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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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|X| ANNUAL REPORT PURSUANT TO SECTION 30 OF THE INVESTMENT COMPANY ACT OF 1940
AND SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 20052006
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________TO ________TO
COMMISSION FILE NO. 2-23772
AMERIPRISE CERTIFICATE COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 41-6009975
(State or other jurisdiction of (I.R.S. Employer
incorporation ofor organization) Identification No.)
52 AMERIPRISE FINANCIAL CENTER, MINNEAPOLIS, MINNESOTA 55474
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:Registrant's telephone number, including area code (612) 671-3131
SECURITIES REGISTERED PURSUANT TO SECTIONSecurities registered pursuant to Section 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTIONof the Act: None
Securities registered pursuant to Section 12(g) OF THE ACT: NONEof the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes [ ]| | No [X]|X|
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act.
Yes [ ]| | No [X]|X|
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X]|X| No [ ]| |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [Not applicable]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of accelerated"accelerated
filer and large accelerated filerfiler" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]Filer | | Accelerated Filer | | Non-Accelerated Filer |X|
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes [ ]| | No [X]|X|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class Outstanding at March 10, 2006date.
CLASS OUTSTANDING AT MARCH 1, 2007
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Common StockShares (par value $10 per share) 150,000 shares
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS
I (I)(1)(a) andAND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE
REDUCED DISCLOSURE FORMAT.
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1
TABLE OF CONTENTS
FORM 10-K
ITEM NUMBER
PART I PAGE
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Business.......................................................... 3
1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Factors...................................................... 6
1B. Unresolved Staff Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Comments......................................... 9
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Properties........................................................ 9
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Proceedings................................................. 10
4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . . . . . 11Holders............... 10
PART II
5. Market for the Registrant's Common Stock andEquity, Related Stockholder Matters
. . . . . . . . . 12and Issuer Purchases of Equity Securities........................ 10
6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Data........................................... 10
7. Management's Discussion and Analysis of Financial Condition and Results of Operation . . . 13Narrative Analysis................................... 11
7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . 17Risk........ 12
8. Financial Statements and Supplementary Data. . . . . . . . . . . . . . . . . . . . . . . . 17Data....................... 14
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure . . . 17Disclosure............................................. 14
9A. Controls and Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Procedures........................................... 14
9B. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Information................................................. 14
PART III
10. Directors, and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . 18and Corporate Governance............ 14
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Compensation............................................ 14
12. Security Ownership of Certain Beneficial Owners and Management
. . . . . . . . . . . . . . 18and Related Stockholder Matters.................................. 14
13. Certain Relationships and Related Transactions, . . . . . . . . . . . . . . . . . . . . . . 18
PART IIIand Director
Independence.................................................... 14
14. Principal AccountantAccounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . 19Services............................ 15
PART IV
15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . . . . . . 20
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Schedules........................... 15
Signatures........................................................ 16
Index to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Statements and Schedules....................... F-1
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Index..................................................... E-1
2
PART I
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ITEM 1. BUSINESS
OVERVIEW
Ameriprise Certificate Company (ACC("ACC" or the Company) is"Company") was incorporated on
October 28, 1977 under the laws of Delaware. ACC's principal executive offices are located at 52
Ameriprise Financial Center, Minneapolis, Minnesota 55474, and its telephone
number is (612) 671-3131. Ameriprise Financial, Inc.
(Ameriprise Financial)("Ameriprise Financial"), a Delaware corporation, located at 55 Ameriprise Financial Center,
Minneapolis, Minnesota 55474, owns 100% of the outstanding
voting securities of ACC. Prior to August 1, 2005, Ameriprise Financial was known as American Express
Financial Corporation and Ameriprise Certificate Company was known as
American Express Certificate Company. Ameriprise Financial and Ameriprise
Certificate Company changed their names on August 1, 2005 as a consequence
of the plans announced by American Express Company (American Express) on
February 1, 2005, to pursue a spin off of the businesses now being operated
as part of Ameriprise Financial (the Separation). The Separation was
completed on September 30, 2005. As a result of the Separation, Ameriprise Financial and its subsidiaries are no longer affiliatedpredecessor companies
have more than 110 years of history providing clients with American
Express. Ameriprise Financial and American Express are independent
companies, with separate public ownership, boards of directors and
management.
In connection with the Separation, Ameriprise Financial has incurred and
will be incurring separation and distribution-related expenses in order to
become a separate company. Based on the terms of the distribution and
investment advisory and services agreements set in place between ACC and its
affiliates, no separation costs will be borne by ACC.financial
solutions.
ACC is registered as an investment company under the Investment Company Act of
1940 (the 1940 Act)"1940 Act") and is in the business of issuing face-amount investment
certificates. Face-amount certificates issued by ACC entitle the certificate
owner to receive at maturity a stated amount of money and interest or credits
declared from time to time by ACC, at its discretion. The certificates issued
by ACC are not insured by any government agency. ACC's certificates are sold
primarily by Ameriprise Financial Services, Inc. (AMPF)("AMPF"), an affiliate of ACC. AMPF is
registered as a broker-dealer in all 50 states, the District of Columbia and
Puerto Rico.
To ACC's knowledge, ACC is the largest issuer of face-amount certificates in
the United States. However, such certificates compete with many other products
(including investments) offered by banks, savings and loan associations,
mutual funds, broker-dealers and others, which may be viewed by potential
clients as offering a comparable or superior combination of safety and return
on investment. In particular, some of ACC's products are designed to be
competitive with the types of investments offered by banks and thrifts. Since
ACC's face-amount certificates are securities, their offer and sale are
subject to regulation under federal and state securities laws. ACC's
certificates are backed by ACC's qualified assets on deposit and are not
insured by any governmental agency or other entity.
OUR RELATIONSHIP WITH AMERICAN EXPRESS COMPANY
Ameriprise Financial was a wholly owned subsidiary of American Express Company
("American Express"). Effective as of the close of business on September 30,
2005, American Express completed the disposition of 100% of its share holdings
in Ameriprise Financial through a tax-free distribution of Ameriprise
Financial common shares to its shareholders (the "Distribution").
In connection with the Distribution, Ameriprise Financial entered into certain
agreements with American Express to effect the separation and to define the
responsibility for obligations arising before and after the date of the
Distribution, including among others, obligations relating to transition
services, taxes and employees. Based on the terms of the distribution and
investment advisory and services agreements set in place between ACC and its
affiliates, no separation costs will be allocated to ACC.
During the third quarter of 2005, ACC agreed with American Express Bank
Limited (AEB)("AEB"), a subsidiary of American Express, to execute an orderly
wind-down of the certificate business marketed through AEB and American
Express Bank International (AEBI(1)("AEBI"). This agreement was effected through
amendments to the existing contracts with AEB and AEBI. Under these
amendments, as of October 1, 2005 AEB and AEBI no longer market or offer ACC
certificate products; however, compensation at reduced rates will continue to
be paid to AEB and AEBI under the agreements until the earlier of the date
upon which the business sold or marketed previously by AEB and AEBI no longer
remains in effect or termination of the agreements. The amount of certificate
reserves associated with this business was approximately $0.7
billion$4.4 million and
$1.6 billion$731.5 million as of December 31, 2006 and 2005, and 2004, respectively.
3
PRODUCTS
As of the date of this report, ACC offers the following five different
certificate products to the public:
1. Ameriprise Cash Reserve Certificate
o Single payment certificate that permits additional investments and
ACC guarantees interest rates in advance for a three-month term on
these certificates.
o Currently sold without a sales charge.
o Available as qualified investments for IRAs, 401(k) plans, and
other qualified retirement plans.
o Distributed pursuant to a Distribution Agreement with AMPF.
o Current policy is to re-evaluate the certificate product interest
crediting rates weekly to respond to marketplace changes.
3
o ACC refers to an independent index or source to set the rates for
new sales and must set the rates for an initial purchase of the
certificate within a specified range of the rate from such index
or source and forsource. For renewals, ACC uses such rates as an indication of
the competitors' rates, but is not required to set rates within a
specified range.
o Published rates of the U.S. ninety-day Treasury bill are used as a
guide in setting rates.
o Competes with popular short-term investment vehicles such as
certificates of deposit, money market certificates, and money
market mutual funds that offer comparable yields, liquidity and
safety of principal.
2. Ameriprise Flexible Savings Certificate
o Single payment certificate that permits a limited amount of
additional payments and on which ACC guarantees interest rates in
advance for a term of six, twelve, eighteen, twenty-four, thirty
or thirty-six months, and potentially other terms, at the certificate product owner'sACC's
option.
o Currently sold without a sales charge.
o Currently bears surrender charges for premature surrenders.
o Available as qualified investments for IRAs, 401(k) plans, and
other qualified retirement plans.
o Distributed pursuant to a Distribution Agreement with AMPF.
o Current policy is to re-evaluate the certificate product interest
crediting rates weekly to respond to marketplace changes.
o ACC refers to an independent index or source to set the rates for
new sales and must set the rates for an initial purchase of the
certificate within a specified range of the rate from such index
or source and forsource. For renewals, ACC uses such rates as an indication of
the competitors' rates, but is not required to set rates within a
specified range.
o Published rates of the BANK RATE MONITOR(R) Top 25 Market Average
(the BRM Average) for various length bank certificates of deposit
are used as the guide in setting rates. BANK RATE MonitorMONITOR and Top
25 Market Average are marks owned by BANKRATE.COM(SM), publication
of Bankrate, Inc., N. Palm Beach, FL 33408.
o Competes with popular short-term investment vehicles such as
certificates of deposit, money market certificates, and money
market mutual funds that offer comparable yields, liquidity and
safety of principal.
3. Ameriprise Installment Certificate
o Installment payment certificate that declares interest rates in
advance for a three-month period and offers bonuses for up to four
certificate years for regular investments.
o Currently sold without a sales charge.
o Currently bears surrender charges for premature surrenders.
o Available as qualified investments for IRAs, 401(k) plans, and
other qualified retirement plans.
o Distributed pursuant to a Distribution Agreement with AMPF.
o Current policy is to re-evaluate the certificate product interest
crediting rates weekly to respond to marketplace changes.
o ACC refers to an independent index or source to set the rates for
new sales and must set the rates for an initial purchase of the
certificate within a specified range of the rate from such index
or source and forsource. For renewals, ACC uses such rates as an indication of
the competitors' rates, but is not required to set rates within a
specified range.
o Average interest rate for money market deposit accounts, as
published by the BRM Average(R), is used as a guide in setting
rates.
o Intended to help clients save systematically and may compete with
passbook savings and NOW accounts.
4. Ameriprise Market Strategy Certificate
o Single payment certificate, with a flexible yield, that pays
interest at a fixed rate or that offers the certificate product
owner the opportunity to have all or part of the certificate
product returns tied to fifty-two week stock market performance,
up to a maximum return, as measured by a broad stock market index,
for a series of fifty-two week terms starting every month or at
intervals the certificate product owner selects.
o Currently sold without a sales charge.
o Currently bears surrender charges for premature surrenders.
o Available as qualified investments for IRAs, 401(k) plans, and
other qualified retirement plans.
4
4.o Distributed pursuant to a Distribution Agreement with AMPF.
o Current policy is to re-evaluate the certificate product interest
crediting rates weekly and maximum return rates at least monthly
to respond to marketplace changes.
o Certain banks offer certificates of deposit that have features
similar to this certificate.
o The rate of interest is calculated in whole or in part based on
any upward movement in a broad-based stock market index up to a
maximum return, where the maximum is a fixed rate for a given
term, but can be changed at ACC's discretion for prospective
terms.
5. Ameriprise Stock Market Certificate
o Single payment certificate that offers the certificate product
owner the opportunity to have all or part of the certificate
product returns tied to fifty-two week stock market performance,
up to a maximum return, as measured by a broad stock market index,
with return of principal guaranteed by ACC and theACC. The owner can also
choose to earn a fixed rate of interest after the first term.
o Currently sold without a sales charge.
o Currently bears surrender charges for premature surrenders.
o Available as qualified investments for IRAs, 401(k) plans, and
other qualified retirement plans.
o Distributed pursuant to a Distribution Agreement with AMPF.
o AMPF has a Selling Agent Agreement with AEBI, a direct
subsidiary of AEB.
o AMPF has a Selling Agent Agreement effective March 10, 1999 with
Securities America, Inc., an affiliate of ACC.
o Current policy is to re-evaluate the certificate product interest
crediting rates weekly and maximum return rates at least monthly
to respond to marketplace changes.
o Certain banks offer certificates of deposit that have features
similar to this certificate.
o The rate of interest is calculated in whole or in part based on
any upward movement in a broad-based stock market index up to a
maximum return, where the maximum is a fixed rate for a given
term, but can be changed at ACC's discretion for prospective
terms.
5. Ameriprise Market Strategy Certificate
o Single payment certificate, with a flexible yield, that pays
interest at a fixed rate or that offers the certificate
product owner the opportunity to have all or part of the
certificate product returns tied to fifty-two week stock
market performance, up to a maximum return, as measured by a
broad stock market index, for a series of fifty-two week
terms starting every month or at intervals the certificate
product owner selects.
o Currently sold without a sales charge.
o Currently bears surrender charges for premature surrenders.
o Available as qualified investments for IRAs, 401(k) plans,
and other qualified retirement plans.
o Distributed pursuant to a Distribution Agreement with AMPF.
o Current policy is to re-evaluate the certificate product
interest crediting rates weekly and maximum return rates at
least monthly to respond to marketplace changes.
o Certain banks offer certificates of deposit that have
features similar to this certificate.
o The rate of interest is calculated in whole or in part based
on any upward movement in a broad-based stock market index up
to a maximum return, where the maximum is a fixed rate for a
given term, but can be changed at ACC's discretion for
prospective terms.
(1) AEBI is a direct subsidiary of AEB and is an Edge Act corporation
organized under the provisions of Section 25(a) of the Federal Reserve Act.
The specified maturities of most of ACC's certificate products range from ten
to twenty years. Within that maturity period, most certificates have interest
crediting rate terms ranging from three to thirty-six months. Interest
crediting rates are subject to change and certificate product owners can
surrender their certificates without penalty at term end. Currently offered
Ameriprise Certificates (listed above), as well as certain certificates
previously issued by ACC (not listed above), contain renewal features which
enable certificate owners to renew their certificate term until certificate
maturity. Accordingly, certificate products that are currently outstanding in
their renewal periods or are exercised for renewal in the future are, and
continue to be, liabilities of ACC until their withdrawals or maturity whether
or not such certificates are available for new sales.
To ACC's knowledge, ACC is the largest issuer of face-amount certificates in
the United States. However, such certificates compete with many other
products (including investments) offered by banks, savings and loan
associations, mutual funds, broker-dealers and others, which may be viewed
by potential clients as offering a comparable or superior combination of
safety and return on investment. In particular, some of ACC's products
5
are designed to be competitive with the types of investment offered by banks
and thrifts. Since ACC's face-amount certificates are securities, their
offer and sale are subject to regulation under federal and state securities
laws. ACC's certificates are backed by ACC's qualified assets on deposit and
are not insured by any governmental agency or other entity.
ACC's certificate product payments received and certificate surrenders paid
for products for each of the three years ended December 31 were (in
millions)(2):
2005 2004 2003
---- ---- ----
SINGLE PAYMENT CERTIFICATES
- ---------------------------
NON-QUALIFIED
Payments through:
AMPF $2,047.4 $1,650.5 $1,124.2
AEBI and AEB $ 655.8 $1,259.4 $1,095.4
Surrenders through:
AMPF $1,690.2 $1,022.4 $1,039.2
AEBI and AEB $1,505.9 $ 980.0 $ 999.6
QUALIFIED
Payments through:
AMPF $ 512.1 $ 342.3 $ 312.4
Surrenders through:
AMPF $ 352.3 $ 268.9 $ 292.6
INSTALLMENT PAYMENT CERTIFICATES
- --------------------------------
Through AMPF
NON-QUALIFIED
Payments $ 27.8 $ 32.9 $ 38.6
Surrenders $ 34.6 $ 41.7 $ 47.9
QUALIFIED
Payments $ 0.6 $ 0.5 $ 0.6
Surrenders $ 0.3 $ 0.4 $ 0.7
OTHER CERTIFICATES
- ------------------
Payments $ - $ - $ -
Surrenders $ 5.3 $ 5.8 $ 4.9
(2) Table includes information related to certificate products currently
sold as well as certificate products that are no longer available for
purchase.DISTRIBUTION AND MARKETING CHANNELS
ACC's certificates are sold primarily by AMPF. For the years ended December
31, 2005 and 2004, respectively, 20 percent and 39 percent of single payment
certificate products payments were through AEBI and AEB. For the year ended
December 31, 2005 and 2004, respectively, ACC received 16 percent and 11
percent of payments on single payment certificate products and 2 percent of
payments on installment certificate products in both 2005 and 2004 from
tax-qualified certificate products for use in IRAs, 401(k) plans, and other
qualified retirement plans. The certificates offered by AMPF are sold
pursuant to a distribution agreement which is terminable on sixty days' notice
and is subject to annual approval by ACC's Board of Directors, including a
majority of the directors who are not "interested persons" of AMPF or ACC as
that term is defined in the 1940 Act. The distribution agreement provides for
the payment of distribution fees to AMPF for services provided.
For the sale of the previously offered American Express Investors Certificate
and the American Express Stock Market Certificate by AEBI, AMPF has a Selling
Agent Agreement with AEBI. For the sale of Ameriprise Stock 6
Market
Certificate,Certificates, AMPF has a Selling Agent Agreement with Securities America Inc.
These agreements are terminable upon sixty days' notice and subject to annual
review by directors who are not "interested persons" of AMPF or ACC except
that such annual review is not required for selling agent agreements.
ASSET MANAGEMENT
ACC has retained RiverSource Investments, LLC, a wholly owned subsidiary of
Ameriprise Financial, to manage ACC's investment portfolio under an investment
management agreement, which is subject to annual review and approval by ACC's
Board of Directors, including a majority of the directors who are not
"interested persons" of AMPF, RiverSource Investments, LLC or ACC. On August 16, 2005October
25, 2006, the Board approved, the investment management agreementsubject to shareholder approval, a new
"Investment Advisory and Services Agreement" with
Ameriprise Financial. Effective October 1, 2005 this agreement was
transferred to RiverSource Investments,
LLC, with an effective date of January 1, 2007. The agreement was subsequently
approved by the Company's sole shareholder, Ameriprise Financial, on October
27, 2006, and on November 7, 2005 the
Board reapproved thethis agreement to run untilruns through December 31, 2006.2007.
5
REGULATION
ACC is required to maintain cash and "qualified assets" meeting the standards
of Section 28(b) of the 1940 Act, as modified by an exemptive order of the
Securities and Exchange Commission (the SEC)"SEC"). The amortized cost of such
investments must be at least equal to ACC's net liabilities on all outstanding
face-amount certificates plus $250,000. ACC's qualified assets consist of cash
and cash equivalents, first mortgage loans on real estate and other loans,
U.S. government and government agency securities, municipal bonds, corporate
bonds, preferred stocks and other securities meeting specified standards. So
long as ACC wishes to rely on the SEC order, as a condition to the order, ACC
has agreed to maintain an amount of unappropriated retained earnings and
capital equal to at least 5five percent of certificate reserves (less
outstanding certificate loans). To the extent that payment of a dividend would
decrease the capital ratio below the required 5five percent, payment of a
dividend would be restricted. In determining compliance with this condition,
qualified assets are valued in accordance with the provisions of Minnesota
Statutes where such provisions are applicable.
ACC has also entered into a written understanding with the State of Minnesota,
Department of Commerce, that ACC will maintain capital equal to 5five percent
of the assets of ACC (less outstanding certificate loans). To the extent that
payment of a dividend would decrease this ratio below the required 5five
percent, payment of a dividend would be restricted. When computing its capital
for these purposes, ACC values its assets on the basis of statutory accounting
for insurance companies rather than U.S. generally accepted accounting
principles (GAAP).principles. ACC is subject to annual examination and supervision by the State
of Minnesota, Department of Commerce (Banking Division).
ITEM 1A. RISK FACTORS.FACTORS
If any of the following risks and uncertainties developdevelops into actual events,
these events could have a material adverse effect on ACC's business, financial
condition or results of operations. Based on thecurrent information
currently known to the Company, ACC believes that the following
information identifies the most significant risk factors affecting ACC in each
of these categories of risk. However, the risks and uncertainties the CompanyACC faces
are not limited to those described below. Additional risks and uncertainties
which are not presently known to the Company or that ACCwhich are currently believebelieved to be immaterial
may also adversely affect ACC's business.
RISKS RELATING TO ACC'S BUSINESS
ACC'SACC's FINANCIAL CONDITION AND RESULTS OF OPERATIONS MAY BE MATERIALLYADVERSELY AFFECTED
BY MARKET FLUCTUATIONS, AND BY ECONOMIC AND OTHER FACTORS.
ACC's results of operations may be materially affected by market
fluctuations, economicfinancial condition and other factors. Resultsresults of operations in the past have been, and
in the future may continue to be, materially affected by many factors of a
global or localized nature, including political, economic and market
conditions; the availability and cost of capital; the level and volatility of
equity prices, commodity prices and interest rates; currency values and other
market indices; technological changes and events; the availability and cost of
credit; inflation; and investor sentiment and confidence in the financial
markets. 7
These factors also may have an impact on the Company's ability to
achieve its strategic objectives.
ACC's financial condition and results of operations are affected by the
"spread", or the difference between the returns ACC earns on the investments
that support its product obligations and the amounts that the Company must pay
certificate holders.
ACC's investment products are sensitive to interest rate fluctuations and
ACC's future costs associated with such variations may differ from its
historical costs. During periods of increasing market interest rates, ACC
must offer higherexpects to increase crediting rates on existing face-amount certificates.
Because returns on invested assets may not increase as quickly as current
interest rates, ACC may have to accept a lower spread and thus lower
profitability or face a decline in sales and greater loss of existing
certificates. In addition, increases in market interest rates may cause
increased certificate surrenders as certificate holders seek to shift assets
to products with perceived higher returns. This process may lead to an earlier
than expected flow of cash out of ACC's business. Also, increases in market
interest rates may result in the extension of the maturities of some of ACC's
investment assets. These earlier outflows and asset maturity extensions may
require investment assets to be sold at a time when the prices of those assets
are lower because of the increase in market interest rates, which may result
in realized investment losses. Increases in crediting rates, as well as
surrenders and withdrawals, could have an adverse effect on ACC's financial
condition and results of operations.
During periods of falling interest rates, ACC's spread may also be reduced.
Because ACC may adjust the interest rates it credits on most of thesethe products
downward only at limited, pre-established intervals, and because some
of themcertificate products have guaranteed minimum crediting rates, ACC's spreads
could decrease.decrease and potentially become negative. Interest rate fluctuations
could also have an adverse effect on the results of ACC's investment
portfolio. During periods of declining market interest rates, the interest ACC
receives on variable interest rate investments decreases. In addition, during
those periods, ACC is forced to reinvest the cash it receives as interest or
return of principal on its investments in lower-yielding,
6
high-grade instruments or in lower-credit instruments to maintain comparable
returns. Issuers of fixed income securities also may decide to prepay their
obligations in order to borrow at lower market rates. This exacerbates the
risk that ACC may have to invest the cash proceeds of these securities in
lower-yielding or lower-credit instruments. Offsetting some of these risks has
the potential for increasing security values in a falling rate environment, as
well as the fact that a significant portion of certificate balances do not
have a minimum guaranteed interest crediting rate.
For additional information regarding the sensitivity of the fixed income
securities in ACC's investment portfolio to interest rate fluctuations, see
Item 7A of this Form 10-K--"Quantitative and Qualitative Disclosures about
Market Risks.Risk."
DEFAULTS IN ACC'S FIXED INCOME SECURITIES PORTFOLIO WOULD ADVERSELY AFFECT THE
COMPANY'S EARNINGS.
Issuers of the fixed income securities thatowned by ACC owns may default on principal
and interest payments. As of December 31, 2005, 32006, 3.2 percent of ACC's
investment portfolio had ratings below investment-grade.investment grade. Moreover, economic
downturns and corporate malfeasance can increase the number of companies,
including those with investment-gradeinvestment grade ratings whichthat default on their debt
obligations, as occurred in 2001 and 2002.
SOME OF ACC'S INVESTMENTS ARE RELATIVELY ILLIQUID.
ACC invests a portion of its assets in privately placed fixed income
securities and mortgage loans. Mortgage loans are relatively illiquid. ACC's
investment manager periodically reviews ACC's private placement investments
using adopted standards to categorize such investments as liquid or
illiquid. As of December 31, 2005, mortgage loans and private placement fixed
income securities that have been categorized as illiquid represented
approximately 7.5 percent of the carrying value of ACC's investment
portfolio. If ACC requires significant amounts of cash on short notice in
excess of its normal cash requirements, ACC may have difficulty selling
these investments in a timely manner, or be forced to sell them for an
amount less than it would otherwise have been able to realize, or both. Any
inability to quickly dispose of illiquid investments could have an adverse
effect on ACC's financial condition and results of operations.
8
obligations.
IF THE COUNTERPARTIES TO THE DERIVATIVE INSTRUMENTS ACC USES TO HEDGE CERTAIN
CERTIFICATE LIABILITIES DEFAULT, ACC MAY BE EXPOSED TO RISKS IT HAD SOUGHT TO
MITIGATE, WHICH COULD ADVERSELY AFFECT ACC'S FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
ACC uses derivative instruments to hedge certain certificate liabilities. ACC
enters into a variety of derivative instruments with a number of
counterparties. If ACC's counterparties fail to honor their obligations under
the derivative instruments, ACC's hedges of the related liabilities will be
ineffective. That failure could have an adverse effect on ACC's financial
condition and results of operations that could be material.
SOME OF ACC'S INVESTMENTS ARE RELATIVELY ILLIQUID.
ACC invests a portion of its assets in privately placed fixed income
securities and mortgage loans. Mortgage loans are relatively illiquid. ACC's
investment manager periodically reviews ACC's private placement investments
using adopted standards to categorize such investments as liquid or illiquid.
As of December 31, 2006, mortgage loans and private placement fixed income
securities that have been categorized as illiquid represented approximately
7.3 percent of the carrying value of ACC's investment portfolio. If ACC
requires significant amounts of cash on short notice in excess of its normal
cash requirements, ACC may have difficulty selling these investments in a
timely manner or be forced to sell them for an amount less than it would
otherwise have been able to realize, or both. Any inability to quickly dispose
of illiquid investments could have an adverse effect on ACC's financial
condition and results of operations.
IF ACC'S RESERVES FOR FUTURE CERTIFICATE REDEMPTIONS AND MATURITIES ARE
INADEQUATE, ACC MAY BE REQUIRED TO INCREASE ITS RESERVE LIABILITIES, WHICH
COULD ADVERSELY AFFECT ITS FINANCIAL CONDITION AND RESULTS OF OPERATIONS AND FINANCIAL CONDITION.OPERATIONS.
Investment certificates may be purchased either with a lump-sum payment or by
installment payments. Certificate product owners are entitled to receive, at
maturity, a definite sum of money. Payments from certificate owners are
credited to investment certificate reserves. Investment certificate reserves
accumulate interest at specified percentage rates as declared by ACC. Reserves
also are maintained for advance payments made by certificate owners, accrued
interest thereon, and for additional credits in excess of minimum guaranteed
rates and accrued interest thereon. On certificates allowing for the deduction
of a surrender charge, the cash surrender values may be less than accumulated
investment certificate reserves prior to maturity dates. Cash surrender values
on certificates allowing for no surrender charge are equal to certificate
reserves. The payment distribution, reserve accumulation rates, cash surrender
values, reserve values and other matters are governed by the 1940 Act.
Certain certificates offer a return based on the relative change in a stock
market index. The certificates with an equity-based return contain embedded
derivatives, which are carried at fair value within investment certificate
reserves on the balance sheets. The fair values of these embedded derivatives
incorporate current market data inputs. Changes in fair value are reflected in
provision for certificate reserves within the statements of income.
ACC monitors its reserve levels continually. If the Company concluded its
reserves were insufficient to cover actual or expected redemptions or
maturities, ACC would be required to increase its reserves and incur income
statement charges for the period in which it makes the determination. Such a
determination could adversely affect ACC's financial condition and results of
operations.
7
INTENSE COMPETITION COULD NEGATIVELY AFFECT ACC'S ABILITY TO MAINTAIN OR
INCREASE ITS MARKET SHARE AND PROFITABILITY.
ACC's business operates in an intensely competitive industry segment. ACC
competes based on a number of factors including name recognition, service,
investment performance, product features and perceived financial strength.
ACC's competitors include broker-dealers, banks, asset managers and other
financial institutions. ACC's business faces competitors that have greater
market share, offer a broader range of products or have greater financial
resources.
ACC'S AFFILIATED DISTRIBUTOR MAY BE UNABLE TO ATTRACT AND RETAIN FINANCIAL
ADVISORS.
ACC is dependent on the branded financial advisors of its affiliated
broker-dealer selling firm for all of the sales of its certificate products. A
significant number of its branded financial advisors operate as independent
contractors under a franchise agreement with its affiliated selling firm.
There can be no assurance that ACC's affiliated selling firm will be
successful in its efforts to recruit and retain new advisors to its network.
If ACC's affiliated selling firm is unable to attract and retain quality
financial advisors, no advisors would be available to sell ACC's certificate
products and ACC's financial condition and results of operations could be
materially adversely affected.
ACC'S RISK MANAGEMENT POLICIES AND PROCEDURES MAY NOT BE FULLY EFFECTIVE IN
MITIGATING ITS RISK EXPOSURE IN ALL MARKET ENVIRONMENTS OR AGAINST ALL TYPES
OF RISK.
ACC has devoted significant resources toward developing its risk management
policies and financial condition.procedures and expects to continue to do so in the future.
Nonetheless, ACC's policies and procedures to identify, monitor and manage
risks may not be fully effective in mitigating its risk exposure in all market
environments or against all types of risk. Many of its methods of managing
risk and exposures are based upon its use of observed historical market
behavior or statistics based on historical models. As a result, these methods
may not accurately predict future exposures, which could be significantly
greater than what its models indicate. Other risk management methods depend
upon the evaluation of information regarding markets, clients, catastrophe
occurrence or other matters that are publicly available or otherwise
accessible to ACC, which may not always be accurate, complete, up-to-date or
properly evaluated. Management of operational, legal and regulatory risks
requires, among other things, policies and procedures to properly record and
verify a large number of transactions and events, and these policies and
procedures may not be fully effective in mitigating ACC's risk exposure in all
market environments or against all types of risk.
ACC'S BUSINESS IS REGULATED AND CHANGES IN REGULATION MAY REDUCE THE COMPANY'S
PROFITABILITY AND LIMIT ITS GROWTH.
ACC operates in a regulated industry. Various regulatory and governmental
bodies have the authority to review ACC's products and business practices and
to bring regulatory or other legal actions against ACC if, in their view,
ACC's practices are improper. Changes in these regulations may lead to
increased fees to servicesservice providers. Additionally, ACC is subject to
heightened regulatory requirements relating to privacy and protection of
customer data.
CONFLICTS OF INTEREST ARE INCREASING AND A FAILURE TO APPROPRIATELY DEAL WITH
CONFLICTS OF INTEREST COULD ADVERSELY AFFECT ACC'S BUSINESS.
ACC has to address potential conflicts of interest, including those relating
to the activities of its affiliated entities. For example, conflicts may arise
between ACC's position as a manufacturer of certificate products and the
position of an ACC affiliate, AMPF, as the distributor of these products. ACC
and its affiliated entities have procedures and controls in place that are
designed to address conflicts of interest. Appropriately dealing with
conflicts of interest, however, is complex and difficult and the enterprise's
reputation could be damaged if it fails, or appears to fail, to deal
appropriately with conflicts of interest. In addition, the SEC and other
federal and state regulators have increased their scrutiny of potential
conflicts of interest. It is possible that potential or perceived conflicts
could give rise to litigation or enforcement actions. 9
It is possible that the
regulatory scrutiny of, and litigation in connection with, conflicts of
interest could make the enterprise's clients less willing to enter into
transactions in which such a conflict may occur, and could adversely affect
ACC's business.
FAILURE OF ACC'S SERVICE PROVIDERS TO PERFORM THEIR RESPONSIBILITIES COULD
ADVERSELY AFFECT ACC'S BUSINESS.
ACC's business operations, including investment management, transfer agent,
custody and distribution services, are performed by affiliated service
providers pursuant to formal contracts. The failure of a service provider to
fulfill its responsibilities could have an adverse effect on ACC's financial
condition and results of operations that could be material.
8
RISKS RELATING TO ACC'S SEPARATION FROM AMERICAN EXPRESS
ACC'S PARENT MAY NOT HAVE SUFFICIENT ABILITY TO GENERATE CAPITAL NECESSARY TO
MEET ACC'S OPERATING AND REGULATORY CAPITAL REQUIREMENTS.
As stated above in Item 1 - Business, ACC is required to meet certain
regulatory capital requirements. At certain times ACC's parent company,
Ameriprise Financial, may be requested to provide capital to ACC to enable ACC
to meet these regulatory requirements. Ameriprise Financial's ability to
satisfy such a request will be dependent on its financial condition at the
time of the request. The failure to satisfy such a request could have an
adverse effect on ACC's financial condition and results of operations that
could be material.
Although American Express made a $1.1 billion capital contribution to
Ameriprise Financial to cover, among other things, certain separation costs
and the costs to establish new brands, ACC cannot be certain that this capital
contribution will be sufficient to cover all of the additional one-time costs
of Ameriprise Financial's operating subsidiaries, including ACC. If it is not
sufficient, ACC's financial condition could be adversely affected.
AS AMERIPRISE FINANCIAL BUILDS ITS INFORMATION TECHNOLOGY INFRASTRUCTURE AND
TRANSITIONS ITS DATA TO ITS OWN SYSTEMS AND THAT OF ITS AFFILIATES, SUCH AS ACC, TO ITS OWN
SYSTEMS, IT COULD EXPERIENCE TEMPORARY BUSINESS INTERRUPTIONS AND INCUR
SUBSTANTIAL ADDITIONAL COSTS. IN ADDITION, ACC RELIES ON AMERICAN EXPRESS
FOR DISASTER RECOVERY AND MAY EXPERIENCE DIFFICULTIES IN DEVELOPING ITS OWN
DISASTER RECOVERY CAPABILITY.
Ameriprise Financial and hence ACC is in the process of installing and
implementing an information technology infrastructure to support its business
functions, including accounting and reporting, customer service and
distribution. ACC anticipates this will involve significant costs. ACC may
incur temporary interruptions in business operations if it cannot transition
effectively from American Express's existing technology infrastructure (which
covers hardware, applications, network, telephony, databases, backup and
recovery solutions), as well as the people and processes that support them.
ACC may not be successful in implementing its new technology infrastructure
and transitioning its data and ACC may incur substantially higher costs for
implementation than currently anticipated. ACC's failure to avoid operational
interruptions as it implements the new infrastructure and transitions its data
or its failure to implement the new infrastructure and transition its data
successfully, could disrupt its business and have a material adverse effect on
its profitability. In addition, technology service failures could have adverse
regulatory consequences for ACC's business and make it vulnerable to its
competitors.
Ameriprise Financial and hence ACC continues to rely on American Express's
disaster recovery capabilities as part of its business continuity processes.
ACC will only have the right to use American Express's disaster recovery
resources for up to two years afterthrough September 30, 2005.2007. ACC will be required to develop and
implement its own disaster recovery infrastructure and develop business
continuity for its operations, which it anticipates will involve significant
costs. ACC may not be successful in developing stand-alone disaster recovery
capabilities and business continuity processes, and may incur substantially
higher costs for implementation than currently anticipated.
10
ACC's failure to
avoid operational interruptions as it implements new business continuity
processes, or its failure to implement the new processes successfully, could
disrupt its business and have a material adverse effect on its profitability
in the event of a significant business disruption.
ACC'S SEPARATION FROM AMERICAN EXPRESS COULD INCREASE ITS U.S. FEDERAL INCOME
TAX COSTS.
Due to the Separation, Ameriprise Financial and other members of the
affiliated group, including ACC, will not be able to file a consolidated U.S.
federal income tax return with Ameriprise Financial's life insurance
subsidiaries for five tax years following September 30, 2005.the Distribution. As a consequence,
during this period, net operating and capital losses, credits and other tax
attributes generated by one group will not be available to offset income
earned or taxes owed by the other group for U.S. federal income tax purposes. Any benefits relating to taxes arising from being part
of the larger American Express Company group may also not be available.
As a result of these and other inefficiencies, the aggregate amount of U.S.
federal income tax that ACC pays may increase and ACC may in addition not be
able to fully realize certain of its deferred tax assets.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
None.ACC occupies office space in Minneapolis, Minnesota, which is leased or owned
by Ameriprise Financial.
9
ITEM 3. LEGAL PROCEEDINGS
ACC may be a party to litigation and arbitration proceedings in the ordinary
course of its business. The outcome of any litigation or threatened litigation
cannot be predicted with any certainty. However, in the
aggregate, ACC does not consider any lawsuits in whichbelieves that it is named asnot a defendantparty
to, nor are any of its properties the subject of, any pending legal,
arbitration or regulatory proceedings that would have a material adverse
effect on its financial condition or results of operations. However, it is
possible that the outcome of any such proceedings could have a material impact
on ACC's financial position or operating
results.results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Item omitted pursuant to General Instructions I (I)(2)(c) of Form 10-K.
11
PART II
-------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK ANDEQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
All of ACC's outstanding common stock is owned by Ameriprise Financial. There
is no established public trading market for ACC's common stock since it is a wholly-owned
subsidiary of Ameriprise Financial.stock. Frequency and
amount of capital transactions with Ameriprise Financial during the past two
years were (in millions):
Receipt of
Dividends Paid Capital from
to Ameriprise Ameriprise
For the year endedFOR THE YEAR ENDED DECEMBER 31, 2006: DIVIDENDS PAID RECEIPT OF CAPITAL
TO AMERIPRISE FROM AMERIPRISE
FINANCIAL FINANCIAL
March 31, 2006............................ $ 35 $ -
June 30, 2006............................. 15 -
September 30, 2006........................ 10 -
December 29, 2006......................... 10 -
--------------- --------------
Total............................ $ 70 $ -
=============== ==============
FOR THE YEAR ENDED DECEMBER 31, 2005: Financial FinancialDIVIDENDS PAID RECEIPT OF CAPITAL
TO AMERIPRISE FROM AMERIPRISE
FINANCIAL FINANCIAL
December 31, 20052005......................... $ 25 $ -
------------- -------------
Total--------------- --------------
Total............................ $ 25 $ -
============= =============
For the year ended December 31, 2004:
Return of Receipt of
Capital to Capital from
Ameriprise Ameriprise
Financial Financial
March 31, 2004 $ 10 $ -
June 30, 2004 10 -
December 31, 2004 - 20
------------- -------------
Total $ 20 $ 20
============= ============================ ==============
Restriction on ACC's present or future ability to make return of capital
payments or to pay dividends to Ameriprise
Financial:
Certain series of installment certificate products outstanding provide that
cash dividends may be paid by ACC only in calendar years for which additional
credits of at least 1/2 of 1one percent on such series of certificates have
been authorized by ACC. This requirement has been met for 20052006 and 20042005 by
ACC's declaration of additional credits in meeting this requirement.
Appropriated retained earnings resulting from the pre-declaration of
additional credits to ACC's certificate product owners are not available for
the payment of dividends by ACC. In addition, ACC will discontinue issuance of
certificates subject to the pre-declaration of additional credits and will
make no further pre-declaration as to outstanding certificates if at any time
the capital and unappropriated retained earnings of ACC should be less than
5five percent of net certificate reserves (certificate reserves less
certificate loans). At December 31, 2005,2006, the capital and unappropriated
retained earnings amounted to 5.8 percent of net certificate reserves.
ITEM 6. SELECTED FINANCIAL DATA
Item omitted pursuant to General Instructions I (I)(2)(a) of Form 10-K.
12
10
ITEM 7. MANAGEMENT'S DISCUSSION ANDNARRATIVE ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following information should be read in conjunction with the accompanying
audited financial statements and related notes included elsewhere in this
report. The following discussion may contain forward-looking statements that
reflect ACC's plans, estimates and beliefs. ACC's actual results could differ
materially from those discussed in these forward-looking statements. Factors
that could cause or contribute to these differences include, but are not
limited to, those discussed below under the heading "Forward-Looking
Statements" and elsewhere in this report, particularly in "Risk Factors."
RESULTS OF OPERATIONS
Ameriprise Certificate Company's net income is derived primarily from the
after-tax yield on investments and realized investment (losses) gains, (losses), less
investment expenses and interest credited on certificate reserve liabilities.
Changes in net income trends occur largely due to changes in investment
returns in ACC's portfolio, from realization of investment (losses) gains,
(losses), and
from changes in interest crediting rates to certificate products. ACC follows
U.S. generally accepted accounting principles (GAAP).
Netprinciples.
In 2006, investment income in 2005 decreased $20.0$37.4 million, or 40.212.0 percent reflecting
realized losses on securities of unaffiliated issuers in 2005 compared
to realized gains2005 mainly due to a reduction in 2004. Thereholdings, mostly related to the AEB and
AEBI business wind-down. This overall decrease was also an increased net provision for
certificate reservesslightly offset primarily by increased net investment income.
Net income in 2004 decreased $3.3 million, or 6.3 percent, reflecting an
increase in investment expenses which was mainlygains on equity index options due to the write-offeffect of previously deferred distribution fees paid to AMPF.higher
appreciation in the S&P 500 on the value of options hedging outstanding Stock
Market Certificates. In 2005, investment income increased $46.9 million, or
17.6 percent compared to 2004, primarily due to higher average volumes and
slightly increased rates of return on investments offset by a decrease in net pre-tax
gains on equity index options due to the effect of lower appreciation in the
S&P 500 on the value of options hedging outstanding stock market certificates. In 2004,
investment income increased $1.4Stock Market Certificates.
Investment expense in 2006 decreased $12.7 million, or 0.5 percent, reflecting24.9 percent. The
decrease is mainly due to fewer distribution fees being paid to AEB and AEBI
as a slight increase inresult of the business wind-down. In 2005, investment income from Available-for-Sale securities
offset by a decrease in net pre-tax gains on equity index optionsexpenses decreased
slightly due to the effectcommencement of lower appreciationAEB and AEBI business wind-down in the
S&P 500third quarter.
In 2006, net provision for certificate reserves increased $12.2 million or 6.1
percent due to an increase in additional credits and interest authorized by
ACC on the valuefully-paid certificates. These increases are a result of options hedging
outstandingincreases in
short-term interest rates and greater stock market certificates.participation costs
resulting from equity market appreciation, partially offset by lower volumes
due to the AEB and AEBI business wind-down and a $1 million adjustment for
interest credited on Stock Market Certificates. In 2005, net provision for
certificate reserves increased $59.3 million or 42.4 percent reflecting higher
average volumes and general increases in interest rates driven by the higher
short-term interest rate environment.
In
2004, provision for certificate reserves decreased $1.5 million or 1.1
percent reflecting lower appreciation in the S&P 500.
In 2005, there were $16.4 million of netNet realized losses on investments were $1.2 million for 2006 compared to
$4.6$16.4 million in net realized gains on investments in 2004.for 2005. Included in net realized gains and losses on
investments are gross realized gains and losses on sales of securities as well as other-than-temporary
impairment losses on investments using
the specific identification method, as noted in the table below for the years
ended December 31:
2005 2004
-----------------------
(in millions)
Available-for-Sale securities:
Gross realized gains from sales $ 2.0 $ 6.1
Gross realized losses from sales $(19.4) $(1.1)
Other-than-temporary impairments $ - $(0.6)
Other, net $ 1.0 $ 0.2
CRITICAL ACCOUNTING POLICIES
The accounting and reporting policies that ACC uses affect its financial
statements. Certain of ACC's accounting and reporting policies are critical
to an understanding of ACC's results of operations and financial condition,
and in some cases the application of these policies can be affected by the
estimates, judgments and assumptions made by management during the
preparation of the Company's financial statements.
13
See Note 1 of ACC's financial statements for further information about the
Company's accounting policies.
2006 2005
--------- ---------
(in thousands)
Available-for-Sale securities:
Gross realized gains from sales..................................... $ 1,815 $ 1,988
Gross realized losses from sales.................................... (3,045) (19,365)
Other-than-temporary impairments.................................... - (27)
Other, net............................................................. (17) 1,015
RECENT ACCOUNTING PRONOUNCEMENTS AND SIGNIFICANT ACCOUNTING POLICIES
For information regarding recent accounting pronouncements and their expected
impact on the Company's future results of operations or financial condition,
see Note 1 to ACC's financial statements. INVESTMENT SECURITIES VALUATION
Generally, investment securitiesAlso see Note 1 for significant
accounting policies.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements, which are carried at fair valuesubject to risks
and uncertainties. The words "believe," "expect," "anticipate," "optimistic,"
"intend," "plan," "aim," "will," "may," "should," "could," "would," "likely,"
and similar expressions are intended to identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the balance
sheet with unrealized gains (losses) recordeddate on which they are made. Such
forward-looking statements involve known and unknown risks, uncertainties and
other important factors, which could cause actual results, performance or
achievements to differ materially from future results, performance or
achievements. These statements are not guarantees or indicative of future
performance. Important assumptions and other important factors that could
cause actual results to differ materially from those forward-looking
statements include, but are not limited to, those factors, risks and
uncertainties
11
described in accumulated other
comprehensive income (loss) within equity, net of income tax provisions
(benefits). At December 31, 2005, ACC had net unrealized pretax losses"Item 1A-Risk Factors" and elsewhere in ACC's Annual Report on
Available-for-Sale securities of $88.5 million. GainsForm 10-K. Our future financial condition and losses are
recognized in results of operations, upon disposition of the securities. In
addition, losses are recognized when management determines that a decline in
value is other-than-temporary, which requires judgment regarding the amount
and timing of recovery. Indicators of other-than-temporary impairment for
debt securities include issuer downgrade, default or bankruptcy. ACC also
considers the extent to which cost exceeds fair value, the duration and size
of that gap, and management's judgment about the issuer's current and
prospective financial condition, as well
as ACC's ability and intent to
hold until recovery. As of December 31, 2005, there were $96.7 millionany forward-looking statements contained in gross unrealized losses that related to $4.3 billion of securities, of which
$1.4 billion has been in a continuous unrealized loss position for twelve
months or more. As part of its ongoing monitoring process, management has
determined that a majoritythis report are made only as of
the gross unrealized losses on these
securities are attributabledate hereof. ACC undertakes no obligation to changes in interest rates. Additionally, ACC
has the ability and intent to hold these securities for a time sufficient to
recover its amortized cost and has, therefore, concluded that none of these
securities is other-than-temporarily impaired at December 31, 2005.
LIQUIDITYupdate or revise any
forward-looking statements.
ITEM 7A. QUANTITATIVE AND CAPITAL RESOURCES
ACC's principal sources of cash are receipts from sales of face-amount
certificate products and cash flows from investments. ACC's principal uses
of cash are payments to certificate product owners for matured and
surrendered certificates, purchases of investments, and return of capital or
dividend payments to Ameriprise Financial.
Cash received from sales of certificates totaled $3.2 billion and $3.3
billion for the years ended December 31, 2005 and 2004, respectively.
Certificate maturities and cash surrenders totaled $3.6 billion and $2.4
billion for the years ended December 31, 2005 and 2004, respectively.
Cash provided by investing activities was $0.2 billion in 2005. Cash used in
investing activities was $1.1 billion in 2004. This change was primarily due
to an increase in sales, maturities and redemptions of Available-for-Sale
securities and a decrease in purchases of Available-for-Sale securities.
Cash used in financing activities was $0.2 billion in 2005. Cash provided by
financing activities was $1.1 billion in 2004. The change is due primarily
to an increase in certificate maturities and cash surrenders partially
offset by an increase in net provisions for certificate reserves.
ACC paid Ameriprise Financial dividends of $25 million and return of capital
of $20 million during 2005 and 2004, respectively. In 2004, ACC also
received a capital contribution of $20 million from Ameriprise Financial.
ACC, as an issuer of face-amount certificates, is impacted by significant
changes in interest rates as interest crediting rates on certificate
products generally reset at shorter intervals than the change in the yield
on ACC's investment portfolio. The specified maturities of most of ACC's
certificate products range from ten to twenty years. Within that maturity
period, most certificates have interest crediting rate terms ranging from
three to thirty-six months. Interest crediting rates are subject to change
and certificate product owners can surrender their certificates without
penalty at term end. ACC has investment certificate obligations totaling
$5.6 billion of which $5.0 billion have terms ending in 2006, $0.4 billion
have terms ending in 2007 and $0.2 billion have terms ending in 2008.
14
Contract holders have the right to redeem the investment certificates
earlier and at their discretion subject to a surrender charge. Mid-term
redemptions are most likely to occur in periods of dramatic increases in
interest rates. ACC has investments in mortgage and asset-backed securities,
and to a lesser extent, intermediate term corporate debt securities. ACC may
enter into interest rate swap contracts that effectively lengthen the rate
reset interval on certificate products. As a result of interest rate
fluctuations, the amount of interest paid on hedged liabilities will
positively or negatively impact reported earnings. Income or loss on the
derivative instruments that are linked to the hedged liabilities will
generally offset the effect of this impact. On two series of ACC's
certificates, interest is credited to certificate products based upon the
relative change in a major stock market index between the beginning and end
of the certificates' terms. To meet the obligations related to the
provisions of these equity market sensitive certificates, ACC purchases and
writes index call options on a major stock market index and, from time to
time, enters into futures contracts.
ACC's investment program is designed to maintain an investment portfolio
that will produce competitive portfolio yields within acceptable risk and
liquidity parameters. ACC's investment program considers investment
securities as investments acquired to meet anticipated certificate owner
obligations.
Debt securities and marketable equity securities are classified as
Available-for-Sale and are carried at fair value. The Available-for-Sale
classification does not mean ACC expects to sell these securities, but
rather these securities are available to meet possible liquidity needs
should there be significant changes in market interest rates or certificate
owner redemptions.
At December 31, 2005, securities classified as Available-for-Sale were
carried, in the aggregate, at a fair market value of $5.3 billion.
Investments primarily include mortgage and asset-backed securities and
corporate debt securities. Of these securities, 97 percent are investment
grade. ACC's corporate debt securities are a diverse portfolio with
concentrations in the following industries: banking and finance, utilities,
communications, food processing and transportation. Other than U.S.
Government Agency mortgage-backed securities, no one issuer represents more
than 1 percent of the fair market value of ACC's total investment portfolio.
The ratio of shareholder's equity, excluding accumulated other comprehensive
income (loss) net of tax, to total assets less certificate loans and net
unrealized gains (losses) on securities classified as Available-for-Sale
(the Capital-to-Assets Ratio) at December 31, 2005 and 2004, was 5.5 percent
and 5.2 percent, respectively. In accordance with a written understanding
with the State of Minnesota, Department of Commerce, ACC has agreed to
maintain at all times a minimum Capital-to-Assets Ratio of 5 percent. In
addition, ACC is required to maintain cash and "qualified investments"
meeting the standards of Section 28(b) of the 1940 Act, as modified by an
exemptive order of the SEC. The amortized cost of such investments must be
at least equal to ACC's net liabilities on all outstanding face-amount
certificates plus $250,000. So long as ACC wishes to rely on the SEC order,
as a condition to the order, ACC has agreed to maintain an amount of
unappropriated retained earnings and capital equal to at least 5 percent of
net certificate reserves.QUALITATIVE DISCLOSURES ABOUT MARKET RISK
IMPACT OF MARKET VOLATILITY ON RESULTS OF OPERATIONS
ACC has two principal components of market risk: interest rate risk and equity
market risk. Interest rate risk results from investing in assets that are
somewhat longer and reset less frequently than the liabilities they support.
In prior years, ACC managesmanaged interest rate risk through the use of a variety of
tools that include derivative financial instruments, such as interest rate
swaps, caps, and floors, which change the interest rate characteristics of
client liabilities or investment assets. Because certain of the provisions for
certificates are impacted by the value of equity indices from time to time ACC
enters into risk management strategies that may include the use of equity
derivative financial instruments, such as equity options, to mitigate ACC's
exposure to volatility in the equity markets.
Ameriprise Financial's Asset Liability Committee (ALCO)("ALCO"), which is comprised
of senior business managers, holds regularly scheduled meetings to review
models projecting various interest rate scenarios and risk/return measures and
their effect on various portfolios managed by RiverSource Investments, LLC,
including that of ACC. ACC's Board of Directors has appointed the ALCO as the
investment committee of ACC. The ALCO's objectives are to structure ACC's
portfolio of investment securities based upon the type and behavior of the
certificates in the certificate reserve liabilities, to achieve targeted
levels of profitability within defined risk parameters and to meet certificate
contractual obligations.
15
Part of the investment committee's strategy could include entering into
interest rate swaps to hedge interest rate risk; however, at December 31,
2005 ACC did not hold any interest rate swaps.
ACC primarily invests in mortgage and asset-backed securities and intermediate
term corporate debt securities to provide its certificate owners with a
competitive rate of return on their certificatecertificates while managing risk. These
investments provide ACC with a historically dependable and targeted margin
between the interest rate earned on investments and the interest rate credited
to certificate owners' accounts. ACC does not invest in securities to generate
short-term trading profits for its own account.
ACC is exposed to risk associated with fluctuating interest payments from
certain certificate products tied to the London Interbank Offering Rate
(LIBOR). As such, certificate product interest crediting rates reset at
shorter intervals than the changes in the investment portfolio yield related
to new investments and reinvestments. Therefore, ACC's spreads may be
negatively impacted by increases in the general level of interest rates. ACC
may hedge the risk of rising interest rates by entering into pay-fixed,
receive-variable (LIBOR-based) interest rate swaps that convert fluctuating
crediting rate payments to fixed payments, effectively protecting ACC from
unfavorable interest rate movements. The interest rate swaps, when utilized,
are treated as cash flow hedges per Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities".
ACC offers Ameriprise Stock Market Certificates (SMC) that offer a return
based upon the relative change in a major stock market index between the
beginning and end of the SMC's term. The SMC product contains an embedded
derivative, essentially the equity based return of the certificate that must
be separated from the host contract and accounted for as a derivative
instrument. As a result of fluctuations in equity markets, and the
corresponding changes in value of the embedded derivative, the amount of
expenses incurred by ACC related to SMC will positively or negatively impact
reported earnings. As a means of hedging its obligations under the
provisions for these certificates, ACC purchases and writes call options on
the major stock market index. ACC views this strategy as a prudent
management of equity market sensitivity, such that earnings are not exposed
to undue risk presented by changes in equity market levels.
The sensitivity analysis of two different tests of market risk discussed
below estimate the effects of hypothetical sudden and sustained changes in
the applicable market conditions on the ensuing year's earnings based on
year-end positions. The market changes, assumed to occur as of year-end, are
a 100 basis point increase in market interest rates and a 10 percent decline
in a major stock market index. Computation of the prospective effects of
hypotheticalTo evaluate interest rate and major stock market index changes are based on
numerous assumptions, including relative levels of market interest rates andequity price risk ACC performs sensitivity
testing which measures the major stock market index level, as well as the levels of assets and
liabilities. The hypothetical changes and assumptions presented will be
different than what actually occurs in the future. Furthermore, the
computations do not anticipate actions that may be taken by management if
the hypothetical market changes occur over time. As a result, actual
earnings effects in the future will differ from those quantified below.
The negative impact on ACC's annual pretax income offrom the sources listed
below for a 12 month period following a hypothetical 100 basis point increase
in interest rates which assumes certificate productand a hypothetical 10% decline in equity markets.
At December 31, 2006, aggregating ACC's exposure from all sources of interest
crediting rate reset intervalsrisk net of financial derivatives hedging that exposure detailed below,
ACC estimates a negative impact of $4.2 million on pretax income for the 12
month period if, hypothetically, interest rates had increased by 100 basis
points and customer behavior based on the
applicationremain at that level for 12 months. This compares with an estimate
of proprietary models, to the book of business$11.4 million made at December 31, 2005 for 12 months following a
hypothetical 100 basis point increase in interest rates at December 31, 2005.
At December 31, 2006, aggregating ACC's exposure from all sources of equity
price risk net of financial derivatives hedging that exposure detailed below,
ACC estimates a minimal impact on pretax income for the 12 month period if,
hypothetically, equity markets had declined by 10% and 2004, would be $11.4 million and $15.1 million, respectively. A 10
percent decrease in theremain at that level
for 12 months. This compares with an estimate of a major stock market index would have no impact onat December 31,
2005 for 12 months following a hypothetical 10% drop in equity markets at
December 31, 2005.
The numbers below show ACC's annualestimate of the pretax incomeimpact of these
hypothetical market moves, net of hedging, as of December 31, 2005 and a minimal
impact on ACC's annual pretax income as of December 31, 2004, since2006. Following
the income effecttable is a decrease in option-related incomediscussion by source of risk and a corresponding
decrease in interest creditedthe portfolio management
techniques and derivative financial instruments ACC uses to the SMC and Ameriprise Market Strategy
Certificate product owners' accounts.
16
FORWARD-LOOKING STATEMENTS
Certain statements in Item 7. of this Form 10-K Annual Report contain
forward-looking statements, which are subject to risks and uncertainties.
The words "believe," "expect," "anticipate," "optimistic," "intend," "plan,"
"aim," "will," "may," "should," "could," "would," "likely," and similar
expressions are intended to identify forward-looking statements. Readers are
cautioned not to place undue reliance onmitigate these
forward-looking statements,
which speak only as of the date on which they are made. ACC undertakes no
obligation to update or revise any forward-looking statements. Factors thatrisks.
NET RISK EXPOSURE TO
PRETAX INCOME
--------------------------
INTEREST EQUITY
SOURCES OF MARKET RISK RATE PRICE
- ----------------------------------------------------------------------------------- ---------- ---------
(in thousands)
Flexible savings and other fixed rate certificates................................ $ (4,207) $ -
Stock market certificates......................................................... - -
--------- --------
Total........................................................................... $ (4,207) $ -
========= ========
Actual results could cause actual results to differ materially from these forward-looking
statements include, butthose illustrated above as they
are not limited to: ACC's ability to successfully
implement a business model that allows for significant net income growth based on revenue growth that is lower than historical levels, includinga number of estimates and assumptions. These include assuming the
ability to improve its operating expense to revenue ratio bothcomposition of invested assets and liabilities does not change in the short-term12 month
period following the market shock and over time, which will dependassuming the increase in partinterest rates
produces a parallel shift in the yield curve. The
12
selection of a 100 basis point interest rate increase and a 10% equity market
decline should not be construed as a prediction of future market events.
FLEXIBLE SAVINGS AND OTHER FIXED RATE CERTIFICATES
ACC has interest rate risk from its flexible savings and other fixed rate
certificates. These are investment certificates ranging in amounts from $1,000
to $1 million with terms ranging from three to 36 months. ACC guarantees an
interest rate to the holders of these products. Payments collected from
clients are primarily invested in fixed rate securities to fund the client
credited rate with the spread between the rate earned from investments and the
rate credited to clients recorded as earned income. Client liabilities and
investment assets generally differ as it relates to basis, repricing or
maturity characteristics. Rates credited to clients generally reset at shorter
intervals than the yield on underlying investments. This exposure is not
currently hedged although ACC monitors their investment strategy and makes
modifications based on changing liabilities and the expected rate environment.
ACC has $3.5 billion in reserves included in certificate reserves on the
effectivenessBalance Sheet at December 31, 2006 to cover the liabilities associated with
these products. At December 31, 2006, ACC estimates the interest rate risk
from this exposure on pretax income for the 12 month period following a
hypothetical increase of reengineering100 basis points in interest rates to be a negative
$4.2 million.
STOCK MARKET CERTIFICATES
Stock market certificates are purchased for amounts generally from $1,000 to
$1 million for terms of 52 weeks which can be extended to a maximum of 14
terms. For each term the certificate holder can choose to participate 100% in
any percentage increase in the S&P 500 Index up to a maximum return or choose
partial participation in any increase in the S&P 500 Index plus a fixed rate
of interest guaranteed in advance. If partial participation is selected, the
total of equity-linked return and other cost control initiatives, as well as factors
impacting ACC's revenues; ACC's ability to grow its business, over time,
which will depend on ACC's ability to manage its capital needs andguaranteed rate of interest cannot exceed
the effectmaximum return. Reserves for the stock market certificates of business mix; the ability to increase investment spending, which
will depend$1.1 billion
are included in partcertificate reserves on the equity marketsBalance Sheet at December 31,
2006. The notional amount and other factors affecting
revenues, and the ability to capitalize on such investments to improve
business metrics; the accuracyfair value asset (liability) of certain critical accounting estimates,
includingderivatives
hedging this product are as follows.
DECEMBER 31,
-------------------------------------------------------------
2006 2005
------------------------------ --------------------------
NOTIONAL FAIR NOTIONAL FAIR
AMOUNT VALUE AMOUNT VALUE
----------- ----------- ---------- ----------
(in thousands)
Purchased calls.......................................... $ 900,029 $ 103,806 $ 1,038,832 $ 73,942
Written calls............................................ (962,499) (55,794) (1,093,916) (38,128)
Purchased S&P 500 futures(1)............................. 1,357 - 816 -
(1) These S&P 500 futures are cash settled daily and, therefore, have no fair
value.
Interest Rate Risk - Stock Market Certificates
Stock market certificates have some interest rate risk as changes in interest
rates affect the fair value of the assets in ACC's investment portfolio
(including those investments that are not readily marketable), fluctuation
in the equity and fixed income markets, which can affect the amount and
types of certificate products sold by ACC, potential deterioration in ACC's
high-yield and other investments, which could result in further losses in
ACC's investment portfolio; the ability of ACCpayout to sell certain high-yield
investments at expected values and within anticipated timeframes andbe made to
maintain its high-yield portfolio at certain levels in the future; and
spreads in the certificate
businesses; credit trendsholder. This exposure to interest rate changes is hedged by the derivatives
listed above. ACC estimates that if, hypothetically, interest rates had
increased by 100 basis points at December 31, 2006 and remain at that level
for 12 months ACC's unhedged exposure would be a negative impact of $0.6
million on pretax income for the rate of
bankruptcies, which can affect returns on ACC's investment portfolios;
fluctuations in foreign currency exchange rates, which could affect
commercial activities, among other businesses, or restrictions on
convertibility of certain currencies; changes in laws or government
regulations, including tax laws affecting ACC's businesses or that may
affect the sales12 month period offset by a positive impact
of the productssame amount from ACC's hedging strategy for a net immaterial exposure.
Equity Price Risk - Stock Market Certificates
The equity-linked return to investors creates equity price risk exposure. ACC
seeks to minimize this exposure with purchased futures and servicescall spreads that
it offers,replicate what ACC must credit to client accounts. ACC estimates that if,
hypothetically, equity markets had declined by 10% at December 31, 2006 and
regulatory
activity inremain at that level for 12 months the areasimpact to pretax income for the 12
month period without hedging would be a positive $26.6 million. The impact of
customer privacy, consumer protection, business
continuity and data protection; the adoptionACC's hedging strategy offsets that gain for an immaterial net exposure.
CREDIT RISK
ACC's potential derivative credit exposure to each counterparty is aggregated
with all of recently issued accounting
rules relatedour other exposures to the consolidationcounterparty to determine compliance
with established credit and market risk limits at the time ACC enters into a
derivative transaction. Credit exposures may take into account enforceable
netting arrangements. Before executing a new type or structure of variable interest entities, including
those involving collateralized debt obligationsderivative
contract, ACC determines the variability of the contract's potential market
and secured loan trusts,
that ACC investscredit exposures and whether such variability might reasonably be expected
to create exposure to a counterparty in which could affect both ACC's balance sheet and resultsexcess of operations; and outcomes and costs associated with litigation and
compliance and regulatory matters. A further description of these and other
risks and uncertainties can be found in ACC's other reports filed with the
SEC. See "Item 1A-Risk Factors" for further discussion of risks.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Items required under this section are included in the Management's
Discussion and Analysis of Financial Condition and Results of Operations
under the section titled "Impact of Recent Market-Volatility on Results of
Operations".established limits.
13
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements at page F-1 hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NoneNone.
ITEM 9A. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
ACC maintains disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended
(the Exchange Act)"Exchange Act")) designed to provide reasonable assurance that the
information required to be reported in the Exchange Act filings is recorded,
processed, summarized and reported within the time periods specified and
pursuant to theSEC regulations, of the SEC, including controls and procedures designed to
ensure that this information is accumulated and communicated to ACC's
management, including its Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding the required disclosure.
17
It should be noted that, because of inherent limitations, ACC's disclosure
controls and procedures, however well designed and operated, can provide only
reasonable, and not absolute, assurance that the objectives of the disclosure
controls and procedures are met.
ACC's management, with the participation of its Chief Executive Officer and
Chief Financial Officer, evaluated the effectiveness of theACC's disclosure
controls and procedures as of the end of the period covered by this report.
Based upon that evaluation, ACC's Chief Executive Officer and Chief Financial
Officer have concluded that ACC's disclosure controls and procedures were
effective at a reasonable level of assurance as of December 31, 2005.2006.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
American Express has historically provided a variety of corporate and other
support services for ACC, including information technology, treasury,
accounting, financial reporting, tax administration, human resources,
marketing, legal, procurement and other services. American Express will
continue to provide ACC with many of these services pursuant to a transition
services agreement for a transition period of up to September 30, 2007. ACC
is now relying upon American Express as a third party to perform these
services, many of which may impact its financial reporting processes. During
this transition thereThere have not been some changes in personnel and in relative
responsibility for oversight of the processes. ACC considers this a material
change in its internal control over financial reporting.
Other than the changes mentioned above, no otherany changes in ACC's internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the fourth fiscal quarter of the year to which this
report relates that have materially affected, or are reasonably likely to
materially affect, ACC's internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, AND EXECUTIVE OFFICERS OF THE REGISTRANTAND CORPORATE GOVERNANCE
Item omitted pursuant to General Instructions I (I)(2)(c) of Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Item omitted pursuant to General Instructions I (I)(2)(c) of Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Item omitted pursuant to General Instructions I (I)(2)(c) of Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Item omitted pursuant to General Instructions I (I)(2)(c) of Form 10-K.
1814
PART III
--------
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The Board of Directors of ACC, at the recommendation of its Audit Committee,
has appointed Ernst & Young LLP (Ernst("Ernst & Young)Young") as its independent registered public accounting firmauditors to
audit the financial statements of ACC for the years ended December 31, 20052006
and 2004.2005.
AUDIT FEES
The aggregate fees billed or to be billed by Ernst & Young for each of the
last two years for professional services rendered for the audit of ACC's
annual financial statementsFinancial Statements and services that were provided in connection with
statutory and regulatory filings were $115,000 and $118,000 for 2006 and 2005,
and $113,000
for 2004.respectively.
AUDIT-RELATED FEES
ACC was not billed by Ernst & Young for any fees for audit-related services
for 20052006 or 2004.2005.
TAX FEES
ACC was not billed by Ernst & Young for any tax fees for 20052006 or 2004.2005.
ALL OTHER FEES
ACC was not billed by Ernst & Young for any other fees for 20052006 or 2004.2005.
POLICY ON PRE-APPROVAL OF SERVICES PROVIDED BY INDEPENDENT AUDITOR
Pursuant to the requirements of the Sarbanes-Oxley Act of 2002, the terms of
the engagement of Ernst & Young are subject to the specific pre-approval of
the Audit Committee of Ameriprise Financial. All audit and permitted non-audit
services to be performed by Ernst & Young for ACC require pre-approval by the
Audit Committee of Ameriprise Financial in accordance with pre-approval
procedures established by the Audit Committee of Ameriprise Financial. The
procedures require all proposed engagements of Ernst & Young for services to
ACC of any kind to be directed to the General Auditor of Ameriprise Financial
and then submitted for approval to the Audit Committee of Ameriprise Financial
prior to the beginning of any services.
In addition, the charter of ACC's Audit Committee requires pre-approval of any
engagement, including the fees and other compensation, of Ernst & Young (1) to
provide any services to ACC and prohibits the performance of certain specified
non-audit services, and (2) to provide any non-audit services to Ameriprise
Financial or any affiliate of Ameriprise Financial that controls, is
controlled by, or under common control with Ameriprise Financial. Certain
exceptions apply to the pre-approval requirement.
19
In 2006, 100% of the services provided by Ernst & Young for ACC were
pre-approved by the Audit Committee of Ameriprise Financial. In 2005, 100% of
the services provided by Ernst & Young for ACC were pre-approved by the Audit
Committee of American Express prior to the Distribution, and thereafter, by
the Audit Committee of Ameriprise Financial.
PART IV
-------
ITEM 15. EXHIBITS, FINANCIAL STATEMENTSSTATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements:
-----------------------------------------
See Index to Financial Statements on page F-1 hereof.
2. Financial Statement Schedules:
-----------------------------------------------------------
See Index to Financial Statements on page F-1 hereof.
3. Exhibits:
-----------------
See Exhibit Index on pages E-1 through E-3E-2 hereof.
20
15
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
REGISTRANT Ameriprise Certificate CompanyAMERIPRISE CERTIFICATE COMPANY
------------------------------
BY /s/ Paula R. Meyer
---------------------------------------William F. Truscott
---------------------------
NAME AND TITLE Paula R. Meyer,William F. Truscott, Director,
President and DirectorChief Executive Officer
(Principal Executive Officer)
DATE March 10, 20061, 2007
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
BY /s/ Brian J. McGrane
------------------------------------------------------------------
NAME AND TITLE Brian J. McGrane, Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
DATE March 10, 20061, 2007
BY /s/ David K. Stewart
------------------------------------------------------------------
NAME AND TITLE David K. Stewart, Vice President,
Controller and ControllerChief
Accounting Officer
(Principal Accounting Officer)
DATE March 10, 20061, 2007
BY /s/ Rodney P. Burwell*
-------------------------------------------------------------
NAME AND TITLE Rodney P. Burwell, Director
DATE March 10, 20061, 2007
BY /s/ Jean B. Keffeler*
------------------------------------------------------------
NAME AND TITLE Jean B. Keffeler, Director
DATE March 10, 20061, 2007
BY /s/ Thomas R. McBurney*
------------------------------------------------------------------
NAME AND TITLE Thomas R. McBurney, Director
DATE March 10, 20061, 2007
BY /s/ Karen M. Bohn*
------------------------------------------------------------------
NAME AND TITLE Karen M. Bohn, Director
DATE March 10, 2006
1, 2007
*By /s/ Paula R. Meyer
-------------------William F. Truscott
-----------------------
Name: Paula R. MeyerWilliam F. Truscott
- -----------------------------------------------
Executed by Paula R. MeyerWilliam F. Truscott on behalf of those indicated pursuant to a
Power of Attorney, dated February 9,August 1, 2006, filed electronically on or about
March 10,
20061, 2007 as Exhibit 24(a) here to.
21
hereto.
16
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
FINANCIAL STATEMENTS:
Part I. Financial Information:
Item 1. Financial Statements
Report of Independent Registered Public Accounting FirmFirm............................ F-2
Balance Sheets - December 31, 2005 and 2004 F-3
Statements of Income - Years ended December 31, 2006, 2005 2004
and 2003 F-52004................ F-3
Balance Sheets - December 31, 2006 and 2005........................................ F-4
Statements of Cash Flows - Years ended December 31, 2006, 2005 2004 and 20032004............ F-6
Statements of Comprehensive Income -Years(Loss) - Years ended December 31, 2006,
2005 2004 and 20032004...................................................................... F-7
Statements of Shareholder's Equity - Years ended December 31, 2006,
2005 2004 and 20032004...................................................................... F-8
Notes to Financial StatementsStatements...................................................... F-9
SCHEDULE NO.:
Financial Schedules:
I Investments in Securities of Unaffiliated Issuers, December 31, 2005 F-252006............... F-24
II Investments in and Advances to Affiliates and Income thereon, December 31, 2006,
2005 2004 and 2003 F-392004...................................................................... F-37
III Mortgage Loans on Real Estate and Interest earned on Mortgages, year ended
December 31, 2005 F-402006.................................................................. F-38
V Qualified Assets on Deposit, December 31, 2005 F-442006..................................... F-40
VI Certificate Reserves, year ended December 31, 2005 F-452006................................. F-41
VII Valuation and Qualifying Accounts, years ended December 31, 2006, 2005 2004 and 2003 F-572004.... F-48
Schedules I, III, V and VI for the years ended December 31, 2005 and 2004
are included in Registrant's Annual Reports on Form 10-K, and are
incorporated herein by reference.
All other Schedules required by Article 6 of Regulation S-X are not required
under the related instructions or are inapplicable and therefore have been
omitted.
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
Ameriprise Certificate Company
We have audited the accompanying balance sheets of Ameriprise Certificate
Company, (formerly known as American Express Certificate Company), a wholly-owned subsidiary of Ameriprise Financial, Inc., as of
December 31, 20052006 and 2004,2005, and the related statements of income,
comprehensive income (loss), shareholder's equity, and cash flows for each of
the three years in the period ended December 31, 2005.2006. Our audits also include
the financial statement schedules listed in the index at Item 8. These
financial statements and schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement. We were not engaged to
perform an audit of the Company's internal control over financial reporting.
Our audits included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. Our procedures included confirmation of investmentssecurities owned as of
December 31, 20052006 and 2004,2005, by correspondence with the custodian. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company at December 31,
20052006 and 2004,2005, the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2005,2006, in conformity with U.S.
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
financial statements taken as whole, present fairly in all material respects
the information set forth therein.
/s/ Ernst & Young LLP
- ---------------------
Minneapolis, Minnesota
February 27, 200626, 2007
F-2
AMERIPRISE CERTIFICATE COMPANY
BALANCE SHEETS
DECEMBER 31, 2005 AND 2004
(in thousands, except share data)
2005 2004
---------- ----------
ASSETS
QUALIFIED ASSETS
Investments in unaffiliated issuers:
Cash and cash equivalents $ 119,100 $ 35,212
Available-for-Sale securities 5,263,814 5,603,789
First mortgage loans on real estate and other loans 430,751 461,211
Certificate loans - secured by certificate reserves 11,305 13,006
---------- ----------
Total investments 5,824,970 6,113,218
---------- ----------
Receivables:
Dividends and interest 39,142 42,162
Investment securities sold 2,336 3,699
---------- ----------
Total receivables 41,478 45,861
---------- ----------
Equity index options 73,942 116,285
---------- ----------
Total qualified assets 5,940,390 6,275,364
---------- ----------
OTHER ASSETS
Deferred taxes, net 60,268 34,483
Due from other affiliates 2,545 1,939
---------- ----------
Total other assets 62,813 36,422
---------- ----------
Total assets $6,003,203 $6,311,786
========== ==========
See Notes to Financial Statements
F-3
AMERIPRISE CERTIFICATE COMPANY
BALANCE SHEETS (CONTINUED)
DECEMBER 31, 2005 AND 2004
(in thousands, except share data)
2005 2004
---------- ----------
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES
Certificate Reserves
Installment certificates:
Reserves to mature $ 87,884 $ 116,637
Additional credits and accrued interest 2,632 3,092
Advance payments and accrued interest 369 474
Other 1 2
Fully paid certificates:
Reserves to mature 5,523,029 5,666,939
Additional credits and accrued interest 34,689 48,053
Due to unlocated certificate holders 31 46
---------- ----------
Total certificate reserves 5,648,635 5,835,243
---------- ----------
Accounts Payable and Accrued Liabilities:
Due to Ameriprise Financial 197 1,190
Due to other affiliates 1,885 687
Current taxes payable 2,255 16,096
Payable for investment securities purchased 6,630 25,541
Equity index options and other liabilities 67,856 89,960
---------- ----------
Total accounts payable and accrued liabilities 78,823 133,474
---------- ----------
Total liabilities 5,727,458 5,968,717
---------- ----------
SHAREHOLDER'S EQUITY
Common shares ($10 par value, 150,000 shares authorized and issued) 1,500 1,500
Additional paid-in capital 323,844 323,844
Retained earnings:
Appropriated for pre-declared additional credits and interest 3,196 549
Appropriated for additional interest on advance payments 15 15
Unappropriated 4,745 2,712
Accumulated other comprehensive (loss) income - net of tax (57,555) 14,449
---------- ----------
Total shareholder's equity 275,745 343,069
---------- ----------
Total liabilities and shareholder's equity $6,003,203 $6,311,786
========== ==========
See Notes to Financial Statements
F-4
AMERIPRISE CERTIFICATE COMPANY
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
2006 2005 2004
AND 2003-------- -------- --------
(in thousands)
2005 2004 2003
-------- -------- -------
INVESTMENT INCOME
Interest income from unaffiliated investments:
Available-for-Sale securitiessecurities........................................ $216,385 $265,125 $213,125 $204,932
Mortgage loans on real estate and other loans 27,358loans........................ 28,310 26,916 26,232
27,093
Certificate loansloans.................................................... 553 672 772
933
DividendsDividends.............................................................. 1,119 1,813 3,348 5,074
Equity index options .................................................. 27,740 15,699 25,639 29,538
Interest rate swap agreementsagreements......................................... - (124) (5,367)
(5,301)
Other 1,944Other.................................................................. 963 2,386 1,879 1,969
-------- -------- --------
Total investment incomeincome....................................... 275,070 312,487 265,628 264,238
-------- -------- --------
INVESTMENT EXPENSES
Ameriprise Financial and affiliated company fees:
DistributionDistribution......................................................... 22,041 33,980 37,960 29,731
Investment advisory and servicesservices..................................... 10,743 12,141 10,940
10,436
Transfer agentagent....................................................... 3,842 3,859 3,522
3,378
DepositoryDepository........................................................... 360 395 414
349
OtherOther.................................................................. 1,271 581 1,162 523
-------- -------- --------
Total investment expensesexpenses..................................... 38,257 50,956 53,998 44,417
-------- -------- --------
NET INVESTMENT INCOME BEFORE PROVISION FOR CERTIFICATE RESERVES AND
INCOME TAX EXPENSEEXPENSE............................................... 236,813 261,531 211,630 219,821
-------- -------- --------
Provision for Certificate ReservesPROVISION FOR CERTIFICATE RESERVES
According to the terms of the certificates:
Provision for certificate reservesreserves................................... 6,841 6,568 6,416 6,043
Interest on additional creditscredits....................................... 217 257 348 425
Interest on advance paymentspayments......................................... 11 13 16 17
Additional credits/interest authorized by ACC:
On fully paid certificates 191,365 131,888 132,975
On installment certificates 2,650 2,650 3,379ACC.......................... 205,981 194,015 134,538
-------- -------- --------
Total provision for certificate reserves before reserve recoveriesrecoveries..... 213,050 200,853 141,318 142,839
Reserve recoveries from terminations prior to maturitymaturity................. (1,626) (1,603) (1,360) (1,356)
-------- -------- --------
Net provision for certificate reservesreserves................................. 211,424 199,250 139,958 141,483
-------- -------- --------
NET INVESTMENT INCOME BEFORE INCOME TAX EXPENSEEXPENSE........................ 25,389 62,281 71,672
78,338
Income tax expenseexpense..................................................... 8,775 21,949 25,040 27,296
-------- -------- --------
Net investment incomeincome.................................................. 16,614 40,332 46,632 51,042
-------- -------- --------
NET REALIZED (LOSS) GAIN ON INVESTMENTS
Securities of unaffiliated issuers before income tax (benefit) expenseexpense. (1,247) (16,388) 4,616 2,944
Income tax (benefit) expenseexpense........................................... (436) (5,736) 1,615 1,031
-------- -------- --------
Net realized (loss) gain on investmentsinvestments................................ (811) (10,652) 3,001 1,913
-------- -------- --------
NET INCOMEINCOME............................................................. $ 15,803 $ 29,680 $ 49,633 $ 52,955
======== ======== ========
See Notes to Financial StatementsStatements.
F-3
AMERIPRISE CERTIFICATE COMPANY
BALANCE SHEETS
DECEMBER 31, 2006 AND 2005
2006 2005
---------- ----------
(in thousands, except share data)
ASSETS
QUALIFIED ASSETS
Investments in unaffiliated issuers:
Cash and cash equivalents................................................... $ 174,247 $ 119,100
Available-for-Sale securities............................................... 4,250,409 5,263,814
First mortgage loans on real estate and other loans, net.................... 408,883 430,751
Certificate loans - secured by certificate reserves......................... 9,526 11,305
---------- ----------
Total investments....................................................... 4,843,065 5,824,970
---------- ----------
Receivables:
Dividends and interest...................................................... 32,719 39,142
Investment securities sold.................................................. 1,665 2,336
---------- ----------
Total receivables....................................................... 34,384 41,478
---------- ----------
Equity index options, purchased............................................... 103,806 73,942
---------- ----------
Total qualified assets.................................................. 4,981,255 5,940,390
---------- ----------
OTHER ASSETS
Deferred taxes, net........................................................... 72,138 60,268
Due from related party........................................................ 94 2,543
---------- ----------
Total other assets...................................................... 72,232 62,811
---------- ----------
Total assets.......................................................... $5,053,487 $6,003,201
========== ==========
See Notes to Financial Statements.
F-4
AMERIPRISE CERTIFICATE COMPANY
BALANCE SHEETS (CONTINUED)
DECEMBER 31, 2006 AND 2005
2006 2005
---------- ----------
(in thousands, except share data)
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES
Certificate Reserves
Installment certificates:
Reserves to mature........................................................ $ 66,805 $ 87,884
Additional credits and accrued interest................................... 2,009 2,632
Advance payments and accrued interest..................................... 278 369
Other..................................................................... 1 1
Fully paid certificates:
Reserves to mature........................................................ 4,606,157 5,523,029
Additional credits and accrued interest................................... 44,322 34,689
Due to unlocated certificate holders...................................... 30 31
---------- ----------
Total certificate reserves............................................ 4,719,602 5,648,635
---------- ----------
Accounts Payable and Accrued Liabilities:
Due to related party........................................................ 700 2,082
Current taxes payable to parent............................................. 41 3,253
Payable for investment securities purchased................................. 1,830 6,630
Equity index options and other liabilities.................................. 101,803 66,856
---------- ----------
Total accounts payable and accrued liabilities................................ 104,374 78,821
---------- ----------
Total liabilities..................................................... 4,823,976 5,727,456
---------- ----------
SHAREHOLDER'S EQUITY
Common shares ($10 par value, 150,000 shares authorized and issued) .......... 1,500 1,500
Additional paid-in capital.................................................... 274,115 323,844
Retained earnings:
Appropriated for pre-declared additional credits and interest............... 15 15
Appropriated for additional interest on advance payments.................... 3,473 3,196
Unappropriated.............................................................. - 4,745
Accumulated other comprehensive loss - net of tax............................. (49,592) (57,555)
---------- ----------
Total shareholder's equity............................................ 229,511 275,745
---------- ----------
Total liabilities and shareholder's equity............................ $5,053,487 $6,003,201
========== ==========
See Notes to Financial Statements.
F-5
AMERIPRISE CERTIFICATE COMPANY
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
2006 2005 2004 AND 2003
(in thousands)
2005 2004 2003
----------- ----------- -----------
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net incomeincome.............................................................. $ 15,803 $ 29,680 $ 49,633 $ 52,955
Adjustments to reconcile net income to net cash provided by operating
activities:
Interest added to certificate loansloans................................... (357) (442) (530) (630)
Amortization of premiums, accretion of discounts, netnet................. 11,876 16,201 17,915
14,907
Deferred taxes, netnet................................................... (14,314) 12,987 (9,127) (38,877)(18,934)
Net realized loss (gain) on investments before income tax provisionprovision.. 1,247 16,388 (4,616) (2,944)
Changes in other operating assets and liabilities:
Deferred distribution fees, netnet..................................... - - 6,453 (479)
Equity index options purchased and written, netnet..................... (12,198) 7,652 (946) 44,273
Dividends and interest receivable (payable)........................... 6,423 3,020 (6,155)
(1,893)
(Due from) due to Ameriprise Financial - federalparent for income taxes (13,014)taxes................................. (3,212) (13,016) 37,553 -
Other assets and liabilities, net 10,959 (114) (6,856)net..................................... 18,344 10,961 9,693
----------- ----------- -----------
Net cash provided by operating activitiesNET CASH PROVIDED BY OPERATING ACTIVITIES............................... 23,612 83,431 90,066 60,456
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Available-for-Sale securities:
SalesSales................................................................. 461,988 804,177 124,575
1,132,131
Maturities and redemptionsredemptions............................................ 836,698 1,051,692 842,427
1,305,953
PurchasesPurchases............................................................. (287,895) (1,659,895) (2,126,951)
(2,626,239)
Other investments:
SalesSales................................................................. 19,211 30,447 25,022
16,972
Maturities and redemptionsredemptions............................................ 118,378 109,025 128,463
117,159
PurchasesPurchases............................................................. (115,819) (107,985) (144,660)
(231,478)
Certificate loans:
PaymentsPayments.............................................................. 1,562 1,352 1,902
2,805
FundingsFundings.............................................................. (1,189) (1,175) (1,558) (1,553)
Changes in amounts due to and from brokers, netnet......................... (4,129) (17,539) 20,615 (238,262)
----------- ----------- -----------
Net cash provided by (used in) investing activitiesNET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES..................... 1,028,805 210,099 (1,130,165) (522,512)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments from certificate ownersowners........................................ 1,945,380 3,243,729 3,285,610
2,571,209
Net provisionProvision for certificate reservesreserves...................................... 211,424 199,250 139,958 141,483
Certificate maturities and cash surrenderssurrenders.............................. (3,084,074) (3,627,621) (2,375,356)
(2,415,860)
Payment of capitalProceeds from Ameriprise Financialreverse repurchase agreements............................. 684,000 - -
Payments on reverse repurchase agreements............................... (684,000) - -
Capital contribution from parent........................................ - - 20,000
-
Dividend / ReturnDividend/return of capital to Ameriprise Financialparent.................................... (70,000) (25,000) (20,000) (50,000)
----------- ----------- -----------
Net cash (used in) provided by financing activitiesNET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES..................... (997,270) (209,642) 1,050,212 246,832
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalentsNET INCREASE IN CASH AND CASH EQUIVALENTS............................... 55,147 83,888 10,113 (215,224)
Cash and cash equivalents at beginning of yearyear.......................... 119,100 35,212 25,099 240,323
----------- ----------- -----------
Cash and cash equivalents at end of yearCASH AND CASH EQUIVALENTS AT END OF YEAR................................ $ 174,247 $ 119,100 $ 35,212 $ 25,099
=========== =========== ===========
Supplemental disclosures including non-cash transactions:
Cash paid for income taxestaxes.............................................. $ 22,38825,382 $ 6,53122,683 $ 71,6476,531
Certificate maturities and surrenders through loan reductions $reductions........... 1,763 1,966 $ 2,786 $ 2,386
See Notes to Financial StatementsStatements.
F-6
AMERIPRISE CERTIFICATE COMPANY
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
2006 2005 2004
AND 2003------- --------- --------
(in thousands)
2005 2004 2003
-------- -------- --------
NET INCOMEINCOME.............................................................. $15,803 $ 29,680 $ 49,633
$ 52,955------- --------- --------
OTHER COMPREHENSIVE LOSS NET OF TAXINCOME (LOSS)
Unrealized gains (losses) gains on Available-for-Sale securities:
Unrealized holding lossesgains (losses) arising during the period, net of
taxes of $44,726, $16,745, and $18,434, respectivelyperiod....... 9,176 (127,788) (47,844)
Income tax expense (benefit)...................................... 1,994 (44,726) (16,745)
------- --------- --------
Net unrealized holding gains (losses) arising during the period... 7,182 (83,062) (31,099)
(34,235)------- --------- --------
Reclassification adjustment for losses (gains)
included in net income, net of taxes of $6,091, $1,538, and $2,891, respectivelyincome......................................... 1,230 17,403 (4,395)
Income tax benefit (expense)...................................... 449 6,091 (1,538)
------- --------- --------
Net reclassification adjustment for losses (gains) 781 11,312 (2,857)
(5,369)included in net income.........................................
------- --------- --------
-------- --------
Unrealized lossesNet unrealized gains (losses) on Available-for-Sale securities, netsecurities........ 7,963 (71,750) (33,956)
(39,604)
-------- --------------- --------- --------
Unrealized (losses) gains on interest rate swaps:
Unrealized (losses) gains arising during the period............... - (515) 1,062
Income tax (benefit) expense...................................... - (180) 372
------- --------- --------
Net unrealized holding (losses) gains arising during the period, net of
taxes of $180, $372, and $1,603, respectivelyperiod... - (335) 690
(2,976)------- --------- --------
Reclassification adjustment for lossesgains included in net income,income...... - 124 5,367
Income tax expense................................................ - 43 1,878
------- --------- --------
Net reclassification adjustment for gains included in net of taxes of $43, $1,878, and $1,855, respectivelyincome.. - 81 3,489
3,445------- --------- --------
-------- --------
UnrealizedNet unrealized (losses) gains on interest rate swaps, netswaps.................. - (254) 4,179
469------- --------- --------
-------- --------NET OTHER COMPREHENSIVE LOSS, NETINCOME (LOSS)................................... 7,963 (72,004) (29,777)
(39,135)
-------- --------------- --------- --------
TOTAL COMPREHENSIVE (LOSS) INCOME $(42,324)(LOSS)....................................... $23,766 $ (42,324) $ 19,856
$ 13,820
======== =============== ========= ========
See Notes to Financial StatementsStatements.
F-7
AMERIPRISE CERTIFICATE COMPANY
STATEMENTS OF SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
RETAINED EARNINGS
------------------------------------
APPROPRIATED
FOR APPROPRIATED ACCUMULATED
PRE-DECLARED FOR ADDITIONAL OTHER
NUMBER OF ADDITIONAL ADDITIONAL INTEREST ON COMPREHENSIVE
OUTSTANDING COMMON PAID-IN CREDITS ADVANCE UNAPPRO- (LOSS) INCOME
SHARES SHARES CAPITAL AND 2003INTEREST PAYMENTS PRIATED NET OF TAX TOTAL
------------------------------------------------------------------------------------------------------
(in thousands)
2005 2004 2003
-------- -------- ---------thousands, except share data)
COMMON SHARES $ 1,500 $ 1,500 $ 1,500
======== ======== =========
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of year $323,844
BALANCE AT DECEMBER 31, 2003 150,000 $1,500 $323,844 $ 373,84415 $ 184 $(46,556) $ 44,226 $323,213
Net income................... - - - - - 49,633 - 49,633
Transfer..................... - - - - 365 (365) - -
Receipt of capital from
Parentparent...................... - - 20,000 - Return- - - 20,000
Dividend/return of capital
to Parentparent................... - - (20,000) (50,000)
-------- -------- ---------
Balance at end of year $323,844 $323,844 $ 323,844
======== ======== =========
RETAINED EARNINGS
APPROPRIATED FOR PRE-DECLARED ADDITIONAL CREDITS AND INTEREST
Balance at beginning of year $ 549 $ 184 $ 811
Transferred from (to) unappropriated retained earnings 2,647 365 (627)
-------- -------- ---------
Balance at end of year $ 3,196 $ 549 $ 184
======== ======== =========
APPROPRIATED FOR ADDITIONAL INTEREST ON ADVANCE PAYMENTS $ 15 $ 15 $ 15
======== ======== =========
UNAPPROPRIATED
Balance at beginning of year $ 2,712 $(46,556) $(100,142)
Net income 29,680 49,633 52,955
Transferred (to) from appropriated retained earnings (2,647) (365) 627
Dividend to Parent (25,000) - - Other - - 4
-------- -------- ---------
Balance at end of year $ 4,745 $ 2,712 $ (46,556)
======== ======== =========
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME - NET OF TAX
Balance at beginning of year $ 14,449 $ 44,226 $ 83,361(20,000)
Net other comprehensive loss (72,004)loss. - - - - - - (29,777) (39,135)(29,777)
------- ------ -------- ---- ------ -------- -------- ---------
Balance at end--------
BALANCE AT DECEMBER 31, 2004 150,000 1,500 323,844 15 549 2,712 14,449 343,069
Net income................... - - - - - 29,680 - 29,680
Transfer..................... - - - - 2,647 (2,647) - -
Dividend/return of year $(57,555)capital
to parent................... - - - - - (25,000) - (25,000)
Net other comprehensive loss. - - - - - - (72,004) (72,004)
------- ------ -------- ---- ------ -------- -------- --------
BALANCE AT DECEMBER 31, 2005 150,000 1,500 323,844 15 3,196 4,745 (57,555) 275,745
Net income................... - - - - - 15,803 - 15,803
Transfer..................... - - - - 277 (277) - -
Dividend/return of capital
to parent................... - - (49,729) - - (20,271) - (70,000)
Net other
comprehensive income........ - - - - - - 7,963 7,963
------- ------ -------- ---- ------ -------- -------- --------
BALANCE AT DECEMBER 31, 2006 150,000 $1,500 $274,115 $ 14,44915 $3,473 $ 44,226- $(49,592) $229,511
======= ====== ======== ==== ====== ======== ======== =========
TOTAL SHAREHOLDER'S EQUITY $275,745 $343,069 $ 323,213
======== ======== =========
See Notes to Financial StatementsStatements.
F-8
1. BASIS OF PRESENTATION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Ameriprise Certificate Company (ACC("ACC" or the Company)"Company"), is a wholly-ownedwholly owned
subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Prior to
August 1, 2005, ("Ameriprise Financial was known as American Express Financial
Corporation. Ameriprise Financial changed its name on August 1, 2005 as a
consequence of the plans announced by American Express Company (American
Express) on February 1, 2005, to pursue a spin off of the businesses now
being operated as part of Ameriprise Financial. The Separation from American
Express (the Separation) was completed on September 30, 2005. After the
Separation from American Express, Ameriprise Financial and its subsidiaries
are no longer affiliated with American Express. Ameriprise Financial and
American Express are independent companies, with separate public ownership,
boards of directors and management.
In connection with the Separation, Ameriprise Financial has incurred and
will be incurring separation and distribution-related expenses in order to
become a separate company. Based on the terms of the distribution and
investment advisory and services agreements set in place between ACC and its
affiliates, no separation costs will be allocated to ACC. If separation
costs were allocated to ACC the amounts may or may not be significant to the
Company.
During the third quarter 2005, ACC agreed with American Express Bank Limited
(AEB), a subsidiary of American Express, to execute an orderly wind-down of
the certificate business marketed through AEB and American Express Bank
International (AEBI)Financial"). This agreement was effected through amendments to
the existing contracts with AEB and AEBI. Under these amendments, as of
October 1, 2005 AEB and AEBI no longer market or offer ACC certificate
products; however compensation, at reduced rates, will continue to be paid
to AEB and AEBI under the agreements until the earlier of the date upon
which the business sold or marketed previously by AEB and AEBI no longer
remains in effect or termination of the agreements. The amount of
certificate reserves associated with this business was approximately $0.7
billion and $1.6 billion as of December 31, 2005 and 2004, respectively. ACC is
registered as an investment company under the Investment Company Act of 1940
(the 1940 Act)"1940 Act") and is in the business of issuing face-amount investment
certificates. Face-amount certificates issued by ACC entitle the certificate
owner to receive at maturity a stated amount of money and interest or credits
declared from time to time by ACC, at its discretion. The certificates issued
by ACC are not insured by any government agency. ACC's certificates are sold
primarily by Ameriprise Financial Services, Inc. (AMPF)("AMPF"), an affiliate of
ACC. AMPF is registered as a broker-dealer in all 50 states, the District of
Columbia and Puerto Rico.
As of December 31, 2005,2006, ACC offered five different certificate products to
the public. ACC is impacted by significant changes in interest rates as
interest crediting rates on certificate products generally reset at shorter
intervals than the change in the yield on ACC's investment portfolio. The
specified maturities of most of ACC's certificate products range from ten to
twenty years. Within that maturity period, most certificates have interest
crediting rate terms ranging from three to thirty-six months. Interest
crediting rates are subject to change and certificate product owners can
surrender their certificates without penalty at term end. In addition, two
types of certificate products have interest tied, in whole or in part, to a
broad-based stock market index. All of the certificates are available as
qualified investments for Individual Retirement Accounts, 401(k) plans and
other qualified retirement plans.
SEPARATION OF AMERIPRISE FINANCIAL
On February 1, 2005, American Express Company ("American Express") announced
its intention to pursue the disposition of 100% of its shareholdings in
Ameriprise Financial (the "Separation") through a tax-free distribution to
American Express shareholders. Effective as of the close of business on
September 30, 2005, American Express completed the separation and distribution
of common shares to American Express shareholders (the "Distribution").
In connection with the Distribution, Ameriprise Financial entered into certain
agreements with American Express to effect the separation of its business and
to define the responsibility for obligations arising before and after the date
of the Distribution, including among others, obligations relating to
transition services, taxes and employees. Based on the terms of the
distribution and investment advisory and services agreements set in place
between ACC and its affiliates, no separation costs will be allocated to ACC.
During the third quarter of 2005, ACC agreed with American Express Bank
Limited ("AEB"), a subsidiary of American Express, to execute an orderly
wind-down of the certificate business marketed through AEB and American
Express Bank International ("AEBI"). This agreement was effected through
amendments to the existing contracts with AEB and AEBI. Under these
amendments, as of October 1, 2005 AEB and AEBI no longer market or offer ACC
certificate products; however, compensation at reduced rates will continue to
be paid to AEB and AEBI under the agreements until the earlier of the date
upon which the business sold or marketed previously by AEB and AEBI no longer
remains in effect or termination of the agreements. The amount of certificate
reserves associated with this business was approximately $4.4 million and
$731.5 million as of December 31, 2006 and 2005, respectively.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying financial statements are presented in accordance with U.S.
generally accepted accounting principles. ACC uses the equity method of
accounting for its wholly-ownedwholly owned unconsolidated subsidiary, Investors Syndicate
Development Corporation, as prescribed by the Securities and Exchange
Commission (SEC)("SEC") for non-investment company subsidiaries. Certain
reclassifications of prior period amounts have been made to conform to the
current presentation.
F-9
Accounting estimates are an integral part of the financial statements. In
part, they are based upon assumptions concerning future events. Among the more
significant is investment securities valuation as discussed in Note 3. These
accounting estimates reflect the best judgment of management and actual
results could differ.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The fair values of financial instruments disclosed in the notes to financial
statements are estimates based upon current market conditions and perceived
risks, and require varying degrees of management judgment.
INTEREST INCOME
Interest income is accrued as earned using the effective interest method,
which makes an adjustment for security premiums and discounts, so that the
related security recognizes a constant rate of return on the outstanding
balance throughout its term.
F-9
PREFERRED STOCK DIVIDEND INCOME
ACC recognizes dividend income from cumulative redeemable preferred stocks
with fixed maturity amounts on an accrual basis similar to that used for
recognizing interest income on debt securities. Dividend income from perpetual
preferred stock is recognized on an ex-dividend date basis.
CASH AND CASH EQUIVALENTS
ACC has defined cash and cash equivalents as cash in banks and highly liquid
investments with original maturities of ninety90 days or less.
AVAILABLE-FOR-SALE SECURITIES
Debt securities and marketable equity securities are classified as
Available-for-Sale and carried at fair value which is generally based on
quoted market prices. Unrealized gains (losses) on securities classified as
Available-for-Sale are reflected, net of taxes, in accumulated other
comprehensive income (loss) as part of Shareholder's Equity.
The basisACC uses the specific identification method for determining cost in computing
realized gains (losses) on securities is specific identification.securities. Gains (losses) are recognized in the
results of operations upon disposition of the securities. In addition, losses
are also recognized when management determines that a decline in value is
other-than-temporary, which requires judgment regarding the amount and timing
of recovery. Indicators of other-than-temporary impairment for debt securities
include issuer downgrade, default or bankruptcy. ACC also considers the extent
to which cost exceeds fair value, the duration of time of that decline and
management's judgment as to the issuer's current and prospective financial
condition, as well as ACC's ability and intent to hold until recovery. The
charges are reflected in net realized (loss) gain (loss) on investments in the
statementsStatements of income.Income.
FIRST MORTGAGE LOANS ON REAL ESTATE AND OTHER LOANS
First mortgage loans on real estate reflect principal amounts outstanding less
allowance for losses, which is the basis for determining realized gains
(losses). Estimated fair values of mortgage loans on real estate are
determined by a discounted cash flow analysis using mortgage interest rates
currently offered for mortgages of similar maturities. Other loans reflect amortized cost less allowance for losses. Carrying values of other loans
represent estimated fair values when quoted prices are not available.
The allowance for loan losses is measured as the excess of the loan's recorded
investment over its present value of expected principal and interest payments
discounted at the loan's effective interest rate or the fair value of
collateral. Additionally, the level of the allowance for loan losses is
determined based on several factors, including historical experience and
current economic and political conditions. Management regularly evaluates the
adequacy of the allowance for loan losses and believes it is adequate to
absorb estimated losses in the portfolio.
F-10
ACC generally stops accruing interest on mortgage loans on real estate for
which interest payments are delinquent more than three months. Based on
management's judgment as to the ultimate collectibility of principal, interest
payments received are either recognized as income or applied to the recorded
investment in the loan.
CERTIFICATE RESERVES
Investment certificates may be purchased either with a lump-sum payment or by
installment payments. Certificate product owners are entitled to receive, at
maturity, a definite sum of money. Payments from certificate owners are
credited to investment certificate reserves. Investment certificate reserves
accumulate interest at specified percentage rates as declared by ACC. Reserves
also are maintained for advance payments made by certificate owners, accrued
interest thereon, and for additional credits in excess of minimum guaranteed
rates and accrued interest thereon. On certificates allowing for the deduction
of a surrender charge, the cash surrender values may be less than accumulated
investment certificate reserves prior to maturity dates. Cash surrender values
on certificates allowing for no surrender charge are equal to certificate
reserves. The payment distribution, reserve accumulation rates, cash surrender
values, reserve values and other matters are governed by the 1940 Act.
Certain certificates offer a return based on the relative change in a stock
market index. The certificates with an equity-based return contain embedded
derivatives, which are carried at fair value within investment certificate
reserves on the balance sheets. The fair values of these embedded derivatives
incorporate current market data inputs. Changes in fair value are reflected in
provision for certificate reserves within the statementsStatements of income.Income.
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Derivative instruments, consisting of interest rate swaps and options and
futures contracts, are classified in the Balance Sheets at fair value. The
fair value of ACC's derivative financial instruments are determined using
either market quotes or valuation models that are based upon the net present
value of estimated future cash flows and incorporate current market data
inputs.
F-10
The accounting for the change in the fair value of the derivative financial
instrument depends on its intended use and the resulting hedge designation, if
any. ACC has historically designated interest rate swaps as cash flow hedges
and does not designate options and futures contracts as accounting hedges.
For derivative financial instruments that qualify as cash flow hedges, the
effective portions of the gain or loss on the derivative instruments are
reported in accumulated other comprehensive income (loss) and reclassified
into earnings when the hedged item or transaction impacts earnings. The amount
that is reclassified into earnings is presented in the statements of income
with the hedged instrument or transaction impact. If a hedge is de-designated
or terminated prior to maturity, the amount previously recorded in accumulated
other comprehensive income (loss) is recognized into earnings over the period
that the hedged item impacts earnings. For any hedge relationships that are
discontinued because the forecasted transaction is not expected to occur
according to the original strategy, any related amounts previously recorded in
accumulated other comprehensive income (loss) are recognized in earnings
immediately.
Derivative financial instruments that are entered into for hedging purposes
are designated as such at the time that ACC enters into the contract. For all
derivative financial instruments that are designated for hedging activities,
ACC formally documents all of the hedging relationships between the hedge
instruments and the hedged items at the inception of the relationships.
Management also formally documents its risk management objectives and
strategies for entering into the hedge transactions. ACC formally assesses, at
inception and on a quarterly basis, whether derivatives designated as hedges
are highly effective in offsetting the fair value or cash flows of hedged
items. If it is determined that a derivative is not highly effective as a
hedge, ACC will discontinue the application of hedge accounting. See Note 9
for further discussion of derivatives and hedging activities of ACC.
For derivative financial instruments that do not qualify for hedge accounting
or are not designated as hedges, changes in fair value are recognized in
current period earnings.
F-11
DEFERRED DISTRIBUTION FEES AND OTHER
Prior to September 30, 2004, distribution fees on sales of certain certificate
products were deferred and amortized over the estimated lives of the related
certificates, which were generally one year but could have been up to 10
years. Upon surrender prior to maturity, unamortized deferred distribution
fees were reflected in expenses and any related surrender charges were
reflected as a reduction to the provision expense for certificate reserves.
During the third quarter of 2004, and based on management's review of ACC's
certificate product portfolio mix and certificate portfolio maturities, ACC
determined it to be appropriate to not defer distribution fees in the future
and to completely write-down previously deferred balances to zero. As a result
of these actions, investment expenses increased $5.7 million on a pre-tax
basis during the third quarter of 2004.
FEDERAL INCOME TAXES
ACC's taxable income is included in the consolidated federal income tax return
of Ameriprise Financial, Inc.Financial. ACC provides for income taxes on a separate return
basis, except that, under an agreement between Ameriprise Financial and ACC,
tax benefits are recognized for losses to the extent they can be used in the
consolidated return. It is the policy of Ameriprise Financial that it will
reimburse its subsidiaries for any tax benefits recorded.
ACC's provision for income taxes represents the net amount of income taxes
that the Company expects to pay or to receive from various taxing
jurisdictions in connection with its operations. The Company provides for
income taxes based on amounts that the Company believes it will ultimately
owe. Inherent in the provision for income taxes are estimates and judgments
regarding the tax treatment of certain items and the realization of certain
offsets and credits. In connection with the provision for income taxes, ACC's
financial statements reflect certain amounts related to deferred tax assets
and liabilities, which result from temporary differences between the assets
and liabilities measured for financial statement purposes versus the assets
and liabilities measured for tax return purposes.
RECENTLY ISSUED ACCOUNTING STANDARDS
On November 3, 2005,In September 2006, the Financial Accounting Standards Board (FASB)("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value
Measurements" ("SFAS 157"). SFAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. SFAS 157 applies under other accounting pronouncements that
require or permit fair value measurements. Accordingly, SFAS 157 does not
require any new fair value measurements. SFAS 157 is effective for fiscal
years beginning after November 15, 2007, and interim periods within those
fiscal years. Early adoption is permitted provided that the entity has not
issued financial statements for any period within the year of adoption. The
provisions of SFAS 157 are required to be applied prospectively as of the
beginning of the fiscal year in which SFAS 157 is initially applied, except
for certain financial instruments as defined in SFAS 157 which will require
F-11
retrospective application of SFAS 157. The transition adjustment, if any, will
be recognized as a cumulative-effect adjustment to the opening balance of
retained earnings for the fiscal year of adoption. The Company is currently
evaluating the impact of SFAS 157 on its results of operations and financial
condition.
In September 2006, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin ("SAB") No. 108, "Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial
Statements" ("SAB 108"). SAB 108 addresses quantifying the financial statement
effects of misstatements, specifically, how the effects of prior year
uncorrected errors must be considered in quantifying misstatements in the
current year financial statements. SAB 108 does not change the SEC staff's
previous positions in SAB No. 99, "Materiality," regarding qualitative
considerations in assessing the materiality of misstatements. SAB 108 was
effective for fiscal years ending after November 15, 2006. The effect of
adopting SAB 108 on the Company's results of operations and financial
condition was insignificant.
In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109"
("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in accordance with FASB Statement No. 109, "Accounting for Income
Taxes." FIN 48 prescribes a recognition threshold and measurement attribute
for the financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. FIN 48 also provides guidance
on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure and transition. The Company adopted FIN 48 as of
January 1, 2007. The effect of adopting FIN 48 on the Company's results of
operations and financial condition was not material.
In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments" ("SFAS 155"). SFAS 155 amends SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities" ("SFAS 133") and SFAS 140,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS 140"). SFAS 155: (i) permits fair value
remeasurement for any hybrid financial instrument that contains an embedded
derivative that otherwise would require bifurcation; (ii) clarifies which
interest-only and principal-only strips are not subject to the requirements of
SFAS 133; (iii) establishes a requirement to evaluate interests in securitized
financial assets to identify interests that are freestanding derivatives or
that are hybrid financial instruments that contain an embedded derivative
requiring bifurcation; (iv) clarifies that concentrations of credit risk in
the form of subordination are not embedded derivatives; and (v) amends SFAS
140 to eliminate the prohibition on a qualifying special-purpose entity from
holding a derivative financial instrument that pertains to a beneficial
interest other than another derivative financial instrument. The Company
adopted SFAS 155 as of January 1, 2007. The effect of adopting SFAS 155 on the
Company's results of operations and financial condition is not expected to be
significant.
Effective January 1, 2006, the Company adopted SFAS No. 154, "Accounting
Changes and Error Corrections," ("SFAS 154"). This Statement replaced APB
Opinion No. 20, "Accounting Changes," and SFAS No. 3, "Reporting Accounting
Changes in Interim Financial Statements," and changed the requirements for the
accounting for and reporting of a change in accounting principle. The effect
of adopting SFAS 154 on the Company's results of operations and financial
condition was insignificant.
Effective January 1, 2006, the Company adopted FASB Staff Position (FSP)("FSP") FAS
115-1 and FAS 124-1, "The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments." ("FSP FAS 115-1and FAS 124-1"). FSP FAS
115-1 and FAS 124-1 addressesaddress the determination as to when an investment is
considered impaired, whether that impairment is other-than-temporary and the
measurement of loss. It also includes accounting considerations subsequent to
the recognition of an other-than-temporary impairment and requires certain
disclosures about unrealized losses that have not been recognized as
other-than-temporary impairments. FSP FAS 115-1 and FAS 124-1 are effective for reporting periods
beginning after December 15, 2005. ACC is currently evaluatingThe impact of the impactadoption of FSP FAS 115-1
and FAS 124-1 on itsthe Company's results of operations and financial position.condition
was not material.
2. DEPOSIT OF ASSETS AND MAINTENANCE OF QUALIFIED ASSETS
Under the provisions of its certificates and the 1940 Act, ACC was required to
have Qualified Assets (as defined in Section 28(b) of the 1940 Act) in the
amount of $5.6$4.7 billion and $5.8$5.6 billion at December 31, 20052006 and 2004,2005,
respectively. ACC reported Qualified Assets of $6.0$5.1 billion and $6.2$6.0 billion
at December 31, 20052006 and 2004,2005, respectively. Qualified Assets exclude net
unrealized pretax losses on Available-for-Sale securities of $89$78.1 million and
pretax gains on Available-for-Sale securities of $22$88.5 million at December 31, 20052006 and 2004,2005, respectively, and unsettled
investment purchases of $7$1.8 million and $26$6.6 million at December 31, 20052006 and
2004,2005, respectively.
Qualified Assets are valued in accordance with such provisions of Minnesota
Statutes as are applicable to investments of life insurance companies. These
values are the same as financial statement carrying values, except for debt
securities classified as Available-for-Sale and all marketable equity
securities, which are carried at fair value in the financial statements but
are valued at either amortized cost, market value or par value based on the
state requirements for qualified asset and deposit maintenance purposes.
F-12
Pursuant to provisions of the certificates, the 1940 Act, the central
depository agreementCentral
Depository Agreement and requirements of various states, qualified assets
(accounted for on a trade date basis) of ACC were deposited as follows:
DecemberDECEMBER 31, 2005
---------------------------------------------------
Required
Deposits Deposits Excess
- -------------------------------------------------------------------------------------------------------------------2006
--------------------------------------
REQUIRED
DEPOSITS DEPOSITS EXCESS
---------- ---------- --------
(in thousands)
Deposits to meet certificate liability requirements:
Pennsylvania (at market value) ...................................... $ 153 $ 150 $ 150 $ -3
Texas, Illinois, New Jersey (at par value) $.......................... 222 $ 215 $ 7
Central Depository (at amortized cost) $5,968,097 $5,615,849 $ 352,248
- -------------------------------------------------------------------------------------------------------------------.............................. 4,978,537 4,678,232 300,305
---------- ---------- --------
Total.............................................................. $4,978,912 $4,678,597 $300,315
========== ========== ========
DecemberDECEMBER 31, 2004
---------------------------------------------------
Required
Deposits Deposits Excess
- -------------------------------------------------------------------------------------------------------------------2005
--------------------------------------
REQUIRED
DEPOSITS DEPOSITS EXCESS
---------- ---------- --------
(in thousands)
Deposits to meet certificate liability requirements:
Pennsylvania (at market value) ...................................... $ 155150 $ 155150 $ -
Texas, Illinois, New Jersey (at par value) $.......................... 222 215 $ 215 $ -7
Central Depository (at amortized cost) $6,133,903 $5,791,601 $ 342,402
- -------------------------------------------------------------------------------------------------------------------.............................. 5,968,097 5,615,849 352,248
---------- ---------- --------
Total.............................................................. $5,968,469 $5,616,214 $352,255
========== ========== ========
The assets on deposit with the central depositoryCentral Depository at December 31, 20052006 and
20042005 consisted of securities and other loans having a deposit value of $5.6$4.6
billion and $5.7$5.6 billion, respectively, mortgage loans on real estate of
$303$265.5 million and $322$303.3 million, respectively, and other investments of
$69$65.6 million and $81$69.4 million, respectively. Additionally, these assets on
deposit include unsettled purchases of investments in the amount of $7$1.8
million and $26$6.6 million at December 31, 20052006 and 2004,2005, respectively.
Ameriprise Trust Company, the custodian for ACC, is the Central Depository.
See Note 7.
3. INVESTMENTS IN UNAFFILIATED ISSUERSAVAILABLE-FOR-SALE SECURITIES
Fair values of investments in securities represent market prices or estimated
fair values when quoted prices are not available. Estimated fair values are
determined by using established procedures involving, among other things,
review of market indexes, price levels of current offerings and comparable
issues, price estimates, estimated future cash flows, and market data from
independent brokers.
Available-for-Sale securities at December 31, 20052006 are distributed by type as
presented below:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ------------------------------------------------------------------------------------------------------------------GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ----------- ---------- ----------
(in thousands)
Mortgage and other asset-backed securities $3,266,592 $4,313 $(52,414) $3,218,491securities.. $2,718,298 $ 2,464 $ (48,570) $2,672,192
Corporate debt securities 2,035,108 3,794 (43,152) 1,995,750securities................... 1,554,492 1,127 (33,421) 1,522,198
Stated maturity preferred stock 11,186 73 (82) 11,177stock............. 5,784 7 (64) 5,727
Perpetual preferred stock 7,782 17 (234) 7,565stock................... 19,613 1,097 - 20,710
U.S. Government and agency obligations 22,661obligations...... 21,346 - (465) 22,196(475) 20,871
State and municipal obligations 9,032obligations............. 9,016 - (397) 8,635
- ------------------------------------------------------------------------------------------------------------------
Total $5,352,361 $8,197 $(96,744) $5,263,814
- ------------------------------------------------------------------------------------------------------------------(305) 8,711
---------- ----------- ---------- ----------
Total..................................... $4,328,549 $ 4,695 $ (82,835) $4,250,409
========== =========== ========== ==========
F-13
Available-for-Sale securities at December 31, 20042005 are distributed by type as
presented below:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ------------------------------------------------------------------------------------------------------------------GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ----------- ---------- ----------
(in thousands)
Mortgage and other asset-backed securities $3,226,417 $23,251 $(17,372) $3,232,296securities.. $3,266,592 $ 4,313 $ (52,414) $3,218,491
Corporate debt securities 2,279,295 29,927 (14,043) 2,295,179securities................... 2,035,108 3,794 (43,152) 1,995,750
Stated maturity preferred stock 24,043 348 (9) 24,382stock............. 11,186 73 (82) 11,177
Perpetual preferred stock 17,782 168 (81) 17,869stock................... 7,782 17 (234) 7,565
U.S. Government and agency obligations 25,365 62 (120) 25,307obligations...... 22,661 - (465) 22,196
State and municipal obligations 9,048 2 (294) 8,756obligations............. 9,032 - ------------------------------------------------------------------------------------------------------------------
Total $5,581,950 $53,758 $(31,919) $5,603,789
- ------------------------------------------------------------------------------------------------------------------(397) 8,635
---------- ----------- ---------- ----------
Total..................................... $5,352,361 $ 8,197 $ (96,744) $5,263,814
========== =========== ========== ==========
Investments in securities with fixed maturities, on an amortized cost basis,
comprised 9088 percent and 9290 percent of ACC's total investments at December 31,
20052006 and 2004,2005, respectively. Securities are rated by either Moody's, Standard
& Poor's (S&P), or by Ameriprise's internal analysts,RiverSource Investments, LLC, using criteria similar to
Moody's and S&P, when a public rating does not exist. Ratings are presented
using S&P's convention and if the two agency's ratings differ, the lower
rating is used. A summary of investments in securities with fixed maturities,
at amortized cost, by rating of investment is as follows:
Rating 2005 2004
- ---------------------------------------------------------------------
AAA 59% 57%
AA 8 6
A 14 15
BBB 16 18
Below investment grade 3 4
- ---------------------------------------------------------------------
Total 100% 100%
- ---------------------------------------------------------------------
RATING 2006 2005
------ ------
AAA.................................. 62% 59%
AA................................... 10 8
A.................................... 11 14
BBB.................................. 14 16
Below investment grade............... 3 3
------ ------
Total............................ 100% 100%
====== ======
Of the securities rated AAA, 4342 percent and 6343 percent at December 31, 20052006
and 2004,2005, respectively, are U.S. Government Agency mortgage-backed securities
that are rated by a public rating agency. At both December 31, 20052006 and 2004,2005,
approximately 3 percent of securities with fixed maturities, other than GNMA,
FNMA and FHLMC, are rated by Ameriprise's internal
analysts.RiverSource Investments, LLC.
The following table provides information about Available-for-Sale securities
with gross unrealized losses and the length of time that individual securities
have been in a continuous unrealized loss position as of December 31, 2006:
LESS THAN 12 MONTHS 12 MONTHS OR MORE TOTAL
-------------------------- -------------------------- --------------------------
FAIR UNREALIZED FAIR UNREALIZED FAIR UNREALIZED
VALUE LOSSES VALUE LOSSES VALUE LOSSES
----------- ---------- ----------- ---------- ----------- -----------
(in thousands)
Mortgage and other
asset-backed securities..... $ 236,573 $ (1,444) $ 1,986,235 $ (47,126) $ 2,222,808 $ (48,570)
Corporate debt securities.... 84,805 (428) 1,308,667 (32,993) 1,393,472 (33,421)
Stated maturity
preferred stock............. - - 3,859 (64) 3,859 (64)
U.S. Government and agency
obligations................. 202 (1) 20,669 (474) 20,871 (475)
State and municipal
obligations................. - - 8,696 (305) 8,696 (305)
----------- ---------- ----------- ---------- ----------- -----------
Total........................ $ 321,580 $ (1,873) $ 3,328,126 $ (80,962) $ 3,649,706 $ (82,835)
=========== ========== =========== ========== =========== ===========
F-14
The following table provides information about Available-for-Sale securities
with gross unrealized losses and the length of time that individual securities
have been in a continuous unrealized loss position as of December 31, 2005:
Less thanLESS THAN 12 monthsMONTHS 12 months or more Total
--------------------------------------------------------------------------------------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
- ----------------------------------------------------------------------------------------------------------------------------------MONTHS OR MORE TOTAL
-------------------------- -------------------------- --------------------------
FAIR UNREALIZED FAIR UNREALIZED FAIR UNREALIZED
VALUE LOSSES VALUE LOSSES VALUE LOSSES
----------- ---------- ----------- ---------- ----------- -----------
(in thousands)
Mortgage and other
asset-
backed securities $1,884,284asset-backed securities...... $ 1,884,284 $ (26,741) $ 816,052 $(25,673) $2,700,336$ (25,673) $ 2,700,336 $ (52,414)
Corporate debt securitiessecurities..... 1,002,070 (20,372) 601,793 (22,780) 1,603,863 (43,152)
Stated maturity
preferred stockstock.............. 3,079 (53) 1,105 (29) 4,184 (82)
Perpetual preferred stockstock..... - - 5,059 (234) 5,059 (234)
U.S. Government and agency
obligationsobligations.................. 21,996 (465) - - 21,996 (465)
State and municipal
obligationsobligations.................. - - 8,605 (397) 8,605 (397)
- ----------------------------------------------------------------------------------------------------------------------------------
Total $2,911,429----------- ---------- ----------- ---------- ----------- -----------
Total......................... $ 2,911,429 $ (47,631) $1,432,614 $(49,113) $4,344,043$ 1,432,614 $ (49,113) $ 4,344,043 $ (96,744)
- ----------------------------------------------------------------------------------------------------------------------------------
F-14
The following table provides information about Available-for-Sale securities
with gross unrealized losses and the length of time that individual
securities have been in a continuous unrealized loss position as of
December 31, 2004:
Less than 12 months 12 months or more Total
--------------------------------------------------------------------------------------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
- ----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Mortgage and other asset-
backed securities $1,444,363 $(12,085) $180,808 $(5,287) $1,625,171 $(17,372)
Corporate debt securities 875,416 (10,104) 135,885 (3,939) 1,011,301 (14,043)
Stated maturity preferred
stock 1,285 (9) - - 1,285 (9)
Perpetual preferred stock 5,213 (81) - - 5,213 (81)
U.S. Government and agency
obligations 10,053 (120) - - 10,053 (120)
State and municipal
obligations 3,850 (150) 4,859 (144) 8,709 (294)
- ----------------------------------------------------------------------------------------------------------------------------------
Total $2,340,180 $(22,549) $321,552 $(9,370) $2,661,732 $(31,919)
- ----------------------------------------------------------------------------------------------------------------------------------=========== ========== =========== ========== =========== ===========
In evaluating potential other-than-temporary impairments, ACC considers the
extent to which cost exceeds fair value and the duration and size of that
difference. A key metric in performing this evaluation is the ratio of fair
value to cost. The following table summarizes the unrealized losses by ratio
of fair value to cost as of December 31, 2005:2006:
Less thanLESS THAN 12 monthsMONTHS 12 months or more Total
- ----------------------------------------------------------------------------------------------------------------------------------
Number Gross Number Gross Number Gross
Ratio of Fair Value of Unrealized of Unrealized of Unrealized
to Amortized Cost Securities Fair Value Losses Securities Fair Value Losses Securities Fair Value Losses
- ----------------------------------------------------------------------------------------------------------------------------------MONTHS OR MORE TOTAL
---------------------------------- ------------------------------------ ------------------------------------
RATIO OF FAIR NUMBER GROSS NUMBER GROSS NUMBER GROSS
VALUE TO OF UNREALIZED OF UNREALIZED OF UNREALIZED
AMORTIZED COST SECURITIES FAIR VALUE LOSSES SECURITIES FAIR VALUE LOSSES SECURITIES FAIR VALUE LOSSES
---------------------------------- ------------------------------------ ------------------------------------
(in thousands, except number of securities)
95% - 100% 351 $2,854,715 $(43,875) 165 $1,304,761 $(40,141) 516 $4,159,476 $(84,016)75 $321,580 $(1,873) 394 $3,280,997 $(77,081) 469 $3,602,577 $(78,954)
90% - 95% 23 55,861 (3,650) 10 115,141 (6,928) 33 171,002 (10,578)- - - 15 41,987 (3,083) 15 41,987 (3,083)
80% - 90% 2 853 (106) 2 12,712 (2,044) 4 13,565 (2,150)
- ----------------------------------------------------------------------------------------------------------------------------------- - 3 5,142 (798) 3 5,142 (798)
---------------------------------- ------------------------------------ ------------------------------------
Total 376 $2,911,429 $(47,631) 177 $1,432,614 $(49,113) 553 $4,344,043 $(96,744)
- ----------------------------------------------------------------------------------------------------------------------------------75 $321,580 $(1,873) 412 $3,328,126 $(80,962) 487 $3,649,706 $(82,835)
================================== ==================================== ====================================
A majority of the gross unrealized losses related to corporate debt and
substantially all of the gross unrealized losses related to mortgage and other
asset-backed securities are attributable to changes in interest rates. A
portion of the gross unrealized losses related to corporate debt securities
are also attributed to credit spreads and specific issuer credit events. As
noted in the table above, a significant portion of the unrealized loss relates
to securities that have a fair value to amortized cost ratio of 95% or above
resulting in an overall 98% ratio of fair value to amortized cost for all
securities with an unrealized loss. The $2$0.8 million in unrealized losses for
securities with an unrealized loss for twelve months or more and a fair value
to amortized cost ratio in the 80-90% category relates to twothree corporate debt
securities for which ACC expects that all contractual principal and interest
will be received. The unrealized losses in the other categories are not
concentrated in any individual industry or with any individual security.
ACC monitors the investments and metrics discussed above on a quarterly basis
to identify and evaluate investments that have indications of possible
other-than-temporary impairment. See the Available-for-Sale Securities section
of Note 1 for information regarding ACC's policy for determining when an
investment's decline in value is other than temporary. F-15
As stated earlier, the
majority of the gross unrealized losses on its Available-for-Sale securities
are attributable to changes in interest rates. Additionally, ACC has the
ability and intent to hold these securities for a time sufficient to recover
its amortized cost and has, therefore, concluded that none are
other-than-temporarily impaired at December 31, 2005.2006.
F-15
The following is a distribution of Available-for-Sale securities by maturity
as of December 31, 2005.2006. Cash flows may differ from contractual maturities
because issuers may call or prepay obligations.
Amortized Fair
Cost Value
- ------------------------------------------------------------------------------
(in thousands)
Due within 1 year $ 226,766 $ 227,005
Due from 1 to 5 years 1,543,251 1,510,767
Due from 5 to 10 years 305,764 297,804
Due in more than 10 years 2,206 2,183
- ------------------------------------------------------------------------------
2,077,987 2,037,759
Mortgage and asset-backed securities 3,266,592 3,218,490
Perpetual preferred stock 7,782 7,565
- ------------------------------------------------------------------------------
Total $5,352,361 $5,263,814
- ------------------------------------------------------------------------------
AMORTIZED FAIR
COST VALUE
---------- ----------
(in thousands)
Due within 1 year.......................................... $ 204,907 $ 203,955
Due from 1 to 5 years...................................... 1,252,250 1,224,660
Due from 5 to 10 years..................................... 133,273 128,687
Due in more than 10 years.................................. 208 205
---------- ----------
1,590,638 1,557,507
Mortgage and asset-backed securities....................... 2,718,299 2,672,192
Perpetual preferred stock.................................. 19,612 20,710
---------- ----------
Total.................................................... $4,328,549 $4,250,409
========== ==========
Mortgage and other asset-backed securities primarily reflect GNMA, FNMA, and
FHLMC securities at December 31, 20052006 and 2004.2005. The expected payouts on
mortgage and other asset-backed securities may not coincide with their
contractual maturities. As such, these securities, as well as perpetual
preferred stock, were not included in the maturities distribution.
At December 31, 20052006 and 20042005 no one issuer, other than GNMA, FNMA and FHLMC,
is greater than 1one percent of the fair market value of ACC's total investment
portfolio.
Included in net realized gains and losses are gross realized gains and losses
on sales of securities, as well as other-than-temporary impairment losses on
investments, classified as Available-for-Sale, using the specific
identification method, as noted in the following table for the years ended
December 31:
2005 2004 2003
- ------------------------------------------------------------------------------
(in millions)
Gross realized gains from sales $ 2.0 $ 6.1 $ 47.1
Gross realized losses from sales $(19.4) $(1.1) $ (2.8)
Other-than-temporary impairments $ - $(0.6) $(36.0)
- ------------------------------------------------------------------------------
The $36.0 million of other-than-temporary impairments in 2003 was primarily
related to corporate debt securities impacted by continued operating
difficulties and bankruptcies of certain large airline carriers and the
overall impact on the airline industry.
ACC reserves freedom of action with respect to its acquisition of restricted
securities that offer advantageous and desirable investment opportunities.
In a private negotiation, ACC may purchase for its portfolio all or part of
an issue of restricted securities. Since ACC would intend to purchase such
securities for investment and not for distribution, it would not be "acting
as a distributor" if such securities are resold by ACC at a later date.
ACC's board of directors, using the aforementioned procedures and factors,
approve fair value procedures, which are implemented by investment
accounting.
F-16
In the event ACC were to be deemed to be a distributor of the restricted
securities, it is possible that ACC would be required to bear the costs of
registering those securities under the Securities Act of 1933, although in
most cases such costs would be incurred by the issuer of the restricted
securities.
2006 2005 2004
------- -------- -------
(in thousands)
Gross realized gains from sales........................... $ 1,815 $ 1,988 $ 6,103
Gross realized losses from sales.......................... (3,045) (19,365) (1,116)
Other-than-temporary impairments.......................... - (27) (592)
4. INVESTMENTS IN FIRST MORTGAGE LOANS ON REAL ESTATE AND OTHER LOANS
The carrying amounts and fair values of first mortgage loans on real estate and other loans at
December 31 are below:
2006 2005
2004
------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- --------------------------------------------------------------------------------------------------------------------------- ---------
(in thousands)
First mortgage loans on real estate $306,318 $311,007 $329,452 $342,116estate............................ $ 268,563 $ 306,318
Other loansloans.................................................... 146,856 130,969 131,576 139,295 140,428
Reserve for losseslosses............................................. (6,536) - (7,536) -
- ------------------------------------------------------------------------------------------------------------------
Net first(6,536)
--------- ---------
First mortgage and other loans, $430,751 $442,583 $461,211 $482,544
- ------------------------------------------------------------------------------------------------------------------net.......................... $ 408,883 $ 430,751
========= =========
At December 31, 2006 and 2005, and 2004, ACC helddid not hold investments in impaired
mortgage or other loans with carrying values totalingloans. ACC recognized nil and $4.6 million,
respectively. ACC recognized $0.1 million and $0.5 million of interest
income related to such investments for the years ended December 31, 2006 and
2005, and
2004, respectively.
F-16
At both December 31, 2006 and 2005, approximately six percent and 2004, approximately 5five
percent, respectively, of ACC's invested assets were first mortgage loans on
real estate. Concentrations of credit risk of first mortgage loans on real
estate by region at December 31 were:
2005 2004
- --------------------------------------------------------------------------
Mortgages by U.S. region:
North Central 25% 25%
Atlantic 22 24
Pacific 19 16
South Central 14 17
Mountain 12 10
New England 8 8
- --------------------------------------------------------------------------
Total 100% 100%
- --------------------------------------------------------------------------
2006 2005
------ -------
Mortgages by U.S. region:
North Central................................................. 28% 25%
Atlantic...................................................... 23 22
Pacific....................................................... 18 19
South Central................................................. 14 14
Mountain...................................................... 12 12
New England................................................... 5 8
------ -------
Total.............................................................. 100% 100%
====== =======
Concentrations of credit risk of first mortgage loans on real estate by
property type at December 31 were:
2005 2004
- --------------------------------------------------------------------------
Mortgage loans by U.S. property type:
Office buildings 46% 44%
Shopping centers and Retail 17 21
Apartments 16 11
Industrial buildings 12 14
Other 9 10
- --------------------------------------------------------------------------
Total 100% 100%
- --------------------------------------------------------------------------
F-17
2006 2005
------ -------
Mortgage loans by U.S. property type:
Office buildings.............................................. 42% 46%
Apartments.................................................... 19 16
Shopping centers and Retail................................... 17 17
Industrial buildings.......................................... 14 12
Other......................................................... 8 9
------ -------
Total.............................................................. 100% 100%
====== =======
At December 31, 20052006 and 2004,2005, commitments for funding of first mortgage loans
on real estate, at market interest rates, aggregated $9.3 millionnil and $2.5$9.3 million,
respectively. ACC holds the mortgage document, which gives ACC the right to
take possession of the property if the borrower fails to perform according to
the terms of the agreements. ACC employs policies and procedures to ensure the
creditworthiness of the borrowers and that funds will be available on the
funding date. ACC's first mortgage loans on commercial real estate are
restricted to 80 percent or less of the market value of the real estate at the
time of the loan funding. Fair values for these commitments were not
substantially different from the commitment amounts at December 31, 20052006 and
2004.2005.
F-17
5. CERTIFICATE RESERVES
Reserves maintained on outstanding certificates have been computed in
accordance with the provisions of the certificates and Section 28 of the 1940
Act. The average rates of accumulation on certificate reserves at December 31,
20052006 were as follows:
Average Gross Average
Reserve Accumulation Additional
Balance Rates Credit Rates
- -----------------------------------------------------------------------------------------------------------------AVERAGE GROSS AVERAGE
RESERVE ACCUMULATION ADDITIONAL
BALANCE RATES CREDIT RATES
-------------------------------------------------
(in thousands, except percentages)
Installment certificates:
Reserves to mature:
With guaranteed ratesrates.......................... $ 7,4965,086 4.00% 0.50%
Without guaranteed rates (a) 80,388.................. 61,719 - 2.25%3.24%
Additional credits and accrued interest 2,632 3.30%interest:
With guaranteed rates.......................... 1,139 3.33% -
Without guaranteed rates (a)................... 870 - 0.44%
Advance payments and accrued interest (b) 369 3.41%....... 278 3.42% -
OtherOther............................................ 1 - 0.23%0.37%
Fully paid certificates:
Reserves to mature:
With guaranteed rates 74,115 3.20% 0.07%rates.......................... 66,294 3.19% 0.03%
Without guaranteed rates (a) and (c) 5,448,914.......... 4,539,863 - 2.88%4.22%
Additional credits and accrued interest 34,689 0.41%interest.......... 44,322 - 0.26%
Due to unlocated certificate holders 31holders............. 30 - -
- ----------------------------------------------------------------------------
Total $5,648,635
- --------------------------------------------------------------------------------------
Total............................................ $4,719,602
==========
The average rates of accumulation on certificate reserves at December 31, 20042005
were as follows:
Average Gross Average
Reserve Accumulation Additional
Balance Rates Credit Rates
- --------------------------------------------------------------------------------------------------------------AVERAGE GROSS AVERAGE
RESERVE ACCUMULATION ADDITIONAL
BALANCE RATES CREDIT RATES
-------------------------------------------------
(in thousands, except percentages)
Installment certificates:
Reserves to mature:
With guaranteed ratesrates.......................... $ 9,3947,496 4.00% 1.00%0.50%
Without guaranteed rates (a) 107,243.................. 80,388 - 1.76%2.72%
Additional credits and accrued interest 3,092 3.25%interest:
With guaranteed rates.......................... 1,750 3.30% -
Without guaranteed rates (a)................... 882 - 0.18%
Advance payments and accrued interest (b) 474 3.37%....... 369 3.41% -
Other 2Other............................................ 1 - 0.01%0.23%
Fully paid certificates:
Reserves to mature:
With guaranteed rates 82,424 3.21% 0.02%rates.......................... 74,115 3.20% 0.05%
Without guaranteed rates (a) and (c) 5,584,515.......... 5,448,914 - 1.30%3.23%
Additional credits and accrued interest 48,053 0.32%interest.......... 34,689 - 0.41%
Due to unlocated certificate holders 46holders............. 31 - -
- ----------------------------------------------------------------------------
Total $5,835,243
- ----------------------------------------------------------------------------
----------
Total............................................ $5,648,635
==========
(a) There is no minimum rate of accrual on these reserves. Interest is
declared periodically, quarterly, or annually in accordance with the terms
of the separate series of certificates.
(b) Certain series of installment certificates guarantee accrual of interest
on advance payments at an average of 3.26 percent. ACC's rate of accrual is
currently set at 4 percent, which is in effect through April 2007.2008.
(c) Ameriprise Stock Market Certificate and Ameriprise Market Strategy
Certificate enable the certificate owner to participate in any relative
rise in a major stock market index without risking loss of principal.
Generally the certificates have a term of 52 weeks and may continue for up
to 20 successive terms. The reserve balances on these certificates at
December 31, 2006 and 2005 and 2004 were $1.2$1.1 billion and $1.5$1.3 billion,
respectively.
F-18
Certificate maturities and surrenders during the years ended December 31, 2006
and 2005 and 2004 were $3.6$3.1 billion and $2.4$3.6 billion, respectively.
On certain series of single payment certificates, additional interest is
pre-declared for periods greater than one year. The retained earnings
appropriated for the pre-declared additional interest at December 31, 2006 and
2005 and 2004 was $3.2$3.5 million and $0.5$3.2 million, respectively, which reflects the
difference between certificate reserves on these series, calculated on a
statutory basis, and the reserves maintained per books.
Fair values of certificate reserves with interest rate terms of one year or
less (including embedded derivatives) approximated the carrying values less
any applicable surrender charges. Fair values for other certificate reserves
are determined by discounted cash flow analyses using interest rates currently
offered for certificates with similar remaining terms, less any applicable
surrender charges.
The carrying amounts and fair values of net certificate reserves at December 31, 20052006 and
2004,2005, respectively, consisted of the following:
2006 2005
2004
--------------------------- ------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- ---------------------------------------------------------------------------------------------------------------------------------- ----------
(in thousands)
Reserves with terms of one year or lessless........................................... $4,275,459 $5,073,606
$5,070,933 $5,393,448 $5,390,878
OtherOther............................................................................. 444,143 575,029
569,420 441,795 439,636
- ---------------------------------------------------------------------------------------------------------------------------------- ----------
Total certificate reservesreserves........................................................ 4,719,602 5,648,635
5,640,353 5,835,243 5,830,514
- ---------------------------------------------------------------------------------------------------------------------------------- ----------
Unapplied certificate transactionstransactions................................................ 2,032 975 975 4,933 4,933
Certificate loans and accrued interest ........................................... (9,657) (11,456)
(11,456) (13,176) (13,176)
- ------------------------------------------------------------------------------------------------------------------------
Total---------- ----------
Total............................................................................. $4,711,977 $5,638,154
$5,629,872 $5,827,000 $5,822,271
- ------------------------------------------------------------------------------------------------------------------------========== ==========
6. DIVIDEND RESTRICTION
Certain series of installment certificates outstanding provide that cash
dividends may be paid by ACC only in calendar years for which additional
credits of at least one-half of one percent on such series of certificates
have been authorized by ACC. This restriction has been satisfied for 20052006 and
20042005 by ACC's declaration of additional credits in meeting this
requirement.credits.
ACC is required to maintain cash and "qualified assets" meeting the standards
of Section 28(b) of the 1940 Act, as modified by an order of the SEC. The
amortized cost of such investments must be at least equal to ACC's net
liabilities on all outstanding face-amount certificates plus $250,000. ACC's
qualified assets consist of cash and cash equivalents, first mortgage loans on
real estate and other loans, U.S. government and government agency securities,
municipal bonds, corporate bonds, preferred stocks and other securities
meeting specified standards. F-19
So long as ACC wishes to rely on the SEC order,
as a condition to the order, ACC has agreed to maintain an amount of
unappropriated retained earnings and capital equal to at least 5five percent of
certificate reserves (less outstanding certificate loans). To the extent that
payment of a dividend would decrease the capital ratio below the required 5five
percent, payment of a dividend would be restricted. In determining compliance
with this condition, qualified assets are valued in accordance with the
provisions of Minnesota Statutes where such provisions are applicable.
ACC has also entered into a written understanding with the State of Minnesota,
Department of Commerce, that ACC will maintain capital equal to 5five percent
of the assets of ACC (less outstanding certificate loans). To the extent that
payment of a dividend would decrease this ratio below the required 5five
percent, payment of a dividend would be restricted. When computing its capital
for these purposes, ACC values its assets on the basis of statutory accounting
for insurance companies rather than GAAP.generally accepted accounting principles.
ACC is subject to annual examination and supervision by the State of
Minnesota, Department of Commerce (Banking Division).
F-19
7. RELATED PARTY TRANSACTIONS
INVESTMENT ADVISORY, JOINT FACILITIES AND TECHNOLOGY SUPPORT
The investment advisory and services agreement with RiverSource Investments,
LLC provides for a graduated scale of fees equal on an annual basis to 0.750
percent on the first $250 million of total book value of investments of ACC,
0.650 percent on the next $250 million, 0.550 percent on the next $250
million, 0.500 percent on the next $250 million and 0.107 percent on the
amount in excess of $1 billion. The fee is payable monthly in an amount equal
to one-twelfth of each of the percentages set forth above. Excluded from
investments for purposes of this computation are first mortgage and other
loans, real estate and any other asset on which ACC pays an outside advisory
or service fee. The fee paid to RiverSource Investments, LLC for managing and
servicing bank loans is equal to 0.35 percent of book value of the investment
on an annual basis.
DISTRIBUTION SERVICES
Fees payable to AMPF on sales of ACC's certificates are based upon terms of
agreements giving AMPF the right to distribute the certificates covered under
the agreements. The agreements provide for payment of fees over a period of
time.
From time to time, ACC may sponsor or participate in sales promotions
involving one or more of the certificates and their respective terms. These
promotions may offer a special interest rate to attract new clients or retain
existing clients. To cover the cost of these promotions, distribution fees
paid to AMPF may be lowered. From September 29, 2004 through March 1, 2005,
ACC sponsored a sales promotion on the 7 and 11-month Flexible Savings
Certificates. ACC ran another promotion from August 30, 2006 through January
2, 2007 on the 7-month Flexible Savings Certificate. During that time,those promotions,
the distribution fee on 7 and 11 month Flexible Savings Certificates was 0.08 percent of the
initial payment and 0.08 percent of the reserves maintained for these
certificates at the beginning of the second and subsequent quarters after
issuance.
The aggregate fees payable under the agreements isare $25 per $1,000 face amount
of installment certificates sold on or after April 30, 1997. The aggregate
fees payable for the first year is $2.50 per $1,000 face amount of installment
certificates and the remaining $22.50,
aggregate fees is payable over nine subsequent years.
The previously offered American Express Investors Certificates have
contractual distribution fee rates at an annualized rate of 1one percent of the
reserves maintained for the certificates. Fees are paid at the end of each
term on certificates with a one, two or three-month term. Fees are paid each
quarter from date of issuance on certificates with a six, twelve, twenty-four
or thirty-six month term. On October 1, 2005, theThe distribution fee rate decreased 15 basis points
on October 1, 2005 and another five basis points on January 1, 2006 as a
consequence of the orderly wind-down of business marketed through AEB and
AEBI.
F-20
Effective April 26, 2000, the Ameriprise Flexible Savings Certificates have
contractual distribution fee rates of 0.08 percent of the purchase price at
the time of issuance and 0.08 percent of the reserves maintained for these
certificates at the beginning of the second and subsequent quarters from issue
date.
Effective April 25, 2001, the Ameriprise Cash Reserve Certificates have
contractual distribution fee rates of 0.0625 percent of the purchase price at
the time of issuance and 0.0625 percent of the reserves maintained for these
certificates at the beginning of the second and subsequent quarters from issue
date.
Effective April 28, 1999, the Ameriprise Stock Market Certificate, sold
through AMPF, and Ameriprise Market Strategy Certificates have contractual
distribution fee rates of 0.90 percent of the initial investment on the first
day of the certificate's term and 0.90 percent of the reserves maintained for
these certificates at the beginning of each subsequent term.
Effective April 26, 2000, the previously offered American Express Stock Market
Certificates, sold through American Express Bank International, have
contractual distribution fee rates of 11.00 percent. Fees are paid on the
purchase price on the first day of the certificate's term and on the reserves
maintained for these certificates at the beginning of each subsequent term.
The basis for computing fees paid or payable to AEB for the distribution of
the previously offered American Express Special Deposits Certificates on an
annualized basis is 1.25 percent of the reserves maintained for the
certificates on an amount from $100,000 to $249,999, 0.80 percent on an amount
from $250,000 to $499,999, 0.65 percent on an amount from $500,000 to $999,999
and 0.50 percent on an amount $1,000,000 or more. Fees are paid at the end of
each term on certificates with a one, two, or three-month term. Fees are paid
at the end of each quarter from date of issuance on certificates with six,
twelve, twenty-four, or thirty-six month terms. On
October 1, 2005, theThe distribution fee rate
decreased 15 basis points on October 1, 2005 and another five basis points on
January 1, 2006 as a consequence of the orderly wind-down of business marketed
through AEB and AEBI.
F-20
DEPOSITORY FEES
The basis for computing fees paid or payable to Ameriprise Trust Company for
depository services is as follows:
Depository fees paid or payable to Ameriprise Trust Company is:
Maintenance charge per accountaccount......... 5 cents per $1,000 of assets on deposit
Transaction chargecharge..................... $20 per transaction
Security loan activity:
Depository Trust Company
receive/deliverdeliver..................... $20 per transaction
Physical receive/deliverdeliver............. $25 per transaction
Exchange collateralcollateral.................. $15 per transaction
A transaction consists of the receipt or withdrawal of securities and
commercial paper and/or a change in the security position. The charges are
payable quarterly except for maintenance, which is an annual fee.
TRANSFER AGENT FEES
The basis of computing transfer agent fees paid or payable to RiverSource
Service Corporation is under a Transfer Agency Agreement effective December 2,
2004. RiverSource Service Corporation maintains certificate owner accounts and
records. ACC pays RiverSource Service Corporation a monthly fee of one-twelfth
of $10.353 per certificate owner account for this service.
F-21
As of January 1, 2007, updated related party contracts become effective
relating to investment advisory fees, distribution services and transfer agent
fees, with no material changes in terms and services.
8. INCOME TAXES
Provisions (benefits) for income taxes were:
2006 2005 2004
2003
--------- ----------------- -------- --------
(in thousands)
Federal income tax:
CurrentCURRENT INCOME TAX:
Federal.............................................. $ 21,111 $ 3,760 $ 44,763
$ 44,777
DeferredState and local...................................... 1,542 (534) 826
-------- -------- --------
Total current income tax........................... 22,653 3,226 45,589
-------- -------- --------
DEFERRED INCOME TAX:
Federal.............................................. (12,486) 12,987 (18,934)
(17,804)State and local...................................... (1,828) - ------------------------------------------------------------------------------------------------
-------- -------- --------
Total federaldeferred income tax 16,747 25,829 26,973
State, local and other income taxes (534) 826 1,354
- -----------------------------------------------------------------------------------------------
Totaltax.......................... (14,314) 12,987 (18,934)
-------- -------- --------
TOTAL INCOME TAX PROVISION............................. $ 8,339 $ 16,213 $ 26,655
$ 28,327
- -----------------------------------------------------------------------------------------------======== ======== ========
The principal reasons that the aggregate income tax provision is different
from that computed by using the U.S. statutory rate of 35% are as follows:
2005 2004 2003
- -----------------------------------------------------------------------------
Tax at U.S. statutory rate 35.0% 35.0% 35.0%
Dividend exclusion (1.0)% (1.1)% (1.2)%
Other, net 2.5% (0.1)% (0.6)%
- -----------------------------------------------------------------------------
Income tax provision 36.5% 33.8% 33.2%
- -----------------------------------------------------------------------------
2006 2005 2004
-------- -------- --------
Tax at U.S. statutory rate......................... 35.0% 35.0% 35.0%
Dividend exclusion................................. (1.2)% (1.0)% (1.1)%
State income tax, net.............................. (3.4)% (0.8)% 0.7%
Contingency reserve................................ 3.2% - -
Other, net......................................... 0.9% 2.1% 0.3%
-------- -------- --------
Income tax provision............................... 34.5% 35.3% 34.9%
======== ======== ========
F-21
Deferred income tax provision (benefit) results from differences between
assets and liabilities measured for financial reporting and for income tax
purposes. The significant components of deferred tax assets and liabilities at
December 31, 20052006 and 2004,2005, respectively are reflected in the following table:
2006 2005
2004
- -------------------------------------------------------------------------------------------------- --------
(in thousands)
Deferred income tax assets:
Certificate reserves $11,010 $18,676reserves......................................... $ 18,730 $ 11,010
Investments, including bond discounts and premiumspremiums........... 24,859 18,754 24,512
Investment unrealized losses, netnet............................ 28,548 30,991
-
OtherOther........................................................ 44 33
-
- -------------------------------------------------------------------------------------------------- --------
Total deferred income tax assetsassets............................... 72,181 60,788
43,188
- -------------------------------------------------------------------------------------------------- --------
Deferred income tax liabilities:
Investment unrealized gains, net - 7,780
OtherOther........................................................ 43 520
925
- -------------------------------------------------------------------------------------------------- --------
Total deferred income tax liabilitiesliabilities.......................... 43 520
8,705
- -------------------------------------------------------------------------------------------------- --------
Net deferred income tax assets $60,268 $34,483
- ------------------------------------------------------------------------------------------assets................................. $ 72,138 $ 60,268
======== ========
ACC is required to establish a valuation allowance for any portion of the
deferred tax assets that management believes will not be realized. In the
opinion of management, it is more likely than not that ACC will realize the
benefit of the deferred tax assets and, therefore, no such valuation allowance
has been established.
9. DERIVATIVE FINANCIAL INSTRUMENTS
ACC maintains an overall risk management strategy that incorporates the use of
derivative instruments to minimize significant unplanned fluctuations in
earnings that are caused by interest rate and equity market volatility. ACC
may enter into interest rate swaps to manage interest rate sensitivity and
currently enters into options and futures contracts to mitigate the negative
effect on earnings that would result from an increase in the equity markets.
ACC did not hold any interest rate swaps at December 31, 2005.2006. ACC
reclassified into earnings pretax losses of $0.1 millionnil and $5.4$0.1 million as a result
of interest rate swap agreements during 2006 and 2005, and 2004, respectively.
F-22
For the
years ended December 31, 20052006 and 2004,2005, ACC recognized no losses on the
derivatives as a result of ineffectiveness.
ACC offers Ameriprise Stock Market Certificates (SMC)("SMC") that offer a return
based upon the relative change in a major stock market index between the
beginning and end of the SMC's term. The SMC product contains an embedded
derivative, essentially the equity based return of the certificate that must
be separated from the host contract and accounted for as a derivative
instrument. As a result of fluctuations in equity markets, and the
corresponding changes in value of the embedded derivative, the amount of
expenses incurred by ACC related to SMC will positively or negatively impact
reported earnings. As a means of hedging its obligations under the provisions
for these certificates, ACC purchases and writes call options on the major
stock market index. ACC views this strategy as a prudent management of equity
market sensitivity, such that earnings are not exposed to undue risk presented
by changes in equity market levels. ACC also purchases futures on the major
stock market index to economically hedge its obligations. The futures are
marked-to-market daily and exchange traded, exposing ACC to no counterparty
risk.
Derivative financial instruments are carried at fair value within other
qualified assets or other liabilities. The fair value of the derivative
financial instruments are determined using either market quotes or valuation
models that are based upon the net present value of estimated future cash
flows and incorporate current market data inputs.
The options and futures contracts do not receive special hedge accounting
under SFAS No. 133. As such, any changes in the fair value of the contracts
are taken through earnings. The fair values of the purchased and written call
options are included in equity indexed options and other liabilities,
respectively, on the balance sheet. The fair value of the embedded derivatives
is reflected in certificate reserves. Gains (losses) on options and futures
are reflected in investment income, equity index options, on the statementsStatements of
income.Income. Changes in fair values of embedded derivative instruments are
reflected in provision for certificate reserves.
By using derivative instruments, ACC is exposed to credit and market risk.
Credit risk is the possibility that the counterparty will not fulfill the
terms of the contract. ACC monitors credit risk related to derivative
financial instruments through established approval procedures, including
setting concentration limits by counterparty, reviewing credit ratings and
requiring collateral where appropriate.
F-22
Market risk is the possibility that the value of the derivative financial
instrument will change due to fluctuations in a factor from which the
instrument derives its value, primarily an interest rate or a major stock
market index. ACC manages the market risk associated with interest rate
contracts by establishing and monitoring limits as to the types and degree of
risk that may be undertaken. ACC primarily uses derivatives to manage risk
and, therefore, cash flow and income effects of such derivatives generally
offset effects of the underlying certificate product reserves.
10. FAIR VALUES OF FINANCIAL INSTRUMENTS
The following table discloses fair value information for financial
instruments. ACC discloses fair value information for financial instruments
for which it is practicable to estimate that value. The fair values of the
financial instruments presented are estimates based upon current market
conditions and perceived risks at December 31, 20052006 and 20042005 and may require
management judgment to estimate such values. These figures may not be
indicative of future fair values. The fair value of the Company, therefore,
cannot be estimated by aggregating the amounts presented herein. The estimated
fair value of certain financial instruments such as cash and cash equivalents
and certificate loans approximate the carrying amounts disclosed in the
Balance Sheets.
F-23
The following table discloses carrying value and fair value information for
the financial instruments at December 31:
2006 2005
2004
- -------------------------------------------------------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Value Value Value Value
- ------------------------------------------------------------------------------------------------------------------------------------------------------- ------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
(in thousands)
Financial assets:FINANCIAL ASSETS:
Assets for which carrying values
approximate fair values $ 119,100 $ 119,100 $ 35,212 $ 35,212
Available-for-Sale securities $5,263,814 $5,263,814 $5,603,789 $5,603,789
Net firstvalues.................. $4,528,462 $4,528,462 $5,456,856 $5,456,856
First mortgage loans on real estate
and other loans $net...................... 408,883 421,526 430,751 $ 442,583
$ 461,211 $ 482,544
Derivative financial instruments $ 73,942 $ 73,942 $ 116,285 $ 116,285
Financial liabilities:FINANCIAL LIABILITIES:
Liabilities for which carrying values
approximate fair valuesvalues.................. $ 23,34371,126 $ 23,34371,126 $ 10,79361,471 $ 10,793
Net certificate61,471
Certificate reserves, $5,638,154 $5,629,872 $5,827,000 $5,822,271
Derivative financial instruments $ 38,128 $ 38,128 $ 72,708 $ 72,708
- -------------------------------------------------------------------------------------------------------------------------------net................... 4,711,977 4,705,983 5,638,154 5,629,872
The following methods were used to estimate the fair values of financial
assets and financial liabilities:
FINANCIAL ASSETS
Assets for which carrying values approximate fair values are cash and cash
equivalents.equivalents, Available-for-Sale securities, and derivative assets. Generally
these assets are carriedeither short-term in duration or are recorded at fair value
inon the Balance Sheets. Gains and losses are recognized in the results of operations upon
disposition. In addition, impairment losses are recognized when management
determines that a decline in value is other-than-temporary.
The fair value of mortgage loans on real estate, except those with significant
credit deterioration, are estimated using discounted cash flow analysis, based
on current interest rates for loans with similar termsmaturities to borrowers of
similar credit quality. For loans with significant credit deterioration, fair
values are based on estimates of future cash flows discounted at rates
commensurate with the risk inherent in the revised cash flow projections, or
for collateral dependent loans, on collateral values.
Derivative financial instruments are carried at fair value within other
qualified assets or other liabilities. The fair value of the derivative
financial instruments are determined using either market quotes or valuation
models that are based upon the net present value of estimated future cash
flows and incorporate current market data inputs.
FINANCIAL LIABILITIES
Liabilities for which carrying values approximate fair values include certain
derivative and other liabilities. The carrying value approximates fair value
due to
thebecause of their short-term nature of these liabilities.or because they are recorded at fair value
on the balance sheet.
For variable rate investment certificates that reprice within a year, faircarrying
values approximate carryingfair values. For other investment certificates, fair value
is estimated using discounted cash flows based on current interest rates. The
valuations are reduced by the amount of the applicable surrender charges.
F-24
Fair values of net certificate reserves with interest rate terms of one year
or less (including embedded derivatives) approximated the carrying values less
any applicable surrender charges. Fair values for other certificate reserves
are determined by discounted cash flow analyses using interest rates currently
offered for certificates with similar remaining terms, less any applicable
surrender charges.
F-23
AMERIPRISE CERTIFICATE COMPANY SCHEDULE I1
INVESTMENTS OFIN SECURITIES INOF UNAFFILIATED ISSUERS
AT DECEMBER 31, 20052006
BAL HELD AT 12/31/052006
PRINCIPAL AMT OF
BONDS & NOTES OR # OF COST VALUE AT 12/31/052006
ISSUER NAME AND ISSUER TITLE # OF SHARES (NOTES a & c) (NOTE a)
- ----------------------------------------------------- ------------------------------------------------------------------------------------------------ ---------------------------------------------------------------
TOTAL -
BONDS AND NOTES
U.S. GOVERNMENT
U.S. Government-Direct Obligations
FNMA COLLATERAL - MUNIFANNIE MAE 2008 4.000% 15,000 14,995 14,703
FNMA COLLATERAL - MUNI$14,997 $14,731
FANNIE MAE 2012 4.450% 7,294 7,294 7,124
U.S.5,974 5,974 5,773
US TREASURY 20062008 5.625% 200 200 200
U.S.204 202
US TREASURY 2014 4.750% 165 172 169171 165
TOTAL - U.S. GOVERNMENT-DIRECT OBLIGATIONS 22,659 22,661 22,19621,339 21,346 20,871
TOTAL - U.S. GOVERNMENT 22,659 22,661 22,19621,339 21,346 20,871
MORTGAGE BACKED SECURITIES
Mortgage Backed Securities
ADJUSTABLE RATE MORTGAGE TRUST 2035 4.659% 5,556 5,556 5,567
AESOP FUNDING II LLC AESOP_03- 2009 3.720% 7,500 7,598 7,3027,549 7,346 (d)
AESOP_05-4 2010 4.400% 18,000 17,995 17,62417,996 17,641 (d)
AESOP_2003-2 2009 3.610% 4,700 4,640 4,573 (d)
ALPS_05-1 2030 4.731% 4,877 4,877 4,8824,666 4,604 (d)
AMCAR_04-BM 2011 2.670% 4,200 4,152 4,080
ARG FUNDING CORP 2007 4.820% 389 389 389 (d)3,801 3,772 3,731
ARMT_2004-2 2035 5.261% 5,366 5,424 5,3625.247% 3,739 3,778 3,724
BAA_2003-1 2033 5.000% 5,081 5,104 5,0403,772 3,793 3,695
BACM_03-1 2036 3.878% 8,936 8,884 8,6008,499 8,456 8,203
BACM_2004-5 2041 4.176% 12,000 12,028 11,73012,012 11,714
BALL_01-FM 2016 6.119% 3,129 3,129 3,2262,649 2,649 2,699 (d)
BALL_06-LAQ 2021 5.510% 25,000 25,023 25,036 (d)
BANC OF AMERICA FUNDING CORP B 2035 5.449% 9,134 9,198 9,1305.376% 7,526 7,576 7,504
BANK OF AMERICA MORTGAGE SECUR 2033 4.164%4.158% 15,000 14,933 14,685
BANK ONE ISSUANCE TRUST BOIT 2010 4.739% 9,750 9,790 9,798
BANK ONE ISSUANCE TRUST BOIT 2011 4.689% 10,000 10,037 10,04514,940 14,891
BANK ONE ISSUANCE TRUST BOIT 2011 3.860% 13,400 13,398 13,09613,399 13,117
BEAR STEARNS ALT-A TRUST BALTA 2035 4.722% 12,039 12,015 11,8174.671% 10,075 10,054 9,872
BEAR STEARNS ALT-A TRUST BALTA 2035 5.274% 4,716 4,735 4,6885.238% 4,705 4,719 4,673
BOAMS_04-B 2034 3.971% 9,365 9,338 8,9123.959% 9,295 9,267 9,203
BOAMS_04-F_2A6 2034 4.156%4.147% 10,000 9,791 9,7769,842 9,831
BOAMS_04G 2034 4.577% 8,587 8,474 8,7034.553% 8,519 8,389 8,354
BOAMS_2004-E 2034 4.114%4.111% 15,000 14,889 14,48414,892 14,708
BOAMS_2004-E 2034 4.035% 5,916 5,704 5,7454.030% 5,858 5,630 5,703
BOAMS_2004-H 2034 4.468% 4,860 4,810 4,8284.453% 4,823 4,774 4,725
BSARM_2003-2 2033 3.990% 7,374 7,406 7,2595,952 5,961 5,874 (d)
BSCMS_03-TOP10 2040 4.000% 7,651 7,678 7,4206,960 6,979 6,734
BSCMS_2004-PWR5 2042 4.254% 7,200 7,230 7,0127,221 7,010
BSMF_06-AR5 2036 5.560% 17,500 17,500 17,500
BVMBS_05-1 2035 4.475% 15,976 15,925 15,399
CARAT_2004-2 2007 3.120% 5,334 5,334 5,31512,822 12,782 12,267
CARAT_2004-2 2009 3.920% 10,000 9,868 9,7689,914 9,834
CDCSC_02-FX1 2019 5.252% 8,292 8,313 8,3617,783 7,798 7,782
CDTIM_05-1A 2017 4.670% 8,008 8,007 7,9264,549 4,549 4,436 (d)
CENTEX HOME EQUITY CHECK_03-A 2031 3.750% 7,390 7,304 7,308
CENTEX HOME EQUITY CHEC_01-A 2029 6.470% 176 176 1762,624 2,607 2,591
CIT EQUIPMENT COLLATERAL 2004- 2008 3.500% 5,000 5,000 4,9251,919 1,919 1,898
CMAC_98-C1 2031 6.490% 7,404 7,822 7,6053,581 3,689 3,614
CMLTI_05-3 2035 4.704% 9,412 9,364 9,258
CNH_05-A 2007 3.640% 19,675 19,675 19,592
COAFT_02-B 2009 3.320% 7,326 7,378 7,2774.681% 8,360 8,317 8,235
COMM_04-LNB3 2037 4.713% 7,500 7,523 7,441
COPAR_2004-3 2007 3.040% 4,537 4,537 4,526
COUNTRYWIDE HOME EQUITY LOAN C 2034 4.649% 4,081 4,079 4,0877,513 7,398
COUNTRYWIDE HOME LOANS CWHL_05 2035 5.522% 2,264 2,263 2,263
COUNTRYWIDE HOME LOANS CWHL_05 2035 4.484% 8,220 8,220 8,2202036 5.481% 1,947 1,946 1,945
CSFBMSC_04-C2 2036 3.819% 6,411 6,258 6,087
F-25
5,898 5,772 5,645
CWALT_05-24 2035 6.068% 8,591 8,679 8,610
CWALT_05-27 2035 6.215% 11,179 11,289 11,234
CWALT_06-OA19 2047 5.600% 24,988 24,988 24,988
CWALT_06-OC8 2036 5.460% 19,170 19,158 19,183
CWA_2004-33 2034 4.933% 4,117 4,145 4,100
CWA_2004-J7 2034 4.673% 4,332 4,322 4,271
F-24
AMERIPRISE CERTIFICATE COMPANY SCHEDULE I1
INVESTMENTS OFIN SECURITIES INOF UNAFFILIATED ISSUERS
AT DECEMBER 31, 20052006
BAL HELD AT 12/31/052006
PRINCIPAL AMT OF
BONDS & NOTES OR # OF COST VALUE AT 12/31/052006
ISSUER NAME AND ISSUER TITLE # OF SHARES (NOTES a & c) (NOTE a)
- ----------------------------------------------------- ------------------------------------------------------------------------------------------------ ---------------------------------------------------------------
CWALT_05-24 2035 4.473% 13,991 14,138 14,030
CWALT_05-27 2035 4.657% 18,744 18,937 18,744
CWA_2004-33 2034 4.953% 6,203 6,256 6,263
CWA_2004-J7 2034 4.673% 9,861 9,839 9,712
CWHEL_04-K 2034 4.669% 3,948 3,953 3,955
CWHEL_04-R 2030 4.619% 5,728 5,728 5,733
CWHEL_04-U 2034 4.639% 5,961 5,961 5,969
CWHEL_05-A 2035 4.609% 6,467 6,467 6,470
CWHEL_05-B 2035 4.549% 6,838 6,838 6,835
CWHEL_2004-N 2034 4.649% 3,992 3,990 3,998
CWHEL_2004-S 2030 4.609% 5,478 5,478 5,4815.650% 1,834 1,837 1,839
CWHL_04-12 2034 4.602% 7,496 7,423 7,2934.564% 7,402 7,322 7,339
CWHL_05-HYB7 2035 5.832% 24,022 24,238 24,2965.760% 19,595 19,703 19,639
CWL_06-24 2036 5.440% 25,000 25,000 25,000
DART_05-2 2010 4.120% 15,000 14,999 14,8628,573 8,573 8,522 (d)
DEUTSCHE ALT-A SECURITIES INC 2037 5.545% 24,300 24,300 24,307
DLJCMC_99-CG3 2032 7.120% 2,541 2,542 2,565674 674 675
DRAT_04-1 2008 3.500% 4,573 4,573 4,549248 248 248 (d)
DSLA_05-AR1 2045 4.620% 8,751 8,751 8,712
EQUITY ONE EQABS_2004-3 2034 4.265% 10,000 10,057 9,9283,762 3,755 3,748
EQUITY ONE EQABS_2004-3 2034 5.100% 10,000 10,222 9,97610,123 9,934
FANNIE MAE FNMA_03-28 2022 5.000% 8,580 8,697 8,5042019 6.075% 11,355 11,584 11,349
FANNIE MAE FNMA_04-3 2034 3.750% 10,000 10,045 9,8872033 4.548% 9,166 9,038 8,887
FANNIE MAE FNMA_05-40 2030 5.000% 12,612 12,690 12,472
FANNIE MAE FNMA_99-8 2014 6.000% 4,727 4,698 4,797
FHAMS_04-AA7 2035 4.742% 6,858 6,909 6,810
FHAMS_05-AA2 2035 5.137% 10,451 10,662 10,619
FHAMS_05-AA3 2035 5.394% 15,648 15,807 15,665
FHAT_2004-A4 2034 5.405% 5,916 5,980 5,978
FHLMC_2382 2030 5.500% 5,065 5,026 5,125
FHLMC_2473 2030 5.500% 1,243 1,240 1,242
FHLMC_2478 2021 5.250% 6,293 6,286 6,235
FHLMC_2619 2022 5.000% 19,333 19,719 19,078
FHLMC_2835 2032 4.500% 11,460 11,446 11,174
FHLMC_2872 2022 4.500% 10,000 10,015 9,705
FHLMC_2901 2033 4.500% 8,029 8,022 7,879
FHLMC_2907 2019 4.500% 8,427 8,423 8,270
FMGT_03-T5 2013 4.055% 6,847 6,847 6,715
FNMA COLLATERAL - MUNI 2019 6.075% 12,908 13,196 13,047
FNMA COLLATERAL - MUNI 2033 4.536% 10,449 10,300 10,129
FNMA COLLATERAL - MUNI 050973 2009 6.000% 2,444 2,414 2,482
FNMA COLLATERAL - MUNI1,347 1,334 1,350
FANNIE MAE 105989 2020 5.759% 288 301 295
FNMA COLLATERAL - MUNI5.585% 163 172 167
FANNIE MAE 190726 2033 5.748% 878 897 881
FNMA COLLATERAL - MUNI7.162% 702 717 717
FANNIE MAE 249907 2024 5.125% 1,125 1,136 1,177
FNMA COLLATERAL - MUNI6.875% 652 658 667
FANNIE MAE 250670 2011 7.000% 332 333 344
FNMA COLLATERAL - MUNI236 236 239
FANNIE MAE 250671 2011 7.500% 954 954 996
FNMA COLLATERAL - MUNI680 680 691
FANNIE MAE 250857 2012 7.000% 868 866 901
FNMA COLLATERAL - MUNI607 605 616
FANNIE MAE 252259 2014 5.500% 65 64 66
FNMA COLLATERAL - MUNI50 49 50
FANNIE MAE 252344 2014 5.500% 4,559 4,460 4,604
FNMA COLLATERAL - MUNI3,597 3,525 3,612
FANNIE MAE 252381 2014 5.500% 4,520 4,416 4,555
FNMA COLLATERAL - MUNI3,348 3,276 3,361
FANNIE MAE 254010 2008 5.500% 1,161 1,159 1,163
FNMA COLLATERAL - MUNI894 892 896
FANNIE MAE 254195 2017 5.500% 7,162 7,143 7,215
FNMA COLLATERAL - MUNI5,791 5,775 5,808
FANNIE MAE 254508 2012 5.000% 13,041 13,288 13,033
FNMA COLLATERAL - MUNI9,691 9,848 9,609
FANNIE MAE 254584 2012 5.000% 19,985 20,279 19,973
FNMA COLLATERAL - MUNI15,203 15,392 15,074
FANNIE MAE 254586 2013 5.000% 31,245 31,916 31,225
FNMA COLLATERAL - MUNI23,939 24,379 23,736
FANNIE MAE 254590 2018 5.000% 25,071 25,263 24,843
FNMA COLLATERAL - MUNI20,991 21,136 20,701
FANNIE MAE 254591 2018 5.500% 13,467 13,919 13,560
FNMA COLLATERAL - MUNI10,988 11,330 11,014
FANNIE MAE 254663 2013 5.000% 4,457 4,519 4,454
FNMA COLLATERAL - MUNI3,391 3,431 3,362
FANNIE MAE 254720 2018 4.500% 71,173 71,506 69,478
FNMA COLLATERAL - MUNI60,460 60,713 58,465
FANNIE MAE 303259 2025 5.504% 927 953 936
FNMA COLLATERAL - MUNI6.963% 703 722 712
FANNIE MAE 303445 2009 5.500% 1,600 1,565 1,614
FNMA COLLATERAL - MUNI888 873 887
FANNIE MAE 303970 2024 6.000% 3,379 3,334 3,410
FNMA COLLATERAL - MUNI2,801 2,765 2,832
FANNIE MAE 313042 2011 7.000% 695 696 718
F-26
474 475 478
FANNIE MAE 313522 2012 7.000% 1,200 1,203 1,236
FANNIE MAE 313561 2012 8.000% 680 688 704
FANNIE MAE 323290 2013 6.000% 119 118 121
FANNIE MAE 323748 2014 6.500% 2,059 2,021 2,108
FANNIE MAE 323833 2014 6.000% 1,049 1,040 1,065
FANNIE MAE 36225 2016 9.000% 10 10 11
FANNIE MAE 367005 2012 7.000% 493 491 508
FANNIE MAE 386642 2008 3.930% 11,377 11,522 11,105
FANNIE MAE 509806 2014 6.500% 829 822 850
FANNIE MAE 51617 2017 10.000% 11 11 12
FANNIE MAE 545249 2016 5.500% 6,700 6,721 6,719
FANNIE MAE 545303 2016 5.000% 8,220 8,114 8,112
FANNIE MAE 545400 2017 5.500% 9,255 9,211 9,282
FANNIE MAE 545492 2022 5.500% 2,967 2,938 2,956
FANNIE MAE 545679 2022 5.500% 6,225 6,068 6,202
FANNIE MAE 545786 2032 5.468% 2,108 2,117 2,113
FANNIE MAE 555724 2018 4.500% 8,755 8,713 8,466
FANNIE MAE 566074 2031 5.859% 819 817 829
FANNIE MAE 584507 2031 5.663% 1,150 1,145 1,173
FANNIE MAE 584829 2016 6.000% 2,234 2,218 2,268
FANNIE MAE 585743 2016 5.500% 6,447 6,473 6,466
FANNIE MAE 616220 2016 5.000% 5,921 5,819 5,843
F-25
AMERIPRISE CERTIFICATE COMPANY SCHEDULE I1
INVESTMENTS OFIN SECURITIES INOF UNAFFILIATED ISSUERS
AT DECEMBER 31, 20052006
BAL HELD AT 12/31/052006
PRINCIPAL AMT OF
BONDS & NOTES OR # OF COST VALUE AT 12/31/052006
ISSUER NAME AND ISSUER TITLE # OF SHARES (NOTES a & c) (NOTE a)
- ----------------------------------------------------- ------------------------------------------------------------------------------------------------ ---------------------------------------------------------------
FNMA COLLATERAL - MUNI 313522 2012 7.000% 1,711 1,716 1,775
FNMA COLLATERAL - MUNI 313561 2012 8.000% 972 985 1,028
FNMA COLLATERAL - MUNI 323290 2013 6.000% 160 159 163
FNMA COLLATERAL - MUNI 323748 2014 6.500% 2,688 2,635 2,765
FNMA COLLATERAL - MUNI 323833 2014 6.000% 1,378 1,366 1,409
FNMA COLLATERAL - MUNI 36225 2016 9.000% 11 11 12
FNMA COLLATERAL - MUNI 367005 2012 7.000% 696 692 723
FNMA COLLATERAL - MUNI 386642 2008 3.930% 11,589 11,834 11,277
FNMA COLLATERAL - MUNI 509806 2014 6.500% 1,122 1,111 1,154
FNMA COLLATERAL - MUNI 51617 2017 10.000% 12 12 13
FNMA COLLATERAL - MUNI 545249 2016 5.500% 8,519 8,550 8,581
FNMA COLLATERAL - MUNI 545303 2016 5.000% 9,762 9,628 9,672
FNMA COLLATERAL - MUNI 545400 2017 5.500% 11,553 11,497 11,638
FNMA COLLATERAL - MUNI 545492 2022 5.500% 3,448 3,414 3,451
FNMA COLLATERAL - MUNI 545679 2022 5.500% 7,193 7,005 7,198
FNMA COLLATERAL - MUNI 545786 2032 5.547% 2,683 2,694 2,564
FNMA COLLATERAL - MUNI 555724 2018 4.500% 10,589 10,538 10,328
FNMA COLLATERAL - MUNI 566074 2031 5.858% 835 834 840
FNMA COLLATERAL - MUNI 584507 2031 5.669% 1,196 1,191 1,220
FNMA COLLATERAL - MUNI 584829 2016 6.000% 2,783 2,763 2,845
FNMA COLLATERAL - MUNI 585743 2016 5.500% 8,009 8,046 8,068
FNMA COLLATERAL - MUNI 616220 2016 5.000% 7,088 6,958 7,023
FNMA COLLATERAL - MUNIFANNIE MAE 617270 2017 5.000% 8,098 8,002 8,024
FNMA COLLATERAL - MUNI6,464 6,391 6,378
FANNIE MAE 620293 2032 5.498% 3,126 3,100 3,094
FNMA COLLATERAL - MUNI5.476% 2,099 2,084 2,103
FANNIE MAE 622462 2016 5.500% 6,505 6,427 6,552
FNMA COLLATERAL - MUNI5,253 5,193 5,268
FANNIE MAE 623866 2017 5.000% 9,580 9,552 9,491
FNMA COLLATERAL - MUNI8,054 8,031 7,948
FANNIE MAE 625943 2017 5.000% 13,686 13,649 13,561
FNMA COLLATERAL - MUNI11,181 11,150 11,026
FANNIE MAE 651629 2032 5.152% 1,400 1,403 1,396
FNMA COLLATERAL - MUNI5.116% 1,262 1,263 1,264
FANNIE MAE 653342 2032 5.156% 926 929 937
FNMA COLLATERAL - MUNI5.350% 503 504 512
FANNIE MAE 654158 2032 4.917% 3,587 3,591 3,568
FNMA COLLATERAL - MUNI4.952% 2,531 2,532 2,505
FANNIE MAE 654195 2032 4.919% 4,338 4,341 4,316
FNMA COLLATERAL - MUNI4.908% 3,755 3,757 3,735
FANNIE MAE 655646 2032 5.777% 2,396 2,399 2,389
FNMA COLLATERAL - MUNI5.743% 1,540 1,541 1,556
FANNIE MAE 655798 2032 5.224% 5,661 5,649 5,639
FNMA COLLATERAL - MUNI5.200% 4,434 4,423 4,447
FANNIE MAE 661349 2032 5.429% 1,279 1,282 1,282
FNMA COLLATERAL - MUNI5.433% 1,127 1,129 1,134
FANNIE MAE 661501 2032 5.091% 1,947 1,955 1,943
FNMA COLLATERAL - MUNI5.070% 1,461 1,465 1,461
FANNIE MAE 661744 2032 5.343% 3,339 3,351 3,366
FNMA COLLATERAL - MUNI5.323% 2,741 2,748 2,763
FANNIE MAE 664521 2032 5.124% 3,708 3,722 3,703
FNMA COLLATERAL - MUNI5.132% 2,921 2,929 2,924
FANNIE MAE 664750 2032 4.948% 2,401 2,405 2,401
FNMA COLLATERAL - MUNI4.910% 1,658 1,660 1,656
FANNIE MAE 670731 2032 5.328% 5,624 5,647 5,445
FNMA COLLATERAL - MUNI5.326% 4,950 4,969 4,935
FANNIE MAE 670779 2032 5.126% 6,972 7,012 6,939
FNMA COLLATERAL - MUNI5.139% 6,357 6,388 6,305
FANNIE MAE 670890 2032 4.719% 7,571 7,593 7,450
FNMA COLLATERAL - MUNI7,126 7,138 7,078
FANNIE MAE 670912 2032 5.069% 6,326 6,345 6,280
FNMA COLLATERAL - MUNI5.070% 5,202 5,215 5,140
FANNIE MAE 670947 2032 4.681% 7,878 7,906 7,745
FNMA COLLATERAL - MUNI4.695% 5,061 5,074 5,025
FANNIE MAE 685479 2018 4.500% 24,123 24,277 23,527
FNMA COLLATERAL - MUNI21,004 21,125 20,312
FANNIE MAE 694852 2033 5.015% 6,677 6,797 6,634
FNMA COLLATERAL - MUNI4.988% 5,082 5,171 5,017
FANNIE MAE 70007 2017 5.164% 194 196 198
FNMA COLLATERAL - MUNI6.521% 148 149 148
FANNIE MAE 701161 2018 4.500% 16,898 17,010 16,481
FNMA COLLATERAL - MUNI13,856 13,939 13,399
FANNIE MAE 70117 2017 4.969% 83 83 84
FNMA COLLATERAL - MUNI6.560% 62 62 62
FANNIE MAE 701269 2018 4.500% 19,071 19,194 18,600
FNMA COLLATERAL - MUNI16,220 16,315 15,685
FANNIE MAE 704592 2018 5.000% 11,122 11,482 11,019
FNMA COLLATERAL - MUNI8,952 9,224 8,821
FANNIE MAE 708635 2018 5.000% 8,030 8,287 7,956
FNMA COLLATERAL - MUNI6,440 6,633 6,345
FANNIE MAE 708646 2018 4.500% 10,679 10,709 10,416
FNMA COLLATERAL - MUNI8,891 8,913 8,598
FANNIE MAE 722779 2033 4.418% 13,437 13,466 12,779
FNMA COLLATERAL - MUNI4.403% 11,418 11,442 11,046
FANNIE MAE 725558 2034 4.581% 4,202 4,161 4,136
FNMA COLLATERAL - MUNI4.575% 3,723 3,687 3,663
FANNIE MAE 725694 2034 4.766% 6,480 6,348 6,269
FNMA COLLATERAL - MUNI5,534 5,423 5,356
FANNIE MAE 725719 2033 4.843% 8,732 8,697 8,565
FNMA COLLATERAL - MUNI4.844% 7,923 7,891 7,769
FANNIE MAE 733525 2033 3.958% 13,106 12,562 12,446
FNMA COLLATERAL - MUNI3.957% 11,754 11,278 11,200
FANNIE MAE 739194 2033 5.041% 4,058 4,071 4,011
FNMA COLLATERAL - MUNI5.055% 3,031 3,039 2,987
FANNIE MAE 743856 2033 4.703% 3,419 3,424 3,334
FNMA COLLATERAL - MUNI4.720% 2,764 2,767 2,698
FANNIE MAE 758873 2033 4.494% 7,233 7,149 6,996
FNMA COLLATERAL - MUNI4.475% 6,066 5,998 5,864
FANNIE MAE 774968 2034 4.760% 4,066 4,114 3,952
F-27
4.770% 3,314 3,353 3,242
FANNIE MAE 794787 2034 5.158% 9,313 9,434 9,204
FANNIE MAE 799733 2034 5.053% 5,489 5,586 5,448
FANNIE MAE 801917 2034 5.009% 10,856 10,910 10,603
FANNIE MAE 804561 2034 4.443% 6,549 6,564 6,447
FANNIE MAE 809532 2035 4.920% 7,790 7,848 7,731
FANNIE MAE 834552 2035 4.891% 8,854 8,907 8,724
FANNIE MAE 88879 2019 4.866% 264 267 266
FANNIE MAE 89125 2019 6.874% 514 525 523
FANNIE MAE FNMA_03-28 2022 5.000% 7,087 7,193 6,943
FANNIE MAE FNMA_04-3 2034 3.750% 5,248 5,257 5,204
FANNIE MAE FNMA_05-40 2030 5.000% 10,552 10,605 10,378
FANNIE MAE FNMA_99-8 2014 6.000% 3,542 3,520 3,571
FHAMS_04-AA7 2035 4.729% 4,928 4,955 4,891
FHAMS_05-AA2 2035 5.078% 6,746 6,870 6,734
FHAMS_05-AA3 2035 5.367% 12,024 12,141 11,955
FHAT_2004-A4 2034 5.389% 4,416 4,461 4,401
FHLMC_2382 2030 5.500% 3,810 3,780 3,793
FHLMC_2473 2030 5.500% 141 140 140
F-26
AMERIPRISE CERTIFICATE COMPANY SCHEDULE I1
INVESTMENTS OFIN SECURITIES INOF UNAFFILIATED ISSUERS
AT DECEMBER 31, 20052006
BAL HELD AT 12/31/052006
PRINCIPAL AMT OF
BONDS & NOTES OR # OF COST VALUE AT 12/31/052006
ISSUER NAME AND ISSUER TITLE # OF SHARES (NOTES a & c) (NOTE a)
- ----------------------------------------------------- ------------------------------------------------------------------------------------------------ ---------------------------------------------------------------
FNMA COLLATERAL - MUNI 794787 2034 5.180% 10,830 10,976 10,732
FNMA COLLATERAL - MUNI 799733 2034 5.056% 6,218 6,330 6,163
FNMA COLLATERAL - MUNI 801917 2034 5.026% 12,343 12,407 12,130
FNMA COLLATERAL - MUNI 804561 2034 4.448% 8,085 8,105 7,972
FNMA COLLATERAL - MUNI 809532 2035 4.933% 9,365 9,437 9,265
FNMA COLLATERAL - MUNI 834552 2035 4.898% 9,834 9,894 9,647
FNMA COLLATERAL - MUNI 88879FHLMC_2478 2021 5.250% 4,416 4,411 4,397
FHLMC_2619 2022 5.000% 16,749 17,084 16,428
FHLMC_2835 2032 4.500% 10,814 10,801 10,503
FHLMC_2872 2022 4.500% 9,913 9,922 9,609
FHLMC_2901 2033 4.500% 5,944 5,939 5,801
FHLMC_2907 2019 4.817% 279 284 280
FNMA COLLATERAL - MUNI 89125 2019 4.999% 759 777 7724.500% 7,170 7,166 6,986
FMGT_03-T5 2013 4.055% 6,050 6,050 5,925
FNMA_02-10 2042 5.000% 599 599 59992 91 91
FNMA_03-18 2043 4.610% 15,000 15,050 14,92210,014 10,021 9,928
FNMA_04-81 2020 4.350% 12,500 12,508 12,21911,814 11,815 11,466
FNMA_04-89 2022 4.500% 10,000 9,943 9,7589,865 9,815 9,626
FNMA_2004-W8 2044 4.572% 9,000 8,997 8,9433,067 3,062 3,045
FREDDIE MAC 1B0183 2031 5.350% 2,106 2,081 2,1165.297% 1,535 1,519 1,549
FREDDIE MAC 350190 2022 5.375% 288 299 2967.000% 86 88 88
FREDDIE MAC 405014 2019 5.047% 127 127 1306.684% 91 91 93
FREDDIE MAC 405092 2019 5.366% 131 130 1336.827% 123 122 125
FREDDIE MAC 405185 2018 4.552% 348 346 3546.351% 243 242 246
FREDDIE MAC 405243 2019 5.033% 133 135 1376.544% 120 120 122
FREDDIE MAC 405360 2019 4.882% 49 49 506.627% 46 47 47
FREDDIE MAC 405437 2019 5.775% 107 106 1097.400% 102 101 103
FREDDIE MAC 405455 2019 5.470% 119 120 1227.095% 113 114 116
FREDDIE MAC 405615 2019 5.424% 221 225 2247.112% 98 99 99
FREDDIE MAC 605041 2019 5.267% 25 25 256.892% 24 24 24
FREDDIE MAC 605048 2018 5.206% 139 139 1426.851% 128 128 131
FREDDIE MAC 605432 2017 5.522% 141 141 1436.963% 132 132 134
FREDDIE MAC 605433 2017 4.886% 280 280 2856.534% 242 243 246
FREDDIE MAC 605454 2017 5.111% 521 519 5296.697% 430 428 434
FREDDIE MAC 606024 2019 4.778% 285 283 2886.365% 159 157 160
FREDDIE MAC 606025 2019 4.999% 870 871 8776.465% 508 509 510
FREDDIE MAC 630074 2018 4.750% 49 49 505.750% 44 43 44
FREDDIE MAC 780514 2033 5.017% 14,722 15,115 14,4925.005% 12,490 12,813 12,306
FREDDIE MAC 780845 2033 4.551% 7,317 7,108 7,2204.536% 6,282 6,106 6,092
FREDDIE MAC 780903 2033 4.554% 7,164 7,096 6,9354.544% 6,197 6,138 5,989
FREDDIE MAC 781884 2034 5.162% 47,150 47,737 46,5165.156% 40,580 41,067 39,847
FREDDIE MAC 785363 2025 4.931% 450 456 4616.775% 328 332 334
FREDDIE MAC 785619 2026 5.750%7.375% 232 233 238 239 243
FREDDIE MAC 785634 2026 5.625% 205 205 2107.375% 89 90 91
FREDDIE MAC 788941 2031 5.590% 782 770 7865.474% 570 561 574
FREDDIE MAC 840031 2019 5.500% 12 12 127.000% 11 11 11
FREDDIE MAC 840035 2019 5.583% 122 121 1237.066% 108 107 109
FREDDIE MAC 840036 2019 5.630% 234 238 2397.342% 56 57 56
FREDDIE MAC 840072 2019 4.870% 145 145 1466.706% 103 103 104
FREDDIE MAC 845154 2022 5.468% 329 342 3367.073% 225 234 228
FREDDIE MAC 845523 2023 5.460% 267 276 2687.070% 174 179 175
FREDDIE MAC 845654 2024 5.537% 790 803 8137.133% 577 585 591
FREDDIE MAC 845730 2023 5.694% 1,217 1,259 1,2547.184% 1,031 1,062 1,060
FREDDIE MAC 845733 2024 5.215% 1,060 1,077 1,0916.716% 823 837 845
FREDDIE MAC 846072 2029 5.279% 426 436 4346.830% 286 293 293
FREDDIE MAC 846107 2025 5.909% 445 455 4547.711% 234 240 238
FREDDIE MAC 865008 2018 6.063% 554 565 5666.107% 468 473 479
FREDDIE MAC FHLMC_2542 2022 5.500% 12,806 13,098 12,84010,776 11,034 10,729
FREDDIE MAC FHLMC_2548 2022 5.500% 33,095 33,622 33,32127,531 27,977 27,387
FREDDIE MAC FHLMC_2550 2022 5.500% 9,520 9,684 9,5458,053 8,197 8,018
FREDDIE MAC FHLMC_2556 2022 5.500% 40,043 40,782 39,98832,970 33,581 32,844
FREDDIE MAC FHLMC_2558 2022 5.500% 12,276 12,470 12,39210,334 10,501 10,289
FREDDIE MAC FHLMC_2574 2022 5.000% 9,381 9,531 9,2958,039 8,175 7,880
FREDDIE MAC FHLMC_2586 2023 5.500% 12,180 12,447 12,310
FREDDIE MAC FHLMC_2595 2022 5.500% 85,242 87,062 86,311
FREDDIE MAC FHLMC_2597 2022 5.500% 37,295 38,131 37,447
FREDDIE MAC FHLMC_2603 2022 5.500% 30,609 31,278 30,849
F-28
10,169 10,410 10,111
F-27
AMERIPRISE CERTIFICATE COMPANY SCHEDULE I1
INVESTMENTS OFIN SECURITIES INOF UNAFFILIATED ISSUERS
AT DECEMBER 31, 20052006
BAL HELD AT 12/31/052006
PRINCIPAL AMT OF
BONDS & NOTES OR # OF COST VALUE AT 12/31/052006
ISSUER NAME AND ISSUER TITLE # OF SHARES (NOTES a & c) (NOTE a)
- ----------------------------------------------------- ------------------------------------------------------------------------------------------------ ---------------------------------------------------------------
FREDDIE MAC FHLMC_2595 2022 5.500% 70,796 72,318 70,527
FREDDIE MAC FHLMC_2597 2022 5.500% 31,328 32,048 31,192
FREDDIE MAC FHLMC_2603 2022 5.500% 25,255 25,805 25,150
FREDDIE MAC FHLMC_2770 2032 3.750% 10,000 9,962 9,6548,945 8,913 8,576
FREDDIE MAC FHR_2931-QA 2015 4.500% 15,972 16,109 15,81113,161 13,234 13,011
FREDDIE MAC GOLD C90581 2022 5.500% 3,884 3,855 3,8883,344 3,320 3,331
FREDDIE MAC GOLD C90582 2022 5.500% 2,396 2,379 2,3992,036 2,022 2,028
FREDDIE MAC GOLD E00151 2007 7.500% 156 157 16052 52 52
FREDDIE MAC GOLD E00383 2010 7.000% 895 893 924601 599 613
FREDDIE MAC GOLD E00388 2010 7.000% 486 481 501331 328 338
FREDDIE MAC GOLD E00426 2011 6.500% 517 513 531353 351 360
FREDDIE MAC GOLD E00484 2012 6.500% 405 398 416290 285 297
FREDDIE MAC GOLD E01140 2017 6.000% 10,983 11,348 11,2118,792 9,063 8,919
FREDDIE MAC GOLD E76761 2014 6.500% 1,944 1,916 1,9991,470 1,451 1,502
FREDDIE MAC GOLD E77557 2014 6.500% 169 166 174
FREDDIE MAC GOLD E80594 2014 6.500% 149 146 153121 119 124
FREDDIE MAC GOLD E90153 2017 6.000% 2,223 2,310 2,2691,793 1,858 1,819
FREDDIE MAC GOLD E90154 2017 6.000% 6,242 6,486 6,3714,588 4,756 4,654
FREDDIE MAC GOLD E91041 2017 5.000% 8,663 8,676 8,5927,477 7,487 7,369
FREDDIE MAC GOLD E91491 2012 5.000% 5,216 5,316 5,2073,999 4,065 3,971
FREDDIE MAC GOLD E93341 2012 5.000% 16,035 16,492 16,00612,488 12,795 12,398
FREDDIE MAC GOLD E95403 2018 5.000% 8,592 8,875 8,5217,182 7,403 7,077
FREDDIE MAC GOLD E95556 2013 4.500% 5,208 5,361 5,1144,079 4,182 4,002
FREDDIE MAC GOLD E95562 2013 4.500% 9,503 9,773 9,3317,611 7,798 7,468
FREDDIE MAC GOLD E95671 2018 5.000% 11,173 11,521 11,0779,080 9,345 8,941
FREDDIE MAC GOLD E96172 2013 4.500% 29,587 30,488 28,93323,437 24,058 22,883
FREDDIE MAC GOLD G10364 2010 7.000% 755 752 777415 414 420
FREDDIE MAC GOLD G10665 2012 7.000% 3,317 3,309 3,4422,320 2,315 2,385
FREDDIE MAC GOLD G10949 2014 6.500% 1,200 1,185 1,234938 927 958
FREDDIE MAC GOLD G11004 2015 7.000% 453 450 471334 332 340
FREDDIE MAC GOLD G11193 2016 5.000% 6,091 6,007 6,0415,027 4,962 4,957
FREDDIE MAC GOLD G11298 2017 5.000% 8,651 8,666 8,5797,116 7,127 7,013
FREDDIE MAC GOLD G30227 2023 5.500% 9,743 10,127 9,7518,479 8,798 8,443
GCCF_02-C1 2013 3.357% 3,239 3,237 3,1642,560 2,558 2,519
GCCF_03-C2 2036 4.022% 6,000 6,078 5,8226,057 5,837
GECAF_2003-1A 2015 4.929%5.900% 10,000 10,097 9,997 (d)
GECAF_2004-1A 2013 4.549% 10,000 10,000 9,82610,070 9,995 (d)
GECCMC_04-C2 2040 4.119% 12,700 12,555 12,35512,585 12,291
GINNIE MAEII 8157008157 2023 4.375% 574 584 5785.375% 434 441 438
GINNIE MAEII 8206008206 2017 4.375% 257 254 2585.375% 203 201 205
GINNIE MAEII 8240008240 2017 4.750% 109 105 110
GINNIE MAEII 8251 2017 4.750% 10 10 10
GINNIE MAEII 8274 2017 4.125% 370 365 372
GINNIE MAEII 8283 2017 4.125% 49 48 49
GINNIE MAEII 8293 2017 4.125% 88 87 89
GINNIE MAEII 8341 2018 4.375% 16 15 16
GINNIE MAEII 8353 2018 4.375% 185 180 185
GINNIE MAEII 8365 2018 4.375% 231 223 231
GINNIE MAEII 8377 2018 4.750%5.750% 93 90 94
GINNIE MAEII 8428 2018 4.125% 33 33 34008251 2017 5.750% 8 8 8
GINNIE MAEII 8440008274 2017 5.125% 294 289 297
GINNIE MAEII 008283 2017 5.125% 39 38 39
GINNIE MAEII 008293 2017 5.125% 78 77 79
GINNIE MAEII 008341 2018 4.125% 142 140 1435.375% 15 15 15
GINNIE MAEII 008353 2018 5.375% 147 145 148
GINNIE MAEII 008377 2018 5.750% 69 67 69
GINNIE MAEII 008428 2018 5.125% 28 28 29
GINNIE MAEII 008440 2018 5.125% 121 120 123
GINNIE MAEII 8365 2018 5.375% 175 169 176
GINNIE MAEII 8638 2025 4.375% 583 588 5865.375% 468 472 472
GMACCMSI_2004-C3 2041 4.207% 8,000 8,030 7,7758,024 7,766
GMHE_2004-AR2 2034 4.405% 7,079 7,094 6,9484.384% 5,932 5,947 5,818
GMHE_2004-AR2 2034 5.237% 10,626 10,639 10,6025.216% 8,649 8,660 8,552
GNMA_02-48 2030 5.750% 741 739 7403 3 3
GNMA_02-81 2025 3.815% 10,791 10,733 10,38710,431 10,381 10,074
GNMA_03-17 2018 2.578% 8,632 8,592 8,2067,564 7,537 7,269
GNMA_04-10 2031 4.043% 9,358 9,316 8,979
GNMA_04-19 2034 4.500% 12,390 12,432 12,219
GNMA_04-77 2020 4.585% 9,049 9,217 8,957
GNMA_05-02 2019 4.116% 11,477 11,477 11,224
GNMA_05-10 2021 4.031% 7,250 7,250 7,068
GNMA_2004-23 2027 3.629% 14,423 14,420 13,652
F-29
9,163 9,125 8,805
F-28
AMERIPRISE CERTIFICATE COMPANY SCHEDULE I1
INVESTMENTS OFIN SECURITIES INOF UNAFFILIATED ISSUERS
AT DECEMBER 31, 20052006
BAL HELD AT 12/31/052006
PRINCIPAL AMT OF
BONDS & NOTES OR # OF COST VALUE AT 12/31/052006
ISSUER NAME AND ISSUER TITLE # OF SHARES (NOTES a & c) (NOTE a)
- ----------------------------------------------------- ------------------------------------------------------------------------------------------------ ---------------------------------------------------------------
GNMA_04-19 2034 4.500% 10,011 10,043 9,820
GNMA_04-77 2020 4.585% 7,759 7,865 7,657
GNMA_05-02 2019 4.116% 10,875 10,875 10,637
GNMA_05-10 2021 4.031% 6,934 6,934 6,760
GNMA_2004-23 2027 3.629% 14,050 14,050 13,265
GNMA_2004-45 2021 4.020% 9,328 9,272 9,0328,935 8,889 8,679
GNMA_2004-60 2018 4.104% 7,773 7,773 7,6247,178 7,178 7,032
GNMA_2004-XX 2020 2.913% 8,237 8,042 7,879
GPMF_05-AR1 2045 4.619% 14,936 14,936 14,6257,585 7,447 7,280
GPMF_05-AR5 2045 5.163% 19,915 20,365 20,3636.758% 15,761 16,117 16,066
GPMF_06-OH1 2037 5.560% 19,120 19,120 19,120
GSAP_05-5 2045 5.370% 21,210 21,068 21,0656.350% 14,894 14,795 14,773 (d)
GSMS_2004-GG2 2038 4.602% 12,215 12,343 12,05812,305 12,022
GSR_04-10F 2019 4.500% 5,712 5,754 5,6134,718 4,746 4,638
GSR_05-AR1 2035 4.952% 15,058 15,109 14,8994.941% 12,763 12,804 12,651
GSR_05-AR3 2035 5.039% 13,171 13,234 13,0345.021% 11,051 11,104 10,886
GSR_05-AR5 2035 5.197% 19,034 19,039 18,9515.178% 16,160 16,163 16,105
HARBORVIEW MORTGAGE LOAN TRUST 2034 4.785% 8,160 8,224 7,8634.784% 7,329 7,388 7,140
HERTZ CORPVEHICLE FINANCING LLC HE 2009 3.230% 15,000 14,996 14,36414,997 14,445 (d)
HLMLT_2004-2 2035 4.689% 6,343 6,343 6,356
HOND_2004-3 2008 2.910% 7,500 7,499 7,362
HVMLT_04-11 2035 4.720% 11,110 11,110 11,0344,013 4,013 3,971
HVMLT_04-5 2034 3.978%3.940% 10,000 9,703 9,7129,705 9,723
HVMLT_04-7 2034 4.646% 9,230 9,150 9,1554.584% 7,459 7,396 7,370
HVMLT_05-15 2045 5.163% 24,758 25,334 25,253
HVMLT_05-2 2035 4.590% 8,832 8,832 8,8236.758% 20,123 20,590 20,550
HVMLT_05-8 2035 4.663% 14,813 14,965 14,9616.258% 8,907 8,996 8,997
HVMLT_06-14 2038 5.550% 17,500 17,500 17,500
HVMLT_2004-10 2035 5.258% 5,253 5,291 5,2565.263% 3,979 4,008 4,001
HVMLT_2004-6 2034 4.713% 5,495 5,459 5,3654.686% 4,858 4,823 4,721
HVML_2004-4 2034 2.975% 5,707 5,651 5,603
IMM_05-2 2035 4.639% 7,935 7,935 7,947
IMPAC CMB TRUST IMM_05-5 2035 4.699% 6,784 6,784 6,785
INDX_04-AR12 2034 4.769% 9,593 9,627 9,604
INDX_04-AR8 2034 4.779% 10,607 10,641 10,6073,719 3,680 3,703
INABS_06-E 2037 5.470% 15,000 15,000 15,000
INDX_05-AR1 2035 5.242% 5,870 5,928 5,964
INDX_05-AR2 2035 4.719% 8,363 8,363 8,3615.175% 3,306 3,319 3,307
INDYMAC INDX MORTGAGE LOAN TRU 2035 5.213% 8,070 8,168 8,09510,013 10,071 9,940
JP MORGAN MORTGAGE ACQUISITION 2036 5.470% 25,000 24,992 24,996
JPMCCMSC_03-CIBC6 2037 4.393% 8,433 8,340 8,2387,374 7,302 7,164
JPMCC_02-CIB5 2037 4.372% 8,650 8,721 8,5027,965 8,019 7,812
JPMCC_04-C2 2041 4.278% 10,598 10,585 10,4149,481 9,469 9,303
JPMCMFC_04-C1 2038 3.053% 5,527 5,433 5,302
LB COMM CONDUIT MORT TRUST LBC 2035 5.870% 170 169 1704,550 4,489 4,379
LB-UBS COMM MORT TRUST LBUBSCM 2026 5.969% 7,500 7,510 7,6013,088 3,090 3,100
LB-UBS COMM MORT TRUST LBUBSCM 2026 4.904% 7,500 7,513 7,4957,506 7,466
LB-UBS COMM MORT TRUST LBUBSCM 2026 4.023% 5,500 5,511 5,3835,506 5,407
LB-UBS COMM MORT TRUST LBUBSCM 2026 4.071% 8,383 8,432 8,1657,642 7,679 7,449
LB-UBS COMM MORT TRUST LBUBSCM 2027 4.064% 10,000 10,026 9,71410,017 9,733
LB-UBS COMM MORT TRUST LBUBSCM 2027 3.636% 12,298 12,330 11,95710,875 10,891 10,607
LB-UBS COMM MORT TRUST LBUBSCM 2027 4.207% 9,680 9,696 9,4869,691 9,472
LBUBSCMT_04-C4 2029 4.567% 10,000 10,092 9,88710,063 9,850
LBUBSCMT_05-C5 20402030 4.741% 19,244 19,332 19,19716,853 16,910 16,702
LBUBSCMT_2004-C7 2029 3.625% 6,108 6,130 5,9524,763 4,776 4,650
LBUBSCMT_2004-C8 2029 4.201% 18,425 18,239 17,96918,284 17,936
LBUBS_05-C1 2030 4.310% 13,100 12,979 12,731
LEHMAN ABS CORPORATION LABS_05 2034 4.559% 4,791 4,791 4,79113,005 12,756
LIFT - LEASE INVESTMENT FLIGHT 2016 4.799% 3,079 3,079 2,865
MARM_04-7 2034 4.819% 10,068 10,106 10,1095.780% 2,605 2,605 2,527
LUMINENT MORTGAGE TRUST LUM_06 2046 5.590% 9,432 9,432 9,459
MARM_05-1 2035 5.169% 11,666 11,890 11,778
MBNA CREDIT CARD MASTER NOTE T 2010 4.809% 10,000 10,049 10,0735.129% 8,045 8,117 8,032
MERRILL LYNCH MOR INVEST INC M 2033 4.086% 10,000 9,980 10,056
MLCC MORTGAGE INVESTORS MLCC_0 2030 4.609% 8,354 8,354 8,3569,977 10,111
MLCC_2004-1 2034 4.742% 4,248 4,256 4,1984.729% 3,730 3,738 3,677
MLMI_05-A1 2034 4.602% 8,231 8,250 8,1024.552% 7,055 7,071 6,961
MLMI_05-A2 2035 4.497% 13,255 13,260 12,9794.489% 11,711 11,714 11,471
MORGAN STANLEY CAPITAL I MSC_0 2019 5.480% 25,000 25,012 25,013 (d)
MORGAN STANLEY CAPITAL I MSDWC 2040 3.270% 7,862 7,888 7,383
MSAC_2004-OP1 2034 4.959% 10,000 10,000 10,0173,677 3,685 3,528
MSALT_2004-HB2 2009 2.940% 4,670 4,670 4,568
F-30
2,560 2,560 2,536
F-29
AMERIPRISE CERTIFICATE COMPANY SCHEDULE I1
INVESTMENTS OFIN SECURITIES INOF UNAFFILIATED ISSUERS
AT DECEMBER 31, 20052006
BAL HELD AT 12/31/052006
PRINCIPAL AMT OF
BONDS & NOTES OR # OF COST VALUE AT 12/31/052006
ISSUER NAME AND ISSUER TITLE # OF SHARES (NOTES a & c) (NOTE a)
- ----------------------------------------------------- ------------------------------------------------------------------------------------------------ ---------------------------------------------------------------
MSC 2004-IQ8 A3 2040 4.500% 7,000 7,025 6,8477,018 6,825
MSCI_04-HQ4 2040 4.220% 7,000 7,004 6,817
MSDWCI_02-IQ2 2035 5.160% 1,487 1,487 1,4897,000 6,811
MSDWCI_02-TOP7 2039 5.380% 3,480 3,503 3,5213,107 3,123 3,111
MSDWCI_04-T13 2045 3.940% 15,000 14,745 14,41514,803 14,433
MSM_2004-10AR 2034 4.842% 7,201 7,271 7,2394.875% 5,168 5,216 5,161
MSM_2004-10AR 2034 5.142% 7,497 7,577 7,5365.123% 5,970 6,037 5,983
MSM_2004-6AR 2034 4.362% 7,449 7,402 7,4834.343% 7,407 7,357 7,241
NAVOT_05-A 2014 4.430% 9,000 8,999 8,8629,000 8,837
NEW YORK CITY TAX LIEN NYCTL_0 20102018 4.780% 2,977 2,977 2,9501,613 1,613 1,601 (d)
NPF XII INC NPF12_00-2 2006 4.711%2007 5.769% 10,000 370 3700 0 (b)(d)(e)
NSLT_2001-A 2012 5.760% 8,804 9,049 8,9435,938 6,078 5,964
PCMT_03-PWR1 2036 3.669% 6,816 6,620 6,5446,410 6,250 6,154
POPLR_05-3 2035 4.437% 10,060 10,055 9,87110,046 9,877
PROVIDIAN GATEWAY MASTER TRUST 2011 3.350% 5,000 4,999 4,8825,000 4,930 (d)
RALI_05-QA2 2035 5.081% 13,197 13,340 13,0095.068% 10,752 10,866 10,643
RALI_2004-QR1 2034 5.250% 6,862 6,907 6,7285,245 5,280 5,111
RALI_2004-QS5 2034 4.750% 4,955 4,937 4,9043,689 3,676 3,614
RAMC_05-3 2035 4.814% 10,000 9,997 9,894
RASC_04-KS12 2035 4.909% 7,000 7,000 7,022
RASC_04-KS9 2034 4.669% 14,925 14,936 14,9519,987 9,877
RESIDENTIAL ACCREDIT LOANS INC 2035 5.631% 5,339 5,396 5,3305.610% 4,066 4,108 4,061
RESTRUCTURED ASSET SECURITIES 2030 4.000% 7,141 7,111 6,8575,860 5,837 5,570 (d)
RFMSI_03-QS2 2033 4.500% 6,346 6,291 6,1284,868 4,822 4,673
RFMSI_04-KS9 2034 4.620% 11,000 10,995 10,63510,993 10,614
RFMSI_05-SA2 2035 5.160% 26,475 26,540 26,0915.147% 22,542 22,596 22,291
SASC_2003-24A 2033 5.571% 3,504 3,571 3,5035.578% 3,282 3,343 3,278
SASC_2004-18H 2034 4.750% 10,000 10,067 9,811
SAST_2004-3 2034 4.559% 776 776 7769,532 9,564 9,374
SBAP_05-10D 2015 4.510% 5,571 5,571 5,4974,763 4,763 4,674
SMALL BUSINESS ADMIN 2022 4.750% 3,948 4,025 3,8973,522 3,587 3,452
SMALL BUSINESS ADMIN 2013 3.900% 2,325 2,354 2,2542,004 2,026 1,935
SMALL BUSINESS ADMIN 2014 3.870% 5,666 5,728 5,4944,727 4,773 4,565
STRUCTURED ADJUSTABLE RATE MOR 2034 4.935% 9,917 10,032 9,816
TMCL_05-1A 2020 4.619% 18,833 18,833 18,836 (d)9,437 9,578 9,297
TOPT_01-TZH 2013 6.522% 5,000 4,997 5,0702,727 2,725 2,759 (d)
TRIAD FINANCIAL CORP 2010 4.280% 10,000 9,999 9,9019,937 9,937 9,854
WAMU_04-AR10 2044 4.819% 9,741 9,777 9,744
WAMU_04-AR12 2044 4.640% 13,624 13,659 13,6465.790% 5,552 5,573 5,574
WAMU_05-AR2 2045 4.599% 3,497 3,497 3,4965.570% 1,145 1,145 1,148
WAMU_05-AR3 2035 4.650% 13,047 13,106 12,8214.641% 11,489 11,539 11,328
WAMU_2004-AR4 2034 3.804%3.801% 10,000 9,799 9,6109,848 9,632
WASHINGTON MUTUAL WAMU_03-A10 2033 4.067%4.062% 15,000 14,805 14,57714,816 14,809
WASHINGTON MUTUAL WAMU_03-A11 2033 3.985% 7,500 7,491 7,2837,487 7,323
WASHINGTON MUTUAL WAMU_03-A12 2034 3.961% 12,500 12,485 12,30712,480 12,175
WASHINGTON MUTUAL WAMU_03-AR3 2033 3.927% 9,213 9,213 9,0027,443 7,443 7,339
WASHINGTON MUTUAL WAMU_04-AR5- 2034 3.851%3.845% 10,000 9,700 9,8309,779 9,534
WASHINGTON MUTUAL WAMU_04-AR7 2034 3.946%3.943% 10,000 9,729 9,6749,801 9,713
WASHINGTON MUTUAL WAMU_04-S3 2034 5.500% 16,047 16,340 15,96514,653 14,956 14,535
WASHINGTON MUTUAL WAMU_05-AR1 2045 4.629% 10,687 10,687 10,6895.600% 2,956 2,956 2,960
WASHINGTON MUTUAL WAMU_05-AR10 2035 4.845%4.837% 10,000 10,002 9,79910,008 9,805
WASHINGTON MUTUAL WAMU_05-AR4 2035 4.679%4.673% 10,000 9,957 10,030
WASHINGTON MUTUAL WAMU_05-AR9 2045 4.699% 9,592 9,592 9,58410,021
WBCMT_2004-C11 2041 3.333% 7,397 7,346 7,1965,381 5,354 5,255
WFMBS_04-DD 2035 4.522%4.504% 5,761 5,771 5,8835,768 5,697
WFMBS_04-P 2034 4.259% 7,877 7,676 7,6344.252% 7,844 7,689 7,706
WFMBS_05-AR10 2035 4.110% 11,865 11,784 11,6944.109% 9,030 8,973 8,877
WFMBS_05-AR2 2035 4.556% 5,000 5,021 4,9074.544% 4,378 4,395 4,292
WFMBS_05-AR2 2035 4.950% 6,624 6,680 6,6464.939% 13,682 13,575 13,469
WFMBS_05-AR4 2035 4.531% 13,133 13,099 12,8954.523% 11,580 11,549 11,369
WFMBS_2004-0 2034 4.896% 7,808 7,730 7,606
F-31
4.892% 7,024 6,963 6,864
WFMBS_2004-CC 2035 4.953% 7,562 7,585 7,453
WFMBS_2004-W 2034 4.564% 20,000 20,119 20,521
F-30
AMERIPRISE CERTIFICATE COMPANY SCHEDULE I1
INVESTMENTS OFIN SECURITIES INOF UNAFFILIATED ISSUERS
AT DECEMBER 31, 20052006
BAL HELD AT 12/31/052006
PRINCIPAL AMT OF
BONDS & NOTES OR # OF COST VALUE AT 12/31/052006
ISSUER NAME AND ISSUER TITLE # OF SHARES (NOTES a & c) (NOTE a)
- ----------------------------------------------------- ------------------------------------------------------------------------------------------------ ---------------------------------------------------------------
WFMBS_2004-CC 2035 4.964% 8,476 8,518 8,395
WFMBS_2004-W 2034 4.583% 20,000 20,154 19,804
WFOT_03-4 2008 2.390% 1,433 1,433 1,430
TOTAL - MORTGAGE BACKED SECURITIES 3,261,182 3,266,592 3,218,4912,718,163 2,718,298 2,672,192
TOTAL - MORTGAGE BACKED SECURITIES 3,261,182 3,266,592 3,218,4912,718,163 2,718,298 2,672,192
MUNICIPAL BONDS
New Jersey
NEW JERSEY STATE TRNPK AUTH 2009 3.140% 4,000 4,000 3,8133,847
TOTAL - NEW JERSEY 4,000 4,000 3,8133,847
New York
NEW YORK CITY GO - LT 2008 3.000% 5,000 5,002 4,7925,001 4,849
TOTAL - NEW YORK 5,000 5,002 4,7925,001 4,849
Pennsylvania
WYOMING VALLEY PA SANI AUTH WT 2007 5.125% 30 30 3015 15 15
TOTAL - PENNSYLVANIA 30 30 3015 15 15
TOTAL - MUNICIPAL BONDS 9,030 9,032 8,6359,015 9,016 8,711
CORPORATE DEBT SECURITIES
Corporate - Asset Backed
HERTZ CORP 2014 8.875% 1,440 1,446 1,467 (d)
TOTAL - CORPORATE - ASSET BACKED 1,440 1,446 1,467
Corporate - Finance
ALLIANCE CAPITAL MGMT -LP 2006 5.625% 12,500 12,491 12,562
ALLSTATE CORP 2006 5.375% 5,000 4,997 5,023
ALLSTATE FINANCIAL GLOBAL FUND 2008 4.250% 5,000 4,994 4,9164,996 4,909 (d)
AMERICAN EXPRESS CREDIT CORP 2010 5.000% 10,000 9,965 9,994
AMERICAN GENERAL FINANCE CORPCORPO 2007 4.500% 7,500 7,491 7,4407,496 7,444
AMERICAN GENERAL FINANCE CORPCORPO 2008 2.750% 7,500 7,449 7,115
ASIF GLOBAL FINANCE 2008 4.444% 15,000 15,000 14,983 (d)7,469 7,232
ASSOCIATED BK GREEN BAY 2007 3.700% 6,000 5,976 5,8785,989 5,918
BANK OF AMERICA CORP 2010 7.800% 5,000 5,635 5,5215,492 5,369
BANK OF AMERICA CORP 2009 5.875% 5,000 5,263 5,1355,183 5,070
BANK OF NEW YORK CO INC 2007 5.200% 7,000 7,035 7,0357,012 6,999
BANK OF NEW YORK CO INC 2009 3.625% 10,000 9,983 9,6819,988 9,734
BANK ONE NA - CHICAGO 2008 3.700% 19,000 19,103 18,612
BANKNORTH GROUP INC 2008 3.750% 8,650 8,690 8,46019,053 18,713
BCP CRYSTAL US HOLDINGS CORP 2014 9.625% 325 327 362359
BERKSHIRE HATHAWAY 2008 3.375% 17,500 17,465 16,86217,477 16,961
CAMDEN PROPERTY TRUST 2009 4.700% 3,750 3,746 3,6933,747 3,686
CAMDEN PROPERTY TRUST 2010 4.375% 10,000 10,014 9,673
CAPITAL ONE BANK 2006 6.875% 8,800 8,819 8,814
CLOROX COMPANY 2010 4.200% 27,660 27,660 26,803
COUNTRYWIDE FUNDING CORP 2006 5.500% 5,000 4,997 5,01710,011 9,735
COUNTRYWIDE FUNDING CORP 2009 4.125% 15,000 14,674 14,449
CROWN AMERICAS INC 2013 7.625% 1,570 1,574 1,629 (d)
CROWN AMERICAS INC 2015 7.750% 825 848 854 (d)14,756 14,568
DIAGEO CAPITAL PLC 2007 3.500% 4,000 3,997 3,8963,998 3,939
DIAGEO CAPITAL PLC 2008 3.375% 10,000 9,965 9,6799,980 9,779
EOP OPERATING LP 2007 7.750% 10,762 11,506 11,27311,115 10,984
ERAC USA FINANCE COMPANY 2008 7.350% 14,658 15,789 15,38115,341 15,025 (d)
ERAC USA FINANCE COMPANY 2008 5.300% 12,000 11,992 12,04511,995 11,933 (d)
ERP OPERATING LP 2009 4.750% 12,500 12,484 12,355
F-32
AMERIPRISE CERTIFICATE COMPANY SCHEDULE I
INVESTMENTS OF SECURITIES IN UNAFFILIATED ISSUERS
AT DECEMBER 31, 2005
BAL HELD AT 12/31/05
PRINCIPAL AMT OF
BONDS & NOTES OR # OF COST VALUE AT 12/31/05
ISSUER NAME AND ISSUER TITLE SHARES (NOTES a & c) (NOTE a)
- ----------------------------------------------------- -----------------------------------------------------
12,489 12,338
FIFTH THIRD BANCORP 2008 3.375% 12,000 11,939 11,58511,962 11,661
FLEETBOSTON FINANCIAL CORP 2007 4.200% 11,000 11,079 10,901
FORD MOTOR CREDIT CO 2006 6.875% 5,000 4,989 4,989
GOLDMAN SACHS 2012 6.600% 10,000 10,127 10,74211,039 10,888
HEINZ H.J. COMPANY 2008 6.428% 10,000 10,290 10,27310,196 10,178 (d)
HOUSEHOLD FINANCE CORP 2006 6.500% 2,000 2,000 2,002
HOUSEHOLD FINANCE CORP 2007 5.750% 5,000 4,973 5,0414,998 5,002
HOUSEHOLD FINANCE CORP 2008 4.625% 12,000 12,173 11,92112,090 11,920
HSBC BANK USA 2009 3.875% 20,000 19,906 19,283
INDESIT COMPANY SPA 2009 5.170% 19,000 19,000 18,573 (d)
JP MORGAN19,930 19,392
JPMORGAN CHASE & COMPANYCO 2008 4.000% 10,000 10,024 9,832
KELLOGG UK HOLDING CO LIMITED 2006 4.490% 2,800 2,800 2,783 (d)10,013 9,867
KEY BANK OF NY 2008 7.500% 9,000 10,031 9,6169,659 9,326
LEHMAN BROTHERS HOLDINGS INC 2010 4.375% 8,500 8,458 8,262
LEHMAN BROTHERS HOLDINGS INC 2010 4.250% 5,000 4,987 4,867
M & I MARSHALL & ILSLEY BANK 2009 3.950% 21,500 21,474 20,908
MARSHALL & ILSLEY CORPORATION 2006 5.750% 10,000 9,999 10,04621,481 20,801
MBNA CORP 2008 4.625% 5,000 4,996 4,9714,997 4,957
MERRILL LYNCH & CO INC 2009 4.750% 10,000 9,988 9,9219,991 9,870
MERRILL LYNCH & CO INC 2008 3.700% 7,500 7,620 7,3077,569 7,338
F-31
AMERIPRISE CERTIFICATE COMPANY SCHEDULE 1
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS
AT DECEMBER 31, 2006
BAL HELD AT 12/31/2006
PRINCIPAL AMT OF
BONDS & NOTES OR COST VALUE AT 12/31/2006
ISSUER NAME AND ISSUER TITLE # OF SHARES (NOTES a & c) (NOTE a)
- ------------------------------------------- ---------------------------------------------------------------
MERRILL LYNCH & CO INC 2010 4.500% 2,000 2,008 1,9562,006 1,949
MERRILL LYNCH AIG CBO 2010 0.000%6.758% 6,500 -0 0 (b)(d)(e)
MERRILL LYNCH ELLIOTT & PAIGE 2010 0.000%6.858% 11,000 0 0 (b)(d)(e)
METROPOLITAN LIFE GLOBAL FUNDI 2010 4.500% 20,000 19,949 19,61019,960 19,621 (d)
MORGAN STANLEY 2006 6.100% 5,000 5,000 5,018
MORGAN STANLEY 2007 5.800% 5,000 4,996 5,051
NATIONWIDE BLDG SOCIETY 2009 4.000% 5,000 4,993 4,8714,999 5,003
NEWS AMERICA INC 2008 6.625% 3,150 3,353 3,2493,254 3,184
NEWS AMERICA INC 2010 4.750% 2,000 2,029 1,9702,023 1,965
OLD NATIONAL BANCORPNATL BANCORP/IN 2008 3.500% 7,000 6,989 6,7556,993 6,799
POPULAR NANORTH AMERICA INC 2008 4.250% 12,500 12,478 12,26512,488 12,326
POPULAR NANORTH AMERICA INC 2008 3.875% 2,500 2,502 2,4162,501 2,435
PRICOA GLOBAL FUNDING I 2008 4.350% 38,000 38,111 37,577 (d)
PRICOA GLOBAL FUNDING I 2010 4.360% 15,000 15,000 15,02538,066 37,487 (d)
PRICOA GLOBAL FUNDING I 2010 4.200% 2,480 2,477 2,4022,478 2,409 (d)
PRINCIPAL LIFE INC FNDG 2010 5.200% 5,000 4,998 5,039
QUEBECOR WORLD CAPITAL CORP 2006 7.200% 10,000 10,000 10,006 (d)4,989
ROGERS WIRELESS INC 2010 7.616%8.485% 1,500 1,544 1,549
SAFECO CORP 2010 4.875% 6,000 5,980 5,931
SHEAR LEH HUTT HLDG 2006 6.250% 10,000 9,998 10,057
SHEAR LEH HUTT HLDG 2010 4.375% 8,500 8,448 8,267
SHEAR LEH HUTT HLDG 2010 4.250% 5,000 4,983 4,8761,529 1,530
SIMON PROPERTY GROUP INC 2007 7.125% 10,000 10,087 10,32110,038 10,122
ST PAUL COMPANIES 2007 5.750% 7,000 6,994 7,0586,999 7,004
SUNTRUST BANK 2009 4.550% 20,000 19,987 19,74619,991 19,669
SUNTRUST BANK 2011 6.375% 3,500 3,869 3,7103,805 3,640
SUNTRUST BANKS INC 2007 5.050% 7,500 7,499 7,5167,500 7,490
TD BANKNORTH INC 2008 3.750% 8,650 8,673 8,484
TIAA GLOBAL MARKETS 2008 3.875% 7,500 7,497 7,3617,498 7,387 (d)
TRAVELERS PROPERTY CASUALTY 2008 3.750% 5,000 4,994 4,8684,997 4,901
UNION PLANTERS NATIONAL BANK 2007 5.125% 5,000 4,999 5,0205,000 4,997
US BANCORP 2008 3.125% 5,000 4,939 4,8284,966 4,872
US BANK NA 2009 3.400% 6,800 6,731 6,5106,752 6,556
US BANK NA 2011 6.375% 21,455 23,228 22,910
WACHOVIA CORP 2006 4.950% 6,000 5,998 6,00022,943 22,397
WACHOVIA CORP 2009 3.625% 10,000 9,985 9,6459,990 9,682
WASHINGTON MUTUAL BANK FA 2011 6.875% 1,500 1,649 1,620
WASHINGTON MUTUAL INC 2006 7.500% 1,400 1,399 1,4231,625 1,582
WASHINGTON MUTUAL INC 2008 4.375% 12,980 13,135 12,82513,060 12,847
WELLS FARGO & COCOMPANY 2007 5.125% 5,000 5,000 5,0104,998
WELLS FARGO & COCOMPANY 2008 3.500% 5,000 4,998 4,8584,999 4,895
WELLS FARGO BANK NA 2011 6.450% 20,250 22,238 21,581
WESTFIELD GROUP 2010 4.375% 12,500 12,462 12,099 (d)21,880 21,146
WORLD SAVINGS BANK FSB 2009 4.125% 15,000 14,963 14,602
F-33
AMERIPRISE CERTIFICATE COMPANY SCHEDULE I
INVESTMENTS OF SECURITIES IN UNAFFILIATED ISSUERS
AT DECEMBER 31, 2005
BAL HELD AT 12/31/05
PRINCIPAL AMT OF
BONDS & NOTES OR # OF COST VALUE AT 12/31/05
ISSUER NAME AND ISSUER TITLE SHARES (NOTES a & c) (NOTE a)
- ----------------------------------------------------- -----------------------------------------------------
14,972 14,550
WORLD SAVINGS BANK FSB 2009 4.500% 30,000 30,098 29,61330,070 29,568
TOTAL - CORPORATE - FINANCE 860,815 851,921 838,849654,760 643,337 631,508
Corporate - Industrial
ALLIED WASTE NORTH AMERICA 2011 6.375% 505 489 492 499
ALUMINUM CO OF AMERICA-ALCOA 2007 4.250% 10,000 9,989 9,9039,996 9,930
AMERICAN STANDARD COS INC 2008 7.375% 2,000 1,967 2,088
AMERISOURCE1,982 2,034
AMERISOURCEBERGEN CORP 2012 5.625% 400 398 400 (d)
AMERISOURCE393
AMERISOURCEBERGEN CORP 2015 5.875% 1,295 1,283 1,306 (d)1,284 1,266
BALL CORP 2012 6.875% 2,000 2,049 2,0452,040 2,038
BEAZER HOMES USA INC 2013 6.500% 750 767 713765 731
BOISE CASCADE LLC 2012 7.025%8.249% 1,000 1,013 9751,006 1,003
BOISE CASCADE LLC 2014 7.125% 500 524 466521 484
BOYD GAMING CORP 2014 6.750% 1,000 1,002 9931,001 998
BRISTOW GROUP INC 2013 6.125% 500 483 473
BRITISH SKY BROADCASTING PLC 2009 6.875% 1,500 1,474 1,5711,482 1,544
BURLINGTON NORTHERN AND SANTA 2012 4.255% 5,562 5,562 5,1774,993 4,993 4,584 (d)
BURLINGTON NORTHERN AND SANTA 2012 4.255% 9,978 9,978 9,3248,529 8,529 7,874 (d)
BURLINGTON NORTHERN SANTA FE C 2010 7.125% 5,000 5,592 5,4425,482 5,323
CADBURY SCHWEPPES US 2008 3.875% 12,500 12,479 12,13911,000 10,988 10,713 (d)
CAESARS ENTERTAINMENT INC 2013 7.000% 1,000 1,071 1,0701,063 1,023
CALIFORNIA STEEL INDUSTRIES 2014 6.125% 1,500 1,493 1,4031,429
CANADIAN NATL RAILWAY COMPANYCO 2009 4.250% 15,250 15,215 14,87115,225 14,868
CARDINAL HEALTH INC 2008 6.250% 16,585 17,431 16,983
CARNIVAL PLC 2007 3.750% 10,000 9,983 9,77517,108 16,772
F-32
AMERIPRISE CERTIFICATE COMPANY SCHEDULE 1
INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS
AT DECEMBER 31, 2006
BAL HELD AT 12/31/2006
PRINCIPAL AMT OF
BONDS & NOTES OR COST VALUE AT 12/31/2006
ISSUER NAME AND ISSUER TITLE # OF SHARES (NOTES a & c) (NOTE a)
- ------------------------------------------- ---------------------------------------------------------------
CASCADES INC 2013 7.250% 425 435 387433 424
CBS CORPORATION 2007 5.625% 2,500 2,503 2,501
CHESAPEAKE ENERGY CORP 2013 7.500% 1,500 1,570 1,5941,559 1,562
CHESAPEAKE ENERGY CORP 2014 7.500% 1,000 1,021 1,0601,019 1,039
CHESAPEAKE ENERGY CORP 2015 6.375% 300 304 300297
CHESAPEAKE ENERGY CORP 2017 6.500% 210 208 211 (d)205
CHURCH & DWIGHT CO INC 2012 6.000% 1,750 1,758 1,7241,756 1,711
CLOROX COMPANY 2010 4.200% 27,660 27,660 26,832
COMCAST CORP 2011 5.500% 7,500 7,852 7,5437,791 7,534
COMMUNITY HEALTH SYSTEMS INC 2012 6.500% 2,350 2,372 2,288
CONOCO FUNDING CO 2006 5.450% 3,000 3,028 3,0122,368 2,315
COTT BEVERAGES INC 2011 8.000% 1,750 1,739 1,7941,740 1,785
CROWN AMERICAS INC 2013 7.625% 1,250 1,250 1,288
CROWN AMERICAS INC 2015 7.750% 1,145 1,176 1,188
CSC HOLDINGS INC 2007 7.875% 2,500 2,455 2,5442,477 2,531
CSC HOLDINGS INC 2012 7.000%7.250% 500 513 473512 488 (d)
CSX CORP 2009 4.875% 8,000 8,076 7,963
CVS CORP 2009 4.000% 17,500 17,567 16,831
DAIMLERCHRYSLER NA HLDG 2006 6.400% 6,000 6,024 6,02817,549 16,919
DAIMLERCHRYSLER NA HLDG 2008 4.750% 9,000 9,232 8,9179,120 8,927
DAIMLERCHRYSLER NA HLDG 2008 4.050% 10,000 10,080 9,73410,048 9,787
DAVITA INC 2013 6.625% 1,000 999 1,0181,003
DEL MONTE CORPORATIONFOODS CO 2015 6.750% 1,500 1,510 1,4631,509 1,485
DENBURY RESOURCES INC 2013 7.500% 665 684681 675
DEX MEDIA WEST LLC/DEX MEDIA F 2010 8.500% 890 928 932
DEX MEDIA WEST 2011 5.875% 1,250 1,250 1,258
DIRECT TV918 924
DIRECTV HOLDINGS LLC 2015 6.375% 1,985 1,963 1,940
DISNEY COMPANY - THE WALT 2006 5.500% 10,000 10,015 10,0461,965 1,903
DISNEY COMPANY - THE WALT 2007 5.375% 5,000 4,996 5,0284,999 4,999
DOMINOS INC 2011 8.250% 500 514 518 523
DONNELLEY - RR & SONS 2009 3.750% 7,500 7,493 7,107
DOW CHEMICAL 2009 4.027% 22,500 22,500 21,60421,611 (d)
DR HORTON INC 2009 8.000% 2,000 1,997 2,091
DR HORTON INC 2012 5.375% 5,825 5,803 5,643
DRS TECHNOLOGIES INC 2013 6.875% 2,550 2,592 2,4382,335 2,365 2,353
ECHOSTAR DBS CORP 2008 5.750% 1,750 1,755 1,7151,753 1,743
ECHOSTAR DBS CORP 2011 6.375% 1,000 1,000 963
EMMIS COMMUNICATIONS CORP 2012 6.875% 1,000 1,004 994
ENCORE ACQUISITION CO 2014 6.250% 1,000 955 950959 938
ENCORE ACQUISITION CO 2015 6.000% 160 151 146
ENERGIZER HOLDINGS INC 2007 3.440% 6,000 6,000 5,8175,871 (d)
ENERGIZER HOLDINGS INC 2008 4.900% 4,000 4,000 3,9773,948 (d)
EQUIFAX INC 2007 4.950% 4,000 3,997 3,997
F-34
3,999 3,972
EQUISTAR CHEMICALS LP 2009 8.750% 1,500 1,533 1,571
FISHER SCIENTIFIC INTERNATIONA 2015 6.125% 675 678 667
FLEXTRONICS INTL LTD 2013 6.500% 1,050 1,058 1,037
GARDNER DENVER INC 2013 8.000% 250 250 260
GENERAL ELECTRIC CAP CORP 2008 3.500% 7,500 7,498 7,330
GENERAL ELECTRIC CAP CORP 2007 5.375% 5,000 4,999 5,000
GENERAL ELECTRIC CAP CORP 2008 4.250% 4,000 3,995 3,959
GENERAL MOTORS ACCEPTANCE CORP 2011 6.875% 12,500 13,122 12,821
GEORGIA GULF CORP 2013 7.125% 2,450 2,533 2,168
GIBRALTAR INDUSTRIES 2015 8.000% 250 250 245
HALLMARK CARDS INC 2008 4.220% 10,000 10,000 9,622 (d)
HCA INC 2012 6.300% 1,800 1,820 1,647
HERTZ CORP 2014 8.875% 1,645 1,657 1,723 (d)
HILTON HOTELS CORP 2009 7.200% 1,500 1,529 1,564
HOST MARRIOTT L.P. 2013 7.125% 2,000 2,051 2,045
INDESIT COMPANY SPA 2009 5.170% 19,000 19,000 18,553 (d)
ING SECURITY LIFE INSTITUTIONA 2010 4.250% 23,750 23,730 23,124 (d)
INTERNATIONAL PAPER CO 2008 3.800% 15,000 15,030 14,694
JONES APPAREL GROUP INC 2009 4.250% 11,250 11,248 10,850
K HOVNANIAN ENTERPRISES INC 2014 6.375% 1,000 1,025 960
K HOVNANIAN ENTERPRISES INC 2015 6.250% 750 750 713
F-33
AMERIPRISE CERTIFICATE COMPANY SCHEDULE I1
INVESTMENTS OFIN SECURITIES INOF UNAFFILIATED ISSUERS
AT DECEMBER 31, 20052006
BAL HELD AT 12/31/052006
PRINCIPAL AMT OF
BONDS & NOTES OR # OF COST VALUE AT 12/31/052006
ISSUER NAME AND ISSUER TITLE # OF SHARES (NOTES a & c) (NOTE a)
- ----------------------------------------------------- ------------------------------------------------------------------------------------------------ ---------------------------------------------------------------
EQUISTAR CHEMICALS LP 2009 8.750% 1,500 1,546 1,579
FISHER SCIENTIFIC INTL INC 2015 6.125% 1,175 1,182 1,175 (d)
FLEXTRONICS INTERNATIONAL 2013 6.500% 1,050 1,060 1,067
GARDNER DENVER INC 2013 8.000% 250 250 263
GENERAL ELECTRIC CAP CORP 2008 3.500% 7,500 7,496 7,279
GENERAL ELECTRIC CAP CORP 2010 4.250% 2,000 1,993 1,939
GENERAL ELECTRIC CAP CORP 2007 5.375% 5,000 4,995 5,031
GENERAL ELECTRIC CAP CORP 2008 4.250% 4,000 3,990 3,954
GENERAL MOTORS ACCEPTANCE CORP 2011 6.875% 12,500 13,234 11,399
GEORGIA GULF CORP 2013 7.125% 2,450 2,547 2,514
GIBRALTAR INDUSTRIES 2015 8.000% 250 250 250 (d)
HALLMARK CARDS INC 2008 4.220% 10,000 10,000 9,684 (d)
HCA INC 2012 6.300% 1,800 1,822 1,809
HCA INC 2009 5.500% 500 502 494
HILTON HOTELS CORP 2009 7.200% 1,500 1,538 1,575
HORTON D R INC 2009 8.000% 2,000 1,996 2,128
HORTON D R INC 2012 5.375% 5,825 5,799 5,628
HOST MARRIOTT L.P. 2013 7.125% 2,000 2,061 2,080
ING SECURITY LIFE INSTITUTIONA 2010 4.250% 23,750 23,724 23,148 (d)
ING SECURITY LIFE INSTITUTIONA 2010 4.340% 11,750 11,767 11,757 (d)
INTERNATIONAL PAPER COMPANY 2008 3.800% 15,000 15,054 14,541
JONES APPAREL GROUP INC 2006 7.875% 2,000 1,999 2,018
JONES APPAREL GROUP INC 2009 4.250% 11,250 11,248 10,722
K HOVNANIAN ENTERPRISES INC 2014 6.375% 1,000 1,027 946
K HOVNANIAN ENTERPRISES INC 2015 6.250% 750 750 706
KB HOME 2014 5.750% 1,660 1,652 1,5651,653 1,528
KB HOME 2015 5.875% 2,035 2,024 1,9192,025 1,866
KELLOGG CO.CO 2008 2.875% 5,000 4,999 4,7685,000 4,831
KENDALL-JACKSON WINE ESTATES L 2009 5.456%6.630% 12,000 12,000 11,30712,000 (d)
KRAFT FOODS INC 2006 4.625% 15,000 14,996 14,963
KRAFT FOODS INC 2011 5.625% 9,250 9,611 9,4639,556 9,347
KRAFT FOODS INC 2008 4.000% 4,000 3,987 3,897
KROGER COMPANY 2006 8.150% 4,000 4,000 4,0603,991 3,916
L-3 COMMUNICATIONS CORP 2013 6.125% 2,750 2,751 2,7292,750 2,695
L-3 COMMUNICATIONS CORP 2015 5.875% 1,000 1,000 970965
LIN TELEVISION CORP 2013 6.500% 1,500 1,482 1,4381,484 1,429
MANITOWOC CO 2013 7.125% 1,575 1,603 1,6181,599 1,591
MASCO CORP 2007 4.625% 5,000 4,996 4,959
MASSEY ENERGY COMPANY 2024 6.875% 990 991 999 (d)4,998 4,964
MAY DEPT STORES 2009 4.800% 17,500 17,563 17,256
MEDIANEWS17,547 17,221
MEDIA NEWS GROUP INC 2013 6.875% 1,500 1,494 1,434 (d)1,495 1,358
MERITAGE CORP 2015 6.250% 575 545 523845 797 803
MERITOR AUTOMOTIVE INC 2009 6.800% 500 513 46687 88 85
MGM MIRAGE INC 2009 6.000% 2,250 2,259 2,2392,257 2,253
MIRANT NORTH AMERICA LLC 2013 7.375% 490 496 496 (d)975 987 990
MOHEGAN TRIBAL GAMING AUTHORIT 2009 6.375% 500 504 503 MOLSON COORS CAPITAL FINANCE U 2010 4.850% 5,000 5,000 4,931500
MOOG INC 2015 6.250% 1,500 1,514 1,4781,512 1,455
NALCO COMPANY 2011 7.750% 1,500 1,538 1,5411,529 1,534
NEWFIELD EXPLORATION CO 2011 7.625% 2,500 2,568 2,6752,557 2,619
NEWFIELD EXPLORATION CO 2014 6.625% 200 209 204
NISOURCE INC 2006 3.628% 10,000 10,021 9,892208 200
NORAMPAC INC 2013 6.750% 2,500 2,487 2,4132,486 2,431
NORTHROP GRUMMAN CORP 2011 7.125% 5,000 5,499 5,4485,411 5,333
NOVA CHEMICALS CORPORATION 2012 6.500% 1,800 1,872 1,7441,861 1,706
NOVELIS INC 2015 7.500%8.250% 1,300 1,331 1,2121,337 1,258 (d)
OCCIDENTAL PETROLEUM CORP 2008 7.375% 7,500 8,016 8,012
OFFICEMAX INC 2013 7.000% 1,500 1,573 1,474
OFFSHORE LOGISTICS INC 2013 6.125% 500 481 4681,563 1,354
OMNICARE INC 2013 6.125% 1,750 1,776 1,7281,771 1,676
OMNICARE INC 2015 6.875% 575 584 584
F-35
583 568
OWENS-BROCKWAY 2011 7.750% 1,500 1,537 1,541
PACIFIC ENERGY PARTNERS L.P. 2014 7.125% 500 507 513
PACIFIC ENERGY PARTNERS L.P. 2015 6.250% 250 252 244
PACKAGING CORP OF AMERICA 2008 4.375% 3,250 3,245 3,187
PEABODY ENERGY CORP 2013 6.875% 2,800 2,871 2,870
PEABODY ENERGY CORP 2016 5.875% 1,000 1,006 975
PRAXAIR INC 2008 2.750% 15,000 14,980 14,473
RAYTHEON COMPANY 2010 6.550% 1,655 1,787 1,715
RAYTHEON COMPANY 2010 6.000% 638 683 652
RAYTHEON COMPANY 2007 4.500% 2,995 3,005 2,971
RIO TINTO LTD 2008 2.625% 12,500 12,499 11,957
ROGERS CABLE SYSTEMS 2013 6.250% 1,500 1,518 1,511
RR DONNELLEY & SONS CO 2009 3.750% 7,500 7,495 7,219
SAFEWAY INC 2007 4.800% 5,000 4,999 4,973
SARA LEE CORP 2008 2.750% 15,000 14,984 14,413
SCOTTS COMPANY 2013 6.625% 1,500 1,522 1,571
SHAW COMMUNICATIONS INC 2011 7.250% 1,250 1,288 1,298
SILGAN HOLDINGS INC 2013 6.750% 1,000 1,001 980
SPEEDWAY MOTORSPORTS INC 2013 6.750% 1,000 1,009 996
STANDARD-PACIFIC CORP 2008 6.500% 1,500 1,502 1,500
STANDARD-PACIFIC CORP 2010 6.500% 295 297 288
STANLEY WORKS/THE 2007 3.500% 2,500 2,498 2,460
STARWOOD HOTELS AND RESORTS WO 2012 7.875% 500 539 528
STATION CASINOS INC 2012 6.000% 1,660 1,634 1,575
SUNGARD DATA 2014 4.875% 370 330 326
THOMSON CORP 2009 4.250% 7,500 7,469 7,285
TRANSDIGM INC 2014 7.750% 720 720 742
TRIAD HOSPITALS INC 2013 7.000% 500 510 503
F-34
AMERIPRISE CERTIFICATE COMPANY SCHEDULE I1
INVESTMENTS OFIN SECURITIES INOF UNAFFILIATED ISSUERS
AT DECEMBER 31, 20052006
BAL HELD AT 12/31/052006
PRINCIPAL AMT OF
BONDS & NOTES OR # OF COST VALUE AT 12/31/052006
ISSUER NAME AND ISSUER TITLE # OF SHARES (NOTES a & c) (NOTE a)
- ----------------------------------------------------- ------------------------------------------------------------------------------------------------ ---------------------------------------------------------------
OWENS-BROCKWAY 2011 7.750% 1,500 1,547 1,566
PACIFIC ENERGY PARTNERS L.P. 2014 7.125% 500 507 515
PACIFIC ENERGY PARTNERS L.P. 2015 6.250% 250 252 246 (d)
PACKAGING CORP OF AMERICA 2008 4.375% 3,250 3,242 3,151
PEABODY ENERGY CORP 2013 6.875% 2,800 2,886 2,912
PEABODY ENERGY CORP 2016 5.875% 1,000 1,007 974
PRAXAIR INC. 2008 2.750% 15,000 14,967 14,253
RAYTHEON COMPANY 2010 6.550% 1,655 1,825 1,744
RAYTHEON COMPANY 2010 6.000% 638 693 660
RAYTHEON COMPANY 2007 4.500% 2,995 3,017 2,969
RIO TINTO LTD 2008 2.625% 12,500 12,498 11,759
ROGERS CABLE SYSTEMS 2013 6.250% 1,500 1,520 1,479
SAFEWAY INC 2007 4.800% 5,000 4,997 4,981
SARA LEE CORP 2008 2.750% 15,000 14,974 14,187
SCOTTS COMPANY 2013 6.625% 1,500 1,525 1,519
SEAGATE TECHNOLOGY HDD HOLDING 2009 8.000% 250 262 263
SHAW COMMUNICATIONS INC 2011 7.250% 1,250 1,295 1,303
SILGAN HOLDING 2013 6.750% 1,000 1,001 995
SPEEDWAY MOTOR SPORT 2013 6.750% 1,000 1,010 1,013
STANDARD PACIFIC CP 2008 6.500% 1,500 1,503 1,483
STANDARD PACIFIC CP 2010 6.500% 295 298 281
STANLEY WORKS 2007 3.500% 2,500 2,496 2,440
STARWOOD HOTELS AND RESORTS WO 2012 7.875% 500 545 551
STATION CASINOS INC. 2012 6.000% 1,660 1,630 1,656
SUNGARD DATA 2014 4.875% 370 325 322
SUSQUEHANNA MEDIA CO 2013 7.375% 1,000 1,030 1,065
TEXAS GENCO HOLDINGS 2014 6.875% 2,250 2,327 2,436 (d)
THOMSON CORP 2009 4.250% 7,500 7,459 7,304
TIME WARNER INC 2006 6.125% 8,000 7,999 8,024
TRANSDIGM INC 2011 8.375% 655 685 689
TRIAD HOSPITALS 2013 7.000% 500 512 501
TRIAD HOSPITALSINC 2012 7.000% 1,500 1,500 1,5321,526
TYCO INTL GROUP SA 2009 6.125% 13,500 14,031 13,79813,865 13,700
UNION PACIFIC CORP 2009 3.875% 6,000 5,990 5,7975,993 5,814
UNION PACIFIC CORP 2010 3.625% 3,000 2,986 2,8202,989 2,834
UNION PACIFIC RAILROAD COMPANY 2012 3.860% 13,242 13,242 12,32910,245 10,245 9,839 (d)
UNION TANK 2008 6.500% 1,653 1,652 1,6801,102 1,101 1,109
UNITED RENTALS - NORTH AMERICA 2012 6.500% 915 914 891904
UNITED STATES STEEL CORP 2010 9.750% 1,500 1,561 1,6311,545 1,594
VAIL RESORTS INC 2014 6.750% 500 508 500650 658 650
VALERO ENERGY CORP 2007 6.125% 3,500 3,498 3,5493,500 3,503
VALMONT INDUSTRIES 2014 6.875% 1,500 1,503 1,5111,502 1,487
VALSPAR CORP 2007 6.000% 10,000 9,985 10,115
VIACOM INC 2007 5.625% 2,500 2,512 2,5139,996 10,014
VIDEOTRON - LE GRPE LTD 2014 6.875% 1,000 1,018 1,0131,015 1,006
VIN & SPIRIT AB - V&S 2008 3.570% 15,000 15,000 14,37514,552 (d)
WABTEC CORP 2013 6.875% 1,360 1,378 1,374
WALMART STORES 2006 5.450% 10,000 10,042 10,0431,376 1,352
WCI COMMUNITIES INC 2013 7.875% 1,810 1,849 1,7061,843 1,619
WEYERHAEUSER CO 2008 5.950% 10,000 10,208 10,202
XTO ENERGY INC 2013 6.250% 1,500 1,536 1,59510,137 10,079
XTO ENERGY INC 2014 4.900% 1,000 994 973954
TOTAL - CORPORATE - INDUSTRIAL 700,998 707,656 690,228623,644 628,080 612,960
Corporate - Utility
ALLTEL CORP 2007 4.656% 10,000 10,092 9,955
AMERICAN ELECTRIC POWER 2010 5.375% 6,000 6,240 6,048
AMERICAN ELECTRIC POWER 2009 5.527% 15,000 15,000 14,105 (d)
AMERITECH CAPITAL FUNDING CORP 2008 6.150% 7,000 7,425 7,130
BELLSOUTH CAP FUNDING 2010 7.750% 15,000 16,811 16,412
F-36
AMERIPRISE CERTIFICATE COMPANY SCHEDULE I
INVESTMENTS OF SECURITIES IN UNAFFILIATED ISSUERS
AT DECEMBER 31, 2005
BAL HELD AT 12/31/05
PRINCIPAL AMT OF
BONDS & NOTES OR # OF COST VALUE AT 12/31/05
ISSUER NAME AND ISSUER TITLE SHARES (NOTES a & c) (NOTE a)
- ----------------------------------------------------- -----------------------------------------------------
7,220 7,032
CINCINNATI BELL 2013 7.250% 1,250 1,270 1,300
CINGULAR WIRELESS LLC 2006 5.625% 5,000 4,996 5,0361,267 1,294
COMCAST CABLE COMMUNICATIONS I 2008 6.200% 15,000 15,853 15,398
COMCAST CABLE COMMUNICATIONS I 2006 6.375% 1,300 1,300 1,30215,567 15,237
CONSOLIDATED EDISON CO OF NEW 2008 6.250% 6,000 6,339 6,1506,179 6,054
CONSOLIDATED NAT GAS CO 2008 6.625% 5,700 6,114 5,9295,977 5,822
CONSUMERS ENERGY 2008 6.375% 3,500 3,675 3,5823,592 3,529
CONSUMERS ENERGY 2008 4.250% 9,500 9,669 9,3049,596 9,355
DETROIT ENERGY 2009 6.650% 5,000 5,357 5,2225,254 5,133
DEUTSCHE TELEKOM INTERNATIONAL 2010 8.500%8.000% 15,750 18,334 17,85717,700 17,055
DEUTSCHE TELEKOM INTERNATIONAL 2008 3.875% 5,000 5,001 4,882
DPL INC 2011 6.875% 899 926 9474,894
DUKE ENERGY CORP.CORP 2008 3.750% 4,500 4,501 4,3934,500 4,418
DUKE ENERGY CORP.CORP 2008 4.200% 10,000 10,050 9,780
ENERGY EAST CORP 2006 5.750% 7,500 7,492 7,540
FIRSTENERGY CORP. 2006 5.500% 10,000 9,998 10,028
FLORIDA POWER CORP 2008 4.880% 10,000 10,000 9,999
FPL FUELS INC 2006 2.340% 5,370 5,370 5,312 (d)
FPL FUELS INC 2006 2.340% 4,630 4,630 4,579 (d)10,033 9,799
FPL GROUP CAPITAL INC. 2007 4.086% 15,000 15,094 14,851
FRANCE TELECOM 2006 7.200% 14,301 14,385 14,35815,011 14,976
GULF STATE UTILITIES 2009 4.810%5.769% 10,000 10,000 9,7559,978
KANSAS CITY POWER & LIGHT 2007 6.000% 4,000 3,998 4,0334,000 4,004
NEVADA POWER COMPANY 2016 5.950% 175 175 175
NISOURCE FINANCE CORPORATION 2010 7.875% 7,500 8,549 8,310
NISOURCE FINANCE CORPORATION 2006 3.200% 3,000 3,001 2,952
NORTHERN STATES POWER 2010 4.750% 3,500 3,494 3,463
NRG ENERGY INC 2013 8.000% 1,000 1,019 1,1158,353 8,091
PACIFIC GAS AND ELECTRIC COMPA 2009 3.600% 17,500 17,202 16,788
PACIFIC GAS AND ELECTRIC COMPA 2011 4.200% 6,250 6,237 5,98117,292 16,913
PACIFICORP 2008 4.300% 6,500 6,495 6,400
PLAINS EXPLOR & PROD 2014 7.125% 895 904 9266,497 6,395
PPL ELECTRIC UTILITIES CORPORA 2007 5.875% 6,135 6,423 6,2216,247 6,146
PROGRESS ENERGY CAROLINAS 2009 5.950% 4,000 4,194 4,103
PROGRESS ENERGY INC 2006 6.750% 2,100 2,100 2,1074,135 4,049
PSEG POWER 2007 5.381% 5,000 5,044 5,011
PUB SERV CO OF COLORADO 2008 4.375% 8,730 8,859 8,6095,021 4,994
PUGET ENERGY INC 2008 3.363% 3,500 3,500 3,3683,403
RELIANT RESOURCES INC 2014 6.750% 1,500 1,523 1,3131,520 1,470
SBC COMMUNICATIONS INC 2011 6.250% 7,000 7,487 7,318
SBC COMMUNICATIONS INC 2006 5.750% 5,000 5,013 5,0137,402 7,227
SBC COMMUNICATIONS INC 2009 4.125% 5,000 4,973 4,8284,980 4,856
SCANA CORP 2008 4.560%5.519% 20,000 20,000 20,013
SEMPRA ENERGY 2009 4.750% 11,000 10,996 10,846
SOUTHERN CA EDISON 2007 4.555% 15,000 14,985 14,985
SOUTHERN CA GAS CO 2009 4.580% 10,000 10,000 9,99820,034
SOUTHERN COMPANY CAPITAL FUNDI 2007 5.300% 6,500 6,500 6,497 6,498
SOUTHWESTERN PUB SRV CO 2006 5.125% 7,000 6,997 7,001
SPRINT CAPITAL CORP 2011 7.625% 10,000 11,155 11,02710,950 10,707
TAMPA ELECTRIC CO 2007 5.375% 3,785 3,931 3,8013,842 3,781
TELECOM ITALIA 2010 4.000% 15,000 14,795 14,28714,843 14,323
TELUS CORP ORD 2007 7.500% 9,000 9,404 9,2949,121 9,067
TELUS CORP ORD 2011 8.000% 9,900 11,347 11,09811,107 10,826
TRANS CONTINENTAL GAS PIPELINE 2011 7.000% 750 789 783 771
US WEST COMMUNICATIONS INC 2015 7.625% 510 515 546
(d)
VERIZON NEW YORK INC 2012 6.875% 4,000 4,336 4,170
VERIZON PENNSYLVANIA 2011 5.650% 12,250 12,704 12,213
VIRGINIA ELEC & PWR CO 2006 5.750% 4,675 4,674 4,686
WISCONSIN ENERGY 2008 5.500% 2,500 2,572 2,539
XCEL ENERGY 2008 3.400% 2,500 2,455 2,408
TOTAL - CORPORATE - UTILITY 460,680 474,085 465,206
F-37
4,288 4,147
F-35
AMERIPRISE CERTIFICATE COMPANY SCHEDULE I1
INVESTMENTS OFIN SECURITIES INOF UNAFFILIATED ISSUERS
AT DECEMBER 31, 20052006
BAL HELD AT 12/31/052006
PRINCIPAL AMT OF
BONDS & NOTES OR # OF COST VALUE AT 12/31/052006
ISSUER NAME AND ISSUER TITLE # OF SHARES (NOTES a & c) (NOTE a)
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