Sun Life 2015 Annual Report Download - page 19

Non-IFRS Financial Measures
We report certain financial information using non-IFRS financial measures, as we believe that these measures provide information that
is useful to investors in understanding our performance and facilitate a comparison of our quarterly and full year results from period to
period. These non-IFRS financial measures do not have any standardized meaning and may not be comparable with similar measures
used by other companies. For certain non-IFRS financial measures, there are no directly comparable amounts under IFRS. These non-
IFRS financial measures should not be viewed as alternatives to measures of financial performance determined in accordance with
IFRS. Additional information concerning these non-IFRS financial measures and reconciliations to the closest IFRS measures are
included in the Supplementary Financial Information packages that are available on www.sunlife.com under Investors – Financial
results & reports.
Operating net income (loss) and financial measures based on operating net income (loss), including operating EPS or operating loss
per share, and operating ROE, are non-IFRS financial measures. Operating net income (loss) excludes from reported net income the
impact of the following amounts that are not operational or ongoing in nature to assist investors in understanding our business
performance: (i) certain hedges in SLF Canada that do not qualify for hedge accounting; (ii) fair value adjustments on MFS’s share-
based payment awards; (iii) acquisition, integration and restructuring costs (including impacts related to acquiring and integrating
acquisitions, previously reported as restructuring and other related costs(1)); (iv) goodwill and intangible asset impairment charges; and
(v) other items that are not operational or ongoing in nature. In 2013, operating net income also excluded impacts related to the sale of
our U.S. Annuity Business(2), consisting of the loss on sale, related assumption changes and management actions, and related
restructuring costs. Operating EPS also excludes the dilutive impact of convertible instruments.
Underlying net income (loss) and financial measures based on underlying net income (loss), consisting of underlying EPS or underlying
loss per share, and underlying ROE, are non-IFRS financial measures. Underlying net income (loss) removes from operating net
income (loss) the impact of the following items that create volatility in our results under IFRS, and when removed assist in explaining
our results from period to period: (a) market related impacts; (b) assumption changes and management actions; and (c) other items
that have not been treated as adjustments to operating net income, and when removed assist in explaining our results from period to
period. Market related impacts include: (i) the impact of changes in interest rates that differ from our best estimate assumptions in the
reporting period on investment returns and the value of derivative instruments used in our hedging programs, including changes in
credit and swap spreads, and any changes to the assumed fixed income reinvestment rates in determining the actuarial liabilities;
(ii) the impact of changes in equity markets, net of hedging, above or below our best estimate assumptions of approximately 2% growth
per quarter in the reporting period and of basis risk inherent in our hedging program for products that provide benefit guarantees; and
(iii) the impact of changes in the fair value of real estate properties in the reporting period. Additional information regarding these
adjustments is available in the footnotes to the table included under the heading 2015 Consolidated Results of Operations in the
Financial Performance section in this document. Assumption changes reflect the impact of revisions to the assumptions used in
determining our liabilities for insurance contracts and investment contracts. The impact on our liabilities for insurance contracts and
investment contracts of actions taken by management in the current reporting period, referred to as management actions include, for
example, changes in the prices of in-force products, new or revised reinsurance on in-force business, or material changes to
investment policies for asset segments supporting our liabilities. Underlying EPS also excludes the dilutive impact of convertible
instruments.
Other non-IFRS financial measures that we use include adjusted revenue, ASO premium and deposit equivalents, mutual fund assets
and sales, managed fund assets and sales, premiums and deposits, adjusted premiums and deposits, AUM, assets under
administration, and effective income tax rate on an operating net income basis.
Unless indicated otherwise, all factors discussed in this document that impact our results are applicable to reported net income (loss),
operating net income (loss) and underlying net income (loss). Reported net income (loss) refers to Common shareholders’ net income
(loss) determined in accordance with IFRS.
All EPS measures in this document refer to fully diluted EPS, unless otherwise stated.
The following tables set out the amounts that were excluded from our operating net income (loss), underlying net income (loss)
operating EPS and underlying EPS, and provide a reconciliation to our reported net income (loss) and reported EPS based on IFRS for
2015, 2014 and 2013. A reconciliation of operating net income (loss) to reported net income (loss) for the fourth quarter of 2015 is
provided in this MD&A under the heading Financial Performance – Fourth Quarter 2015 Performance.
(1) Beginning in the third quarter of 2015, we renamed the operating adjustment Acquisition, integration and restructuring costs from Restructuring and other related costs to
accommodate acquisition and integration adjustments arising from our 2015 activities.
(2) Information on the sale of our U.S. Annuity Business is provided in this MD&A under the heading Financial Performance – Discontinued Operations.
Management’s Discussion and Analysis Sun Life Financial Inc. Annual Report 2015 17