Prudential 2003 Annual Report Download - page 142

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PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
12. STOCKHOLDERS’ EQUITY (continued)
Comprehensive Income
The components of comprehensive income for the years ended December 31, are as follows:
2003 2002 2001
(in millions)
Net income (loss) .................................................................... $1,264 $ 194 $(154)
Other comprehensive income, net of tax:
Change in foreign currency translation adjustments ...................................... 153 83 (130)
Change in net unrealized investments gains (losses) ..................................... (259) 1,606 869
Additional pension liability adjustment ............................................... (33) (48) (29)
Other comprehensive income (loss), net of tax of $(159); $818, $568 ............................ (139) 1,641 710
Comprehensive income ................................................................ $1,125 $1,835 $ 556
The balance of and changes in each component of “Accumulated other comprehensive income (loss)” for the
years ended December 31, are as follows (net of taxes):
Accumulated Other Comprehensive Income (Loss)
Foreign
Currency
Translation
Adjustments
Net
Unrealized
Investment
Gains (Losses)
Pension
Liability
Adjustment
Total
Accumulated
Other
Comprehensive
Income (Loss)
(in millions)
Balance, December 31, 2000 ......................... $(107) $ 359 $ (18) $ 234
Change in component during year ................. (130) 869 (29) 710
Balance, December 31, 2001 ......................... (237) 1,228 (47) 944
Change in component during year ................. 83 1,606 (48) 1,641
Balance, December 31, 2002 ......................... (154) 2,834 (95) 2,585
Change in component during year ................. 153 (259) (33) (139)
Balance, December 31, 2003 ......................... $ (1) $2,575 $(128) $2,446
Statutory Net Income and Surplus
Prudential Financial’s U.S. insurance subsidiaries are required to prepare statutory financial statements in
accordance with statutory accounting practices prescribed or permitted by the insurance department of the state of
domicile. Statutory accounting practices primarily differ from GAAP by charging policy acquisition costs to expense
as incurred, establishing future policy benefit liabilities using different actuarial assumptions as well as valuing
investments and certain assets and accounting for deferred taxes on a different basis. Statutory net income (loss) of
Prudential Insurance amounted to $1,231 million, $(490) million and $(896) million for the years ended December 31,
2003, 2002 and 2001, respectively. Statutory capital and surplus of Prudential Insurance amounted to $7,472 million
and $5,699 million at December 31, 2003 and 2002, respectively.
13. EARNINGS PER SHARE
The Company has outstanding two separate classes of common stock. The Common Stock reflects the
performance of the Financial Services Businesses and the Class B Stock reflects the performance of the Closed Block
Business. Accordingly, earnings per share is calculated separately for each of these two classes of common stock.
Earnings per common share amounts are based on the earnings available to common stockholders for the periods
subsequent to the date of demutualization.
Net income for the Financial Services Businesses and the Closed Block Business is determined in accordance with
GAAP and includes general and administrative expenses charged to each of the respective businesses based on the
Growing and Protecting Your Wealth140