Nationwide Financial Reports First Quarter Results
Net income increases 43 percent year-over-year
FOR IMMEDIATE RELEASE
May 3, 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 first quarter 2007 net income of $203.2 million, or $1.38 per diluted share, compared with first quarter 2006 net income of $142.3 million, or $0.93 per diluted share. Included in the current quarter’s net income was a $45.5 million, or $0.31 per diluted share, gain on the sale of The 401(k) Company. As a result of the sale, results of operations for The 401(k) Company and the associated gain on sale are both reflected as discontinued operations.
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 10 reconciles net operating earnings to net income, including the related diluted per share amounts for the periods indicated.
“We achieved solid first quarter financial results driven by strong equity market performance as well as the progress we are making to improve profitability through better execution and financial discipline across the organization,” said Jerry Jurgensen, chief executive officer.
“At the same time, we are also making significant strides in our efforts to enhance Nationwide Financial’s business model and extend its capabilities into higher growth and return markets. Over the last several months, we have completed several key transactions. Nationwide Bank completed its merger with the Nationwide Federal Credit Union, which helped drive bank assets to more than $1 billion. Additionally, we completed the NWD Investment Management transaction and closed on the sale of The 401(k) Company. All of these transactions are meaningful steps in our journey toward achieving our long-term growth targets and increasing shareholder returns,” Jurgensen added.
Highlights from the quarter:
First quarter 2007 net operating earnings were $170.4 million, or $1.16 per diluted share, compared to net operating earnings of $144.3 million, or $0.94 per diluted share, for the same period a year ago. The year-over-year improvement was driven by strong equity market performance resulting in higher asset based revenues and lower general operating and benefit expenses in the individual protection segment. Additionally, net investment income increased compared to the prior year, primarily the result of increased income from commercial mortgage loan prepayments and bond call premiums.