(1) Management believes that an analysis of Net Income (Loss) applicable
to common stock before net realized investment gains or losses, net of
related amortization and income taxes, ("Net Operating Income," a non-
GAAP financial measure) is important to evaluate the financial
performance of the company, and is a key measure commonly used in the
life insurance industry. Management uses this measure to evaluate
performance because realized investment gains or losses can be
affected by events that are unrelated to the company's underlying
fundamentals. A reconciliation of Net Operating Income to Net Income
applicable to common stock is provided in the table on page 2.
Additional information concerning this non-GAAP measure is included in
our periodic filings with the Securities and Exchange Commission that
are available in the "Investor - SEC Filings" section of Conseco's
website, http://www.conseco.com.
(2) Management believes that an analysis of earnings or loss before net
realized investment gains (losses), corporate interest and taxes
("EBIT," a non-GAAP financial measure) provides a clearer comparison
of the operating results of the company quarter-over-quarter because
it excludes: (i) corporate interest expense; and (ii) net realized
investment gains (losses) that are unrelated to the company's
underlying fundamentals. A reconciliation of EBIT to Net Income
applicable to common stock is provided in the table on page 2.
(3) Measured by new annualized premium, which includes 6% of annuity and
10% of single premium whole life deposits and 100% of all other
premiums, PDP sales equal $310 per enrolled policy, PFFS sales equal
$2,100 per enrolled policy.
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