8-KEarnings & ResultsOther EventsExhibits & Filings

AMERIPRISE FINANCIAL INC 8-K Report, Financial Results (Oct 24, 2005)

Filed October 24, 2005For Securities:AMP

Summary

Ameriprise Financial, Inc. (AMP) filed an 8-K on October 24, 2005, reporting on two key events. First, the company released its third-quarter 2005 financial results, which include non-GAAP "adjusted" figures that exclude accounting changes, discontinued operations, and separation costs from its former parent, American Express. Investors should note the use of these adjusted metrics as AMP aims to provide a clearer view of operating performance. Second, and significantly, AMP announced a Memorandum of Understanding (MOU) to settle a consolidated securities class action lawsuit, "In re American Express Financial Advisors Securities Litigation." The company, along with other defendants including its former parent, has agreed to pay $100 million into an escrow settlement fund. This settlement aims to resolve claims related to the sale of mutual funds and financial plans during the class period of March 10, 1999, to the settlement date. While the company denies liability, this settlement, once finalized and approved by the court, will provide resolution to a substantial contingent liability.

Key Highlights

  • 1Ameriprise Financial announced its Q3 2005 financial results.
  • 2The company is utilizing non-GAAP 'adjusted' financial measures (adjusted earnings, revenues, expenses) to better reflect operating performance.
  • 3Key adjusted metrics exclude accounting changes, discontinued operations, and separation costs from American Express.
  • 4Ameriprise has entered into a Memorandum of Understanding (MOU) to settle a class action lawsuit.
  • 5The company will contribute $100 million to a settlement fund for the class action lawsuit.
  • 6The settlement covers claims related to mutual fund sales and financial plans during the period of March 10, 1999, through the settlement date.
  • 7Ameriprise has accrued a reserve sufficient to cover the litigation settlement as of September 30, 2005, with an increase of $70 million pre-tax recorded in Q3 2005.

Frequently Asked Questions

Ameriprise Financial reported its third-quarter 2005 financial results. The company is presenting both GAAP and non-GAAP "adjusted" financial measures. These adjusted measures, including adjusted earnings, adjusted revenues, and adjusted expenses, exclude items like accounting changes, discontinued operations, and costs associated with the company's separation from American Express. Investors are encouraged to review these adjusted figures for a clearer understanding of ongoing operational performance.

The class action lawsuit, styled 'In re American Express Financial Advisors Securities Litigation,' concerns allegations of fraudulent or improper practices related to the sale of mutual funds and financial plans during the period of March 10, 1999, through the settlement date. Ameriprise Financial, Inc. (along with its subsidiary and former parent company) is a defendant and has entered into a Memorandum of Understanding to settle the matter. While denying any wrongdoing, the company will contribute $100 million to a settlement fund.

Ameriprise Financial has agreed to pay $100 million into an escrow settlement fund. As of September 30, 2005, the company had already accrued a reserve sufficient to cover this contingent liability, having increased this reserve by $70 million pre-tax (and $46 million after-tax) in the third quarter of 2005. The settlement, once approved, will resolve this significant litigation matter, allowing the company to move forward under its new brand.

Ameriprise Financial believes that its non-GAAP 'adjusted' financial measures, which exclude items such as separation costs and other non-recurring items, are more indicative of the company's operating performance than the directly comparable GAAP measures. Investors should consider these adjusted figures as a supplemental view of performance, but always in conjunction with the standard GAAP financial statements to gain a complete picture.