Prudential 2005 Annual Report Download - page 13

SELECTED FINANCIAL DATA
We derived the selected consolidated income statement data for the years ended December 31, 2005, 2004 and 2003 and the selected
consolidated balance sheet data as of December 31, 2005 and 2004 from our Consolidated Financial Statements included elsewhere herein.
We derived the selected consolidated income statement data for the years ended December 31, 2002 and 2001 and the selected consolidated
balance sheet data as of December 31, 2003, 2002 and 2001 from consolidated financial statements not included herein.
The 2005 income tax provision includes a benefit of $720 million from reduction of tax liabilities in connection with the Internal
Revenue Service examination of our tax returns for the years 1997 through 2001.
On April 1, 2004, we acquired the retirement business of CIGNA Corporation. Results for 2004 include results of that business from
the date of acquisition.
On July 1, 2003, we completed an agreement with Wachovia Corporation, or Wachovia, to combine each company’s respective retail
securities brokerage and clearing operations forming a joint venture, Wachovia Securities. We have a 38% ownership interest in the joint
venture, while Wachovia owns the remaining 62%. The transaction included our securities brokerage operations but did not include our
equity sales, trading and research operations. As part of the transaction we retained certain assets and liabilities related to the contributed
businesses, including liabilities for certain litigation and regulatory matters. We account for our 38% ownership of the joint venture under
the equity method of accounting; periods prior to July 1, 2003, continue to reflect the results of our previously wholly owned securities
brokerage operations on a fully consolidated basis. Accordingly, operating results for 2005 and 2004 reflect earnings from the joint venture
on the equity basis. Results for 2003 reflect our securities brokerage operations on a consolidated basis for the first six months of 2003 and
earnings from the joint venture on the equity basis for the remaining six month period. Results for 2002 and prior years reflect our
securities brokerage operations on a fully consolidated basis.
On May 1, 2003, we acquired Skandia U.S. Inc., which included American Skandia, Inc. Results presented below include results of
American Skandia from the date of acquisition.
In April 2001, we acquired Gibraltar Life, which has adopted a November 30 fiscal year end. Consolidated balance sheet data as of
December 31, 2005, 2004, 2003, 2002 and 2001 includes Gibraltar Life assets and liabilities as of November 30 and fully consolidated
income statement data for 2001 includes Gibraltar Life results from April 2, 2001, the date of its reorganization, through November 30,
2001. Consolidated income statement data for 2005, 2004, 2003 and 2002 includes Gibraltar Life results for the twelve months ended
November 30, 2005, 2004, 2003 and 2002, respectively.
We have made several dispositions that materially affect the comparability of the data presented below. In the fourth quarter of 2003,
we completed the sale of our property and casualty insurance companies that operated nationally in 48 states outside of New Jersey, and the
District of Columbia, to Liberty Mutual Group, as well as our New Jersey property and casualty insurance companies to Palisades Group.
Results for 2003 include a pre-tax loss of $491 million related to the disposition of these businesses. In the fourth quarter of 2000, we
terminated the capital markets activities of Prudential Securities. This business had a pre-tax loss of $22 million in 2004, pre-tax income of
$287 million in 2003, including the gain from a $332 million settlement of an arbitration award, a pre-tax loss of $36 million in 2002 and a
pre-tax loss of $159 million in 2001. We incurred losses of $81 million in 2003 and $79 million in 2002 under a stop-loss agreement we
entered into at the time of sale. Gibraltar Casualty had no impact on results in 2001.
On December 18, 2001, Prudential Insurance converted from a mutual life insurance company owned by its policyholders to a stock
life insurance company and became an indirect, wholly owned subsidiary of Prudential Financial. “Demutualization costs and expenses”
amounted to $588 million in 2001. “Demutualization costs and expenses” in 2001 include $340 million of demutualization consideration
paid to former Canadian branch policyholders.
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