GAAP Basis to Managed Basis Reconciliation — Effect of Securitizations Years Ended December 31, (Millions) Effect of Securitizations GAAP Basis Securitization Effect Managed Basis 2002 2001 2000 2002 2001 2000 2002 2001 2000 Net revenues: Discount revenue $ 7,931 $ 7,714 $ 7,779 Net card fees 1,726 1,675 1,651 $ — $1 6$ 2$ 1,726 $ 1,691 $ 1,653 Lending: Finance charge revenue 1,995 2,363 2,280 2,509 2,259 1,697 4,504 4,622 3,977 Interest expense 510 939 1,025 340 545 569 850 1,484 1,594 Net finance  charge revenue 1,485 1,424 1,255 2,169 1,714 1,128 3,654 3,138 2,383 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 (1,941) (1,432) (1,012) — — — Other revenues 2,855 3,183 3,215 720 445 203 3,575 3,628 3,418 Total net revenues 17,721 17,359 17,120 948 743 321 18,669 18,102 17,441 Expenses: Marketing and promotion 1,456 1,237 1,434 (81) (92) (86) 1,375 1,145 1,348 Provision for losses  and claims: Charge card 960 1,195 1,006 — 36 151 960 1,231 1,157 Lending 1,369 1,318 891 1,098 925 595 2,467 2,243 1,486 Other 149 164 105 Total 2,478 2,677 2,002 1,098 961 746 3,576 3,638 2,748 Charge card  interest expense 1,001 1,443 1,202 (14) 33 206 987 1,476 1,408 Net discount expense — 96 489 — (96) (489) — — — Human resources 3,503 3,992 4,126 Other operating  expenses 6,207 5,442 5,154 (55) (63) (56) 6,152 5,379 5,098 Restructuring charges (4) 414 — Disaster recovery charge — 79 — Total expenses 14,641 15,380 14,407 $ 948 $ 743 $ 321 $ 15,589 $ 16,123 $ 14,728 Pretax income 3,080 1,979 2,713 Income tax provision 945 520 784 Net income $ 2,135 $ 1,459 $ 1,929 The following discussion of TRS’ results is presented on a managed basis. In 2002, TRS’ net revenues rose 3 percent as a result of greater net finance charge revenue, higher cardmember spending and increased cards-in-force, partially offset by lower travel commissions and fees, Travelers Cheque investment income and other revenues. These increases reflect the benefits of higher net finance charge revenue from the cardmember lending portfolio due to higher loan balances and improved spreads and growth in worldwide billed business. 2001 net revenues were 4 percent higher than 2000 as increased cards-in-force, growth in cardmember loans outstanding and higher fee revenue were partially offset by relatively flat worldwide billed business and lower travel commissions and fees. The 2001 performance reflected over- all weakness in the economy, especially within the travel and entertainment sectors. I 37 AXP I FINANCIAL REVIEW