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24 UNUM • 2014 ANNUAL REPORT
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
We believe that excluding the 2014 costs related to the early retirement of debt is appropriate because in conjunction with the debt
redemption, we recognized in realized investment gains and losses a deferred gain from previously terminated derivatives which were
associated with the hedge of this debt. The amount recognized as a realized investment gain, which basically offsets the cost of the debt
redemption, is also excluded from our non-GAAP financial measures since we analyze our performance excluding amounts reported as
realized investment gains or losses. We believe it provides investors with a more realistic view of our overall profitability if we are
consistent in excluding both the cost of the debt retirement as well as the gain on the hedge of the debt.
We may at other times exclude certain other items from our discussion of financial ratios and metrics in order to enhance the
understanding and comparability of our operational performance and the underlying fundamentals, but this exclusion is not an indication
that similar items may not recur and does not replace net income or net loss as a measure of our overall profitability.
A reconciliation of “operating revenue” to total revenue and “before-tax operating income” to income before income tax is as follows:
Year Ended December 31
(in millions of dollars) 2014 2013 2012
Operating Revenue $10,493.6 $10,347.0 $10,459.2
Net Realized Investment Gain 16.1 6.8 56.2
Total Revenue $10,509.7 $10,353.8 $10,515.4
Before-tax Operating Income $ 1,292.5 $ 1,241.8 $ 1,239.7
Net Realized Investment Gain 16.1 6.8 56.2
Non-operating Retirement-related Loss (70.0) (32.9) (46.4)
Costs Related to Early Retirement of Debt (13.2) — —
Long-term Care Reserve Increase (698.2) — —
Unclaimed Death Benefits Reserve Increase — (95.5) —
Group Life Waiver of Premium Benefit Reserve Reduction — 85.0 —
Income Before Income Tax $ 527.2 $ 1,205.2 $ 1,249.5
The after-tax impacts of these items are reflected in the following reconciliation of after-tax operating income to net income.
Year Ended December 31
2014 2013 2012
(in millions) per share* (in millions) per share* (in millions) per share*
After-tax Operating Income $ 910.4 $ 3.55 $882.5 $ 3.32 $887.5 $ 3.15
Net Realized Investment Gain,
Net of Tax 12.8 0.05 3.9 0.02 37.1 0.13
Non-operating Retirement-related Loss,
Net of Tax (45.6) (0.18) (21.4) (0.08) (30.2) (0.11)
Costs Related to Early Retirement of Debt,
Net of Tax (10.4) (0.04) — — — —
Long-term Care Reserve Increase,
Net of Tax (453.8) (1.77) — — — —
Unclaimed Death Benefits Reserve
Increase, Net of Tax — — (62.1) (0.24) — —
Group Life Waiver of Premium Benefit
Reserve Reduction, Net of Tax — — 55.2 0.21 — —
Net Income $ 413.4 $ 1.61 $858.1 $ 3.23 $894.4 $ 3.17
* Assuming Dilution