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notes to consolidated financial statements
american express company
89
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, 2007 $12 $(71) $ (255) $(128) $ — $ (442)
Investment securities
Net unrealized securities losses (718)(718)
Reclassification for net realized gains (8)(8)
Derivatives
Net unrealized losses on cash flow hedges (170)(170)
Cash flow hedge losses reclassified to earnings 161 161
Foreign currency translation adjustments
Translation losses (1,102)(1,102)
Net gains related to hedges of investment in foreign
operations 961 961
Pension and other postretirement benefit costs
Annual valuation adjustment (353)(353)
Curtailment/settlement impact 8 8
Amortization of prior service cost and net actuarial loss 16 16
Discontinued operations(c) 15 28 (2)41
Net change in accumulated other comprehensive income
(loss) (711)(9)(113) (331) — (1,164)
Balances at December 31, 2008 $(699) $ (80) $ (368) $(459) $ — $(1,606)
(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) 2008 2007 2006
Investment securities $(472)$(84) $ (4)
Derivatives (4)(56)(61)
Foreign currency translation adjustments (66)17 (28)
Pension and other postretirement benefit costs (159)152 (209)
Minimum pension liability adjustment ——10
Discontinued operations(c) 16 29 16
Total tax impact $(685)$58 $(276)
(b) Other gains (losses) primarily related to the impact of changes in the fair market value of the interest-only strip for year 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 strip, which was recorded in
other comprehensive income (loss) in previous periods. Changes in the fair value of the interest-only strip 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 AEIDC.