international banking and other provisions and a 4 percent increase in cardmember lending provisions at TRS. Total provisions for losses and benefits in 2001 increased 20 percent primarily due to a 48 percent increase in the cardmember lending provision at TRS, which was largely the result of portfolio growth and maturation; a 31 percent increase in life insurance, international banking and other provisions; and a 19 percent increase in charge card provisions at TRS, primarily due to higher volumes and generally weaker economic and business conditions. Professional services expense rose 22 percent and 8 percent during 2002 and 2001, respectively. The increase in 2002 is primar- ily the result of the technology outsourcing agreement discussed earlier. Marketing and promotion expense increased 19 percent in 2002 primarily due to an 18 percent increase at TRS relating to the launch of the new brand advertising campaign and the introduction of new card products. In 2001, marketing and promotion expense declined 14 percent, primarily due to a similar 14 percent decrease at TRS, as certain marketing efforts were rational- ized in light of the weaker business environment. Occupancy expense decreased 7 percent in 2002 primarily due to the benefits of reengineering activities. Occupancy expense increased slightly in 2001 versus 2000. Interest expense declined 28 percent in 2002 including a 31 percent decrease in charge card interest expense at TRS primarily due to the benefit of a lower effective cost of funds. Interest expense increased 11 percent in 2001 including a 20 percent increase at TRS primarily as a result of higher borrowing rates. Other expenses rose 16 percent in 2002 including a 20 percent increase at TRS, while 2001 expenses were relatively unchanged from 2000 levels. The increases in 2002 resulted primarily from higher expenses related to cardmember loyalty programs, losses on certain strategic investments versus gains in the prior year, and increases in deferred acquisition costs (DAC) related expenses, including a $44 million net increase in DAC expenses in the third quarter of 2002 as a result of a comprehensive review of the company’s DAC related practices. See AEFA’s Results of Operations for further discussion of DAC. In the third and fourth quarters of 2001, the company recorded aggregate restructuring charges of $631 million ($411 million after-tax). The aggregate restructuring charges consisted of $369 million for severance related to the original plans to eliminate approximately 12,900 jobs and $262 million of exit costs primarily consisting of $138 million of charges related to consolida- tion of real estate facilities, $35 million of asset impairment charges, $26 million in loss provisions, $25 million in contract termination costs and $24 million of currency translation losses. During 2002, the company adjusted the 2001 restructuring charges by taking back into income a net pretax amount of $31 million which is comprised of the reversal of severance and related benefits of $62 million partially offset by additional net exit costs related to various office facilities of $31 million. Additionally, during 2002, the company recorded restructuring charges of $24 million, of which $19 million was recorded at TRS and $5 million was recorded at AEB. These new charges primarily relate to certain international operations and consist of $17 million of severance and related benefits and $7 million of other exit costs. See Note 19 to the Consolidated Financial Statements for further information. The estimated savings realized from restructuring initiatives during 2002 was approximately $0.6 billion. Further, the company expects the savings for 2003 to be approximately $0.7 billion, a portion of which will flow through to earnings in the form of improved operating expense margins. The rest is expected to be reinvested into business areas with high-growth potential. In the third quarter of 2001, the company incurred $98 million ($65 million after-tax) of one-time costs and business interrup- tion losses related to the September 11th terrorist attacks. These losses included provisions for credit exposures to travel industry service establishments and insurance claims, as well as approximately $8 million of waived finance charges and late fees. Further, during 2002, $7 million ($4 million after-tax) of this amount was reversed as a result of lower than anticipated insured loss claims. As of December 31, 2002, the company incurred total expenditures of approximately $198 million related to the terrorist attacks of September 11th, which are expected to be substantially covered by insurance and, consequently, did not impact results.  I 28 AXP I FINANCIAL REVIEW