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.