Nationwide Financial Reports First Quarter Results
Variable Annuity Sales Gaining Momentum
Vice President, Investor Relations
Officer, Public Relations
May 4, 2006
COLUMBUS, Ohio — Nationwide Financial Services, Inc. (NYSE: NFS), a leading provider of long-term savings and retirement products, today reported first quarter 2006 net income of $142.3 million, or $0.93 per diluted share, compared with first quarter 2005 net income of $160.5 million, or $1.05 per diluted share. Net realized losses on investments, hedging instruments and hedged items compared to gains in the first quarter of 2005 was the primary driver for the year-over-year decline in net income.
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. A table on the top of page 10 reconciles net operating earnings to net income, including the related diluted per share amounts for the periods indicated.
The quarter’s net operating earnings were $144.3 million, or $0.94 per diluted share, compared to net operating earnings of $142.4 million, or $0.93 per diluted share, a year ago. The year-over-year increase was driven by improved operating results in the retirement plans segment partially offset by a decline in the operating earnings in the individual investments, individual protection and corporate and other segments.
“First quarter results were in line with our expectations given the sales performance in our individual businesses over the last few years and the corresponding impact on our asset base,” said Jerry Jurgensen, chief executive officer. “While there is still much work to be done,” Jurgensen added, “I am encouraged by the progress we made against our strategic priorities during the first quarter, highlighted by the improving sales momentum in our variable annuity business. Our priority focus during 2006 remains on continuing to drive sales growth in our individual product lines and building new sources of higher return business.”
Insurance • Financial Services • On Your Side One Nationwide Plaza Columbus, OH 43215-2220 www.nationwidefinancial.com