SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the quarter ended March 31, 1994
Commission File No. 1-7434
AFLAC INCORPORATED
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
GEORGIA 58-1167100
- - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
1932 WYNNTON ROAD, COLUMBUS, GEORGIA 31999
-----------------------------------------------------
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code (706) 323-3431
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 of each of the issuer's classes
of common stock, as of the latest practicable date.
Class May 6, 1994
---------------------------- ------------------
Common Stock, $.10 Par Value 100,606,307 shares
<PAGE>
AFLAC INCORPORATED AND SUBSIDIARIES
INDEX
Page
No.
----
Part I. Financial Information:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1994 and December 31, 1993........... 2
Condensed Consolidated Statements of Earnings -
Three Months Ended March 31, 1994 and 1993...... 3
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1994 and 1993...... 4
Notes to Condensed Consolidated Financial
Statements...................................... 5
Review by Independent Certified Public
Accountants..................................... 7
Independent Auditors' Report...................... 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..... 9
Part II. Other Information:
Item 4. Submission of Matters to a Vote
of Security Holders...................... 13
Item 6. Reports on Form 8-K....................... 14
<PAGE>
Part I. Financial Information
AFLAC INCORPORATED AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In thousands - Unaudited)
March 31, December 31,
1994 1993*
----------- ------------
ASSETS
Investments:
Securities available for sale:
Fixed maturities (1994 at market;
1993 at amortized cost)
(amortized cost, $13,147,697 in 1994;
market value, $11,570,386 in 1993) $ 14,237,289 $ 10,055,436
Equity securities, at market value
(cost, $56,909 in 1994 and
$67,692 in 1993) 70,350 82,065
Fixed maturities held to maturity,
at amortized cost (market value
$2,418,540 in 1993) - 2,082,326
Mortgage loans on real estate 27,779 57,485
Other long-term investments 4,134 1,726
Short-term investments 433,725 166,689
----------- -----------
Total investments 14,773,277 12,445,727
Cash 35,360 23,413
Receivables, primarily premiums 258,011 231,977
Accrued investment income 168,422 184,087
Deferred policy acquisition costs 2,139,795 1,953,248
Property and equipment, net 387,614 361,246
Intangible assets, net 113,067 114,165
Other 139,844 128,823
----------- -----------
Total assets $ 18,015,390 $ 15,442,686
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Policy liabilities $ 13,870,367 $ 11,947,137
Notes payable 166,320 122,062
Income taxes, primarily deferred 1,279,821 950,278
Payables for security transactions 546,902 659,158
Other 435,523 398,427
----------- -----------
Total liabilities 16,298,933 14,077,062
----------- -----------
Shareholders' equity:
Common stock 10,375 10,371
Other shareholders' equity 1,706,082 1,355,253
----------- -----------
Total shareholders' equity 1,716,457 1,365,624
----------- -----------
Total liabilities and
shareholders' equity $ 18,015,390 $ 15,442,686
=========== ===========
See accompanying notes to consolidated condensed financial statements.
* Condensed from consolidated balance sheet included in the 1993
Annual Report to Shareholders.
2
PAGE
<PAGE>
<TABLE>
AFLAC INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<CAPTION>
(In thousands, except for per share amounts - Unaudited) Three Months Ended March 31,
----------------------------------
1994 1993 % Change
----------- ----------- ----------
<S> <C> <C> <C>
Revenues:
Premiums, principally supplemental health insurance $1,179,121 $ 949,490 24.2
Net investment income 191,922 152,486
Realized investment gains 832 633
Other income 20,107 18,861
---------- ----------
Total revenues 1,391,982 1,121,470 24.1
---------- ----------
Benefits and expenses:
Benefits and claims 962,136 765,061 25.8
Acquisition and operating expenses:
Amortization of deferred policy acquisition costs 31,526 25,032
Insurance commissions 155,745 126,221
Insurance expenses 91,073 80,448
Interest expense 2,707 2,401
Capitalized interest on building construction (2,419) (1,483)
Other operating expenses 29,249 26,965
---------- ----------
Total acquisition and operating expenses 307,881 259,584 18.6
---------- ----------
Total benefits and expenses 1,270,017 1,024,645 23.9
---------- ---------
Earnings before income taxes and cumulative
effect of accounting changes 121,965 96,825 26.0
Income taxes 52,008 43,079
---------- ----------
Earnings before cumulative effect of
accounting changes 69,957 53,746 30.2
Cumulative effect on prior years of accounting changes - 11,438
---------- ----------
Net earnings $ 69,957 $ 65,184
========== ==========
Earnings per share:
Earnings before cumulative effect of
accounting changes $ 0.67 $ 0.51 31.4
Cumulative effect of accounting changes - 0.11
---------- ----------
Net earnings $ 0.67 $ 0.62
========== ==========
Shares used in computing earnings per share 104,913 105,093
========== ==========
Cash dividends per share $ 0.10 $ 0.088 13.6
========== ==========
See accompanying notes to consolidated condensed financial statements.
</TABLE>
3
PAGE
<PAGE>
AFLAC INCORPORATED AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(In thousands - Unaudited)
Three Months Ended
March 31,
---------------------------
1994 1993
----------- -----------
Net cash flows from
operating activities $ 525,720 $ 404,605
----------- -----------
Cash flows from investing activities:
Proceeds from investments sold
or matured 352,710 226,403
Costs of investments acquired (820,887) (521,724)
Additions to property & equipment,
net (11,333) (88,403)
----------- -----------
Net cash used by investing
activities (479,510) (383,724)
----------- -----------
Cash flows from financing activities:
Proceeds from borrowings 45,619 -
Principal payments under debt
obligations (3,456) (7,081)
Purchase of treasury stock (68,730) -
Dividends paid to stockholders (10,351) (9,068)
Other, net 248 1,301
----------- -----------
Net cash used by financing
activities (36,670) (14,848)
----------- -----------
Effect of exchange rate changes on cash 2,407 2,550
----------- -----------
Net change in cash 11,947 8,583
Cash at beginning of period 23,413 36,138
----------- -----------
Cash at end of period $ 35,360 $ 44,721
=========== ===========
See accompanying notes to consolidated condensed financial statements.
4
<PAGE>
AFLAC INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (none of which
were other than normal recurring accruals with the exception of the
adjustments required for the adoption of new accounting standards
discussed in Notes 2 and 3) necessary to present fairly the financial
position as of March 31, 1994, and the results of operations and cash
flows for the three months ended March 31, 1994 and 1993. Results of
operations for interim periods are not necessarily indicative of results
for the entire year.
2. Effective January 1, 1994, the Company adopted SFAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities, issued
by the Financial Accounting Standards Board. Under the new standard, the
Company has classified all fixed-maturity securities as "available for
sale." Such securities are carried at market value rather than amortized
cost. The related unrealized gains and losses, less amounts applicable to
policy liabilities and deferred income taxes, are reported in a separate
component of shareholders' equity together with unrealized gains and
losses on equity securities. As a result, this change in accounting
method has no effect on net earnings.
The effect on shareholders' equity of applying this standard was as
follows:
(In millions) January 1, 1994 March 31, 1994
_______________ ______________
Invested assets $ 1,851.1 $ 1,089.6
Policy liabilities (1,088.6) (480.9)
Deferred income taxes (301.0) (283.6)
____________ ____________
Shareholders' equity,
net unrealized gains $ 461.5 $ 325.1
============ ============
The changes in the separate shareholders' equity component,
unrealized gains on securities available for sale, for the three months
ended March 31, 1994, were as follows:
(In thousands)
Balance at December 31, 1993 $ 14,811
____________
Cumulative effect of adopting SFAS No. 115 at
January 1, 1994, net of deferred income taxes
of $301,030 461,478
Change in unrealized gains (losses) on fixed
maturity and equity securities during the first
quarter, net of deferred income tax benefits
of $17,106 (137,736)
____________
Net change for the quarter 323,742
____________
Balance at March 31, 1994 $ 338,553
============
The portion of unrealized gains credited to policy liabilities at
January 1, 1994 and March 31, 1994, represents gains that would not inure
5
<PAGE>
to the benefit of the shareholders, if such gains were actually realized.
These amounts are necessary to cover policy reserve interest requirements
based on market investment yields at these dates.
3. Effective January 1, 1993, three new accounting standards were
adopted through a one-time cumulative net credit to earnings of $11.4
million, or $.11 per share, as follows:
(In millions)
SFAS No. 109 - Deferred Income Taxes $22.0
SFAS No. 106 - Other Postretirement Benefits (9.6)
SFAS No. 112 - Postemployment Benefits (1.0)
_____
Net effect January 1, 1993 $11.4
=====
Additional information concerning these accounting changes is
included in note 1 of notes to the Company's 1993 consolidated financial
statements.
4. In February 1994, the Company's board of directors authorized the
purchase of up to 4.6 million shares of the Company's common stock.
During the first quarter of 1994, 2.3 million shares were purchased, and
at March 31, 1994, 2.5 million shares were held in the treasury at a cost
of $75 million. The impact of the share purchases was not material to the
first quarter earnings per share.
The shares purchased in the first quarter were financed by available
cash and $45.6 million of temporary borrowings in late March 1994. In
April permanent bank financing was arranged under a new revolving credit
and term note agreement for up to $150 million with interest at LIBOR plus
50 basis points. Principal payments on the new loan are payable over five
years beginning in June 1995. As of April 30, 1994, bank borrowings of
$75 million were outstanding in connection with the share purchase plan.
5. The changes in shareholders' equity during the three months ended
March 31, 1994, are as follows:
(In thousands)
Shareholders' equity, beginning of year $ 1,365,624
__________
Change in unrealized gains on securities
available for sale 323,742
Change in unrealized foreign currency
translation gains 35,960
Net earnings 69,957
Shares issued for exercises of stock options 248
Purchases of treasury stock (68,730)
Dividends to shareholders ($.10 per share) (10,351)
Notes receivable for stock purchases 7
__________
Net change for the period 350,833
__________
Shareholders' equity at March 31, 1994 $ 1,716,457
==========
6
<PAGE>
REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The March 31, 1994 and 1993 financial statements included in this
filing have been reviewed by KPMG Peat Marwick, independent certified
public accountants, in accordance with established professional standards
and procedures for such a review.
The report of KPMG Peat Marwick commenting upon their review is
included on page 8.
7
<PAGE>
KPMG PEAT MARWICK
Certified Public Accountants
303 Peachtree Street, N.E. Telephone: 404-222-3000
Suite 2000 Telefax: 404-222-3050
Atlanta, GA 30308
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
AFLAC Incorporated:
We have reviewed the condensed consolidated balance sheet of AFLAC
Incorporated and subsidiaries as of March 31, 1994, and the related
condensed consolidated statements of earnings for the three-month periods
ended March 31, 1994 and 1993, and the condensed consolidated statements
of cash flows for the three-month periods ended March 31, 1994 and 1993,
in accordance with standards established by the American Institute of
Certified Public Accountants.
A review of interim financial information consists principally of
obtaining an understanding of the system for the preparation of interim
financial information, applying analytical review procedures to financial
data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
As discussed in Note 2 to the financial statements, the Company adopted
the provisions of the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 115, Accounting for Certain Investments
in Debt and Equity Securities, as of January 1, 1994.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of AFLAC Incorporated and
subsidiaries as of December 31, 1993, and the related consolidated
statements of earnings, stockholders' equity, and cash flows for the year
then ended (not presented herein); and in our report dated January 31,
1994, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1993, is fairly
presented, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
KPMG PEAT MARWICK
April 25, 1994
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ANALYSIS OF FINANCIAL CONDITION
Since December 31, 1993, the financial condition of AFLAC
Incorporated and subsidiaries (the "Company") has remained strong.
Investments have continued to increase in their functional currencies and
continue to consist of high-quality securities.
Due to the relative size of AFLAC Japan, our largest operating unit,
changes in the yen/dollar exchange rate can have a significant effect on
the Company's financial statements when reported in U.S. dollars. The
yen/dollar exchange rate at the end of each reporting period is used to
convert balance sheet items. The rate at March 31, 1994, of 103.15 yen to
one U.S. dollar, strengthened 8.6% compared to the exchange rate of 112.00
as of December 31, 1993. Management estimates that the stronger yen rate
increased invested assets by $1.0 billion and total assets by $1.2
billion, while increasing total liabilities by $1.2 billion over the
amounts that would have been reported based on the exchange rate as of
December 31, 1993.
Since December 31, 1993, total investments (including cash) have
increased by $2.3 billion, or 18.8%, with AFLAC Japan increasing $2.3
billion, or 20.3% (10.8% in yen), and AFLAC U.S. increasing $44.2 million,
or 4.0%. The continued growth in invested assets reflects the strength of
our main operating units, the continued strong cash flows from these
operations, the effect of the stronger yen/dollar exchange rate as of
March 31, 1994, compared to the exchange rate as of December 31, 1993, and
the effect of SFAS No. 115. See Note 2 to the accompanying Notes to
Condensed Consolidated Financial Statements for the three months ended
March 31, 1994 ("Note 2").
Deferred policy acquisition costs increased $186.5 million, or 9.6%
during the first three months of 1994. AFLAC Japan increased $176.8
million, or 11.5% (2.7% in yen), with approximately $41.4 million relating
to operations of AFLAC Japan and $135.4 million of the increase relating
to the stronger yen rate at March 31, 1994. AFLAC U.S. increased $9.7
million, or 2.4% during the same period.
Policy liabilities increased $1.9 billion, or 16.1% during the first
three months of 1994. AFLAC Japan increased $1.9 billion, or 17.6% (8.3%
in yen) and AFLAC U.S. increased $39.1 million, or 3.2%. These increases
are due to the addition of new business as well as the maturing of
existing policies in force and the effect of the stronger yen on AFLAC
Japan, and the effect of SFAS No. 115. (See Note 2.)
The Company negotiated new unsecured notes payable to banks. As of
March 31, 1994, the additional notes payable amounted to $45.6 million.
This amount, less principal payments, plus foreign exchange gains,
accounts for the increase of $44.3 million in notes payable since December
31, 1993. See Note 4 to the accompanying Notes to Condensed Consolidated
Financial Statements for the three months ended March 31, 1994.
The income tax liability increased by $329.5 million, or 34.7%, since
December 31, 1993. The increase is primarily due to the recognition of
deferred income taxes of $283.6 million on unrealized gains on securities
available for sale due to the implementation of SFAS No. 115. (See Note
2.)
Shareholders' equity increased $350.8 million during the first three
months of 1994. This increase was principally due to the implementation
of SFAS No. 115 (see Note 2). For further information on the changes in
shareholders' equity, see Note 5 of the accompanying Notes to Condensed
Consolidated Financial Statements for the three months ended March 31,
1994.
9
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The board of directors approved a 15% increase in the quarterly cash
dividend from $.10 to $.115 per share. The second quarter cash dividend
of $.115 per share is payable on June 1, 1994, to shareholders of record
at the close of business on May 20, 1994.
RESULTS OF OPERATIONS
The results of operations for the first three months of 1993 included
the cumulative effect on prior years of a one-time credit of $11.4 million
($.11 per share) due to accounting changes adopted. The following
earnings comparisons exclude the effect of these accounting adjustments.
See Note 3 to the accompanying Notes to Condensed Consolidated Financial
Statements for the three months ended March 31, 1994.
For the first three months of 1994, net earnings increased 30.2% to
$70.0 million, up from $53.7 million for the comparable period of 1993.
Net earnings per share increased 31.4%, from $0.51 to $0.67 per share.
Operating earnings (excluding realized investment gains/losses, net of
taxes) increased 28.4% to $69.3 million, up from $54.0 million. Operating
earnings per share increased 29.4%, from $.51 to $.66 per share.
The increases in consolidated earnings, and earnings of AFLAC Japan,
continued to be aided by favorable translations from yen to U.S. dollars
for the first quarter of 1994, compared to the exchange rates used in the
comparable period of 1993. The yen/dollar exchange rates used to
translate the statements of earnings are the year-to-date cumulative
average exchange rates for the period. The cumulative average yen/dollar
exchange rate of 107.65 for the first three months of 1994 strengthened
12.5% compared to the rate of 121.09 for the first three months of 1993.
For the three month period ending March 31, 1994, management estimates
that the stronger yen/dollar exchange rate increased total operating
revenues by $126.7 million and increased net earnings by $7.3 million and
operating earnings (excluding realized gains/losses) by $7.3 million. The
foreign exchange effect was $.07 per share for both net earnings and
operating earnings. Without the beneficial effect of the stronger yen,
net earnings per share would have increased 17.6% and operating earnings
per share would have increased 15.7% for the first three months of 1994.
Premium income for the first three months of 1994 increased 24.2% to
$1.2 billion. Net investment income increased 25.9% to $191.9 million.
Total revenues increased 24.1% to $1.4 billion. The ratio of benefits and
claims to total revenues (benefit ratio) increased to 69.1% for the first
three months of 1994, up from 68.2%, continuing the upward trend
experienced during the last several years due to the maturing of policies
in force. The ratio of expenses to total revenues (expense ratio)
decreased to 22.1% from 23.1%, which also continues the downward trend
experienced during the last several years due to effective cost controls
and the general growth of total revenues. The changes in the benefit and
expense ratios resulted in the pretax operating profit margin increasing
to 8.7%, up from 8.6% a year ago.
During the first quarter the Japanese government enacted new tax
legislation that terminated an extension of the temporary Special
Corporate Tax of .9% of Japan's taxable income. This tax was scheduled to
expire at December 31, 1994. The tax reduction was not material to first
quarter net earnings and is expected to reduce the Company's income tax
expense for the year 1994 by approximately $3.7 million.
AFLAC JAPAN
The yen continued to appreciate against the dollar in the first
quarter. The cumulative average exchange rate for the first three months
of 1994 was 107.65, or 12.5% stronger than the average rate of 121.09 a
10
<PAGE>
year ago. As a result, growth rates for AFLAC Japan continued to be
higher in dollars than in yen. The cumulative exchange rate for the full
year of 1993 was 111.21.
Premium income translated into dollars rose 27.5% (13.3% in yen) to
$981.6 million for the first three months of 1994. The increase in
premium income was due to collection of premiums from new policies, the
continued excellent policy persistency of older policies and, in dollars,
the stronger yen rate. Total new sales, including conversions of older
policies to newer policies, increased 38.3% in dollars (25.5% in yen) for
the first three months of 1994. New sales, excluding conversions, in
dollars increased 33.6% (21.4% in yen) to $145.3 million, up from $108.8
million for the three-month period. New annualized premium sales of the
Super Cancer plan were especially strong, increasing 38.8% in yen. The
strong cancer insurance production is primarily due to the sales
associates' efforts to sell policies prior to the implementation of a
premium rate increase. The rate increases will apply to new cancer policy
issues after July 1, 1994. As anticipated, Super Care sales were much
lower than a year ago due to the emphasis on cancer insurance sales.
Super Care accounted for 9.3% of first quarter new sales. Management
expects these trends to continue into the second quarter, but in the
second half of the year, Management expects this trend to reverse, with
cancer insurance sales slowing and care sales improving compared with the
first half of the year. Management's goal is to increase new sales by 10%
in yen for the year.
Investment income increased 26.9% (12.7% in yen) to $172.4 million
for the first three months of 1994. The increase was due to the continued
strong cash flow from operations, offset somewhat during the last two
years by construction expenditures for AFLAC Japan's new administrative
office building and the increasing amounts of profit transfers to AFLAC
U.S. Available investment yields rose slightly during the quarter,
although they remained at historically low levels. For example, the yield
on a composite of 10-year Japanese government bonds reached a low of 3.26%
in January and rose to 4.40% in March, averaging 3.91% for the quarter.
During the quarter, available cash flow was invested at an average
yield-to-maturity of 4.77% compared to 5.83% during the first quarter of
1993. The overall return on average invested assets at amortized cost,
net of investment expenses, decreased slightly for the first three months
of the year, to 6.05% from 6.21% for the same period last year. The
Company continues to enter into forward purchase commitments in
anticipation of lower investment yields in the near future. Approximately
47% of the estimated 1994 cash flow has been invested or committed to
invest at an average yield-to-maturity of 4.96%. The overall return on
average invested assets is expected to decrease slightly during the rest
of the year, if available market investment yields remain constant or
decrease further.
AFLAC Japan's pretax operating earnings in dollars for the first
three months of 1994 increased 22.1% (8.4% in yen) to $110.5 million. The
pretax operating profit margins for the first three months of 1994
decreased slightly, from 10.0% to 9.6%. The reduction in pretax operating
profit margins was principally caused by an increase in incurred benefits
and reduced investment income due to profit transfers to AFLAC U.S., lower
investment yields, and construction expenditures for the new building.
AFLAC Japan's results continue to reflect the pattern which has developed
during the last several years, slightly higher benefit ratios somewhat
offset by lower expense ratios.
AFLAC U.S.
Premium income rose 10.6% to $193.0 million for the first three
months of 1994. The increase in premium income was due to an increase
11
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in new sales over the last twelve months and the recent improvement in
policy persistency. Total new sales, excluding policy conversions,
increased 9.6% (9.2% including conversions) for the first three months
compared to last year. In 1993, new policy sales increased 11.3% for the
full year. Management expects new policy sales to increase by 10% to 15%
for the year.
While it is not possible to predict the long-term effect on the
policy sales of AFLAC U.S. associated with the uncertainty among U.S.
health insurance consumers concerning the pending redesign of the U.S.
health care system, Management believes the impact will not adversely
affect AFLAC's major products.
Investment income increased 18.3% to $18.6 million for the first
three months of 1994. This increase was primarily due to the increase in
invested assets associated with repatriation of profits from AFLAC Japan
and the continued strong cash flow from operations. During the first
quarter, available cash flow was invested at an average yield-to-maturity
of 7.08% compared to 7.18% during the first quarter of 1993. The overall
return on average invested assets, net of investment expenses, was down
slightly for the first three months of 1994 over 1993, decreasing to 7.37%
from 7.66%.
Pretax operating earnings for AFLAC U.S. increased 20.4% to $20.5
million for the first three months of the year. The results continue to
reflect slightly lower benefit ratios, principally due to the mix of
business shifting toward accident policies which have a lower benefit
ratio compared to other products, and investment income on profits
transferred from AFLAC Japan. The expense ratios decreased slightly
during the quarter. As a result, the pretax operating profit margins for
the first three months improved to 9.7%, up from 8.9%.
12
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PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of the Shareholders was held on April 25, 1994.
Matters submitted to the shareholders were: (1) Election of twenty
members to the Board of Directors; (2) Amendments to Stock Option Plan
(1985); (3) Adoption of Management Incentive Plan (in effect since 1985)
to comply with the Omnibus Budget Reconciliation Act of 1993; (4)
Ratification of the selection of auditors for 1994. The four proposals
were approved by the shareholders.
A summary of each vote cast for, against or withheld, as well as the
number of abstention and broker non-votes, as to each such matter,
including a separate tabulation with respect to each nominee for office is
as follows:
VOTES
-------------------------------------------------
Absten- With- Broker
For Against tions held Non-Votes
--------------------------------------------------
(1) Election of twenty
members to the Board of
Directors:
Paul S. Amos 199,988,232 N/A N/A 350,328 None
Daniel P. Amos 199,998,691 N/A N/A 339,870 None
J. Shelby Amos, II 199,936,159 N/A N/A 402,401 None
Michael H. Armacost 199,706,152 N/A N/A 632,409 None
M. Delmar Edwards,M.D. 199,747,842 N/A N/A 590,718 None
George W. Ford, Jr. 199,861,996 N/A N/A 476,565 None
Cesar E. Garcia 199,938,950 N/A N/A 399,610 None
Joe Frank Harris 199,412,933 N/A N/A 925,627 None
Elizabeth J. Hudson 199,739,361 N/A N/A 599,199 None
Kenneth S. Janke, Sr. 200,045,985 N/A N/A 292,575 None
Charles B. Knapp 199,852,164 N/A N/A 486,396 None
Hisao Kobayashi 199,998,519 N/A N/A 340,041 None
Peter D. Morrow 199,675,992 N/A N/A 662,568 None
Yoshiki Otake 199,995,570 N/A N/A 342,990 None
John M. Pope 199,935,184 N/A N/A 403,376 None
E. Stephen Purdom,M.D. 199,988,084 N/A N/A 350,477 None
Jack S. Schiffman 199,990,489 N/A N/A 348,071 None
Henry C. Schwob 199,923,730 N/A N/A 414,830 None
J. Kyle Spencer 199,929,060 N/A N/A 409,501 None
Glenn Vaughn, Jr. 199,871,791 N/A N/A 466,769 None
(2) Amendments to Stock
Option Plan (1985) 183,713,919 13,121,642 2,599,579 N/A 903,420
(3) Adoption of Manage-
ment Incentive Plan (in
effect since 1985) to
comply with the Omnibus
Budget Reconciliation
Act of 1993 184,657,155 12,830,139 1,947,846 N/A 903,420
(4) Ratification of
appointment of KPMG Peat
Marwick as independent
auditors 197,576,637 1,371,887 1,390,036 N/A None
13
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed for the quarter ended
March 31, 1994.
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
Date May 9, 1994 /s/ KRISS CLONINGER,III
________________________ ___________________________
KRISS CLONINGER,III
Executive Vice President;
Treasurer and
Chief Financial Officer
Date May 9, 1994 /s/ NORMAN P. FOSTER
________________________ ___________________________
NORMAN P. FOSTER
Executive Vice President,
Corporate Finance
14
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