Managed net revenues increased 7 percent in 2002 to $22.8 billion, compared with $21.4 billion in 2001 which was 3 percent lower than 2000. Managed net revenues rose in 2002 due to greater discount revenues, higher lending spreads and loan balances, and higher revenues related to AEFA’s investment portfolio. These items were partially offset by lower management fees and weaker travel revenues. 2001 net revenues declined due to lower spreads on AEFA’s investment portfolio, weaker travel revenues as well as lower management and distribution fees. These items were partially offset by an increase in cards-in-force, larger loan balances and greater insurance revenues. See TRS and AEFA segments for a discussion of why a managed basis presentation at TRS and net revenues at AEFA is used by management and is important to investors. I 35 AXP I FINANCIAL REVIEW TRAVEL RELATED SERVICES Results of Operations STATEMENTS OF INCOME Years Ended December 31, (Millions) 2002 2001 2000 Net revenues: Discount revenue $ 7,931 $ 7,714 $ 7,779 Net card fees 1,726 1,675 1,651 Lending: Finance charge revenue 1,995 2,363 2,280 Interest expense 510 939 1,025 Net finance charge revenue 1,485 1,424 1,255 Travel commissions and fees 1,408 1,537 1,821 Travelers Cheque investment income 375 394 387 Securitization income 1,941 1,432 1,012 Other revenues 2,855 3,183 3,215 Total net revenues 17,721 17,359 17,120 Expenses: Marketing and promotion 1,456 1,237 1,434 Provision for losses and claims: Charge card 960 1,195 1,006 Lending 1,369 1,318 891 Other 149 164 105 Total 2,478 2,677 2,002 Charge card interest expense 1,001 1,443 1,202 Net discount expense — 96 489 Human resources 3,503 3,992 4,126 Other operating expenses 6,207 5,442 5,154 Restructuring charges (4) 414 — Disaster recovery charge — 79 — Total expenses 14,641 15,380 14,407 Pretax income 3,080 1,979 2,713 Income tax provision 945 520 784 Net income $ 2,135 $ 1,459 $ 1,929