Nationwide Financial Reports Fourth Quarter Results
Fourth quarter total sales increased 28 percent versus 2005; full-year net income improved 19 percent
FOR IMMEDIATE RELEASE
Feb. 8, 2007
Mark Barnett (614) 249-8437
Erica Lewis (614) 249-0184
COLUMBUS, Ohio — Nationwide Financial Services, Inc. (NYSE: NFS), a leading provider of long-term savings and retirement products, today reported fourth quarter 2006 net income of $154.2 million, or $1.03 per diluted share, compared with fourth quarter 2005 net income of $130.3 million, or $0.85 per diluted share.
Nationwide Financial analyzes operating performance using a non-GAAP financial measure called “net operating earnings,” which the Company believes enhances understanding and comparability of its performance by highlighting its results from continuing operations and the underlying profitability drivers. See Exhibit 3 for a description of non-GAAP financial measures included in this earnings announcement, a reconciliation of non-GAAP financial measures to GAAP financial measures, and the substantive reasons why the Company believes presentation of these non-GAAP financial measures provides useful information to investors regarding its financial condition and results of operations. The table on the top of page 11 reconciles net operating earnings to net income, including the related diluted per share amounts for the periods indicated.
“We made great progress during 2006, accomplishing the strategic objectives we set forth at the beginning of the year – restoring variable annuity sales momentum, building new capabilities and improving capital efficiency," said Jerry Jurgensen, chief executive officer.
“As we look forward, our focus will be on accelerating growth and optimizing our business mix to significantly improve our earnings and return potential. We expect that the improvements we’ve made to our core operations, combined with an increasingly more efficient capital structure, will result in a modest improvement to our run-rate financial performance during 2007, and more meaningful acceleration in operating EPS and ROE growth during 2008,” Jurgensen said.
Highlights from the quarter:
Fourth quarter 2006 net operating earnings were $144.7 million, or $0.97 per diluted share, compared to net operating earnings of $152.3 million, or $0.99 per diluted share, for the same period a year ago. Increased asset fees, driven by strong equity market performance and improved net flows in each of the business segments, were offset by increased operating expenses and lower spread income.