Prudential 2003 Annual Report Download - page 117

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
3. ACQUISITIONS AND DISPOSITIONS (continued)
over the value included in the Reorganization Plan of real estate and loans, net of transaction costs and taxes. As of
December 31, 2003, a liability of $882 million is included in “Policyholders’ dividends” which is based on the
difference between the current estimated fair values of loans and real estate at the date of the Consolidated Statements
of Financial Position and the value of such assets included in the Reorganization Plan.
For purposes of inclusion in the Company’s Consolidated Financial Statements, Gibraltar Life has adopted a
November 30 fiscal year end; therefore, the consolidated financial statements as of December 31, 2003 and 2002,
include Gibraltar Life’s assets and liabilities as of November 30, 2003 and 2002, respectively, and for the years ended
December 31, 2003, 2002 and 2001, respectively, include Gibraltar Life’s results of operations for the periods April 2,
2001 through November 30, 2001, December 1, 2001 through November 30, 2002 and December 1, 2002 through
November 30, 2003. The Company’s Consolidated Financial Statements include income from continuing operations
before income taxes for Gibraltar Life of $345 million, $221 million and $238 million for the years ended December
31, 2003, 2002 and 2001, respectively.
Discontinued Operations
Results of operations of discontinued businesses, including charges upon disposition, for the years ended
December 31, are as follows:
2003 2002 2001
(in millions)
International securities operations (a) ........................................................ $ (76) $(69) $(40)
Web-based workplace distribution of voluntary benefits (b) ...................................... — (58) (20)
Healthcare operations (c) ................................................................. 11 71 25
Property and casualty operations (d) ......................................................... (28) (32) (21)
Other (e) .............................................................................. (13) 3 (25)
Loss from discontinued operations before income taxes ......................................... (106) (85) (81)
Income tax benefit ....................................................................... (62) (10) (16)
Loss from discontinued operations, net of taxes ................................................ $ (44) $(75) $(65)
The Company’s Consolidated Statements of Financial Position include total assets and total liabilities related to
discontinued businesses of $1,511 million and $1,172 million, respectively, at December 31, 2003 and $3,107 million
and $2,600 million, respectively, at December 31, 2002.
(a) In the fourth quarter of 2002, the Company announced its decision to exit certain of the international securities operations of Prudential
Securities Group Inc. in Europe. The exited operations include European retail transaction-oriented stockbrokerage and related activities. As a
result of exiting these activities, the primary business of Prudential Securities Group Inc. in Europe is the provision of private banking and
wealth management services to high net worth individuals. Institutional services in Europe are limited primarily to the sale of U.S. equities. The
loss for the discontinued businesses for the year ended December 31, 2002 includes a pre-tax charge of $38 million relating primarily to
severance and termination benefits and office closure costs.
In the fourth quarter of 2003, the Company determined, based upon its expected continued involvement with certain of the international
securities operations of Prudential Securities Group Inc. after their sale, that those operations no longer qualified for discontinued operations
treatment. As such, the results of these businesses (after tax losses of $15 million and $4 million in 2003 and 2002, respectively, and after tax
income of $1 million in 2001) were reclassified to continuing operations for all periods.
(b) In the third quarter of 2002, the Company discontinued its web-based business for the workplace distribution of voluntary benefits. The loss for
the year ended December 31, 2002 includes a pre-tax impairment charge of $32 million on the Company’s investment in a vendor of that
distribution platform, as well as a pre-tax charge of $7 million related to severance and contract termination costs.
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