Prudential 2011 Annual Report Download - page 166

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
3. ACQUISITIONS AND DISPOSITIONS (continued)
Under the sale agreement, the buyer may continue to use the Company’s trademark during a limited transition period and the real
estate brokerage franchisees may continue to use the Company’s trademark, based on the terms of their respective franchise agreements. In
addition, the Company has agreed to provide certain Brookfield affiliates with transitional financing for the transferred relocation services
business. See Note 23 for more information on the transitional financing arrangements.
PRERS does not qualify as a Discontinued Operation due to the continuing involvement through the financing provided to Brookfield
and the retained equity in PREFSA. Results related to PRERS are included in Corporate and Other operations as a divested business.
Sale of investment in Wachovia Securities
On December 31, 2009 the Company completed the sale of its minority joint venture interest in Wachovia Securities. See Note 7 for
more details on this transaction.
Acquisition of Yamato Life
On May 1, 2009, the Company’s Gibraltar Life operations acquired Yamato Life, a Japanese life insurance company that declared
bankruptcy in October 2008. Gibraltar Life served as the reorganization sponsor for Yamato and under the reorganization agreement
acquired Yamato by contributing $72 million of capital to Yamato. At the date of acquisition the Company recognized $2.3 billion of assets
and $2.3 billion of liabilities related to Yamato. Subsequent to the acquisition, the Company renamed the acquired company The Prudential
Gibraltar Financial Life Insurance Company, Ltd.
Acquisition of Hyundai Investment and Securities Co., Ltd.
In 2004, the Company acquired an 80 percent interest in Hyundai Investment and Securities Co., Ltd., a Korean asset management
firm, from an agency of the Korean government. In January, 2008, the Company acquired the remaining 20 percent. In February 2010, the
Company signed a definitive agreement to sell Prudential Investment & Securities Co., Ltd. and Prudential Asset Management Co., Ltd,
which together comprise its Korean asset management operations. This transaction closed on June 1, 2010 and the results of these
operations are now reflected in discontinued operations. See below for a further discussion of the sale of these operations.
Discontinued Operations
Income (loss) from discontinued businesses, including charges upon disposition, for the years ended December 31, are as follows:
2011 2010 2009
(in millions)
Global commodities business(1) ................................................................. $16 $30 $ 28
Korean asset management operations(2) ........................................................... 0 37 17
Real estate investments sold or held for sale(3) ..................................................... 37 7 22
Mexican asset management operations(4) .......................................................... 0 6 12
Other(5) .................................................................................... 0 1 2
Income from discontinued operations before income taxes ........................................ 53 81 81
Income tax expense ................................................................... 18 48 100
Income (loss) from discontinued operations, net of taxes .......................................... $35 $33 $(19)
(1) On April 6, 2011, the Company entered into a stock and asset purchase agreement with Jefferies Group, Inc. (“Jefferies”), pursuant to which the
Company agreed to sell to Jefferies all of the issued and outstanding shares of capital stock of the Company’s subsidiaries that conduct its global
commodities business (the “Global Commodities Business”) and certain assets that are primarily used in connection with the Global Commodities
Business. Subsidiaries included in the sale are Prudential Bache Commodities, LLC, Prudential Bache Securities, LLC, Bache Commodities Limited,
and Bache Commodities (Hong Kong) Ltd. On July 1, 2011, the Company completed the sale and received cash proceeds of $422 million, which
includes a final purchase price true-up of $2 million received post closing. Included in the table above for the year ended December 31, 2011, are
after-tax losses of $17 million recorded in connection with the sale of these operations, consisting of pre-tax losses of $18 million and income tax
benefit of $1 million.
(2) In the first quarter of 2010, the Company signed a definitive agreement to sell Prudential Investment & Securities Co. Ltd. and Prudential Asset
Management Co. Ltd., which together comprised the Company’s Korean asset management operations. This transaction closed in the second quarter of
2010. Included within the table above for the year ended December 31, 2010, is an after-tax loss of $5 million recorded in connection with the sale of
these operations, consisting of a pre-tax gain of $29 million and income tax expense of $34 million. Income tax expense reflected above for the year
ended December 31, 2009 include net tax expenses associated with the change in repatriation assumption of the earnings in these operations. Included in
this net tax expense for the year ended December 31, 2009 is a tax benefit that was related to January 1, 2009 balances that were recorded in Other
Comprehensive Income and for which the pre-tax losses were not recorded until 2010.
(3) Reflects the income or loss from discontinued real estate investments.
(4) In the second quarter of 2009, the Company entered into an agreement to sell its mutual fund and banking operations in Mexico. This transaction closed
in the fourth quarter of 2009. Included within the table above for the years ended December 31, 2010 and 2009 are $6 million and $8 million,
respectively of pre-tax gains recorded in connection with the sale of this business.
(5) Includes the results of the equity sales, trading and research operations of Prudential Equity Group, European retail transaction-oriented stockbrokerage
operations and related activities of Prudential Securities Group, Inc. and the Company’s healthcare business.
164 Prudential Financial, Inc. 2011 Annual Report