-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TGzJLLrDL12xQOge3Vweyn0xJWmqnyeAV3NlfqzgwQ0Io+u/N5MfQ93t5MVo48vu 1gHa9cEgirKYnbaRCw11Kw== 0000950148-98-002431.txt : 19981111 0000950148-98-002431.hdr.sgml : 19981111 ACCESSION NUMBER: 0000950148-98-002431 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981110 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNAMERICA INC CENTRAL INDEX KEY: 0000054727 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 860176061 STATE OF INCORPORATION: MD FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-04618 FILM NUMBER: 98743601 BUSINESS ADDRESS: STREET 1: PO BOX 54299 CITY: LOS ANGELES STATE: CA ZIP: 90054-0299 BUSINESS PHONE: 3107726000 MAIL ADDRESS: STREET 1: 733 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: KAUFMAN & BROAD INC DATE OF NAME CHANGE: 19890515 FORMER COMPANY: FORMER CONFORMED NAME: KAUFMAN & BROAD BUILDING CO DATE OF NAME CHANGE: 19711006 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________________________ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIES EVENT REPORTED) NOVEMBER 10, 1998 SUNAMERICA INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) MARYLAND 1-4618 86-0176061 (STATE OR OTHER (COMMISSION (IRS EMPLOYER JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.) INCORPORATION) 1 SUNAMERICA CENTER LOS ANGELES, CALIFORNIA 90067-6022 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (310) 772-6000 2 Item 5. Other Events ------------ The Registrant has released earnings information for fiscal year ended September 30, 1998. See the attached press release dated November 10, 1998. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits --------------------------------------------------------- (c) Exhibits Exhibit (99) Press release dated November 10, 1998. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SUNAMERICA INC. Date: November 10, 1998 By: /s/ Susan L. Harris ------------------- Susan L. Harris Senior Vice President and Secretary EX-99 2 EXHIBIT 99 1 EXHIBIT 99 [SUNAMERICA LETTERHEAD] Karel Carnohan Vice President, Investor Relations (310) 772-6535 Brent Zimmerman Director, Investor Relations (310) 772-6534 FOR IMMEDIATE RELEASE SUNAMERICA'S FISCAL 1998 OPERATING EARNINGS UP 29% AT $2.47 PER SHARE; Total Sales Increase 60% LOS ANGELES - November 10, 1998 -- SunAmerica Inc. (NYSE:SAI) today reported operating earnings for its fiscal year ended September 30, 1998 of $543.4 million or $2.47 per share, exceeding the analyst consensus estimate as published by FirstCall. This was a 29% increase on a per-share basis from $398.0 million or $1.91 per share in fiscal 1997. All earnings per share amounts were calculated on a diluted basis. Operating earnings, which exclude net realized investment gains or losses, are a commonly used earnings measure in the insurance industry and the measure most analysts use in their published earnings estimates. Net income for the year totaled $516.3 million or $2.34 per share, up 29% on a per-share basis compared with $379.1 million or $1.81 per share in fiscal 1997. The company's return on average equity remained strong at 19.9% for the year versus 21.2% in fiscal 1997. For the fourth quarter of fiscal 1998, the company reported operating earnings of $148.3 million or $0.68 per share, a 28% increase on a per-share basis from the $116.4 million or $0.53 per share in last year's fourth quarter and higher than the First Call consensus estimate. Net income for the fourth quarter was $113.9 million or $0.52 per share compared with $117.5 million or $0.54 per share in the 1997 fourth quarter. Reflecting its conservative balance sheet philosophy, the company recorded net realized losses of $52.9 million in the fourth quarter of 1998, posting increased impairment reserves for various bonds and other assets. 2 "1998 was yet another year of outstanding achievements and record growth," said Eli Broad, chairman and chief executive officer. "Sales reached record levels, asset growth was strong, and we continued to capitalize on attractive consolidation opportunities within the industry." SunAmerica's total sales rose to a record $8.5 billion in fiscal 1998, up 60% over the prior year. Total annuity sales for fiscal 1998 reached a record $3.7 billion, up 32% over last year, with variable annuity product sales rising 40% to $3.5 billion. Fixed annuity product sales were $208 million in 1998 versus $324 million in the prior year, reflecting a general decrease in demand for long-term fixed-rate products. For the fourth quarter of fiscal 1998, total sales were a record $2.3 billion, up 58% over last year. Total annuity sales reached $1 billion for the second consecutive quarter, rising 32% over 1997 fourth-quarter annuity sales of $763 million. Demand for SunAmerica's variable annuity products remained strong in the fourth quarter of fiscal 1998, as sales rose 48% to $973 million, as compared to $656 million in the 1997 fourth quarter. Fixed annuity product sales were $36 million in the 1998 fourth quarter, versus $107 million in last year's comparable quarter. The fixed component of variable annuity product sales was $491 million in the fourth quarter of 1998, versus $234 million in last year's fourth quarter, indicating continued strong demand for dollar- cost-averaging features designed to mitigate the impact of investing in a volatile equity market. Highlighting the flexibility of the variable annuity and the advantages of dollar-cost-averaging, investors moved a net $395 million from the fixed accounts of SunAmerica's variable annuity products into variable accounts during the current quarter. SunAmerica's flagship variable annuity, Polaris/Polaris II, was the nation's number-one selling individual, multi-manager variable annuity in the first nine months of calendar 1998. According to preliminary numbers from the Variable Annuity Research and Data Service (VARDS), Polaris ranked 5th among all U.S. variable annuities, pushing SunAmerica's nine-month variable annuity sales growth to 47%, versus industry growth of about 18%. The company increased the attractiveness of Polaris II during the year with several enhancements, including a "Dogs" of Wall Street fund option, a six-month dollar-cost-averaging account and a choice of death benefits. 3 "Long-term, as the demographics of the aging baby boomer generation fuel demand, sales of variable annuities should continue to increase," said Jana Waring Greer, president, SunAmerica Retirement Markets. "However, in recent weeks, sales of variable annuities have slowed as investors paused to reevaluate their investment decisions in light of volatile markets. At SunAmerica, we continue to believe that fluctuating market conditions increase the value of financial planning services and make the flexibility and security of variable annuities even more attractive. Our strong presence in financial planning distribution channels and the strong performance of Polaris gives us an advantage in these markets." The company's mutual fund sales continued to benefit from strong demand for the Style Select Series, as well as its recently introduced "Dogs" of Wall Street and "Focus" funds. Fund sales rose 60% in the 1998 fourth quarter to $252 million, as compared to $158 million in last year's quarter. For the full year, mutual fund sales increased 88% to $854 million, up from $455 million in fiscal 1997. Assets under management at the end of fiscal 1998 were $3.0 billion, up 16% from a year ago. In an ongoing effort to provide cutting-edge products, the company was recently the first to offer the security of a minimum guaranteed return of principal plus interest to the beneficiaries of the investor who buys a SunAmerica mutual fund. Sales of the company's institutional products, guaranteed investment contracts (GICs), nearly doubled in the 1998 fourth quarter to more than $1 billion, up 96% from $525 million in the prior-year quarter. For the full year, GIC sales rose 93% to $4 billion, and GIC reserves at the end of the fiscal year totaled $8.4 billion, up 51% from a year earlier. This growth reflects the company's ongoing efforts to expand its international GIC sales and increased marketing of its "AAA"-rated products. The international GIC sales, which are non-surrenderable contracts, have lengthened the overall maturity and duration of the company's GIC business. Part of the company's growth strategy is to increase its share of existing retirement savings assets by acquiring select businesses. The company will soon add another $5 billion of annuity and life insurance reserves with the acquisition of MBL Life, expected to be completed by the end of the calendar year. During this same period, it continued to expand its distribution network by acquiring four new broker-dealers with more than 3,500 representatives. Now with a total of 9,600 representatives, the SunAmerica Financial Network represents the fifth-largest retail securities sales force in the nation. To support future sales growth, the company has also strengthened its wholesaling and marketing organizations and fortified its commitment to increase awareness of the SunAmerica brand by reinvigorating its highly successful national advertising campaign. 4 "Our solid sales growth this quarter is evidence that the demand for top-performing retirement savings and investment products has remained strong," Broad said. "SunAmerica is well-positioned in the U.S. retirement savings market, with a powerful distribution network and an increasingly recognized brand name - crucial elements in a highly competitive marketplace. We also recognize the significant opportunities that exist in international retirement savings markets, and we are very excited at the prospect of expanding our franchise around the globe as part of American International Group." SunAmerica's fee income rose to $125.5 million in the current quarter, up 36% over the 1997 fourth quarter, primarily reflecting the company's strength in the variable annuity market and the growth of the SunAmerica Financial Network. Average variable annuity reserves in the quarter were up 32% over last year's comparable quarter, helping to boost variable annuity fees by 35% to $56.4 million in the current quarter. Net retained commissions increased 71% to $31.4 million in the 1998 fourth quarter, versus the comparable 1997 quarter, and asset management fees rose 15% to $7.8 million. The company's net investment income rose 13% to $224.1 million in the fourth quarter of 1998 from $197.9 million in the 1997 fourth quarter, reflecting an increase in average invested assets due to strong sales and a growing capital base. Average invested assets totaled $26.2 billion in the 1998 fourth quarter, up 7% over the $24.4 billion reported for the same period last year. The company's spread between the yield on its average invested assets and the rate paid on its average interest-bearing liabilities (the "spread difference") was 2.97% in 1998's fourth quarter, up slightly from the 2.94% reported in both the prior-year fourth quarter and the 1998 third quarter. For the full year, net investment income rose 24% and the spread difference was 2.93%, as compared to 2.95% in fiscal 1997. The yield on partnership investments in fiscal 1998 remained strong at 23.4%, up slightly from 21.0% in the prior year. This portfolio includes more than 650 investments with an average size of about $2.5 million, including investments in affordable housing, real estate and a varied group of privately managed partnerships. Credit quality remained excellent with non-performing assets at 0.2% of total invested assets at fiscal year end, which is well below industry averages. 5 SunAmerica Inc. is a diversified financial services company specializing in retirement savings and investment products and services. The company earns fees or spread income on approximately $110 billion of assets, including $26.1 billion of investments and $11.4 billion of variable annuity assets on its balance sheet at September 30, 1998; $3 billion managed in mutual funds and private accounts; $13 billion under custody in retirement trust accounts; and an estimated $56 billion of nonproprietary and advisory assets in the SunAmerica Financial Network. To obtain investor materials, including the company's annual and quarterly shareholder reports, please call SunAmerica's investor relations department at (310) 772-6235, or send e-mail requests to investor@sunamerica.com. To learn more about the SunAmerica companies, please visit our Web site at www.sunamerica.com. SunAmerica's variable annuities and mutual funds are offered by prospectus only. The prospectus includes detailed information, including charges and fees. Investors should read the prospectus carefully before investing. (Tables attached) 6 SUNAMERICA INC. CONDENSED CONSOLIDATED BALANCE SHEET (In thousands - unaudited)
September 30, September 30 1998 1997 ------------- ------------ Assets Cash and short-term investments $ 1,796,132 $ 993,349 Bonds, notes and redeemable preferred stocks available for sale, at fair value 18,800,847 18,523,655 Mortgage loans 3,412,449 3,139,309 Commons stocks, at fair value 82,808 96,541 Equity-method partnerships 779,098 561,336 Cost-method partnerships 865,953 725,457 Other invested assets 328,120 368,531 ------------ ------------ Total investments 26,065,407 24,408,178 Variable annuity assets held in separate accounts 11,405,434 9,514,675 Deferred acquisition costs 996,503 1,118,582 Other assets 733,063 595,451 ------------ ------------ TOTAL ASSETS $ 39,200,407 $ 35,636,886 ============ ============ Liabilities and shareholders' equity Liabilities: Reserves for fixed annuity contracts $ 12,970,549 $ 14,445,126 Reserves for guaranteed investment contracts 8,380,844 5,553,292 Variable annuity liabilities related to separate accounts 11,405,434 9,514,675 Long-term notes and debentures 1,216,483 1,136,072 Trust deposits 439,918 427,433 Payable to brokers for purchases of securities 91,463 266,477 Other payables and accrued liabilities and deferred income taxes 1,208,649 1,214,705 ------------ ------------ Total liabilities 35,713,340 32,557,780 ------------ ------------ Preferred securities of subsidiary grantor trusts 495,000 495,000 ------------ ------------ Shareholders' equity: Preferred Stock 248,000 248,000 Nontransferable Class B Stock 16,273 16,273 Common Stock 179,526 179,076 Additional paid-in capital 755,776 750,401 Retained earnings 1,596,220 1,180,446 Net unrealized gains on debt and equity securities available for sale 196,272 209,910 ------------ ------------ Total shareholders' equity 2,992,067 2,584,106 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 39,200,407 $ 35,636,886 ============ ============
7 SUNAMERICA INC. CONSOLIDATED INCOME STATEMENT (In thousands, except per-share amounts) (Unaudited)
Quarters ended September 30, Years ended September 30, ----------------------------- --------------------------- 1998 1997 1998 1997 ------------ ------------ ------------ ----------- Investment income $ 567,604 $ 525,318 $ 2,160,463 $1,795,826 --------- ---------- ----------- ---------- Interest expense on: Fixed annuity contracts (172,633) (192,450) (721,490) (644,426) Guaranteed investment contracts (125,604) (87,185) (426,496) (314,144) Trust deposits (2,475) (2,333) (9,400) (9,726) Senior indebtedness (32,480) (35,110) (120,253) (106,279) --------- ----------- ----------- ---------- Total interest expense (333,192) (317,078) (1,277,639) (1,074,575) Dividends paid on preferred securities of grantor trusts (10,294) (10,296) (41,178) (41,874) --------- ----------- ----------- ---------- NET INVESTMENT INCOME 224,118 197,944 841,646 679,377 --------- ----------- ----------- ---------- NET REALIZED INVESTMENT GAINS (LOSSES) (52,945) 1,679 (41,721) (29,203) --------- ----------- ----------- ---------- Fee income: Variable annuity fees 56,440 41,920 204,474 141,204 Net retained commissions 31,432 18,365 114,461 64,911 Surrender charges 13,210 10,696 54,361 35,241 Asset management fees 7,839 6,839 29,592 25,764 Loan servicing fees 5,868 6,202 23,398 24,264 Trust Fees 4,338 4,612 18,080 17,912 Other Fees 6,341 3,696 14,461 8,407 --------- ---------- ----------- ---------- TOTAL FEE INCOME 125,468 92,330 458,827 317,703 --------- ---------- ----------- ---------- GENERAL AND ADMINISTRATIVE EXPENSES (74,294) (74,030) (310,273) (265,738) --------- ---------- ----------- ---------- AMORTIZATION OF DEFERRED ACQUISITION COSTS (66,685) (52,596) (241,167) (165,089) --------- ---------- ----------- ---------- PRETAX INCOME 155,662 165,327 707,312 537,050 Income tax expense (41,800) (47,800) (191,000) (158,000) --------- ---------- ----------- ---------- NET INCOME $ 113,862 $ 117,527 $ 516,312 $ 379,050 ========= ========== =========== EARNINGS PER SHARE: Basic $ 0.57 $ 0.60 $ 2.61 $ 2.01 ========= ========== =========== ========== Diluted $ 0.52 $ 0.54 $ 2.34 $ 1.81 ========= ========== =========== ==========
8 SUNAMERICA INC. KEY OPERATING STATISTICS (In thousands, except per-share amounts) (Unaudited)
Quarters ended September 30, Years ended September 30, ----------------------------- --------------------------- 1998 1997 1998 1997 ------------ ------------ ------------ ---------- Operating earnings(1) $ 148,276 $ 116,436 $ 543,431 $ 398,032 ============ ============ ============ ========== Operating earnings per share: Basic $ 0.75 $ 0.60 $ 2.75 $ 2.12 ============ ============ ============ ========== Diluted $ 0.68 $ 0.53 $ 2.47 $ 1.91 ============ ============ ============ ========== Average shares outstanding Basic $ 193,499 $ 189,356 $ 193,023 $ 179,381 ============ ============ ============ ========== Diluted $ 218,261 $ 217,967 $ 220,404 $ 205,726 ============ ============ ============ ========== At September 30, At September 30, 1998 1997 ------------ ---------- Aggregate common shares outstanding $ 195,798 $ 195,348(2) ============ ========== Book value per-share $ 14.45 $ 12.40 ============ ========== Pro forma book value per share(2) $ 16.02 $ 13.40 ============ ========== Book Value per share excluding net unrealized gains/losses or debt and equity securities available for sale $ 13.50 $ 11.39 ============ ========== Pro forma book value per share excluding net unrealized gains/ losses on debt and equity securities available for sale(2) $ 15.10 $ 12.47 ============ ==========
(1) After-tax earnings before net realized investment gains and losses. (2) On a pro forma basis, assuming that the Premium Equity Redemption Cumulative Security Units were converted to Common Stock. NOTES TO EDITORS: ANALYST ESTIMATES ARE BASED ON OPERATING EARNINGS PER DILUTED SHARE, WHICH WERE $0.68 IN THE FOURTH QUARTER OF FISCAL 1998, UP 28% FROM $0.53 IN THE 1997 FOURTH QUARTER; AND $2.47 FOR FISCAL 1998, UP 29% FROM $1.91 IN FISCAL 1997. -----END PRIVACY-ENHANCED MESSAGE-----