WE ARE  STRONGER ECONOMICALLY BECAUSE OF THE INCREASED  In all, we ended the year energized and with a strong sense of momentum. Earlier than many of our competi- tors, we took the difficult, and sometimes painful, steps to prepare our business to compete effectively and prosper in the current environment. Just as impor- tant, we moved aggressively in the marketplace at a time when some of our traditional competitors were distracted by their problems and were not as prepared to deal with the difficult environment. As a result, we entered 2003 operating from a position of strength and on the offense. We continue to believe our long-term financial targets of 12 to 15 percent earnings per share growth, 8 percent revenue growth and 18 to 20 percent return on equity, on average and over time, are appropriate. These targets have two key underlying assumptions: growth in the S&P 500 Index of 8 percent and card billings growth of 6 to 10 percent, both of which are consider- ably lower than the historical rates that we experi- enced over the past 20 years. We are confident in our ability to meet our long-term targets, even in a slower growth environment, because of the changes we have made to our business models. Before moving on to a review of business unit results,  I would like to address some important changes we made regarding our use of stock options. Following extensive review of our compensation strategy, we decided to reduce the number of option shares granted in 2003. As a result of the actions we have taken, the annual stock grants issued in January 2003 repre- sented 1.1 percent of total shares outstanding, which  is down significantly from 2.9 percent a year ago.  In addition, we made the decision to expense options beginning with 2003 awards. We were able to make these and other changes while maintaining a total compensation program that will enable us to attract and retain highly talented employees, and to reward superior performance. I 6 AXP I