Interest income for the company’s international banking loans is accrued on unpaid principal balances in accordance with the terms of the loan. Loan fees and deferred loan acquisition costs are amortized over the life of the loan using the effective interest method. Generally, the accrual of interest on these loans is discontinued at the time the loan is 90 to 180 days delinquent, depending on loan type, or when an impairment is determined. Interest and dividends is presented net of interest expense of $254 million, $434 million and $559 million for the years ended December 31, 2002, 2001 and 2000, respectively. For the year ended December 31, 2001, interest and dividends, net was reduced by a $34 million charge ($22 million after-tax) related to the cumulative effect of the adoption of Emerging Issues Task Force (EITF) Issue No. 99-20, “Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets” as of January 1, 2001. Before this accounting change, income for the year ended December 31, 2001 was $1,333 million, basic earnings per common share (EPS) was $1.01 and diluted EPS was $1.00. Management and distribution fees Management fees relate primarily to managed assets for proprietary mutual funds and proprietary account assets, and are generally based on the underlying asset values which are accrued daily and generally collected monthly. Many of the propri- etary mutual funds have a performance incentive adjustment (PIA). This PIA adjusts the level of management fees received based on the specific fund’s relative performance as measured against a designated external index. Distribution fees primarily include point-of-sale fees (i.e., front-load mutual fund fees) and asset-based fees (i.e., 12b-1 fees) that are generally based on a contractual fee as a percentage of assets and recognized when received. Securitization income Securitization income includes revenue associated with retained and subordinated interests in securitized loans, servicing income from loans sold and gains recorded at the time of securitization.  Net card fees  Card fees are recognized as revenue over the card membership period covered by the card fee, net of provision for projected refunds of card fees for cancellation of card membership.  Cardmember lending net finance charge revenue Cardmember lending finance charges are assessed using the average daily balance method for receivables owned and are recog- nized based upon the principal amount outstanding in accordance with the terms of the applicable account agreement until the outstanding balance is paid or charged off. Cardmember lending net finance charge revenue is presented net of interest expense of $510 million, $939 million and $1,025 million for the years ended December 31, 2002, 2001 and 2000, respectively.  Travel commissions and fees Customer revenue is earned by charging a transaction or management fee for airline or other transactions based on contractual agreements with the travel clients. Customer related fees and other revenues are recognized at the time a client books travel arrangements. Travel suppliers pay commission on airline tickets issued and on sales and transaction volumes, based on contractual agree- ments. These revenues are recognized at the time a ticket is purchased. Revenue from other travel suppliers is generally not under firm contractual agreements and is recognized when cash is received.  Life and other insurance revenues Premiums on traditional life, disability income and long-term care insurance are recognized as revenue when due. Premiums on property/casualty insurance are recognized ratably over the coverage period. Other revenues include fees from financial planning, consulting and business services and miscellaneous investment income. The company expenses advertising costs in the year in which the advertising first takes place. Other Marketing and Promotion I 59 AXP I NOTES TO CONSOLIDATED FINANCIAL STATEMENTS