Prudential 2011 Annual Report Download - page 165

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
3. ACQUISITIONS AND DISPOSITIONS (continued)
Star and Edison Businesses amounted to $173 million. Based on the Company’s final calculation of the 338(g) election the Company
determined that none of the goodwill is tax deductible. In accordance with U.S. GAAP, goodwill will not be amortized but rather will be
tested at least annually for impairment. The test will be performed at the reporting unit level which for this acquisition is the International
Insurance segment’s Gibraltar Life and Other operations.
Results of the Star and Edison Businesses since the Acquisition Date
The Star and Edison Businesses use a November 30 fiscal year end for purposes of inclusion in the Company’s Consolidated Financial
Statements. Due to this one month reporting lag, the Company’s Consolidated Financial Statements as of December 31, 2011 include the
results for the Star and Edison Businesses from February 1, 2011 through November 30, 2011. The following table presents selected
financial information reflecting results for the Star and Edison Businesses that are included in the Company’s Consolidated Statements of
Operations for the year ended December 31, 2011.
February 1, 2011 through
November 30, 2011
Total revenues .............................................................................. $4,874
Income from continuing operations .............................................................. 642
The results of the Star and Edison Businesses in the table above include a pre-tax charge of $27 million for estimated claims and
expenses arising from the earthquake and tsunami in Japan on March 11, 2011. The results of the Star and Edison Businesses in the table
above do not reflect the impact of transaction and integration costs on the Company’s results. Transaction costs represent costs directly
related to effecting the acquisition. Integration costs are costs associated with the integration of the core operations of the Star and Edison
Businesses with the Gibraltar Life operations. Both transaction and integration costs are expensed as incurred and are included in “General
and administrative expenses.” For the year ended December 31, 2011, the Company incurred $213 million of transaction and integration
costs reflected in the International Insurance segment and $8 million of costs related to the acquisition reflected in Corporate and Other
operations.
Supplemental Unaudited Pro Forma Information
The following supplemental information presents selected unaudited pro forma information for the Company assuming the acquisition
had occurred as of January 1, 2010. This pro forma information does not purport to represent what the Company’s actual results of
operations would have been if the acquisition had occurred as of the date indicated or what such results would be for any future periods.
The pro forma information does not reflect the impact of future events that may occur, including but not limited to, expense efficiencies
arising from the acquisition and also does not give effect to certain one-time charges that the Company expects to incur, such as
restructuring and integration costs.
Year Ended December 31,
2011 2010
(in millions, except per share amount)
Total revenues ............................................................................ $50,365 $42,596
Income from continuing operations ............................................................ 3,868 3,227
Net income attributable to Prudential Financial, Inc. .............................................. 3,831 3,248
Earnings per share-Financial Services Businesses
Basic:
Income from continuing operations attributable to Prudential Financial, Inc. per share of Common
Stock ......................................................................... $ 7.58 $ 5.67
Net income attributable to Prudential Financial, Inc. per share of Common Stock ............... 7.65 5.73
Diluted:
Income from continuing operations attributable to Prudential Financial, Inc. per share of Common
Stock ......................................................................... $ 7.48 $ 5.61
Net income attributable to Prudential Financial, Inc. per share of Common Stock ............... 7.55 5.67
Earnings per share-Closed Block Business
Basic and Diluted:
Income from continuing operations attributable to Prudential Financial, Inc. per share of Class B
Stock ......................................................................... $ 55.50 $222.00
Net income attributable to Prudential Financial, Inc. per share of Class B Stock ................. 55.50 222.50
Sale of Real Estate Brokerage Franchise and Relocation Services Business
On December 6, 2011, the Company sold its real estate brokerage franchise and relocation services business (“PRERS”) to Brookfield
Asset Management, Inc. The Prudential Real Estate Financial Services Company of America Inc. (“PREFSA”), a finance subsidiary of the
Company with investments in a limited number of real estate brokerage franchises, was excluded from the transaction. The proceeds from
the sale, before transaction related expenses, were $108 million and resulted in a pre-tax gain of $49 million and an after tax gain of $62
million.
Prudential Financial, Inc. 2011 Annual Report 163