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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN EXPRESS COMPANY
Three Years Ended December 31,
(Millions), net of tax(a)
Net Unrealized
Gains (Losses)
on Securities
Net
Unrealized
Gains
(Losses)
on
Derivatives
Foreign
Currency
Translation
Adjustments
Net
Unrealized
Pension
and Other
Postretirement
Benefit Costs
Minimum
Pension
Liability
Adjustment
Accumulated
Other
Comprehensive
Income (Loss)
Balances at December 31, 2006 $ 92 $ 27 $ (222) $ (417) $ — $(520)
Investment securities
Net unrealized securities losses (76) (76)
Reclassification for net realized losses(e) 48 48
Other losses(b) (47) (47)
Derivatives
Net unrealized gains on cash flow hedges (68) (68)
Cash flow hedge gains reclassified to earnings (30) (30)
Foreign currency translation adjustments
Reclassification to earnings due to sale of foreign entities 3 3
Translation gains 347 347
Net losses related to hedges of investment in foreign
operations (380) (380)
Pension and other postretirement benefit costs
Annual valuation adjustment 239 239
Curtailment impact 18 18
Amortization of prior service cost and net actuarial loss 28 28
Discontinued operations(c) (5) (3) 4 (4)
Net change in accumulated other comprehensive income
(loss) (80) (98) (33) 289 — 78
Balances at December 31, 2007 $12 $ (71) $ (255) $ (128) $ — $(442)
(a) The following table shows the tax impact for the three years ended December 31, for the changes in each component of accumulated other comprehensive income (loss):
(Millions) 2007 2006 2005
Investment securities $ (52) $ (2) $ (81)
Derivatives (56) (61) 139
Foreign currency translation adjustments 17 (28) 30
Pension and other postretirement benefit costs 152 (209) —
Minimum pension liability adjustment —10 (2)
Discontinued operations(c) (3) 14 (234)
Total tax impact $ 58 $(276) $(148)
(b) Other gains (losses) primarily related to the impact of changes in the fair market value of the interest-only strip for year 2005 and 2006. In connection with the initial
adoption of SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments – an amendment of FASB Statements No. 133 and 140” (SFAS No. 155), as of
January 1, 2007, the Company recognized a gain of $80 million ($50 million after-tax) related to the fair value of the interest-only strips, which was recorded in other
comprehensive income (loss) in previous periods. Changes in the fair value of the interest-only strips subsequent to the adoption of this standard are reflected in
securitization income, net.
(c) Relates to the change in accumulated other comprehensive income (loss) prior to the dispositions of AEB and other businesses (including TBS) and the spin-off of
Ameriprise.
(d) Relates to the ending balance of accumulated other comprehensive income (loss) of Ameriprise at the time of the spin-off and certain other dispositions (including
TBS) which is shown as a separate component on the Statement of Shareholders’ Equity.
(e) Includes the impact of transfer of Available-for-Sale securities to Trading securities. The transfer resulted in a gain of $2 million after-tax ($3 million pretax) and loss
of $35 million after-tax ($54 million pretax) reclassified from other comprehensive income to earnings.
89