Excerpt from American Express Company's
        Quarterly Report on Form 10-Q for quarter ended September 30, 1998.



Year 2000

The Year 2000 (Y2K) issue is the result of  computer  programs  having been
written using two digits rather than four to define a year.   Some programs
may  recognize  a date  using "00" as the year 1900 rather than 2000.  This
misinterpretation  could  result  in  the   failure  of  major  systems  or
miscalculations, which could have a  material impact on the Company and its
businesses  or  subsidiaries  through  business  interruption  or shutdown,
financial loss, reputational  damage  and legal liability to third parties.
The  Company began  addressing the Y2K issue in 1995 and has  established a
plan for resolution, which  involves the  remediation,  decommissioning and
replacement of relevant systems, including mainframe, mid-range and desktop
computers, application  software, operating systems, systems software, date
back-up archival and retrieval services, telephone and other communications
systems, and hardware  peripherals  and  facilities  dependent  on embedded
technology. As a part of our plan, we have generally  followed and utilized
the specific policies and  guidelines  established by the Federal Financial
Institutions  Examination  Council, as well as other U.S. and international
regulatory  agencies.  Additionally,  we  continue  to  participate  in Y2K
related  industry  consortia  sponsored by various  partners and suppliers.
Progress is reviewed  regularly  with the Company's senior  management  and
Board of Directors.

Our Y2K compliance effort related to information technology (IT) systems is
divided  into  two  initiatives.   The  first, which  is  the  much  larger
initiative, is known  internally as "Millenniax," and relates to  mainframe
and  other  technological   systems  maintained  by  the  American  Express
Technologies organization (AET). The second, known as "Business T," relates
to the technological assets that are owned,  managed or  maintained  by the
Company's  individual  business  units.   Business  T also  encompasses the
remediation  of  non-IT systems.  These  initiatives  involve a substantial
number of  employees  and  external  consultants.   This multiple  sourcing
approach is intended to mitigate the risk of becoming  dependent on any one
vendor or resource.  While  the vast  majority of our  systems that require


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modification are being  remediated, in some cases we have chosen to migrate
to new applications that are already Y2K compliant.

The Company's  plans  for  remediation  with  respect  to   Millenniax  and
Business T include the following program phases: (i) employee awareness and
mobilization,   (ii) inventory  collection  and  assessment,   (iii) impact
analysis,      (iv) remediation/decommission,      (v) testing   and   (vi)
implementation.  As part of the first three phases,  we have identified the
Company's  mission-critical  systems  for  purposes of prioritization.  The
Company's  goals are to  substantially  complete  remediation  of  critical
systems  by the end of 1998,  complete  testing  of  those systems by early
1999, and to continue compliance efforts, including but not limited to, the
testing of systems on an  integrated  basis and  independent  validation of
such  testing, through 1999.**   We are currently on schedule to meet these
goals.  With respect to systems  maintained by the Company, the first three
phases  referred  to  above  have  been  substantially  completed  for both
Millenniax  and  Business T.  As  of  October 31, 1998, for Millenniax, the
remediation/decommission,    testing   and   implementation    phases   are
approximately  80%,  65%  and  55% complete, respectively.  For Business T,
such  phases  are  approximately  70%,  55% and 55% complete, respectively.
Certain critical  systems have already been made Y2K compliant, such as the
Worldwide Credit Authorization System, and we have completed testing of the
global  point  of  sale infrastructure.  As a result, we have begun issuing
Year 2000 dated charge and credit cards.

Our most commonly used  methodology  for remediation is the sliding window.
Once an application/system has been  remediated, we apply specific types of
tests, such as stress, regression, unit, future date and baseline to ensure
that the remediation process has achieved  Y2K compliance while maintaining
the  fundamental  data  processing  integrity of the particular system.  To
assist with  remediation  and  testing,  we are using  various standardized
tools obtained from a variety of vendors.

The Company's  cumulative costs since inception of the Y2K initiatives were
$311 million  through  September 30, 1998  and  are  estimated to be in the
range of $210 - $235  million  for the  remainder  through 2000. **   These
include both  remediation costs and costs related to replacements that were
or will be required as a result of Y2K.  These costs, which are expensed as
incurred, relate to both  Millenniax  and Business T, and have not had, nor
are they expected  to have, a  material  adverse  impact  on  the Company's
results   of  operations   or  financial  condition.**   Costs  related  to
Millenniax, which represent most of the total Y2K costs of the Company, are
managed by and included in the  Corporate  and Other segment; costs related
to Business T are included in the  business  segments. Y2K costs related to
Millenniax  represent  15%, 5% and 1% of the AET budget for the years 1998,
1999 and 2000,  respectively.  Millenniax  costs  have  been  substantially
offset by an earnings payout from  Travelers  Inc. related to the 1993 sale
of  the  Shearson   Lehman  Brothers  Division,  sales  of  securities  and
adjustment  of  valuation  allowances  related to certain corporate assets.
The  Company  has  not  deferred  other  critical  technology  projects  or
investment  spending  as a result of Y2K. However, because the Company must
continually   prioritize   the allocation of  finite  financial  and  human
resources, certain non-critical spending initiatives have been deferred.

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The Company's major businesses are heavily dependent upon internal computer
systems,  and  all  have  significant  interaction  with  systems  of third
parties, both  domestically  and  internationally.   The Company is working
with key external  parties, including  merchants,  clients, counterparties,
vendors, exchanges, utilities, suppliers, agents and regulatory agencies to
mitigate the potential risks to us of Y2K.  The failure of external parties
to  resolve  their  own Y2K  issues  in  a  timely manner could result in a
material financial risk to the  Company.  As part of our overall compliance
program, the Company is actively  communicating  with third parties through
face-to-face meetings and correspondence, on an ongoing basis, to ascertain
their state of readiness.  Although  numerous  third parties have indicated
to us in writing that they are  addressing  their  Y2K  issues  on a timely
basis, the  readiness  of third parties overall varies across the spectrum.
Because the  Company's  Y2K  compliance  is  dependent on key third parties
being  compliant  on  a  timely basis, there can be no  assurances that the
Company's efforts alone will resolve all Y2K issues.

At this point, the Company  has  not completed its assessment of reasonably
likely Y2K systems failures and related consequences.  However, the Company
is in the process of  preparing  specific Y2K contingency plans for all key
American  Express  business  units to mitigate the potential impact of such
failures.  This  effort  is  a  full-scale  initiative  that  includes both
internal and external experts under the guidance of a Company-wide steering
committee.  Our  contingency  plans,  which  will  be  based  in part on an
assessment  of the  magnitude  and  probability  of  potential  risks, will
primarily focus on  proactive steps to prevent Y2K failures from occurring,
or if they should occur, to detect them quickly,  minimize their impact and
expedite their repair.  The Y2K  contingency plans will supplement disaster
recovery and  business  continuity plans already in place, and are expected
to include measures such as selecting alternative suppliers and channels of
distribution, and developing our own technology  infrastructure  in lieu of
those provided by third parties.  Development of the Y2K  contingency plans
is expected to be substantially complete by the end of the first quarter of
1999, and  will  continue  to  be  refined  throughout  1999  as additional
information related to our exposures is gathered. **

Statements   in  this   Y2K  discussion  marked   with two  asterisks  are
forward-looking  statements  which  are subject to risks and uncertainties.
Important factors that could cause  results to differ materially from these
forward-looking statements include,  among other things, the ability of the
Company to  successfully  identify systems  containing two-digit codes, the
nature and amount of programming  required to fix the affected systems, the
costs  of  labor  and  consultants  related  to such efforts, the continued
availability  of such resources,  and  the  ability  of  third parties that
interface with the Company to successfully address their Y2K issues.

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