Prudential 2012 Annual Report Download - page 163

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
14. SHORT-TERM AND LONG-TERM DEBT (continued)
As of December 31,
2012 2011
(in millions)
Consolidated Statements of Financial Position:
Total assets ................................................................................ $473,201 $399,740
Total liabilities ............................................................................. $452,626 $379,942
Total member’s equity ................................................................... 20,566 19,788
Noncontrolling interests .................................................................. 9 10
Total equity ............................................................................... 20,575 19,798
Total liabilities and equity .................................................................... $473,201 $399,740
Years Ended December 31,
2012 2011 2010
(in millions)
Consolidated Statements of Operations:
Total revenues ..................................................................... $56,078 $25,241 $23,961
Total benefits and expenses ........................................................... 55,332 24,206 21,408
Income from continuing operations before income taxes and equity in earnings of operating joint
ventures ........................................................................ 746 1,035 2,553
Net income ....................................................................... 807 813 1,886
Less: Income (loss) attributable to noncontrolling interests .................................. (1) (13) 1
Net income attributable to Prudential Holdings, LLC. ...................................... $ 808 $ 826 $ 1,885
Consolidated Statements of Cash Flows:
Cash flows from operating activities .................................................... $ 2,756 $ 5,060 $ 4,492
Cash flows used in investing activities .................................................. (4,620) (4,741) (3,684)
Cash flows from (used in) financing activities ............................................ 1,113 603 (4,367)
Effect of foreign exchange in cash and cash equivalents .................................... (7) (15) (28)
Net increase (decrease) in cash and cash equivalents ....................................... $ (758) $ 907 $ (3,587)
Prudential Financial is a holding company and is a legal entity separate and distinct from its subsidiaries. The rights of Prudential
Financial to participate in any distribution of assets of any subsidiary, including upon its liquidation or reorganization, are subject to the
prior claims of creditors of that subsidiary, except to the extent that Prudential Financial may itself be a creditor of that subsidiary and its
claims are recognized. PHLLC and its subsidiaries have entered into covenants and arrangements with third parties in connection with the
issuance of the IHC debt which are intended to confirm their separate, “bankruptcy-remote” status, by assuring that the assets of PHLLC
and its subsidiaries are not available to creditors of Prudential Financial or its other subsidiaries, except and to the extent that Prudential
Financial and its other subsidiaries are, as shareholders or creditors of PHLLC and its subsidiaries, or would be, entitled to those assets.
At December 31, 2012, the Company was in compliance with all IHC debt covenants.
Interest Expense
In order to modify exposure to interest rate and currency exchange rate movements, the Company utilizes derivative instruments,
primarily interest rate swaps, in conjunction with some of its debt issues. The impact of these derivative instruments are not reflected in the
rates presented in the tables above. For those derivative instruments that qualify for hedge accounting treatment, interest expense was
increased by $16 million, by $12 million, and by $5 million for the years ended December 31, 2012, 2011, and 2010, respectively. See
Note 21 for additional information on the Company’s use of derivative instruments.
Interest expense for short-term and long-term debt was $1,389 million, $1,315 million and $1,224 million for the years ended
December 31, 2012, 2011 and 2010, respectively. This includes interest expense of $8 million, $17 million and $39 million for the years
ended December 31, 2012, 2011 and 2010, respectively, reported in “Net investment income.”
Prudential Financial, Inc. 2012 Annual Report 161