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UNITED STATES FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported) April 26, 2005
Aflac Incorporated |
(Exact name of Registrant as specified in its charter) |
GEORGIA |
001-07434 |
58-1167100 |
(State or other jurisdiction |
(Commission |
(IRS Employer Identification No.) |
of incorporation) |
File Number) |
|
1932 Wynnton Road, Columbus, Georgia |
31999 |
|
(Address of principal executive offices) |
(Zip Code) |
706.323.3431 |
(Registrant's telephone number, including area code) |
(Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |
|
[ ] |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[ ] |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[ ] |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Aflac Incorporated is providing its press release dated April 26, 2005 in which it reported its first quarter results and also its First Quarter Report to Shareholders herein as Exhibits 99.1 and 99.2.
In accordance with General Instruction B.2 of Form 8-K, the information included or incorporated in this report (including Exhibits 99.1 and 99.2) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be set forth by specific reference in such filing.
(c) |
Exhibits. |
|
99.1 - |
Press release of Aflac Incorporated dated April 26, 2005 |
|
99.2 - |
First Quarter Report to Shareholders 2005 |
|
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Aflac Incorporated |
||
/s/ Ralph A. Rogers, Jr. |
April 26, 2005 |
|
(Ralph A. Rogers, Jr.) |
||
Senior Vice President, Financial Services |
||
Chief Accounting Officer |
||
2
EXHIBIT INDEX:
|
99.1 |
- |
Press release of Aflac Incorporated dated April 26, 2005 |
|
99.2 |
- |
First Quarter Report to Shareholders 2005 |
3
EXHIBIT 99.1
AFLAC INCORPORATED ANNOUNCES FIRST QUARTER RESULTS,
DECLARES SECOND QUARTER CASH DIVIDEND
COLUMBUS, Georgia - April 26, 2005 - Aflac Incorporated today reported its first quarter results.
On January 1, 2005, Aflac adopted the accounting standard SFAS 123R, which addresses accounting for share-based transactions, such as stock options. The company elected to adopt SFAS 123R using the modified-retrospective transition method. As a result, 2004 results have been adjusted to reflect the expensing of stock options.
Total revenues, which benefited from foreign currency translation, were $3.6 billion in the first quarter, or 8.5% higher than a year ago. Net earnings in the first quarter of 2005 were $328 million, or $.64 per share on a diluted basis, compared with $304 million, or $.59 per diluted share, a year ago. Net earnings included realized investment gains of $2 million, compared with realized investment gains of $6 million, or $.01 per diluted share, a year ago. Net earnings in the first quarter also included a loss of $9 million, or $.02 per diluted share, from the change in fair value of the interest rate component of the cross-currency swaps related to the company's senior notes, as required by SFAS 133. In the first quarter of 2004, the impact from SFAS 133 benefited net earnings by $11 million, or $.02 per diluted share. Net earnings in the first quarter of 2004 also reflected a one-time gain of $3 million, or $.01 per diluted share, as a result of the transfer of certain Aflac Japan pension obligati ons to the Japanese government.
We believe that an analysis of operating earnings, a non-GAAP financial measure, is vitally important to an understanding of Aflac's underlying profitability drivers. We define operating earnings as the profits we derive from our operations before realized investment gains and losses, the impact from SFAS 133, and nonrecurring items.
Management uses operating earnings to evaluate the financial performance of Aflac's insurance operations because realized gains and losses, the impact from SFAS 133, and nonrecurring items tend to be driven by general economic conditions and events, and therefore may obscure the underlying fundamentals and trends in Aflac's insurance operations.
Operating earnings in the first quarter of 2005 were a record $335 million, compared with $284 million in the first quarter of 2004. Operating earnings per diluted share rose 20.0% to $.66, compared with $.55 a year ago. The stronger yen/dollar exchange rate increased operating earnings per share by $.01 during the quarter. Excluding the impact from the stronger yen, operating earnings per share increased 18.2%, which was significantly better than our annual objective for operating earnings per share growth in 2005.
The board of directors declared the second quarter cash dividend. The second quarter dividend of $.11 per share is payable on June 1, 2005, to shareholders of record at the close of business on May 20, 2005.
Commenting on the company's first quarter results, Chairman and Chief Executive Officer Daniel P. Amos stated: "Overall, we had a solid start in 2005. We are especially pleased that operating earnings per share growth before currency translation grew at a faster rate than our primary financial target of a 15% increase.
"Aflac Japan's total new annualized premium sales rose 5.3% in the first quarter to 29.8 billion yen, or $285 million. These sales results were in line with our expectations and our sales target for the year. As we expected, sales growth was restrained by continued declines in Rider MAX. And while sales through Dai-ichi Mutual Life declined for the quarter, its results were better than we had expected. Excluding the contribution from Dai-ichi Life, sales were up 6.3% for the quarter. We were especially pleased that Aflac Japan produced very strong sales of medical products. Medical sales rose 28.5% and accounted for 40% of total new annualized premium sales for the quarter, benefiting from the successful introduction of EVER Half and EVER Bonus, our two new medical products. We believe agent and consumer reception of our new products is further affirmation of our number one position in the market for stand-alone medical insurance products in Japan. Our objective for the year is a 5% to 10% increase in total new annualized premium sales in yen.
"We were encouraged that Aflac U.S. sales were in line with our expectations for the quarter. Although total new annualized premium sales declined 2.1% to $286 million in the first quarter, we had expected a sales decline of up to 5% due primarily to a tough comparison to 2004. The difficult comparison resulted from fewer production days in the first quarter of 2005, compared with a year ago. Had the number of production days been the same in both quarters, we estimate sales would have increased in line with our annual objective. We were very pleased that new agent recruitment continued to improve. During the first quarter, we recruited more than 6,400 new sales associates, which was 10.3% above the first quarter of 2004. At the end of the first quarter, Aflac U.S. was represented by 60,300 licensed sales associates, or 4.6% higher than a year ago. We believe we will see improved sales momentum as the year progresses due in part to the continued expansion of our sales force. And we are also op timistic that the introduction of a new vision product will benefit sales in the second half of the year. Our objective for the year is a 3% to 8% increase in total new annualized premium sales.
"As we think about the remainder of this year and beyond, we are enthusiastic about the opportunities for our operations in both the United States and Japan. The United States remains a significant market for our products. And we believe we can tap into that potential by further expansion of our distribution system and product line, and enhanced training of our sales force. We also believe we can maintain our strong position in Japan's insurance market. With Japan's aging population and higher out-of-pocket expenses, we are convinced that consumers will increasingly turn to affordable products that provide 'living' benefits. Aflac Japan is the market leader for living-benefit products, and we believe we will maintain our number one position.
"We are also optimistic about achieving our financial objectives. Our goal for 2005 is to increase operating earnings per diluted share 15%, excluding foreign currency translation. Based on the strength of our first quarter earnings, we believe we will have the opportunity to increase our sales promotion activities for the remainder of 2005 and still achieve our earnings objective for the year. For 2006 our goal is to again produce 15% growth in operating earnings per diluted share, excluding the impact of the yen. We believe these financial objectives reasonably reflect the market opportunities we see, as well as our expectation for continued margin expansion for Aflac Japan."
For 50 years, Aflac products have given policyholders the opportunity to direct cash where it is needed most when a life-interrupting medical event causes financial challenges. Aflac is the number one provider of guaranteed-renewable insurance in the United States and the number one insurance company in terms of individual insurance policies in force in Japan. Aflac's insurance products provide protection to more than 40 million people worldwide. In January 2005, Aflac was included in Fortune magazine's list of the 100 Best Companies to Work For in America for the seventh consecutive year. Aflac has also been included in both Forbes magazine's Platinum 400 List of America's Best Big Companies and in Fortune magazine's listing of America's Most Admired Companies for five consecutive years. Aflac Incorporated is a Fortune 500 company listed on the New York Stock Exchange under the symbol AFL. To find out more about Aflac, visit aflac.com.
A copy of Aflac's First Quarter Report to Shareholders can be found on the Investor Relations page of aflac.com.
Aflac Incorporated will webcast its first quarter conference call on the Investor Relations page of aflac.com at 9:00 a.m. (EDT), Wednesday, April 27.
AFLAC INCORPORATED AND SUBSIDIARIES CONSOLIDATED SUMMARY OF EARNINGS
(UNAUDITED -- IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)
THREE MONTHS ENDED MARCH 31, |
2005 |
2004* |
% Change |
|||||||||
Total revenues |
$ |
3,559 |
$ |
3,280 |
8.5 |
% |
||||||
Operating earnings |
335 |
284 |
17.9 |
|||||||||
Reconciling items, net of tax: |
||||||||||||
Realized investment gains (losses) |
2 |
6 |
||||||||||
Impact from SFAS 133 |
(9 |
) |
11 |
|||||||||
Japanese pension obligation transfer |
- |
3 |
||||||||||
Net earnings |
328 |
304 |
7.9 |
|||||||||
Operating earnings per share - diluted |
.66 |
.55 |
20.0 |
|||||||||
Reconciling items, net of tax: |
||||||||||||
Realized investment gains (losses) |
- |
.01 |
||||||||||
Impact from SFAS 133 |
(.02 |
) |
.02 |
|||||||||
Japanese pension obligation transfer |
- |
.01 |
||||||||||
Net earnings per share - diluted |
.64 |
.59 |
8.5 |
|||||||||
Net earnings per share - basic |
.65 |
.60 |
8.3 |
|||||||||
Cash dividends paid per share |
.11 |
.095 |
15.8 |
|||||||||
Shares used to compute earnings per share (000): |
||||||||||||
Basic |
502,706 |
509,924 |
(1.4 |
) |
||||||||
Diluted |
509,449 |
519,355 |
(1.9 |
) |
*Adjusted to include stock option expense resulting from adoption of SFAS 123R
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" to encourage companies to provide prospective information, so long as those informational statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those included in the forward-looking statements. We desire to take advantage of these provisions. This document contains cautionary statements identifying important factors that could cause actual results to differ materially from those projected herein, and in any other statements made by company officials in oral discussions with the financial community and contained in documents filed with the Securities and Exchange Commission (SEC). Forward-looking statements are not based on historical information and relate to future operations, strategies, financial results or other developments. Furthermore, forward-looking information is subject to numerous assumptions, risks, and uncertainties. In particular, statements containing words such as "expect," "anticipate," "believe," "goal," "objective," "may," "should," "estimate," "intends," "projects," "will," "assumes," "potential," "target," or similar words as well as specific projections of future results, generally qualify as forward-looking. Aflac undertakes no obligation to update such forward-looking statements.
We caution readers that the following factors, in addition to other factors mentioned from time to time in our reports filed with the SEC, could cause actual results to differ materially from those contemplated by the forward-looking statements: legislative and regulatory developments; assessments for insurance company insolvencies; competitive conditions in the United States and Japan; new product development and customer response to new products and new marketing initiatives; ability to attract and retain qualified sales associates; ability to repatriate profits from Japan; changes in U.S. and/or Japanese tax laws or accounting requirements; credit and other risks associated with Aflac's investment activities; significant changes in investment yield rates; fluctuations in foreign currency exchange rates; deviations in actual experience from pricing and reserving assumptions including, but not limited to, morbidity, mortality, persistency, expenses, and investment yields; level and outcome of litigation; downgrades in the company's credit rating; changes in rating agency policies or practices; subsidiary's ability to pay dividends to parent company; ineffectiveness of hedging strategies used to minimize the exposure of our shareholders' equity to foreign currency translation fluctuations; events resulting in catastrophic loss of life or injury; and general economic conditions in the United States and Japan.
Analyst and investor contact - Kenneth S. Janke Jr., 800.235.2667 - option 3, FAX: 706.324.6330, or kjanke@aflac.com
Media contact - Laura Kane, 706.596.3493, FAX: 706.320.2288, or lkane@aflac.com
First
Quarter
Report
To
Shareholders
2005
Three Months Ended
March 31, 2005
HIGHLIGHTS
TO OUR SHAREHOLDERS:
Overall, we are pleased with our start in 2005. Our first quarter financial results were strong and in line with our annual performance targets. Aflac Japan produced solid sales growth following the successful introduction of two new medical products. And while Aflac U.S. sales declined slightly, they were consistent with our expectations for the quarter. Most important, we exceeded our primary financial target for 2005 of a 15% increase in operating earnings per diluted share before the impact of currency translation.
FIRST QUARTER RESULTS
On January 1, 2005, Aflac adopted the accounting standard SFAS 123R, which addresses accounting for share-based transactions, such as stock options. We elected to adopt SFAS 123R using the modified-retrospective transition method. As a result, we have adjusted 2004 results to reflect the expensing of stock options.
Aflac's first quarter financial results benefited from the stronger yen/dollar exchange rate, compared with the first quarter of 2004. Total revenues were up 8.5% to $3.6 billion. Net earnings in the first quarter of 2005 were $328 million, or $.64 per share on a diluted basis, compared with $304 million, or $.59 per diluted share, a year ago. Net earnings included realized investment gains of $2 million, compared with realized investment gains of $6 million, or $.01 per diluted share, a year ago. Net earnings in the first quarter also included a loss of $9 million, or $.02 per diluted share, from the change in fair value of the interest rate component of the cross-currency swaps related to the company's senior notes, as required by SFAS 133. In the first quarter of 2004, the impact from SFAS 133 benefited net earnings by $11 million, or $.02 per diluted share. Net earnings in the first quarter of 2004 also reflected a one-time gain of $3 million, or $.01 per diluted sh are, as a result of the transfer of certain Aflac Japan pension obligations to the Japanese government.
We believe that an analysis of operating earnings, a non-GAAP financial measure, is vitally important to an understanding of Aflac's underlying profitability drivers. We define operating earnings as the profits we derive from our operations before realized investment gains and losses, the impact from SFAS 133, and nonrecurring items.
Management uses operating earnings to evaluate the financial performance of Aflac's insurance operations because realized gains and losses, the impact from SFAS 133, and nonrecurring items tend to be driven by general economic conditions and events, and therefore may obscure the underlying fundamentals and trends in Aflac's insurance operations. A reconciliation of operating to net earnings appears on Page 5.
1
Furthermore, because a significant portion of our business is in Japan, where our functional currency is the Japanese yen, we believe it is equally important to understand the impact on operating earnings from translating yen into dollars. We translate Aflac Japan's yen-denominated income statement from yen into dollars using an average exchange rate for the reporting period, and we translate its balance sheet using the exchange rate at the end of the period. However, except for a limited number of transactions, we do not actually convert yen into dollars. As a result, we view foreign currency translation as a financial reporting issue for Aflac and not an economic event to our company or shareholders. Because changes in exchange rates distort the growth rates of our operations, we also encourage readers of our financial statements to evaluate our financial performance excluding the impact of foreign currency translation. The chart on Page 4 compares selected income stat ement items with and without foreign currency changes to illustrate the effect of those changes.
Operating earnings in the first quarter of 2005 were a record $335 million, compared with $284 million in the first quarter of 2004. Operating earnings per diluted share rose 20.0% to $.66, compared with $.55 a year ago. The stronger yen/dollar exchange rate increased operating earnings per share by $.01 during the quarter. Excluding the impact from the stronger yen, operating earnings per share increased 18.2%, which was significantly better than our annual objective for operating earnings per share growth in 2005.
During the first quarter, we acquired 2.9 million shares of Aflac stock. As of March 31, 2005, approximately 24 million shares were available for purchase under our current share repurchase program.
AFLAC JAPAN
Aflac Japan continued to produce solid results that were in line with our expectations. Premium income in yen increased 6.5% in the first quarter of 2005 and net investment income rose 6.4%. Investment income growth in yen terms was again held down by the stronger yen/dollar exchange rate for the quarter because approximately 30% of Aflac Japan's investment income is derived from dollar-denominated investments. Total revenues rose 6.6%. Due to improvement in the benefit and expense ratios, the pretax operating profit margin expanded from 13.9% to 14.9%. As a result, pretax operating earnings in yen were up 14.5%.
The average yen/dollar exchange rate in the first quarter of 2005 was 104.50, compared with an average rate of 107.32 in the first quarter of 2004. As a result of the 2.7% strengthening of the average exchange rate during the quarter, Aflac Japan's growth rates in dollar terms were greater than increases on a yen basis.
Reflecting the stronger yen, first quarter premium income in dollars increased 9.3% to $2.3 billion. Net investment income also rose 9.3% to $411 million. Total revenues were up 9.4% to $2.7 billion. Pretax operating earnings advanced 17.6% to $399 million.
Investment yields in Japan declined slightly from the fourth quarter of 2004, although they remained higher than a year ago. For example, the yield of a composite index of 20-year Japanese government bonds averaged 2.03% in the first quarter of 2005, compared with an average yield of 2.08% in the fourth quarter of 2004, and 1.87% in the first quarter of 2004. We purchased yen-denominated investments at an average yield of 2.84% during the first quarter of 2005. Including dollar-denominated securities, our new money yield for the quarter was 3.06%. As of April 18, 2005, we had invested, or committed to invest, approximately 46% of our expected 2005 cash flow at an average yield of 3.05%.
2
Aflac Japan's total new annualized premium sales rose 5.3% in the first quarter to 29.8 billion yen, or $285 million. These sales results were in line with our expectations and our sales target for the year. As we expected, sales growth was restrained by continued declines in Rider MAX. And while sales through Dai-ichi Mutual Life declined for the quarter, its results were better than we had expected. Excluding the contribution from Dai-ichi Life, sales were up 6.3% for the quarter. We were especially pleased that Aflac Japan produced very strong sales of medical products. Medical sales rose 28.5% and accounted for 40% of total new annualized premium sales for the quarter, benefiting from the successful introduction of EVER Half and EVER Bonus, our two new medical products. We believe agent and consumer reception of these new products is further affirmation of our number one position in the market for stand-alone medical insurance products in Japan. Our objective for the year is a 5% to 10% increase in total new annualized premium sales in yen.
AFLAC U.S.
Aflac U.S. produced solid financial results in the first quarter. Premium income increased 10.7% to $787 million. Net investment income rose 5.2% to $102 million. Total revenues were up 10.1% to $891 million. Pretax operating earnings were $133 million, an increase of 9.7%.
We were encouraged that Aflac U.S. sales were in line with our expectations for the quarter. Although total new annualized premium sales declined 2.1% to $286 million in the first quarter, we had expected a sales decline of up to 5% due primarily to a tough comparison to 2004. The difficult comparison resulted from fewer production days in the first quarter of 2005, compared with a year ago. Had the number of production days been the same in both quarters, we estimate sales would have increased in line with our annual objective.
We were very pleased that new agent recruitment continued to improve. During the first quarter, we recruited more than 6,400 new sales associates, which was 10.3% above the first quarter of 2004. At the end of the first quarter, Aflac U.S. was represented by 60,300 licensed sales associates, or 4.6% higher than a year ago. We believe we will see improved sales momentum as the year progresses due in part to the continued expansion of our sales force. And we are also optimistic that the introduction of a new vision product will benefit sales in the second half of the year. Our objective for the year is a 3% to 8% increase in total new annualized premium sales.
DIVIDEND
The board of directors declared the second quarter cash dividend. The second quarter dividend of $.11 per share is payable on June 1, 2005, to shareholders of record at the close of business on May 20, 2005.
OUTLOOK
As we think about the remainder of this year and beyond, we are enthusiastic about the opportunities for our operations in both the United States and Japan. The United States remains a significant market for our products. And we believe we can tap into that potential by further expansion of our distribution system and product line, and enhanced training of our sales force. We also believe we can maintain our strong position in Japan's insurance market. With Japan's aging population and higher out-of-pocket expenses, we are convinced that consumers will increasingly turn to affordable products that provide "living" benefits. Aflac Japan is the market leader for living-benefit products, and we believe we will maintain our number one position.
3
We are also optimistic about achieving our financial objectives. Our goal for 2005 is to increase operating earnings per diluted share 15%, excluding foreign currency translation. Based on the strength of our first quarter earnings, we believe we will have the opportunity to increase our sales promotion activities for the remainder of 2005 and still achieve our earnings objective for the year. For 2006 our goal is to again produce 15% growth in operating earnings per diluted share, excluding the impact of the yen. We believe these financial objectives reasonably reflect the market opportunities we see, as well as our expectation for continued margin expansion for Aflac Japan.
/s/ Daniel P. Amos |
|
Daniel P. Amos |
|
Chairman and Chief Executive Officer |
|
April 26, 2005 |
Foreign Currency Translation |
Three-Month Results |
||||||||
Effect on Operating Results |
Including |
Excluding |
|||||||
Currency |
Currency |
||||||||
Selected Percentage Changes (1) |
Changes |
Changes(2) |
|||||||
(For the period ended March 31, 2005 - unaudited) |
Premium income |
9.6 |
% |
7.5 |
% |
||||
1 |
The numbers in this table are presented on |
Net investment income |
8.6 |
7.0 |
|||||
an operating basis, which is described on |
|||||||||
Page 1. |
Total benefits and expenses |
8.5 |
6.4 |
||||||
2 |
Amounts excluding foreign currency changes |
Operating earnings |
17.9 |
16.3 |
|||||
were determined using the same yen/ |
|||||||||
dollar exchange rate for the current period |
Operating earnings per |
||||||||
as the comparable period in the prior year. |
diluted share |
20.0 |
18.2 |
||||||
4
Consolidated Statements of Earnings |
Aflac Incorporated and Subsidiaries |
|||||||||||
(In millions, except for share and per-share amounts - Unaudited) |
Three Months Ended March 31, |
|||||||||||
|
2005 |
2004 |
% Change |
|||||||||
Revenues: |
||||||||||||
|
Premiums, principally supplemental health insurance |
$ |
3,041 |
$ |
2,773 |
9.6 |
% |
|||||
|
Net investment income |
514 |
474 |
8.6 |
||||||||
|
Realized investment gains (losses) |
3 |
6 |
|||||||||
|
Other income (losses) |
1 |
27 |
|||||||||
|
Total revenues |
3,559 |
3,280 |
8.5 |
||||||||
Benefits and expenses: |
||||||||||||
|
Benefits and claims |
2,266 |
2,078 |
9.1 |
||||||||
|
Acquisition and operating expenses: |
|||||||||||
|
Amortization of deferred policy acquisition costs |
137 |
130 |
|||||||||
|
Insurance commissions |
333 |
311 |
|||||||||
|
Insurance expenses |
287 |
267 |
|||||||||
|
Interest expense |
6 |
6 |
|||||||||
|
Other operating expenses |
24 |
22 |
|||||||||
|
Total acquisition and operating expenses |
787 |
736 |
6.9 |
||||||||
|
Total benefits and expenses |
3,053 |
2,814 |
8.5 |
||||||||
|
Earnings before income taxes |
506 |
466 |
8.6 |
||||||||
Income taxes |
178 |
162 |
||||||||||
|
Net earnings |
$ |
328 |
$ |
304 |
7.9 |
% |
|||||
Net earnings per share: |
||||||||||||
|
Basic |
$ |
.65 |
$ |
.60 |
8.3 |
% |
|||||
|
Diluted |
.64 |
.59 |
8.5 |
||||||||
Common shares used in computing EPS (In thousands): |
||||||||||||
|
Basic |
502,706 |
509,924 |
(1.4 |
)% |
|||||||
|
Diluted |
509,449 |
519,355 |
(1.9 |
) |
|||||||
Cash dividends paid per share |
$ |
.11 |
$ |
.095 |
15.8 |
% |
||||||
Reconciliation of Operating to Net Earnings |
||||||||||
(In millions, except for per-share amounts - unaudited) |
Three Months Ended March 31, |
|||||||||
2005 |
2004 |
% Change |
||||||||
Operating earnings |
$ |
335 |
$ |
284 |
17.9 |
% |
||||
|
Reconciling items, net of tax: |
|||||||||
|
Realized investment gains (losses) |
2 |
6 |
|||||||
SFAS 133 |
(9 |
) |
11 |
|||||||
|
Japan pension obligation transfer |
- |
3 |
|||||||
Net Earnings |
$ |
328 |
$ |
304 |
7.9 |
% |
||||
Operating earnings per share - diluted |
$ |
.66 |
$ |
.55 |
20.0 |
% |
||||
|
Reconciling items, net of tax: |
|||||||||
|
Realized investment gains (losses) |
- |
.01 |
|||||||
SFAS 133 |
(.02 |
) |
.02 |
|||||||
|
Japan pension obligation transfer |
- |
.01 |
|||||||
Net earnings per share - diluted |
$ |
.64 |
$ |
.59 |
8.5 |
% |
||||
5
Consolidated Balance Sheets |
Aflac Incorporated and Subsidiaries |
||||||||
(In millions, except for share and per-share amounts - Unaudited) March 31, |
2005 |
2004 |
|||||||
Assets: |
|||||||||
Investments and cash: |
|||||||||
|
Securities available for sale, at fair value: |
||||||||
|
Fixed maturities |
$ |
29,092 |
$ |
27,141 |
||||
|
Perpetual debentures |
4,196 |
3,573 |
||||||
|
Equity securities |
82 |
70 |
||||||
|
Securities held to maturity, at amortized cost: |
||||||||
|
Fixed maturities |
10,736 |
9,910 |
||||||
|
Perpetual debentures |
4,610 |
4,480 |
||||||
|
Other investments |
47 |
34 |
||||||
|
Cash and cash equivalents |
992 |
1,169 |
||||||
|
Total investments and cash |
49,755 |
46,377 |
||||||
Receivables, primarily premiums |
436 |
442 |
|||||||
Accrued investment income |
446 |
400 |
|||||||
Deferred policy acquisition costs |
5,583 |
5,193 |
|||||||
Property and equipment, net |
491 |
521 |
|||||||
Other |
330 |
356 |
|||||||
|
Total assets |
$ |
57,041 |
$ |
53,289 |
||||
Liabilities and Shareholders' equity: |
|||||||||
Liabilities: |
|||||||||
|
Policy liabilities: |
||||||||
|
Future policy benefits |
$ |
39,000 |
$ |
36,700 |
||||
Unpaid policy claims |
2,427 |
2,158 |
|||||||
|
Unearned premiums |
586 |
540 |
||||||
|
Other policyholders' funds |
1,300 |
1,084 |
||||||
|
Notes payable |
1,398 |
1,423 |
||||||
|
Income taxes |
2,623 |
2,447 |
||||||
|
Payables for return of cash collateral on loaned securities |
507 |
479 |
||||||
|
Other |
1,424 |
1,463 |
||||||
|
Total liabilities |
49,265 |
46,294 |
||||||
Shareholders' equity: |
|||||||||
|
Common stock |
65 |
65 |
||||||
|
Additional paid-in capital |
698 |
617 |
||||||
|
Retained earnings |
6,980 |
5,968 |
||||||
|
Accumulated other comprehensive income: |
||||||||
|
Unrealized foreign currency translation gains |
272 |
206 |
||||||
|
Unrealized gains on investment securities |
2,449 |
2,488 |
||||||
|
Minimum pension liability adjustment |
(28 |
) |
(25 |
) |
||||
|
Treasury stock |
(2,660 |
) |
(2,324 |
) |
||||
|
Total shareholders' equity |
7,776 |
6,995 |
||||||
Total liabilities and shareholders' equity |
$ |
57,041 |
$ |
53,289 |
|||||
Shareholders' equity per share |
$ |
15.49 |
$ |
13.76 |
|||||
Shares outstanding at end of period (In thousands) |
501,987 |
508,345 |
|||||||
6
FORWARD-LOOKING INFORMATION
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" to encourage companies to provide prospective information, so long as those informational statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those included in the forward-looking statements. We desire to take advantage of these provisions. This document contains cautionary statements identifying important factors that could cause actual results to differ materially from those projected herein, and in any other statements made by company officials in oral discussions with the financial community and contained in documents filed with the Securities and Exchange Commission (SEC). Forward-looking statements are not based on historical information and relate to future operations, strategies, financial results or other developments. Furthermore, forward-looking information is subj ect to numerous assumptions, risks, and uncertainties. In particular, statements containing words such as "expect," "anticipate," "believe," "goal," "objective," "may," "should," "estimate," "intends," "projects," "will," "assumes," "potential," "target," or similar words as well as specific projections of future results, generally qualify as forward-looking. Aflac undertakes no obligation to update such forward-looking statements.
We caution readers that the following factors, in addition to other factors mentioned from time to time in our reports filed with the SEC, could cause actual results to differ materially from those contemplated by the forward-looking statements: legislative and regulatory developments; assessments for insurance company insolvencies; competitive conditions in the United States and Japan; new product development and customer response to new products and new marketing initiatives; ability to attract and retain qualified sales associates; ability to repatriate profits from Japan; changes in U.S. and/or Japanese tax laws or accounting requirements; credit and other risks associated with Aflac's investment activities; significant changes in investment yield rates; fluctuations in foreign currency exchange rates; deviations in actual experience from pricing and reserving assumptions including, but not limited to, morbidity, mortality, persistency, expenses, and investment yields; level and outcome of litigation; downgrades in the company's credit rating; changes in rating agency policies or practices; subsidiary's ability to pay dividends to parent company; ineffectiveness of hedging strategies used to minimize the exposure of our shareholders' equity to foreign currency translation fluctuations; events resulting in catastrophic loss of life or injury; and general economic conditions in the United States and Japan.
7
Aflac Incorporated
Worldwide Headquarters
1932 Wynnton Road
Columbus, Georgia 31999
Tel: 706.323.3431
aflac.com
Customer Service
Policyholders and claimants needing assistance
Shareholder and Investor Inquiries
If you have questions about Aflac, call our toll-free
Contact
: Kenneth S. Janke Jr.
Senior Vice President, Investor Relations
800.235.2667 or 706.596.3264
Fax: 706.324.6330
kjanke@aflac.com
8
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