Nationwide Financial Reports Third Quarter Results
Sales momentum continues, led by strong variable annuity and 401(k) plan sales
FOR IMMEDIATE RELEASE
November 1, 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 third quarter 2007 net income of $147.0 million, or $1.03 per diluted share, compared with third quarter 2006 net income of $161.9 million, or $1.08 per diluted share. The change compared to the prior year was primarily driven by realized losses on investment trading activity compared to gains in the prior year period.
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.
“Our core operating trends reflect another quarter of strong financial performance. Furthermore, our living benefit risk management strategies are proving effective and our balance sheet remains strong despite the volatility exhibited in the capital markets this quarter,” said Jerry Jurgensen, chief executive officer.
“We’re making significant progress on our efforts to develop new capabilities focused on higher growth and return markets. Over the past quarter, we launched a series of Nationwide branded target-date mutual funds and continued our transition to a sub-advised mutual fund platform. In addition, the Nationwide Bank continues to meet planned objectives,” Jurgensen continued. “As a key point of differentiation over the longer term, we’re working to find new and innovative ways to fulfill our brand promise and improve the overall customer service experience across the Nationwide enterprise.”
Highlights from the quarter:
Third quarter 2007 net operating earnings were $155.4 million, or $1.09 per diluted share, compared to net operating earnings of $157.1 million, or $1.05 per diluted share, for the same period a year ago. Increased asset-based fees, driven by growth in variable assets, were offset by lower interest spread income on general account assets, primarily the result of continued fixed annuity outflows, and higher general operating expenses.
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