Sun Life 2012 Annual Report Download - page 27

Reconciliation of Net Income from Continuing Operations to Operating Net Income from Continuing
Operations
($ millions) 2012 2011(1)
Reported net income (loss) from Continuing Operations 1,374 225
After-tax gain (loss) on adjustments:
Impact of certain hedges in SLF Canada that do not qualify for hedge accounting (7) (3)
Fair value adjustments on share-based payment awards at MFS (94) (80)
Restructuring and other related costs (4) (29)
Goodwill and intangible asset impairment charges –(196)
Total adjusting items (105) (308)
Operating net income (loss) from Continuing Operations 1,479 533
(1) Some periods have been restated. See Accounting Adjustments.
Reconciliation of EPS from Continuing Operations to Operating EPS from Continuing Operations
($ millions) 2012 2011(1)
Reported EPS (diluted) from Continuing Operations ($) 2.29 0.39
Less:
Impact of certain hedges in SLF Canada that do not qualify for hedge accounting (0.01) (0.01)
Fair value adjustments on share-based payment awards at MFS (0.16) (0.14)
Restructuring and other related costs –(0.05)
Goodwill and intangible asset impairment charges –(0.33)
Impact of convertible securities on diluted EPS (0.03) –
Operating EPS (diluted) from Continuing Operations 2.49 0.92
(1) Some periods have been restated. See Accounting Adjustments.
Management also uses the following non-IFRS financial measures:
Adjusted revenue. This measure excludes from revenue the impact of: (i) currency; (ii) fair value changes in FVTPL assets and
liabilities; (iii) reinsurance for the insured business in SLF Canada’s GB operations; and (iv) net premiums from Life and Investment
Products in SLF U.S. that closed to new sales effective December 30, 2011. This measure is an alternative measure of revenue that
provides greater comparability across reporting periods.
Adjusted premiums and deposits. This measure excludes from premiums and deposits the impact of: (i) currency; (ii) reinsurance for
the insured business in SLF Canada’s GB operations; and (iii) net premiums and deposits from Life and Investment Products in SLF
U.S. that closed to new sales effective December 30, 2011. This measure is an alternative measure of premiums and deposits that
provides greater comparability across reporting periods. A reconciliation of adjusted premiums and deposits is provided in this
document under the heading Premiums and Deposits from Continuing Operations.
Pre-tax operating profit margin ratio for MFS. This ratio is a measure of the underlying profitability of MFS, which excludes certain
investment income and commission expenses that are offsetting. These amounts are excluded in order to neutralize the impact these
items have on the pre-tax operating profit margin ratio, as they are offsetting in nature and have no impact on the underlying profitability
of MFS.
Impact of foreign exchange. Several IFRS financial measures are adjusted to exclude the impact of currency fluctuations. These
measures are calculated using the average currency and period end rates, as appropriate, in effect at the date of the comparative
period.
Equity market, interest rate, credit spread, swap spread and real estate market sensitivities. Our equity market, interest rate,
credit spread, swap spread and real estate market sensitivities are non-IFRS financial measures, for which there are no directly
comparable measures under IFRS. It is not possible to provide a reconciliation of these amounts to the most directly comparable IFRS
measures on a forward-looking basis because we believe it is only possible to provide ranges of the assumptions used in determining
those non-IFRS financial measures, as actual results can fluctuate significantly inside or outside those ranges and from period to
period.
Other. Management also uses the following non-IFRS financial measures for which there are no comparable financial measures in
IFRS: (i) ASO premium and deposit equivalents, mutual fund sales, managed fund sales and total premiums and deposits; (ii) AUM,
mutual fund assets, managed fund assets, other AUM and assets under administration; (iii) the value of new business, which is used to
measure the estimated lifetime profitability of new sales and is based on actuarial calculations; and (iv) assumption changes and
management actions, which is a component of our sources of earnings disclosure. Sources of earnings is an alternative presentation of
our Consolidated Statements of Operations that identifies and quantifies various sources of income. The Company is required to
disclose its sources of earnings by its principal regulator, OSFI.
Impact of Sale of U.S. Annuity Business
On December 17, 2012, SLF Inc. and certain of its subsidiaries entered into a definitive stock purchase agreement with Delaware Life
Holdings, LLC, pursuant to which we agreed to sell our U.S. Annuity Business to Delaware Life Holdings, LLC for a base purchase
price of US$1,350 million, which will be adjusted to reflect the performance of the business through closing. The transaction will consist
Management’s Discussion and Analysis Sun Life Financial Inc. Annual Report 2012 25