CONDENSED CONSOLIDATED STATEMENT  OF NET OPERATING INCOME (Unaudited and in thousands except per share amounts) The Condensed Consolidated Statement of Net Operating Income has been prepared in the manner Torchmark management uses to evaluate the operating results of the company. It differs from the Consolidated Statement of Operations found in the attached SEC Form 10-K primarily by the reclassification of interest on net policy liabilities and the exclusion of the nonoperating items listed above. Torchmark Corporation • Net Operating Income Revenue: Life premium $1,220,995 $1,144,955 7 % Health premium 1,019,120 1,010,753 1 Other premium 38,918 59,461 (35) Total 2,279,033 2,215,169 3 Investment income: Taxable equivalent basis 522,319 496,207 5 Taxable equivalent adjustment (3,701) (4,377) Other income 3,906 4,391 Total operating revenue 2,801,557 2,711,390 3 Benefits and expenses: Benefits: Life 531,889 485,277 Health 658,560 648,997 Other 1,867 (901) Commissions and acquisition expenses: Life 389,885 375,349 Health 193,073 188,298 Other 23,630 35,603 Interest on net policy liabilities: Life 190,797 185,567 Health (3,936) (2,427) Other 5,946 6,043 Insurance administrative expenses 124,605 119,038 Corporate expenses 10,523 10,104 Interest on debt and dividends on  MIPS/Trust Preferred 34,513 51,479 Income taxes 216,596 204,378 Total benefits and expenses 2,377,948 2,306,805 3% Net operating income $423,609 $404,585 5% Net operating income per diluted share $3.51 $3.21 9% Diluted average shares outstanding 120,669 125,861 Net operating income $423,609 $404,585 Non operating items, net of tax: Realized gains/(losses) (51,728) (4,764) Realized gains/(losses) - Interest Rate Swap 11,554 3,184 Amortization of goodwill 0 (12,075) Gain/(loss) on redemption of debt  (2) (4,553) Discontinued operations 0 (3,280) Change in accounting principle 0 (26,584) Net income $383,433 $356,513 Twelve months ended December 31, 2002 2001 % Inc (Decr) 16