01—Abstract
Summary
Summary of the 10-K/A filed February 15, 2006. Cited figures are marked; the original filing is the authoritative source.
This Amendment No. 1 on Form 10-K/A, filed by Prudential Financial, Inc. (PRU) on February 15, 2006, amends Items 8 and 9A of the 2004 Annual Report solely to restate the Consolidated Statements of Cash Flows for 2004, 2003 and 2002.
The restatement reclassifies items among operating, investing and financing activities; it has no effect on the total change in cash, net income, the Consolidated Statements of Operations, or the Consolidated Statements of Financial Position. Restated 2004 cash flows from operating activities are $4,583 milliona, down from $7,119 million as originally reported, with investing outflows of $6,198 million (originally $7,423 million) and financing inflows of $1,807 million (originally $506 million). The filing reports 2004 net income of $2,256 million, total revenues of $28,348 million, and total assets of $401,058 million, with stockholders' equity of $22,344 million at December 31, 2004.
Management concluded that internal control over financial reporting was effective as of December 31, 2004, though the restatement was identified after the original filing and management implemented enhancements to its cash flow statement review process. PricewaterhouseCoopers LLP's opinion on Note 2 is dated February 15, 2006.
For investors, the principal takeaway is that the restatement changes the composition of reported cash flows but not reported earnings or the balance sheet. The filing reflects December 31, 2004 information and does not update for later events.
02—Key points
Key Highlights
- Restated 2004 operating cash flow of $4,583 million, versus $7,119 million originally reported
- Restated 2004 investing cash outflow of $6,198 million, versus $7,423 million originally reported
- Restated 2004 financing cash inflow of $1,807 million, versus $506 million originally reported
- No change to net income ($2,256 million in 2004), total revenues ($28,348 million), or total assets ($401,058 million)
- Total change in cash and cash equivalents unchanged at $123 million for 2004 after restatement
- Restatement reclassifies unsettled investment purchases and sales, deconsolidations of three subsidiaries, and policy loan changes among cash flow categories
- Management reports internal control over financial reporting was effective as of December 31, 2004, and has added review controls over cash flow statements
03—Questions
Frequently Asked Questions
Why did Prudential restate its cash flow statements?
The filing states that certain amounts were incorrectly classified in the audited Consolidated Statements of Cash Flows for 2004, 2003 and 2002. The restatement reclassified items such as unsettled investment purchases and sales, deconsolidations of three subsidiaries, net changes in policy loans, and bank overdrafts and other items among operating, investing and financing activities.
Did the restatement change Prudential's reported net income or balance sheet?
No. The filing states the restatements had no impact on the total change in cash and cash equivalents or on the Consolidated Statements of Operations or Consolidated Statements of Financial Position. Net income for 2004 remains $2,256 million.
What were the restated operating, investing and financing cash flows for 2004?
Restated cash flows from operating activities were $4,583 million, cash used in investing activities was $6,198 million, and cash from financing activities was $1,807 million for 2004. Originally reported figures were $7,119 million, $(7,423) million and $506 million, respectively.
Does this amendment update Prudential's financial information for later periods?
No. The filing states that information is generally stated as of December 31, 2004 and does not reflect subsequent events other than the cash flow restatement. The filing points to the Form 10-Q for the quarter ended September 30, 2005 for more current information.
04—Continue