unbilled
  receivables owned by Credco at the end of each month, during the periods
 indicated, to the volume of cardmember receivables purchased by Credco.

The year over year net increase in cardmember receivables was attributable to   
the increase in participation interests owned by CRC and the overall increase in
cardmember receivable volume, offset by the sale of cardmember receivables as a 
result of Credco's change in funding strategies in certain international markets
implemented during 2004.                                                        

Cardmember Loans                                                                

At June 30, 2005 and 2004, Credco owned cardmember loans totaling $0.6 billion  
and $5.2 billion, respectively, representing 2 percent and 20 percent,          
respectively, of all interests in cardmember receivables and loans owned by     
Credco. These loans consist of certain interest-bearing and discounted extended 
payment plan receivables comprised principally of American Express credit card, 
Sign & Travel and Extended Payment Option receivables, and lines of credit and  
loans to American Express Bank Ltd. customers. During the six months ended June 
30, 2005 and 2004, Credco purchased $565 million and $5.8 billion, respectively,
of cardmember loans. At June 30, 2005 and 2004, CRC did not own any             
participation interest in cardmember loans.                                     

The following table summarizes selected information related to the cardmember   
loan portfolio:                                                                 

                                                        [Enlarge/Download Table]

Six months ended June 30, (Millions, except percentages)                              2005               2004  
---------------------------------------------------------------------------------------------------------------
                                                                                                               
Total cardmember loans                                                            $   570            $ 5,152   
Past due cardmember loans as a % of total:                                                                     
    30-89 days                                                                        5.4%               2.7%  
    90+ days                                                                          1.8%               1.4%  
Loss reserves                                                                     $    25            $   183   
    as a % of cardmember loans                                                        4.3%               3.5%  
    as a % of past due                                                               59.0%              87.0%  
Write-offs, net of recoveries                                                     $    12            $   113   
Net write-off rate (1)                                                               4.15%              4.32%  

(1)    Credco's write-offs, net of recoveries, expressed as a percentage of the 
    average amount of cardmember loans owned by Credco at the beginning of
     the year and at the end of each month in each of the periods indicated.

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 AMERICAN EXPRESS CREDIT CORPORATION

The year over year decrease in Credco's owned cardmember loans was primarily    
driven by Credco's change in funding strategies during 2004 for cardmember      
receivables and loans in certain international markets, and the TRS sale of its 
small business financing unit, American Express Business Finance Corporation, in
December 2004.                                                                  

The following is an analysis of the reserves for cardmember receivables and     
cardmember loans (Millions):                                                    

                                                                [Download Table]

                               2005             2004    
                      ----------------  ----------------
                                                        
Balance, January 1        $     610         $    737    
Provision for losses            357              399    
Accounts written off           (344)            (443)   
Other                            53               (6)   
                      ----------------  ----------------
Balance, June 30          $     676         $    687    
                      ================  ================

Loans and Deposits with Affiliates                                              

At June 30, 2005 and 2004, Credco had loans to affiliates outstanding of $7.2   
billion and $1.9 billion, respectively. Such amounts represent intercompany     
borrowings by other wholly-owned TRS subsidiaries and American Express. The year
over year increase in loans and deposits with affiliates was primarily driven by
Credco's change in funding strategies for cardmember receivables and cardmember 
loans in certain international markets during 2004. Of the $7.2 billion         
outstanding as of June 30, 2005, $5.1 billion is collateralized by third party  
assets owned by American Express or TRS and its subsidiaries.                   

Liquidity and Capital Resources                                                 

Financing Activities                                                            

Credco's assets are financed through a combination of short-term debt,          
medium-term notes, long-term senior notes, bank borrowing facilities and equity 
capital. Funding requirements are met primarily by the sale of commercial paper,
the issuance of medium-term notes and borrowings under long-term bank credit    
facilities in certain international markets. Credco has readily sold the volume 
of commercial paper necessary to meet its funding needs as well as to cover the 
daily maturities of commercial paper issued. During the six months ended June   
30, 2005, Credco had uninterrupted access to the commercial paper and capital   
markets to fund its business operations.                                        

The commercial paper market represents the primary source of short-term funding 
for Credco. Credco's commercial paper is a widely recognized name among         
short-term investors. At June 30, 2005, and December 31, 2004, Credco had $8.1  
billion and $7.6 billion, respectively of commercial paper outstanding. Average 
commercial paper outstanding was $7.6 billion and $10.1 billion for the six     
months ended June 30, 2005 and 2004, respectively. Credco currently manages the 
level of commercial paper outstanding, net of certain short-term investments,   
such that the ratio of its bank credit facility to net short-term debt is not   
less than 100%. Net short-term debt, which consists mainly of commercial paper  
less cash and cash equivalents, was $6.7 billion at June 30, 2005. Based on the 
maximum available borrowings under bank credit facilities, Credco's bank line   
coverage of net short-term debt was 131% at June 30, 2005.                      

Medium- and long-term debt is raised through the offering of debt securities in 
the U.S. and international capital markets. Medium-term debt is generally       
defined as any debt with an original maturity greater than 12 months but less   
than 36 months. Long-term debt is generally defined as any debt with an original
maturity greater than 36 months. At June 30, 2005 and December 31, 2004, Credco 
had an aggregate of $9.9 billion and $12.2 billion, respectively, of            
medium-term debt outstanding at fixed and floating rates, a portion of which    
can be extended by the holders up to an additional three years. Credco's        
outstanding long-term debt at June 30, 2005 and December 31, 2004 was           
$6.5 billion and $6.4 billion, respectively.                                    

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 AMERICAN EXPRESS CREDIT CORPORATION

As of June 30, 2005, Credco had the ability to issue approximately $7.2 billion 
of debt securities under a shelf registration statement filed with the          
Securities and Exchange Commission. In addition, Credco; TRS; American Express  
Overseas Credit Corporation Limited (AEOCC), a wholly-owned subsidiary of       
Credco; American Express Centurion Bank (Centurion Bank), a wholly-owned        
subsidiary of TRS; and American Express Bank Ltd., a wholly-owned subsidiary of 
American Express have established a program 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 June 30, 2005, $3.2     
billion was outstanding under this program, including $500 million issued by    
TRS.                                                                            

In August 2004, Credco established a new 99.9% owned entity, American Express   
Capital Australia (AECA). In September 2004, Credco borrowed $1.9 billion to    
provide an alternate funding source for business in Australia. At the same time,
Credco sold its Australian cardmember loan portfolio, net of reserves, of $980  
million and cardmember receivable portfolio of $1.0 billion to American Express 
Australia Limited (AEAL), a wholly-owned subsidiary of TRS and the issuer of    
charge and credit cards in Australia.                                           

Subsequently, AEAL transferred with recourse these cardmember receivables and   
cardmember loans to AECA and will transfer with recourse new cardmember         
receivables and cardmember loans originated by AEAL in the future to AECA. The  
transfer of cardmember receivables and cardmember loans with recourse to AECA   
resulted in Credco recording a loan with affiliate of $2.3 billion and $2.1     
billion, respectively, in its Consolidated Balance Sheets at June 30, 2005 and  
December 31, 2004, respectively.                                                

Additionally, in October 2004, Credco established two additional 99.9 percent   
owned entities, American Express Sterling Funding Limited Partnership (AESLP)   
and American Express Euro Funding Limited Partnership (AEELP) in connection with
the implementation of alternate receivable funding strategies in the United     
Kingdom and Germany. AESLP in turn established a wholly-owned subsidiary,       
American Express Funding (Luxembourg) SARL (SARL). These entities were funded   
with the proceeds of debt securities issued by Credco in pounds sterling and    
euros, in the third and fourth quarters of 2004, respectively. During the fourth
quarter of 2004, Credco sold its cardmember loan and receivable portfolios in   
the United Kingdom and Germany to American Express Services Europe Limited      
(AESEL), a wholly-owned subsidiary of TRS. Subsequently, AESEL transferred with 
recourse cardmember receivables and cardmember loans of $2.5 billion and $619   
million to SARL and AEELP, respectively. These transfers of cardmember          
receivables and cardmember loans with recourse resulted in Credco recording     
loans with affiliates $2.8 billion and $2.9 billion in its Consolidated Balance 
Sheets at June 30, 2005 and December 31, 2004.                                  

Liquidity Portfolio                                                             

During the normal course of business, funding activities may raise more proceeds
than are necessary for immediate funding needs. These amounts are invested      
principally in overnight, highly liquid instruments. In addition, in the fourth 
quarter of 2003, Credco began a program to develop a liquidity portfolio in     
which proceeds raised from such borrowings are invested in U.S. Treasury        
securities. At June 30, 2005, Credco held $3.0 billion of U.S. Treasury notes   
under this program. The invested amounts of the liquidity portfolio provide     
back-up liquidity, primarily for Credco's commercial paper program. U.S.        
Treasury securities are the highest credit quality and most liquid of investment
instruments available. Credco can easily sell these securities or enter into    
sale/repurchase agreements to immediately raise cash proceeds to meet liquidity 
needs.                                                                          

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 AMERICAN EXPRESS CREDIT CORPORATION

Bank Credit Facilities                                                          

Credco may borrow a maximum amount of $12.6 billion (including amounts          
outstanding), with a commensurate reduction in the amount available to American 
Express. These facilities expire as follows (billions): 2006, $1.5; 2009, $6.3; 
and 2010, $4.8. As of June 30, 2005, Credco had outstanding borrowings of $3.8  
billion under these bank credit facilities which consisted of $2.2 billion      
related to the Australian credit facility and $1.6 billion related to the       
Canadian credit facility. The availability of the credit lines is subject to    
Credco's compliance with certain financial covenants, which do not include the  
tangible net worth covenant that is applicable only to American Express'        
borrowings on its credit lines.                                                 

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

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 AMERICAN EXPRESS CREDIT CORPORATION

Forward-Looking Statements                                                      

Various forward-looking statements have been made in this Quarterly Report on   
Form 10-Q. Forward-looking statements may also be made in Credco's other reports
filed with the SEC and in other documents. In addition, from time to time,      
Credco through its management may make oral forward-looking statements.         
Forward-looking statements are subject to risks and uncertainties, including    
those identified below, which could cause actual results to differ materially   
from such statements. The words "believe", "expect", "anticipate", "optimistic",
"intend", "evaluate", "plan", "estimate", "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. Credco undertakes no obligation to update publicly or revise any      
forward-looking statements. Factors that could cause actual results to differ   
materially from Credco's forward-looking statements include, but are not limited
to:                                                                             

    o    credit trends and the rate of bankruptcies, which can affect spending
  on card products and debt payments by individual and corporate
customers;                                                  
  o    Credco's ability to accurately estimate the provision for losses in
       Credco's outstanding portfolio of cardmember receivables and loans;
o    fluctuations in foreign currency exchange rates;                 
 o    negative changes in Credco's credit ratings, which could result in
decreased liquidity and higher borrowing costs;             
    o    the effect of fluctuating interest rates, which could affect Credco's
borrowing costs; and                                        
o    the impact on American Express Company's business resulting from 
continuing geopolitical uncertainty.                        

OTHER REPORTING MATTERS                                                         

Accounting Developments                                                         

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

Item 4.  Controls and Procedures                                                

Credco's management, with the participation of Credco's Acting Chief Executive  
Officer and Chief Financial Officer, has evaluated the effectiveness of Credco'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, Credco's Acting Chief Executive Officer and Chief Financial    
Officer have concluded that, as of the end of such period, Credco's disclosure  
controls and procedures are effective. There have not been any changes in       
Credco'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, Credco's internal control over financial reporting.

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 AMERICAN EXPRESS CREDIT CORPORATION

PART II. OTHER INFORMATION                                                      

Item 6.    Exhibits                                                             

                                                                [Download Table]
                                                                               
 12.1     Computation in Support of Ratio of Earnings to Fixed Charges         
          of American Express Credit Corporation.                              

 12.2     Computation in Support of Ratio of Earnings to Fixed Charges         
          of American Express Company.                                         

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

 31.2     Certification of Paul H. Hough pursuant to Rule 13a-14(a) promulgated
          under the Securities Exchange Act of 1934, as amended.               

 32.1     Certification of Erich Komdat pursuant to 18 U.S.C. Section 1350,    
          as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 32.2     Certification of Paul H. Hough pursuant to 18 U.S.C. Section 1350,   
          as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


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 AMERICAN EXPRESS CREDIT CORPORATION

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 CREDIT CORPORATION
(Registrant)

DATE:  August 11, 2005         By  /s/Erich Komdat                              
                                   ---------------------------------------------
  Erich Komdat
                                 Acting President and Acting Chief Executive
Officer   

DATE:  August 11, 2005         By  /s/Susanne L. Miller                         
                                   ---------------------------------------------
       Susanne L. Miller
                                 Vice President and Chief Accounting Officer

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 AMERICAN EXPRESS CREDIT CORPORATION

 EXHIBIT INDEX

Pursuant to Item 601 of Regulation S-K

                                                        [Enlarge/Download Table]

                                   Description                                  How Filed        
                                   -----------                                  ---------        

                                                                                                 
Exhibit 12.1  Computation in Support of Ratio of                   Electronically filed herewith.
              Earnings to Fixed Charges of American                                              
              Express Credit Corporation.                                                        

Exhibit 12.2  Computation in Support of Ratio of                   Electronically filed herewith.
              Earnings to Fixed Charges of American Express                                      
              Company.                                                                           

Exhibit 31.1  Certification of Erich Komdat pursuant to Rule       Electronically filed herewith.
              13a-14(a) promulgated under the Securities Exchange                                
              Act of 1934, as amended.                                                           

Exhibit 31.2  Certification of Paul H. Hough pursuant to Rule      Electronically filed herewith.
              13a-14(a) promulgated under the Securities Exchange                                
              Act of 1934, as amended.                                                           

Exhibit 32.1  Certification of Erich Komdat pursuant to 18         Electronically filed herewith.
              U.S.C. Section 1350, as adopted pursuant to                                        
              Section 906 of the Sarbanes-Oxley Act of 2002.                                     

Exhibit 32.2  Certification of Paul H. Hough pursuant to 18        Electronically filed herewith.
              U.S.C. Section 1350, as adopted pursuant to                                        
              Section 906 of the Sarbanes-Oxley Act of 2002.                                     

 E-1

STATEMENT OF DIFFERENCES  

The registered trademark symbol shall be expressed as................  'r'

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-Q’ Filing	Date	First	Last	Other Filings

Filed on:	8/11/05	1	17
For Period End:	6/30/05	1	14
	12/31/04	6	13	10-K
	9/30/04	6		10-Q
	6/30/04	2	12	10-Q
	12/31/03	6		10-K
				List all Filings

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American Express Credit Corp – ‘10-Q’ for 6/30/05

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10-Q — American Express Credit CorpDocument Table of Contents

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