AMP » Topics » Cash Flows

This excerpt taken from the AMP 10-K filed Mar 8, 2006.

Cash Flows

 

We had $2.5 billion in cash and cash equivalents at December 31, 2005, up from $1.1 billion at December 31, 2004, including cash from discontinued operations, primarily due to a $1.1 billion capital contribution from American Express. We believe cash flows from operations, available cash balances and short-term borrowings will be sufficient to fund our operating liquidity needs.

 

This excerpt taken from the AMP 10-Q filed Nov 14, 2005.

Cash Flows

 

We had $2.6 billion in cash and cash equivalents at September 30, 2005, up from $1.0 billion at December 31, 2004, primarily due to $1.1 billion capital contribution from American Express. We believe cash flows from operations, available cash balances and short-term borrowings will be sufficient to fund our operating liquidity needs.

 

Operating Cash Flows

 

For the nine months ended September 30, 2005, net cash provided by operating activities was $369 million compared to $462 million for the same period in 2004. This decrease reflects lower net income coupled with changes in various operating assets and liabilities, partially offset by net cash provided by the return of seed money from our mutual funds and equity method investments in hedge funds.

 

Investing Cash Flows

 

Our investing activities primarily relate to our available-for-sale investment portfolio. Further, this activity is significantly affected by the net flows of our investment certificate, fixed annuity and universal life products reflected in financing activities. For the nine months ended September 30, 2005, net cash used in investing activities was $91 million compared to $406 million from the same period in 2004. This change resulted primarily from $3.5 billion  in proceeds from the sales of available-for-sale securities for the nine months ended September 30, 2005,  compared to $1.6 billion in the same period one year ago.  This was partially offset by $6.4 billion in purchases of available-for-sale securities during the nine months ended September 30, 2005 compared to $5.0 billion in purchases for the same period in 2004.

 

Financing Cash Flows

 

Our financing activities primarily include the issuance of debt and our sale of annuities and face-amount certificates. We generated $1.3 billion net cash from financing activities as of September 30, 2005, compared to $624 million for the same period in 2004. This change primarily reflects the $1.1 billion capital contribution from American Express, as well as other debt and capital settlements described below.

 

This excerpt taken from the AMP 8-K filed Sep 16, 2005.

Cash Flows

Operating Cash Flows

        For the six months ended June 30, 2005, net cash provided by operating activities was $395 million compared to $582 million for the same period in 2004. This decrease reflects lower net income coupled with changes in various operating assets and liabilities, partially offset by net cash provided by the return of seed money from our mutual funds and equity method investments in hedge funds.

        For the year ended December 31, 2004, net cash provided by operating activities was $911 million, significantly higher than for the year ended December 31, 2003. We generated net cash from operating activities in amounts greater than net income during 2004 primarily due to adjustments for depreciation and amortization, which represent expenses in our consolidated statements of income but do not require cash at the time of provision. Net cash used to fund seed money in our mutual funds and hedge funds, which are classified as trading securities and used to fund equity method investments in hedge funds, substantially decreased in 2004 compared to 2003. Operating cash flows also increased in 2004 due to net cash provided by changes in derivatives and other assets, which can vary significantly due to the amount and timing of payments. Net cash provided by operating activities was significantly lower in 2003 than 2002, as higher net income in 2003 was more than offset by fluctuations in our operating assets and liabilities primarily reflecting cash used to seed new mutual funds, hedge funds and collateralized loan portfolios. In addition, cash was used to purchase derivatives to mitigate interest rate risk.

    Investing Cash Flows

        Our investing activities primarily relate to our available-for-sale investment portfolio. Further, this activity is significantly affected by the net flows of our investment certificate, fixed annuity and universal life products reflected in financing activities. For the six months ended June 30, 2005, net cash provided by investing activities was $290 million compared to net cash used in investing activities of $575 million from the same period in 2004. This change resulted primarily from $285 million in net purchases of available-for-sale securities during the six months ended June 30, 2005 compared to $785 million in net purchases for the same period in 2004. In addition, the continued liquidation of the SLTs, which were originally consolidated under FIN 46, provided $337 million of net cash period over period.

        For the year ended December 31, 2004, we used $2,642 million net cash in investing activities, a significant change from the $8,416 million used in 2003. The change primarily reflects a $3,610 million increase in cash flows from unsettled securities transactions payable and receivable, related to investment transactions near the end of 2002 that settled in 2003. Positive net flows on investment certificate, fixed annuity and universal life products were $2,831 million for the year ended December 31, 2004 and $3,721 million for the same period in 2003. For the year ended December 31, 2003, net cash used in investing activities increased over the $1,516 million used in 2002 primarily due to cash flows from unsettled securities transactions payable and receivable related to investment transactions near the end of 2002 that settled in 2003 and $482 million in cash used for the Threadneedle acquisition in 2003. Positive net flows on investment certificate, fixed annuity and universal life products were $3,721 million for the year ended December 31, 2003 and $4,600 million for the same period in 2002.

    Financing Cash Flows

        Our financing activities primarily include the issuance of debt and our sale of annuities and face-amount certificates. Our borrowing needs are less significant as we generate funds through our operations, primarily through sales of our own asset accumulation, income management and protection

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products. We generated $755 million net cash from financing activities as of June 30, 2005, compared to using $65 million for the same period in 2004. This change reflects $656 million of dividends paid to American Express Company affiliated entities during the six months ended June 30, 2004 compared to no such dividends paid during the same period in 2005. In addition, we had $782 million of positive net flows from our face-amount certificates, fixed annuity and universal life products compared to $628 million for the same period in 2004. Finally, we used $70 million of cash to redeem our outstanding 6.5% medium-term notes at maturity in the first quarter of 2004.

        We generated $1,718 million from financing activities in 2004, down significantly from $4,274 million in 2003 and $4,717 million in 2002. These declines are principally the result of increased dividend payments to American Express Company in 2004 as well as a decrease in consideration received from sales of our annuity products. We paid an aggregate of $1,325 million in dividends, including extraordinary dividends received from IDS Life of $930 million, to American Express Company during 2004, compared to $334 million in dividends in 2003 and $377 million in dividends in 2002.

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