<PAGE>
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 earliest event reported) February 1, 2000
February 1, 2000
TORCHMARK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-9052 63-0780404
(State or other (Commission File No.) (I.R.S. Employer ID No.)
jurisdiction
of incorporation)
2001 Third Avenue South, Birmingham, Alabama 35233
(Address of principal executive offices)
Registrant's telephone number, including area code: (205) 325-4200
None
(Former name or former address, if changed since last report)
Index of Exhibits page 2.
Total number of pages in this report is 8.
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Item 5. Other Events.
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Torchmark Corporation issued a press release dated February 1, 2000, which is
incorporated herein by reference and attached hereto as an exhibit.
Item 7. Financial Statement and Exhibits.
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(a) Financial Statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
Page
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(99) Torchmark Corporation Press Release 4
Dated February 1, 2000
<PAGE>
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.
TORCHMARK CORPORATION
Date: February 1, 2000 /s/ Larry Hutchison
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Larry Hutchison,
Executive Vice President & General Counsel
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EXHIBIT 99
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NEWS RELEASE [LOGO OF TORCHMARK CORPORATION]
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Torchmark Corporation . 2001 Third Avenue South . Birmingham, Alabama 35233
Contact: Joyce Lane 972-569-3627 NYSE Symbol: TMK
TORCHMARK CORPORATION REPORTS YEAR END
AND FOURTH QUARTER 1999 RESULTS
Birmingham, Alabama, February 1, 2000....Torchmark Corporation (NYSE: TMK)
reported today that for the year ended December 31, 1999, net operating income,
before a nonrecurring charge recognized in the fourth quarter, was $2.55 per
share ($341 million) up 11% from $2.29 per share ($324 million) for the prior
year. For the fourth quarter of 1999, net operating income, before the
nonrecurring charge, was $.66 per share ($87 million) compared with $.60 per
share ($85 million) for the fourth quarter of 1998, a 10% per share increase.
In the third quarter of 1999, Reader's Digest Association (RDA) and
Torchmark entered into an agreement to market Torchmark insurance products to
RDA's United States and Canadian customers. Torchmark began test marketing
during the fourth quarter of 1999. The less than favorable results from these
tests indicate that it is unlikely that Torchmark will recover the full amount
of compensation guaranteed to RDA. As a result, Torchmark recorded a
nonrecurring after tax operating charge of $13 million ($.10 per share) in the
fourth quarter of 1999. Including this nonrecurring charge, net operating
income was $2.45 per share for the year ended December 31, 1999, and $.56 per
share for the fourth quarter of 1999.
The following chart displays the key per share components of Torchmark's
net operating income:
<TABLE>
<CAPTION>
Key Components of Net Operating Income Per Diluted Share
----------------------------------------------------------------------
Year Ended Quarter Ended
December 31, % December 31, %
------------ -------------
1999 1998 Change 1999 1998 Change
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Insurance Underwriting Income:
Excluding Family Service Life $ 2.49 $ 2.25 11 $ .64 $ .58 10
Family Service Life 0 .01 0 0
Excess Investment Income 1.61 1.46 10 .41 .38 8
Other ( .25) ( .25) 0 (.06) (.06) 0
Income Tax (1.30) (1.17) 11 (.33) (.31) 6
------ ------ ----- -----
Net Operating Income
Excluding Nonrecurring Charge $ 2.55 $ 2.29 11 $ .66 $ .60 10
Nonrecurring Charge-Recognition
Of Charge Relating to Reader's
Digest Contract, After Tax ( .10) (.10)
------ ------ ------ ------
Net Operating Income $ 2.45 $ 2.29 $ .56 $ .60
</TABLE>
1
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INSURANCE OPERATIONS - comparing the year ended December 31, 1999, with the year
ended December 31, 1998:
Total premium revenue increased 8% to $1.9 billion. Life premium revenue
increased 6% to $1.0 billion. Health premium revenue increased 9% to $825
million.
Insurance net underwriting income increased 5% to $333 million. The life
underwriting margin (before administrative expenses) was 26% of premium,
compared with 27% for 1998. The health underwriting margin was 18% of premium,
the same as for the year 1998. Administrative expenses were $105 million,
compared with $103 million for 1998, but declined as a percentage of premium
from 5.9% to 5.6%. Insurance underwriting results are summarized in the
following chart:
<TABLE>
<CAPTION>
Insurance Underwriting Income
(in millions, except per share data)
--------------------------------------------------------------------------------------
Year Year
Ended % of Ended % of
December 31, 1999 Premium December 31, 1998 Premium Change
----------------- ------- ----------------- ------- ------
<S> <C> <C> <C> <C> <C>
Underwriting Income before
Administrative Expenses
Life $ 264.4 26 $ 254.1 27 4
Health 144.6 18 139.4 18 4
Annuity 25.7 21.8 18
------- -------
434.7 415.4
Other Income 3.3 4.5
Administrative Expenses (104.9) 6 (102.6) 6 2
------- -------
Underwriting Income -
Excluding Family Service Life * $ 333.2 $ 317.4 5
Per Share $ 2.49 $ 2.25
Underwriting Income -
Family Service Life * 0 1.4
Total Underwriting Income $ 333.2 $ 318.7
</TABLE>
* As previously reported, Family Service Life was sold to an unaffiliated
acquirer during the second quarter of 1998.
Total insurance sales were $450 million, a 17% increase. Total life
insurance sales of $257 million were up 5%.
Total health insurance sales, including sales of Medicare supplements,
were $193 million, an increase of 39%. Health sales by the United American
Agencies were $171 million, an increase of 49%, and were primarily sales of
Medicare supplements. Total Medicare supplement sales were $153 million, an
increase of 49%. Medicare supplement annualized premium in force at year end
1999, increased 14% to $631 million. Sales by distribution channels are shown in
the following chart:
2
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<TABLE>
<CAPTION>
Annualized Life and Health Premium Issued
(dollars in millions)
----------------------------------------------------------------------
Life Health Total
------------ ------------ ------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
------------ % ------------ % ------------ %
1999 1998 Chg. 1999 1998 Chg. 1999 1998 Chg.
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Direct Response $ 96.1 $ 93.5 3 $ 4.3 $ 3.9 11 $100.4 $ 97.4 3
LNL Exclusive Agency 51.5 45.5 13 9.9 11.1 (11) 61.3 56.7 8
American Income Agency 54.0 53.6 1 8.0 9.1 (12) 62.1 62.7 (1)
UI Agency 15.6 15.4 1 -- -- -- 15.6 15.4 1
Military Agency 17.1 16.9 1 -- -- -- 17.1 16.9 1
United American Agencies
Exclusive Agency 5.3 5.5 (3) 102.6 64.2 60 107.9 69.7 55
Independent Agency 13.3 9.4 42 68.0 50.5 35 81.3 59.9 36
Other 4.2 4.7 (10) -- -- -- 4.2 4.7 (10)
------ ------ ------ ------ ------ ------
Total Premium Issued $257.2 $244.5 5 $192.8 $138.9 39 $450.0 $383.4 17
</TABLE>
INVESTMENTS - comparing the year ended December 31, 1999, with year ended
December 31, 1998:
Excess investment income (investment income less interest credited on
net policy liabilities and less financing costs) increased 5% to $215 million.
Investment income declined 3% to $459 million due primarily to the sale of
Family Service Life in the second quarter of 1998 and the repurchase of
Torchmark shares since late 1998. Financing costs decreased 7% to $66 million,
due in part to the redemption of long term debt during 1998 as well as continued
low short term borrowing rates. Interest credited to net policy liabilities
declined 8% to $177 million, due primarily to the sale of Family Service Life.
After tax net realized capital losses were $72 million for 1999 compared
with $51 million for 1998. The losses in 1999 consist of $41 million relating to
the previously reported write down of Torchmark's real estate portfolio, $19
million of losses resulting from planned sales of fixed maturity investments and
$12 million due to the decline in the market value of its interest rate swap.
3
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SHARE REPURCHASE
During 1999, a total of 5.4 million shares at a total cost of $175.5
million were repurchased at an average cost of $32.50 per share. At December
31, 1999, there were 132.0 million Torchmark shares outstanding (132.3 million
on a diluted basis).
On November 16, 1999, the Company executed a voluntary stock option
exercise program through which 85 directors and employees exercised vested stock
options and received replacement options at the current market price. As a
result, the Company issued 1.8 million new shares to the participants; however,
1.3 million of the new shares were immediately sold through the open market by
the employees and directors to cover the option exercise price of their new
shares and their related income taxes. As a result of the program, management's
ownership in the Company increased, and the Company will receive a significant
current tax benefit from the exercise of the options. In order to maintain an
orderly market in the Company's shares, on November 16, the Company bought 1.3
million open market shares not reflected in the Company's share buy-back program
data described above.
TORCHMARK CONSOLIDATED
Return on equity for the year ended December 31, 1999, (excluding the
effect of SFAS 115, net realized investment losses and the nonrecurring charge)
was 16.2%. Total assets at December 31, 1999, were $12.1 billion and
shareholders' equity was $2.0 billion. Book value per share at December 31,
1999 was $16.32, excluding the effect of SFAS 115. The debt to capital ratio,
excluding the effect of SFAS 115, was 25.2% at December 31, 1999 as compared
with 24.3% at December 31, 1998 (31.3% and 30.6% respectively, when the Monthly
Income Preferred Securities are treated as debt rather than equity).
Torchmark's total revenues for the year of 1999 increased 5% to $2.3
billion. Net operating income, before the nonrecurring charge recorded in the
fourth quarter, for the year 1999 ($341 million) differs from net income by the
following items, net of taxes:
(i) net realized investment losses and related DAC adjustment,
(ii) net loss from discontinued asset management operations,
(iii) gain on sale of equipment, and
(iv) the effect of a change in accounting principle for the interest rate
swap.
Net operating income for the year of 1998 ($324 million) differs from net income
for that period by the following items, net of taxes:
(i) net income from discontinued asset management operations,
(ii) expenses related to the spinoff of discontinued asset management
operations,
(iii) net realized investment losses and DAC adjustment,
(iv) income related to the investment in Vesta Insurance Group and
the effect of the restatement of its carrying value, and
(v) loss on redemption of debt.
4
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<TABLE>
<CAPTION>
Summary of Financial Results
(in thousands, except per share data)
-----------------------------------
Year Ended December 31, Quarter Ended December 31,
----------------------- --------------------------
1999 1998 1999 1998
----------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Total Revenue * $2,332,763 $2,215,513 $593,302 $553,385
Net Operating Income:
Before nonrecurring charge $ 341,167 $ 324,315 $ 86,887 $ 84,660
Per diluted share $ 2.55 $ 2.29 $ .66 $ .60
After nonrecurring charge $ 327,744 $ 324,315 $ 73,464 $ 84,660
Per diluted share $ 2.45 $ 2.29 $ .56 $ .60
Weighted Average Diluted Shares
Outstanding (000 omitted) 133,986 141,352 132,317 140,419
</TABLE>
* Total revenue excludes net realized investment losses and the gain on sale
of equipment.
For additional information contact: Joyce Lane
Vice President, Investor Relations
Phone: 972/569-3627
FAX: 972/569-3696
[email protected]
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