Yep, that's how it works.
Your online statement, though, should break out all of the expiration dates for you (mine has: POINTS EXPIRING 12/31/08, POINTS EXPIRING 12/31/09, and POINTS EXPIRING 12/31/10).
Points earned in 2005: already expired (12/31/07)
Points earned in 2006: expire 12/31/08
Points earned in 2007: expire 12/31/09
Points earned in 2008: expire 12/31/10