<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1997 Commission File Number 1-8052
TORCHMARK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 63-0780404
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 3rd Avenue South, Birmingham, Alabama 35233
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (205) 325-4200
NONE
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding for each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT OCTOBER 31, 1997
Common Stock, 140,028,540
$1.00 Par Value
Index of Exhibits (Page 11)
Total number of pages included are 12.
<PAGE>
TORCHMARK CORPORATION
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheet 1
Consolidated Statement of Operations 2
Consolidated Statement of Cash Flow 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 6. Exhibits and Reports on Form 8-K 11
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
TORCHMARK CORPORATION
CONSOLIDATED BALANCE SHEET
(Amounts in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS:
Investments:
Fixed maturities, available for sale, at fair value
(amortized cost: 1997 - $5,494,994;
1996 - $5,265,499) $ 5,652,462 $5,328,276
Equity securities, at fair value
(cost: 1997 - $3,284; 1996 - $3,799) 11,246 8,858
Mortgage loans, at cost (estimated fair value:
1997 - $75,774; 1996 - $61,970) 77,151 64,353
Investment real estate, at depreciated cost 163,532 150,490
Policy loans 217,364 206,959
Other long-term investments (at fair value) 75,695 95,485
Short-term investments 137,405 85,099
----------- ----------
Total investments 6,334,855 5,939,520
Cash 14,941 18,272
Investment in unconsolidated subsidiaries 99,654 88,051
Accrued investment income 97,666 91,837
Other receivables 132,811 112,291
Deferred acquisition costs 1,339,532 1,253,727
Value of insurance purchased 222,187 244,368
Property and equipment 48,605 50,323
Goodwill 529,308 540,540
Other assets 33,594 41,846
Separate account assets 1,831,518 1,420,025
----------- ----------
Total assets $10,684,671 $9,800,800
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Future policy benefits $ 4,971,122 $4,797,738
Unearned and advance premiums 83,954 83,670
Policy claims and other benefits payable 220,268 220,121
Other policyholders' funds 81,929 80,812
----------- ----------
Total policy liabilities 5,357,273 5,182,341
Accrued income taxes 368,068 340,287
Short-term debt 79,474 40,910
Long-term debt (estimated fair value:
1997 - $810,778; 1996 - $814,082) 772,358 791,880
Other liabilities 251,029 202,869
Separate account liabilities 1,831,518 1,420,025
----------- ----------
Total liabilities 8,659,720 7,978,312
Monthly income preferred securities (estimated
fair value: 1997 - $210,000; 1996 - $210,000) 193,186 193,145
Shareholders' equity:
Preferred stock - -
Common stock 143,220 73,784
Additional paid-in capital 185,162 141,701
Unrealized investment gains, net of tax 107,245 46,581
Retained earnings 1,520,294 1,549,391
Treasury stock, at cost (124,156) (182,114)
----------- ----------
Total shareholders' equity 1,831,765 1,629,343
----------- ----------
Total liabilities and shareholders' equity $10,684,671 $9,800,800
=========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
- 1 -
<PAGE>
TORCHMARK CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited and in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -------------------------
1997 1996 1997 1996
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue:
Life premium $229,677 $215,642 $ 680,247 $ 639,520
Health premium 182,995 181,400 555,284 552,934
Other premium 7,555 5,543 20,273 15,853
-------- -------- ---------- ----------
Total premium 420,227 402,585 1,255,804 1,208,307
Financial services revenue 53,482 45,529 151,760 137,023
Net investment income 110,615 101,577 321,144 301,694
Realized investment gains (losses) (390) 498 (34,169) 5,590
Other income 130 409 792 790
-------- -------- ---------- ----------
Total revenue 584,064 550,598 1,695,331 1,653,404
Benefits and expenses:
Life policyholder benefits 148,820 139,933 443,507 417,400
Health policyholder benefits 117,173 110,527 348,003 338,512
Other policyholder benefits 13,318 13,152 40,679 37,973
-------- -------- ---------- ----------
Total policyholder benefits 279,311 263,612 832,189 793,885
Amortization of deferred acquisition costs 56,736 54,788 168,387 164,522
Commissions and premium taxes 34,321 34,900 104,836 106,434
Financial services selling expense 14,218 12,215 38,702 37,461
Other operating expense 36,324 38,589 110,440 116,793
Amortization of goodwill 3,744 3,744 11,232 11,232
Interest expense 17,385 17,655 53,544 55,486
-------- -------- ---------- ----------
Total benefits and expenses 442,039 425,503 1,319,330 1,285,813
Income before income taxes and
equity in earnings of unconsolidated affiliates 142,025 125,095 376,001 367,591
Income taxes (51,058) (46,201) (135,937) (135,275)
Equity in earnings of unconsolidated subsidiaries 4,496 4,360 12,180 11,060
Monthly income preferred securities dividend (2,489) (2,424) (7,352) (7,233)
-------- -------- ---------- ----------
Net income from continuing operations 92,974 80,830 244,892 236,143
Discontinued operations of energy segment (after tax) - (7,137) - (7,137)
-------- -------- ---------- ----------
Net income $ 92,974 $ 73,693 $ 244,892 $ 229,006
======== ======== ========== ==========
Net income per share $ 0.67 $ 0.52 $ 1.76 $ 1.60
======== ======== ========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
- 2 -
<PAGE>
TORCHMARK CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOW
(Amounts in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------
1997 1996
----------- ---------
<S> <C> <C>
Cash provided from operations $ 368,920 $ 324,658
Cash provided from (used for) investment activities:
Investments sold or matured:
Fixed maturities available for sale - sold 689,602 344,627
Fixed maturities available for sale - matured, called, and repaid 330,856 269,832
Other long-term investments 76,216 28,324
----------- ---------
Total investments sold or matured 1,096,674 642,783
Investments acquired:
Fixed maturities (1,275,943) (730,667)
Other long-term investments (83,576) (46,731)
----------- ---------
Total investments acquired (1,359,519) (777,398)
Net decrease (increase) in short-term investments (52,336) (42,213)
Proceeds from sale of discontinued energy operations 27,057 15,500
Payments related to sale of discontinued energy operations (15,021) 0
Dividend from discontinued affiliate 0 35,625
Disposition of properties 775 498
Additions to properties (6,340) (13,089)
----------- ---------
Cash used for investment activities (308,710) (138,294)
Cash provided from (used for) financing activities:
Issuance of common stock 92,590 4,106
Additions to debt 38,696 0
Repayments of debt (20,132) (139,035)
Acquisition of treasury stock (178,618) (49,009)
Cash dividends paid to shareholders (59,992) (62,400)
Net receipts from deposit product operations 63,915 71,728
----------- ---------
Cash used for financing activities (63,541) (174,610)
Net increase (decrease) in cash (3,331) 11,754
Cash at beginning of year 18,272 13,158
----------- ---------
Cash at end of period $ 14,941 $ 24,912
=========== =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
- 3 -
<PAGE>
TORCHMARK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q, and, therefore, do
not include all disclosures required by generally accepted accounting
principles. However, in the opinion of management, these statements include all
adjustments, consisting of normal recurring accruals, which are necessary for a
fair presentation of the consolidated financial position at September 30, 1997,
and the consolidated results of operations for the periods ended September 30,
1997, and 1996.
4
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Operating Results
Torchmark's net operating income from continuing operations (net income
excluding realized investment gains and losses and the associated adjustment to
deferred acquisition costs, net of tax) was $1.92 per share or $267 million for
the first nine months of 1997, compared with $1.63 per share or $233 million for
the same period of 1996, an increase in per share operating earnings for 1997
of 18%. Per share amounts for prior periods have been restated to reflect
Torchmark's 100% stock dividend paid in the third quarter of 1997, which
doubled the number of shares outstanding. Net income was $245 million in the
1997 period, compared with $229 million in the same period for 1996. Net income
was affected by an after-tax realized investment loss of $22 million in the 1997
period, compared with a gain of $3 million in 1996. The 1997 realized
investment losses resulted primarily from the intentional sale of fixed-maturity
investments which were taken to offset current and prior year taxable gains. Net
income was also affected in 1996 by a $7 million after-tax loss on the disposal
of Torchmark's discontinued energy operations.
Operating revenues (revenues excluding realized investment gains and
losses) rose 5% to $1.7 billion in the first nine months of 1997. Total premium
increased 4% to $1.3 billion. Life premium grew 6% to $680 million for the 1997
period, while health premium increased slightly to $555 million. Life premium
represented 54% of total premium in the 1997 period. Financial services revenues
gained 11% to $152 million, while net investment income rose 6% to $321 million.
Operating expense declined 5% to $110 million for the 1997 nine months
from $117 million. As a percentage of operating revenue, operating expenses fell
from 7.1% in the 1996 period to 6.4%. The major contributing factor to the
decline in these expenses was the $8 million decline in litigation expense,
compared with the prior-year period, at Torchmark's Alabama-based insurer,
Liberty National Life Insurance Company. A discussion of Torchmark's operations
follows under the appropriate captions.
Life insurance. Life insurance premium income rose 6% to $680 million
through the third quarter of 1997, from $640 million in the same nine-month
period a year ago. Annualized life premium in force increased 7% over the prior
year and was $995 million at September 30, 1997, compared with $933 million a
year earlier. Annualized life insurance premium in force represented 57% of
Torchmark's total annualized premium in force at September 30, 1997, compared
with 55% the same date a year earlier, reflecting Torchmark's continued emphasis
on life product sales. Life insurance sales, in terms of annualized premium
issued, were $173 million in the 1997 period, rising 6% over 1996 sales of $163
million. Benefits and acquisition expenses as a percentage of premium were
stable in both periods at 82%. Underwriting margins for life insurance were
unchanged at 27%.
5
<PAGE>
Health insurance. Torchmark's health insurance premium rose from $553
million in the first nine months of 1996 to $555 million in the same period of
1997. Annualized health insurance premium in force grew 1% to $757 million at
September 30, 1997. Cancer annualized premium in force rose 8% to $130 million,
primarily as a result of premium rate increases. Medicare Supplement annualized
premium in force was level at $525 million at September 30, 1997. Medicare
Supplement annualized premium represents over 69% of health premium in force.
Sales of health insurance, as measured by annualized premium issued, grew 9% to
$79 million. Underwriting margins declined from 20% in 1996 to 19% in 1997,
primarily because of a slight increase in loss ratios on certain Cancer and
Medicare Supplement business.
Annuities. Torchmark sells both fixed and variable annuities. Fixed
annuity collections were $71 million in the 1997 nine months, compared with $66
million collected in the 1996 period, an increase of 7%. Collections of variable
annuities were $173 million in the 1997 period, declining 6% from variable
collections of $184 million in 1996. Fixed annuities on deposit with Torchmark
grew 4% to slightly over $1 billion at September 30, 1997. The variable annuity
balance on deposit rose 40% during the past twelve months, boosted in large part
by the strength in financial markets. This balance was $1.78 billion at
September 30, 1997, compared with $1.27 billion a year ago. Policy charges for
annuities for the 1997 nine months were $20.3 million, compared with $15.9
million for the 1996 period, an increase of 28%. Policy charges are assessed
against the annuity account balance periodically for insurance risk, sales,
administration, and cash surrender. The increase in policy charges resulted
primarily from the growth in variable annuities over the prior-year period.
Annuity underwriting margins improved 20% from $12 million in the 1996 period to
$14 million in 1997.
Investment. Torchmark's investment income rose 6% in the first nine
months of 1997 to $321 million, the result of a 7% increase in mean invested
assets for the 1997 period versus the 1996 period. Invested assets at amortized
cost increased to $6.2 billion at September 30, 1997, compared with $5.8 billion
at September 30, 1996.
Acquisitions, which continue to emphasize call-protected, medium-
maturity corporate obligations, also include mortgage-backed securities, below
investment grade bonds, and municipal obligations. Acquisitions made during the
first nine months of 1997 totaled $1.27 billion and had a tax-equivalent yield
of 7.29%, compared with acquisitions of $731 million made at a yield of 7.24%
for the 1996 comparable period. The increase in 1997 acquisitions over the 1996
level resulted in large part from the reinvestment of proceeds from planned
sales of fixed income securities, which were completed in order to partially
offset current and prior-year taxable realized gains. Realized losses of $27.3
million were generated on fixed maturities in the first three quarters of 1997.
6
<PAGE>
Fixed maturity investments represented 89% of total invested assets at
September 30, 1997. The portfolio had a yield of 7.50%, compared with a 7.59%
yield at September 30, 1996. Because of the decrease in interest rates during
the period, the fixed-income portfolio had an unrealized gain of $157 million,
compared with an unrealized gain of $63 million at year-end 1996 and a $6
million unrealized loss at September 30, 1996.
Financial services. Financial services revenues for the first nine
months of 1997 increased 11% to $152 million over the prior period. Asset
management fees, the largest component of financial services revenues, rose 15%
to $87 million. These fees are based on the amount of assets under management.
Average assets under management rose 10% in the 1997 period versus the 1996 nine
months. Assets under management were $22.5 billion at September 30, 1997,
compared with $18.9 billion at year-end 1996 and $18.7 billion at September 30,
1996. Mutual fund assets under management were $20.7 billion at September 30,
1997, $17.2 billion at 1996 year end, and $16.6 billion a year ago. Growth in
fee revenue was greater than the growth in average assets due to the loss of
several large accounts in 1996 with lower than average fees.
Commission revenues from investment product sales increased 1% to $56
million in the 1997 period from $55 million for the prior nine months.
Investment product sales of $1.11 billion in the 1997 nine-month period declined
4% compared with $1.16 billion in the same period of 1996. However, for the
third quarter of 1997, investment product sales were $389 million, a 9% increase
compared with the 1996 third quarter. Commission revenues gained 11% compared
with the 1996 quarter. Commissions from the sale of insurance products were flat
at $10.2 million in both periods. Service fees increased 12% to $23 million. The
sum of all financial services revenue components is greater than total financial
services revenue because the portion of commission related to the sale of
insurance and variable annuity products of United Investors Life Insurance
Company is eliminated in consolidation. Direct expenses for financial services,
which rose 3% year-over-year, declined as a percentage of revenues from 27% in
the 1996 period to 26% in the 1997 period. Administrative expense as a
percentage of revenue also declined 1%. Administrative expenses remained stable
at $22 million both years. The financial services pretax profit margin increased
from 50% in the 1996 period to 54%.
FINANCIAL CONDITION
Liquidity. Positive cash flow, marketable investments, and the
availability of a line of credit facility provide Torchmark with strong
liquidity and financial flexibility. Torchmark's insurance and asset-management
operations typically generate cash flows in excess of immediate requirements.
Torchmark's net cash inflows from operations were $369 million in the first nine
months of 1997, compared with $325 million in the same period of 1996, a 14%
increase. In addition to cash flows from operations, Torchmark received $331
million in investment maturities or repayments during the 1997 period.
7
<PAGE>
Torchmark's cash and short-term investments were $152 million at the end
of September, 1997, rising 47% over the $103 million of these assets at December
31, 1996. Cash and short-term investments represented 1.4% of total assets at
September 30, 1997. In addition, Torchmark's entire portfolio of fixed-income
and equity securities, in the amount of $5.7 billion at market value on
September 30, 1997, is available for sale should a need arise.
Torchmark has in place a line of credit facility, which is also designed
as a backup credit line for a commercial paper program. This program provides
credit up to a maximum amount of $600 million, and permits Torchmark to borrow
from either the credit line or issue commercial paper at any time up to the
combined facility maximum of $600 million. Terms of the facility permit
borrowing up to the maximum amount at variable interest rates. Torchmark is
subject to certain covenants regarding capitalization and earnings, with which
Torchmark was in full compliance at September 30, 1997. At that date, Torchmark
had commercial paper outstanding in the amount of $79 million and no borrowings
on the line of credit. At December 31, 1996, $41 million in commercial paper was
outstanding.
Capital resources. Torchmark's total debt outstanding was $852 million
at September 30, 1997, compared with $833 million at December 31, 1996 and $843
million at September 30, 1996. Debt as a percentage of total capitalization was
31% at September 30, 1997, counting the Monthly Income Preferred Securities as
equity and excluding the effects on equity of an accounting rule requiring
market revaluation of fixed securities and an adjustment to deferred acquisition
costs based on changes in interest rates in the financial markets. The debt to
capitalization ratio was 32% at both year-end 1996 and at September 30, 1996.
Torchmark repaid $20 million principal amount of its 8 5/8% Sinking Fund
Debentures due 2017 on July 15, 1997.
Torchmark's shareholders' equity was $1.83 billion at September 30,
1997, compared with $1.63 billion at 1996 year end. Shareholders' equity was
$1.58 billion one year ago. Book value per share was $13.08 at quarter end,
compared with $11.69 at year-end 1996 and $11.16 a year earlier. Shareholders'
equity is impacted by the previously mentioned accounting rule that requires
equity to be adjusted for the fluctuations in the market values of fixed
investments and deferred acquisition costs based on changes in interest rates.
After adjusting shareholders' equity to remove the effects of interest-rate
fluctuations on an after-tax basis, shareholders' equity was $1.74 billion at
September 30, 1997, compared with $1.59 billion at 1996 year end and $1.58
billion a year ago. On a per share basis, book value was $12.42 at the end of
September, 1997, compared with $11.42 at year-end 1996 and $11.17 at September
30, 1996. Annualized return on common equity, adjusted to exclude the effects of
the accounting rule and realized investment gains and losses, was 21.2% for the
1997 nine-month period, compared with 20.2% for the same period of 1996.
8
<PAGE>
On September 26, 1997, Torchmark executed a "reload" stock option
exercise program through which over 100 Torchmark directors and employees
exercised vested stock options and received replacement options at current
market price. This program resulted in the issuance of 4.8 million shares, but
over 3 million of the new shares were immediately sold by the directors and
employees through the open market to cover the cost of the purchased shares and
related taxes. As a result of the "reload" program, management's ownership
interest increased, and Torchmark will receive a significant current tax benefit
from the exercise of the options.
During the third quarter ending September 30, 1997, Torchmark
repurchased 3.2 million of its shares at an average cost of $39.16, including
3.1 million shares that became available on the market September 26. For the
nine months of 1997, a total of 5.1 million shares have been acquired at a cost
of $179 million.
9
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings.
Torchmark and its subsidiaries continue to be named as parties to
pending or threatened legal proceedings. These lawsuits involve tax matters,
alleged breaches of contract, torts, including bad faith and fraud claims based
on alleged wrongful or fraudulent acts of agents of Torchmark's insurance
subsidiaries, employment discrimination and miscellaneous other causes of
action. Many of these lawsuits involve claims for punitive damages in the state
courts of Alabama, a jurisdiction particularly recognized for its large punitive
damage verdicts. Accordingly, the likelihood or extent of a punitive damage
verdict in any given case is virtually impossible to predict. As of September
30, 1997, Liberty National Life Insurance Company ("Liberty") was a party to
approximately 294 active lawsuits (including 26 employment cases and excluding
interpleader and stayed cases), approximately 199 of which were Alabama
proceedings in which punitive damages were sought. At September 30, 1996,
Liberty had been a party to approximately 283 active lawsuits (including 26
employment cases and excluding interpleader and stayed cases) , approximately
280 of which were Alabama cases in which punitive damages were sought. Liberty
faces trial settings in these cases on an on-going basis. Some of such actions
involving Liberty also name Torchmark as a defendant.
Liberty has previously reported that it is a party to Harris v. Liberty
-----------------
National Life Insurance Company (CV-96-01836), a purported class action filed in
- -------------------------------
the Circuit Court of Jefferson County, Alabama in March, 1996. In Harris, the
------
plaintiffs allege that a class of persons were insured under Liberty cancer
policies when Liberty knew that such persons were not entitled to retain any
benefits under these policies. On March 21, 1997, a purported class action with
substantially similar allegations was filed in the Circuit Court of St. Clair
County, Alabama (Gentry v. Liberty National Life Insurance Company, CV-97-61).
--------------------------------------------------
The St. Clair County Circuit Court entered an order conditionally certifying a
class in Gentry on May 27, 1997. The Harris case has been stayed by the
------ ------
Jefferson County Circuit Court pending resolution of the Gentry proceedings. No
------
class has been certified in Harris. Plaintiffs in Harris have filed a petition
------ ------
for a writ of mandamus which remains pending with the Alabama Supreme Court in
the Gentry case.
------
It has been previously reported that Torchmark, its subsidiaries United
American and Globe and certain individual corporate officers are parties to
purported class action litigation filed April 5, 1996 in the U.S. District Court
for the Northern District of Georgia (Crichlow v. Torchmark Corporation, Case
---------------------------------
No.: 4:96-CV 0086-HLM). The complaint alleged RICCO violations, fraud, breach of
contract, conspiracy, violations of the Oklahoma Consumer Protection Act and
breach of the duty of good faith and fair dealing on behalf of all persons who
purchased, at any time between 1987 and the present, certain hospitalization and
surgical insurance policies issued by Globe and United American. The plaintiffs
asserted that they purchased these policies and subsequently incurred improper
claim denials, wrongful recision and "rate-ups" and post-claim underwriting. On
10
<PAGE>
December 4, 1996, the U.S. District Court dismissed the RICCO counts, the
Oklahoma Consumer Protection Act and contract counts as to certain defendants
and ordered plaintiffs to file an amended complaint. On December 23, 1996, the
plaintiffs filed the amended complaint as ordered, alleging breach of contract,
fraud, conspiracy and breach of the duty of good faith and fair dealing on
behalf of a purported class of persons who purchased Globe, but not United
American, policies from 1987 to the present. Defendants filed motions to dismiss
and for partial summary judgment. On September 11, 1997, the U.S. District Court
entered an order granting summary judgment against the plaintiffs on certain
issues and denying national class certification, although the Court indicated
that plaintiffs could move for certification of a state class of Georgia
policyholders. Plaintiffs have moved for reconsideration of the September 1997
Order. Currently, the claims which remain in the "Crichlow" case involve breach
of contract and the duty of good faith arising from closure of the block of
business and certain post-claim matters as well as fraud and conspiracy relating
to pricing and delay in implementing rate increases.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Statement re computation of per share earnings.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed in the third quarter of 1997.
11
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TORCHMARK CORPORATION
Date: November 10, 1997 /s/ Keith A. Tucker
____________________________
Keith A. Tucker, Vice Chairman
Date: November 10, 1997 /s/ Gary L. Coleman
____________________________
Gary L. Coleman, Vice President and
Chief Accounting Officer
12
<PAGE>
Exhibit 11. Statement re computation of per share earnings.
TORCHMARK CORPORATION
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three months ended September 30,
1997 1996
------------ ------------
<S> <C> <C>
Net income - continuing operations $ 92,973,909 $ 80,830,107
Discontinued operations - (7,137,000)
------------ ------------
Net income 92,973,909 73,693,107
Preferred dividends - -
------------ ------------
Net income available to common shareholders $ 92,973,909 $ 73,693,107
============ ============
Weighted average shares and common
stock equivalents outstanding 138,475,521 142,628,747
============ ============
Primary earnings per share:
Net income - continuing operations $ 0.67 $ 0.57
Discontinued operations - (0.05)
------------ ------------
Net income $ 0.67 $ 0.52
============ ============
Nine months ended September 30,
1997 1996
------------ ------------
Net income - continuing operations $244,891,600 $236,142,811
Discontinued operations - (7,137,000)
------------ ------------
Net income 244,891,600 229,005,811
Preferred dividends - -
------------ ------------
Net income available to common shareholders $244,891,600 $229,005,811
============ ============
Weighted average shares and common
stock equivalents outstanding 138,921,044 143,183,806
============ ============
Primary earnings per share:
Net income - continuing operations $ 1.76 $ 1.65
Discontinued operations - (0.05)
------------ ------------
Net income $ 1.76 $ 1.60
============ ============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<DEBT-HELD-FOR-SALE> 5,652,462
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 11,246
<MORTGAGE> 77,151
<REAL-ESTATE> 163,532
<TOTAL-INVEST> 6,334,855
<CASH> 14,941
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 1,561,719
<TOTAL-ASSETS> 10,684,671
<POLICY-LOSSES> 4,971,122
<UNEARNED-PREMIUMS> 83,954
<POLICY-OTHER> 220,268
<POLICY-HOLDER-FUNDS> 81,929
<NOTES-PAYABLE> 851,832
193,186
0
<COMMON> 143,220
<OTHER-SE> 1,688,545
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1,255,804
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