Ameriprise 2005 Annual Report Download - page 97

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Ameriprise Financial, Inc. |
as all share-based compensation was granted on American
Express common shares and, as a result, there were no
share-based awards outstanding until the September 30,
2005 conversion described in Note 10. The computations of
basic and diluted EPS for the years ended December 31,
2005, 2004 and 2003 are as follows:
2005 2004 2003
(in millions, except per share amounts)
Numerator:
Income before discontinued
operations and accounting
change $ 558 $ 825 $ 694
Discontinued operations, net
of tax 16 40 44
Cumulative effect of accounting
change, net of tax –(71) (13)
Net income $ 574 $ 794 $ 725
Denominator:
Basic: Weighted-average shares
outstanding during the period 247.1 246.2 246.2
Add: dilutive effect of stock
options .1 ––
Diluted: Weighted-average shares
outstanding during the period 247.2 246.2 246.2
Basic and Diluted EPS:
Income before discontinued
operations and accounting
change $ 2.26 $ 3.35 $ 2.82
Discontinued operations, net
of tax 0.06 0.16 0.18
Cumulative effect of accounting
change, net of tax –(0.29) (0.05)
Net income $ 2.32 $ 3.22 $ 2.95
20. Segment Information
The Company has two main operating segments: (i) Asset
Accumulation and Income and (ii) Protection. These two oper-
ating segments are aligned with the financial solutions the
Company offers to address its clients’ needs. The Asset
Accumulation and Income business offers mutual funds, annu-
ities and other asset accumulation and income management
products and services to retail clients through its financial advisor
network. The Company also offers its annuity products through
outside channels, such as banks and broker-dealer networks.
This operating segment also serves institutional clients in the
separately managed account, sub-advisory and 401(k) mar-
kets, among others. The Protection segment offers various life
insurance, disability income and long-term care, and brokered
insurance products through the Company’s financial advisor
network. The Company also offers auto and home insurance
products on a direct basis to retail clients principally through
its strategic marketing alliances.
The Company also has a Corporate and Other segment, which
consists of income derived from corporate level assets and
unallocated corporate expenses, primarily separation costs, as
well as the results of its subsidiary, Securities America
Financial Corporation, which operates its own independent
separately branded distribution platform. The Corporate and
Other segment also includes the assets representing capital
that have not been allocated to any other segment. Financial
results of the Corporate and Other segment primarily reflect
the Company’s financing activities (including interest expense),
income on capital not allocated to other segments, income tax
items and certain income, expenses and other after-tax adjust-
ments not allocated to the segments based on the nature of
such items.
The accounting policies of the segments are the same as
those of the Company, except for the method of capital alloca-
tion and the accounting for gains (losses) from intercompany
revenues, which are eliminated in consolidation. The Company
allocates capital to each segment based upon an internal capi-
tal allocation method that allows the Company to more
efficiently manage its capital. The Company evaluates the
performance of each segment based on income before income
tax provision, discontinued operations and accounting change.
The Company allocates certain non-recurring items, such as
separation costs, to the Corporate and Other segment.
The following is a summary of assets by operating segment as
of December 31:
2005 2004
(in millions)
Asset Accumulation and Income $74,032 $69,516
Protection 16,587 13,465
Corporate and Other 2,502 4,259
Assets of discontinued operations –5,873
Total assets $93,121 $93,113