Prudential 2002 Annual Report Download - page 54
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Please find page 54 of the 2002 Prudential annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.2001 to 2000 Annual Comparison. Adjusted operating income decreased $64 million, from $205 million in
2000 to $141 million in 2001 due primarily to lower earnings from asset management and lower asset based
distribution revenues resulting from declines in market value of the underlying assets on which our fees our
based. Although 2000 adjusted operating income reflected expenses related to the consolidation of substantially
all of our public equity management capabilities into our Jennison unit, these expenses were largely offset by
revenues from performance incentive fees that exceeded those earned in 2001.
Revenues
The following table sets forth the Investment Management segment’s revenues, as shown in the table above
under “—Operating Results,” by source for the periods indicated.
Year Ended December 31,
2002 2001 2000
(in millions)
Revenues:
Retail customers(1) ....................................................................... $ 184 $ 210 $ 244
Institutional customers .................................................................... 335 383 409
General account ......................................................................... 221 227 221
Sub-total ........................................................................... 740 820 874
Mutual fund revenues(2) .................................................................. 495 537 593
Totalrevenues ...................................................................... $1,235 $1,357 $1,467
(1) Consists of individual mutual funds and both variable annuities and variable life insurance asset management revenues in our separate
accounts. Fixed annuities and the fixed rate options of both variable annuities and variable life insurance are included in general account.
Also includes funds invested in proprietary mutual funds through our defined contribution plan products.
(2) Represents mutual fund revenues other than asset management fees paid to affiliates, which are included in the appropriate categories
above.
2002 to 2001 Annual Comparison. Revenues, as shown in the table above under “—Operating Results,”
decreased $122 million, from $1.357 billion in 2001 to $1.235 billion in 2002. The decrease came from a decline
of $74 million in revenues from management of institutional and retail customer assets as well as a decline of $42
million in our mutual fund revenue. The decrease in revenues from management of institutional and retail
customer assets came primarily from declines in market value of the underlying equity assets under management
on which our fees are based, as well as lower loan origination and servicing revenue. The decline in mutual fund
revenues was the result of lower average market values of customer accounts on which our fees are based.
2001 to 2000 Annual Comparison. Revenues decreased $110 million, from $1.467 billion in 2000 to
$1.357 billion in 2001. The decrease came primarily from declines of $34 million in revenues from the
management of retail customer assets and $26 million from management of institutional customer assets. The
decrease in revenues from management of retail customer assets came primarily from market value declines on
publicly traded equity securities which resulted in a lower level of average assets under management. The
decrease in revenues from management of institutional customer assets reflected a $25 million performance
incentive fee earned in 2000. Our mutual fund revenues decreased $56 million primarily due to lower asset based
distribution revenues as well as a lower level of fee producing redemptions.
Expenses
2002 to 2001 Annual Comparison. Expenses, as shown in the table above under “—Operating Results,”
decreased $120 million, from $1.216 billion in 2001 to $1.096 billion in 2002. The decrease primarily reflects
decreases in incentive compensation expenses. Additionally, our 2002 results reflect savings associated with cost
reduction initiatives implemented in 2001. In 2002 and 2001 our results reflect $23 million and $55 million,
respectively, in employee termination and facility consolidation costs.
2001 to 2000 Annual Comparison. Expenses decreased $46 million, from $1.262 billion in 2000 to $1.216
billion in 2001 due primarily to a decrease in general and administrative expenses reflecting our expense
Prudential Financial 2002 Annual Report 53