Basis of Presentation

9 Months Ended

Sep. 30, 2012

Basis of Presentation

Basis of Presentation

1.  Basis of Presentation

Ameriprise Financial, Inc. is a holding company, which primarily conducts business through its subsidiaries to provide financial planning, products and services that are designed to be utilized as solutions for clients’ cash and liquidity, asset accumulation, income, protection and estate and wealth transfer needs. The foreign operations of Ameriprise Financial, Inc. are conducted primarily through its subsidiary, Threadneedle Asset Management Holdings Sàrl (“Threadneedle”).

The accompanying Consolidated Financial Statements include the accounts of Ameriprise Financial, Inc., companies in which it directly or indirectly has a controlling financial interest and variable interest entities (“VIEs”) in which it is the primary beneficiary (collectively, the “Company”). The income or loss generated by consolidated entities which will not be realized by the Company’s shareholders is attributed to noncontrolling interests in the Consolidated Statements of Operations. Noncontrolling interests are the ownership interests in subsidiaries not attributable, directly or indirectly, to Ameriprise Financial, Inc. and are classified as equity within the Consolidated Balance Sheets. The Company, excluding noncontrolling interests, is defined as “Ameriprise Financial.” All intercompany transactions and balances have been eliminated in consolidation. See Note 3 for additional information related to VIEs.

The results of Securities America Financial Corporation and its subsidiaries (collectively, “Securities America”) have been presented as discontinued operations for all periods presented. The Company completed the sale of Securities America in the fourth quarter of 2011. See Note 14 for additional information on discontinued operations.

The accompanying Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain reclassifications of prior period amounts have been made to conform to the current presentation. Results of operations reported for interim periods are not necessarily indicative of results for the entire year. These Consolidated Financial Statements and Notes should be read in conjunction with the consolidated Financial Statements and Notes in the Company’s annual report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission (“SEC”) on February 24, 2012.

The Company evaluated events or transactions that may have occurred after the balance sheet date for potential recognition or disclosure through the date the financial statements were issued.

The interim financial information in this report has not been audited. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated results of operations and financial position for the interim periods have been made. Except for the adjustments described below, all adjustments made were of a normal recurring nature.

In the second quarter of 2012, the Company made a correction for a tax item related to prior periods, which resulted in a $32 million decrease to net income attributable to Ameriprise Financial. During the second quarter, the Company discovered it had received incomplete data from a third-party service provider for securities lending activities that resulted in the miscalculation of the Company’s dividend received deduction and foreign tax credit, which resulted in an understatement of taxes payable and an overstatement of reported earnings in prior periods. Management has determined that the effect of this correction is not material to the Consolidated Financial Statements for all current and prior periods. The Company has resolved the data issue and has stopped the securities lending that negatively impacted its tax position.

In the third quarter of 2011, the Company made an adjustment for additional bond discount accretion investment income related to prior periods resulting from revisions to the accounting classification of certain structured securities, which resulted in a $40 million pretax benefit, net of deferred acquisition costs (“DAC”) and deferred sales inducement costs (“DSIC”) amortization. Management has determined that the effect of this adjustment is immaterial to prior periods presented.

In July 2012, the Company announced its intention to transition its federal savings bank subsidiary, Ameriprise Bank, FSB, to a limited powers national trust bank by year-end 2012. Final approvals from the appropriate federal and state regulators are pending.

On January 1, 2012, the Company retrospectively adopted the new accounting standard for DAC for insurance and annuity products. See Note 2 and Note 6 for further information on the new accounting standard and the resulting changes in the Company’s accounting policies on the deferral of acquisition costs. The following tables present the effect of the change on affected financial statement line items for prior periods retrospectively adjusted.

	Three Months Ended September 30, 2011
	Previously
	Reported			Effect of Change			As Adjusted
	(in millions)
Revenues
Total net revenues	$	2,455		$	—		$	2,455
Expenses
Distribution expenses	624			17			641
Interest credited to fixed accounts	213			1			214
Benefits, claims, losses and settlement expenses	257			1			258
Amortization of deferred acquisition costs	318			(116		)	202
Interest and debt expense	71			—			71
General and administrative expense	725			18			743
Total expenses	2,208			(79		)	2,129
Income from continuing operations before income tax provision	247			79			326
Income tax provision	81			28			109
Income from continuing operations	166			51			217
Income from discontinued operations, net of tax	2			—			2
Net income	168			51			219
Less: Net loss attributable to noncontrolling interests	(105		)	—			(105		)
Net income attributable to Ameriprise Financial	$	273		$	51		$	324
Earnings per share attributable to Ameriprise Financial, Inc. common shareholders
Basic
Income from continuing operations	$	1.14		$	0.21		$	1.35
Income from discontinued operations	0.01			—			0.01
Net income	$	1.15		$	0.21		$	1.36
Diluted
Income from continuing operations	$	1.12		$	0.21		$	1.33
Income from discontinued operations	0.01			—			0.01
Net income	$	1.13		$	0.21		$	1.34

	Nine Months Ended September 30, 2011
	Previously
	Reported			Effect of Change			As Adjusted
	(in millions)
Revenues
Total net revenues	$	7,610		$	—		$	7,610
Expenses
Distribution expenses	1,886			48			1,934
Interest credited to fixed accounts	632			2			634
Benefits, claims, losses and settlement expenses	1,045			1			1,046
Amortization of deferred acquisition costs	572			(206		)	366
Interest and debt expense	221			—			221
General and administrative expense	2,221			67			2,288
Total expenses	6,577			(88		)	6,489
Income from continuing operations before income tax provision	1,033			88			1,121
Income tax provision	288			31			319
Income from continuing operations	745			57			802
Loss from discontinued operations, net of tax	(73		)	—			(73		)
Net income	672			57			729
Less: Net loss attributable to noncontrolling interests	(151		)	—			(151		)
Net income attributable to Ameriprise Financial	$	823		$	57		$	880
Earnings per share attributable to Ameriprise Financial, Inc. common shareholders
Basic
Income from continuing operations	$	3.66		$	0.23		$	3.89
Loss from discontinued operations	(0.30		)	—			(0.30		)
Net income	$	3.36		$	0.23		$	3.59
Diluted
Income from continuing operations	$	3.58		$	0.23		$	3.81
Loss from discontinued operations	(0.29		)	—			(0.29		)
Net income	$	3.29		$	0.23		$	3.52

	December 31, 2011
	Previously
	Reported		Effect of Change			As Adjusted
			(in millions)
Assets
Deferred acquisition costs	$	4,402	$	(1,962	)	$	2,440
Other assets	7,468		283			7,751
Total assets	133,986		(1,679		)	132,307
Liabilities and Equity
Liabilities:
Future policy benefits and claims	31,723		(13		)	31,710
Other liabilities	5,432		(399		)	5,033
Total liabilities	123,025		(412		)	122,613
Equity:
Retained earnings	6,983		(1,380		)	5,603
Accumulated other comprehensive income, net of tax	638		113			751
Total equity	10,961		(1,267		)	9,694
Total liabilities and equity	$	133,986	$	(1,679	)	$	132,307

	December 31, 2010
	Previously
	Reported		Effect of Change			As Adjusted
	(in millions)
Retained earnings	$	6,190	$	(1,420	)	$	4,770
Accumulated other comprehensive income, net of tax	565		85			650
Total equity	$	11,285	$	(1,335	)	$	9,950