Prudential 2003 Annual Report Download - page 32

Download and view the complete annual report

Please find page 32 of the 2003 Prudential annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 180

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180

Consolidated Results of Operations
Net Income and Other Data
The following table summarizes income from continuing operations for the Financial Services Businesses and the
Closed Block Business as well as other components comprising net income.
Year ended
December 31,
2003 2002 2001
(in millions)
Financial Services Businesses by segment:
Individual Life and Annuities .................................................................... $ 565 $243 $293
Group Insurance .............................................................................. 117 26 (2)
Total Insurance Division .................................................................... 682 269 291
Investment Management ........................................................................ 167 203 133
Financial Advisory ............................................................................ (111) (43) (140)
Retirement ................................................................................... 196 (235) 24
Other Asset Management ....................................................................... 46 45 55
Total Investment Division ................................................................... 298 (30) 72
International Insurance ......................................................................... 805 569 554
International Investments ....................................................................... (69) (6) (44)
Total International Insurance and Investments Division ........................................ 736 563 510
Corporate and Other ....................................................................... (128) 35 (375)
Income from continuing operations before income taxes for Financial Services Businesses ........................ 1,588 837 498
Income (loss) from continuing operations before income taxes for Closed Block Business ........................ 370 (757) (619)
Income (loss) from continuing operations before income taxes .............................................. 1,958 80 (121)
Income taxes (benefit) .......................................................................... 650 (189) (32)
Income (loss) from continuing operations ............................................................... 1,308 269 (89)
Loss from discontinued operations, net of taxes .......................................................... (44) (75) (65)
Net income (loss) ................................................................................. $1,264 $ 194 $(154)
In managing our business, we analyze operating performance separately for our Financial Services Businesses and
our Closed Block Business. For the Financial Services Businesses, we analyze our segments’ operating performance
using a non-GAAP measure we call “adjusted operating income.” Results of the Closed Block Business for all periods
are evaluated and presented only in accordance with GAAP. We calculate adjusted operating income for the segments
of the Financial Services Businesses by adjusting our income from continuing operations before income taxes to
exclude the following items:
• realized investment gains, net of losses, and related charges and adjustments;
• the contribution to income/loss of divested businesses that have been or will be sold or exited that do not
qualify for “discontinued operations” accounting treatment under GAAP;
• life insurance sales practices remedies and costs; and
• demutualization costs and expenses.
The contributions to income / loss of wind-down businesses that we have not divested remain in adjusted operating
income.
The excluded items are important to an understanding of our overall results of operations. Adjusted operating
income is not a substitute for net income determined in accordance with GAAP, and our definition of adjusted
operating income may differ from that used by other companies. However, we believe that the presentation of adjusted
operating income as we measure it for management purposes enhances the understanding of our results of operations
by highlighting the results from ongoing operations and the underlying profitability of the Financial Services
Businesses. Adjusted operating income excludes net realized investment gains and losses. A significant element of
realized losses is impairments and losses from sales of credit-impaired securities, the timing of which depends largely
Growing and Protecting Your Wealth30