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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1996
AFLAC INCORPORATED 401(k) PLAN
1932 Wynnton Road
Columbus, Georgia 31999
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan)
have duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
AFLAC INCORPORATED 401(k) PLAN
Date: June 26, 1997 By: /s/ Martin A. Durant, III
----------------------------------
Martin A. Durant, III
Senior Vice President,
Corporate Services
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AFLAC INCORPORATED 401(k) PLAN
Table of Contents
-----------------
Page
----
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits 2
Statements of Changes in Net Assets Available for
Plan Benefits 3
Notes to Financial Statements 4-11
Item 27a - Schedule of Assets Held for Investment Purposes 12
Item 27d - Schedule of Reportable Transactions 13
ii
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KPMG Peat Marwick LLP
303 Peachtree Street, N.E.
Suite 2000 Telephone: (404) 222-3000
Atlanta, Georgia 30308 Facsimile: (404) 222-3050
INDEPENDENT AUDITORS' REPORT
The Administrative Committee
AFLAC Incorporated 401(k) Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the AFLAC Incorporated 401(k) Plan (the Plan) as of December 31,
1996 and 1995, and the related statements of changes in net assets available
for plan benefits for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits of the
AFLAC Incorporated 401(k) Plan at December 31, 1996 and 1995, and the
changes in net assets available for plan benefits for the years then ended
in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements of the AFLAC Incorporated 401(k) Plan taken as a whole.
The supplementary information included in Schedules 1 and 2 is presented for
the purpose of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. Such information
has been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
KPMG PEAT MARWICK LLP
June 24, 1997
1
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AFLAC INCORPORATED 401(k) PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1996 and 1995
1996 1995
---------- ----------
Assets:
Investments (Note 5):
Money market funds $ 4,441 $ 130,362
Mutual funds (cost $12,650,230 in 1996,
$9,785,046 in 1995) 15,673,288 12,184,368
AFLAC Incorporated common stock
(cost $7,316,892 in 1996, $6,058,644
in 1995) 15,214,169 9,527,720
Common trust funds (cost $2,128,139
in 1995) - 2,469,634
---------- ----------
Total investments 30,891,898 24,312,084
---------- ----------
Receivables:
Employee contributions 19,297 80,947
AFLAC Incorporated contributions 1,433,571 1,334,237
Accrued interest and dividends 549 -
---------- ----------
Total receivables 1,453,417 1,415,184
---------- ----------
Cash 3,702,390 -
---------- ----------
Total assets 36,047,705 25,727,268
---------- ----------
Liabilities:
Excess employee contributions payable 95,831 87,210
Other 117,699 401,422
---------- ----------
Total liabilities 213,530 488,632
---------- ----------
Net assets available for
plan benefits $35,834,175 $25,238,636
========== ==========
See accompanying Notes to Financial Statements.
2
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AFLAC INCORPORATED 401(k) PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 1996 and 1995
1996 1995
---------- ----------
Contributions:
Participant withholdings $ 3,563,785 $ 3,141,229
Participant transfers
from other plans 50,500 17,406
AFLAC Incorporated matching 1,433,571 1,340,987
---------- ----------
Total 5,047,856 4,499,622
Interest and dividend income 1,581,505 930,003
Net realized gains on sale
of investments 1,002,292 39,846
Net unrealized appreciation
on investments 4,710,519 4,486,474
Distributions to participants (1,702,157) (838,040)
Forfeitures (44,476) (29,525)
---------- ----------
Increase in net assets 10,595,539 9,088,380
Net assets available
for plan benefits:
Beginning of year 25,238,636 16,150,256
---------- ----------
End of year $35,834,175 $25,238,636
========== ==========
See accompanying Notes to Financial Statements.
3
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AFLAC INCORPORATED 401(k) PLAN
Notes to Financial Statements
December 31, 1996 and 1995
(1) DESCRIPTION OF THE PLAN
The AFLAC Incorporated 401(k) Plan (the Plan) was established for the
benefit of the employees of AFLAC Incorporated and related companies,
American Family Life Assurance Company of Columbus (excluding Japan Branch
employees), American Family Life Assurance Company of New York, AFLAC
Broadcast Division, AFLAC International, Inc., and Communicorp, Inc.
The following description provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
(a) GENERAL.
Eligible employees may voluntarily participate in the Plan upon
completing one year of service and attaining the age of 21. The
Plan is subject to certain provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
The Plan is administered by a plan administrator appointed by
the Company's Board of Directors. All Plan expenses are paid
by the Company.
(b) CONTRIBUTIONS.
Contributions to the Plan are made by both participants and the
Company. Participants may contribute through payroll deductions
from 1% to 18%, subject to certain limitations, of their
aggregate compensation. The first 1% to 6% of participants'
compensation contributed may be subject to a percentage matching
contribution by the Company. For the years ended December 31,
1996 and 1995, the Company's matching contribution was 50% of the
portion of the participants' contributions, which were not in
excess of 6% of the participants' compensation.
(c) PARTICIPANT ACCOUNTS.
An account is maintained for each participant and is credited
with participant contributions and investment earnings/losses
thereon. Contributions may be invested in one or more of the
investment funds available under the Plan at the direction of
the participant. A separate account is maintained with respect
to each participant's interest in the Company's matching
contributions. Amounts in this account are apportioned and
invested in the same manner as the participant's account.
(d) VESTING.
Participants are 100% vested in their contributions plus actual
investment earnings/losses thereon. Participants become vested
in the Company's contribution upon completing five years of
service. Employees who became participants on or before
September 29, 1990 are 100% vested in all Company contributions.
4
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AFLAC INCORPORATED 401(k) PLAN
Notes to Financial Statements
A participant's interest in the Company's contributions is also
vested upon termination either because of death or disability or
after attaining his/her early retirement date or normal
retirement age. Participants forfeit the portion of their
interest which is not vested upon termination of employment.
These forfeitures reduce the Company's matching contribution.
(e) DISTRIBUTIONS.
Participants may receive a distribution equal to the value of
their account upon death, disability, retirement, or termination
of either the participant's employment or the Plan. Distributions
may only be made in the form of a lump-sum payment and/or AFLAC
Incorporated common stock.
(f) AGREEMENTS WITH TRUSTEE.
The assets of the Plan are held in a trust maintained by Charles
Schwab Trust Company (the former trustee was Synovus Trust
Company).
(g) AMENDMENTS.
The Plan was amended and restated in its entirety effective
February 1, 1997. The major amendments are as follows:
1. Eligible employees may voluntarily participate in the Plan
on the first day of the month which coincides with or next
follows the completion of thirty days of employment.
2. Participants become vested in the Company's contribution
according to the following schedule.
Years of Service Vested Percentage
---------------- -----------------
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
3. The Plan permits in-service withdrawals for a participant who
is 100% vested in the Company's contribution and has attained
age 60.
5
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AFLAC INCORPORATED 401(k) PLAN
Notes to Financial Statements
4. Participants are allowed to borrow from their accounts. The
minimum amount of any loan is $1,000. The maximum amount
of any loan is such that when the amount of the loan is added
to the outstanding balance of all other loans made to the
participant from the Plan (and any other plans maintained by
the employer or any related companies) the total does not
exceed the lesser of:
a. 50% of the participant's vested accrued benefit (as
defined in the Plan); or
b. $50,000, reduced by the amount, if any, of the highest
balance of all outstanding loans to the participant
during the one-year period ending on the day prior to
the day on which the loan is made.
(2) SUMMARY OF ACCOUNTING POLICIES
(a) BASIS OF PRESENTATION.
The accompanying statements of net assets and changes in net
assets have been prepared on the accrual basis of accounting.
(b) INVESTMENTS.
Investments are stated at fair value based upon quotations
obtained from national security exchanges or the value as
determined by the trustees of money market or common trust funds.
Securities transactions are accounted for on the trade date (the
date the order to buy or sell is executed). Realized gains and
losses on the sale of investments are calculated based on the
difference between selling price and cost on an average cost
basis.
(3) FEDERAL INCOME TAXES
The Internal Revenue Service has determined and informed the Company by
a letter dated July 18, 1995, that the Plan and related trust are in
accordance with applicable sections of the Internal Revenue Code. The
Plan's amendments since July 1995 are not expected to change the Plan's tax
status.
Participants in the Plan are not subject to Federal income taxes on
their contributions, on amounts contributed by the employer, or on earnings
or appreciation of investments held by the Plan until withdrawn by the
participant or distributed to the participant's named beneficiary in the
event of death.
6
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AFLAC INCORPORATED 401(k) PLAN
Notes to Financial Statements
(4) PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right to terminate the Plan at any time subject to the provisions of ERISA.
In the event of Plan termination, participants will become 100% vested in
their accounts.
(5) INVESTMENT FUNDS
The following schedules show net assets available for Plan benefits as
of December 31, 1996 and 1995, and changes in net assets available for plan
benefits for the years ended December 31, 1996 and 1995 by investment fund.
The investments in the American Balanced Fund, Washington Mutual Investors
Fund, Fidelity Magellan Fund and AFLAC Incorporated Common Stock all
exceeded five percent of the Plan's net assets available for Plan benefits
at December 31, 1996.
7
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<TABLE>
AFLAC INCORPORATED 401(k) PLAN
Notes to Financial Statements
Net Assets Available for Plan Benefits, Investment Fund Information
December 31, 1996
<CAPTION>
Disburse- AFLAC
Schwab Master Money ment GIC Income American Washington Incorporated Fidelity
Cash Market Fund Account Fund 4 Balanced Mutual Common Stock Magellan Totals
--------- ------------ -------- ---------- -------- ---------- ------------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments:
Money market funds $ - $ - $ - $ 4,441 $ - $ - $ - $ - $ 4,441
Mutual funds - - - - 3,823,406 8,076,699 - 3,773,183 15,673,288
AFLAC Incorporated
common stock - - - - - - 15,214,169 - 15,214,169
-------- ----------- -------- --------- --------- --------- ---------- --------- ----------
Total Investments - - - 4,441 3,823,406 8,076,699 15,214,169 3,773,183 30,891,898
Receivables:
Employee contributions 19,297 - - - - - - - 19,297
AFLAC Incorporated
contributions - - - 147,092 161,862 327,459 585,425 211,733 1,433,571
Accrued interest and
dividends - - 549 - - - - - 549
Cash 288,562 - - 2,926,148 151 449,716 37,813 - 3,702,390
Excess employee
contributions payable - - - (8,600) (10,766) (21,574) (35,445) (19,446) (95,831)
Other liabilities:
Accrued transfers (66,295) 66,931 (342) 190 13,325 3,380 (5,920) (11,269) -
Other (241,564) (66,931) (207) 115,996 3,663 14,294 49,060 7,990 (117,699)
-------- -------- -------- --------- --------- --------- ---------- --------- ----------
Net assets
available for
plan benefits $ - $ - $ - $3,185,267 $3,991,641 $8,849,974 $15,845,102 $3,962,191 $35,834,175
======== =========== ======== ========= ========= ========= ========== ========= ==========
8
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<TABLE>
AFLAC INCORPORATED 401(k) PLAN
Notes to Financial Statements
Net Assets Available for Plan Benefits, Investment Fund Information
December 31, 1995
<CAPTION>
Disburse- AFLAC
Master Money ment GIC Income American Washington Incorporated Fidelity
Market Fund Account Fund 4 Balanced Mutual Common Stock Magellan Totals
------------ --------- ---------- -------- ---------- ------------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments:
Money market funds $ 17,944 $ 111,740 $ - $ - $ - $ 678 $ - $ 130,362
Mutual funds - - - 2,944,353 6,365,161 - 2,874,854 12,184,368
AFLAC Incorporated
common stock - - - - - 9,527,720 - 9,527,720
Common trust funds - - 2,469,634 - - - - 2,469,634
--------- -------- --------- --------- --------- --------- --------- ---------
Total Investments 17,944 111,740 2,469,634 2,944,353 6,365,161 9,528,398 2,874,854 24,312,084
Receivables:
Employee contributions 80,947 - - - - - - 80,947
AFLAC Incorporated
contributions - - 132,293 150,223 263,242 531,387 257,092 1,334,237
Excess employee
contributions payable - - (1,676) (13,881) (24,690) (32,714) (14,249) (87,210)
Other liabilities:
Accrued transfers (69,696) 235,785 (9,738) (9,773) (26,311) (117,396) (2,911) (40)
Other (29,195) (347,525) - - - (24,662) - (401,382)
--------- ------- --------- --------- --------- --------- ------- ---------
Net assets
available for
plan benefits $ - $ - $2,590,513 $3,070,922 $6,577,402 $9,885,013 $3,114,786 $25,238,636
========= ======= ========= ========= ========= ========= ========= ==========
9
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<TABLE>
AFLAC INCORPORATED 401(k) PLAN
Notes to Financial Statements
Changes in Net Assets Available for Plan Benefits, Investment Fund Information
Year Ended December 31, 1996
<CAPTION>
GIC AFLAC
Schwab Income American Washington Incorporated Fidelity
Cash Fund 4 Balanced Mutual Common Stock Magellan Totals
------ ------ -------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Participant withholdings $ 80 $ 337,933 $ 420,142 $ 815,385 $ 1,405,796 $ 584,449 $ 3,563,785
Participant transfers
from other plans - 33,401 1,798 2,895 5,992 6,414 50,500
AFLAC Incorporated matching - 147,092 161,862 327,459 585,425 211,733 1,433,571
Interest and dividend income - (983) 336,152 594,786 105,303 546,247 1,581,505
Net realized gains on sale
of investments - 503,949 20,433 45,077 400,452 32,381 1,002,292
Net unrealized appreciation
(depreciation) on investments - (341,495) 69,585 749,673 4,428,200 (195,444) 4,710,519
Transfers (113) 84,858 88,084 46,997 (86,955) (132,871) -
Distributions to participants 33 (168,457) (174,479) (301,830) (867,300) (190,124) (1,702,157)
Forfeitures - (1,544) (2,858) (7,870) (16,824) (15,380) (44,476)
----- ---------- --------- --------- ---------- --------- ---------
Net change - 594,754 920,719 2,272,572 5,960,089 847,405 10,595,539
Net assets available for plan
benefits at beginning of year - 2,590,513 3,070,922 6,577,402 9,885,013 3,114,786 25,238,636
----- ---------- --------- --------- ---------- --------- ----------
Net assets available for plan
benefits at end of year $ - $ 3,185,267 $3,991,641 $8,849,974 $15,845,102 $3,962,191 $35,834,175
===== ========== ========= ========= ========== ========= ==========
10
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<TABLE>
AFLAC INCORPORATED 401(k) PLAN
Notes to Financial Statements
Changes in Net Assets Available for Plan Benefits, Investment Fund Information
Year Ended December 31, 1995
<CAPTION>
GIC AFLAC
Income American Washington Incorporated Fidelity
Fund 4 Balanced Mutual Common Stock Magellan Totals
------ -------- ---------- ------------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participant withholdings $ 345,085 $ 363,049 $ 667,418 $ 1,239,207 $ 526,470 $ 3,141,229
Participant transfers
from other plans 484 2,808 4,698 8,987 429 17,406
AFLAC Incorporated matching 135,918 151,173 264,267 532,537 257,092 1,340,987
Interest and dividend income 385 196,842 460,838 104,852 167,086 930,003
Net realized gains on sale
of investments 27,508 2,311 4,090 313 5,624 39,846
Net unrealized appreciation
on investments 116,918 385,543 1,295,798 2,173,563 514,652 4,486,474
Transfers (53,070) 11,322 (17,607) 52,919 6,436 -
Distributions to participants (142,089) (57,038) (126,127) (424,446) (88,340) (838,040)
Forfeitures (1,289) (965) (4,410) (17,252) (5,609) (29,525)
---------- --------- --------- ---------- --------- ----------
Net change 429,850 1,055,045 2,548,965 3,670,680 1,383,840 9,088,380
Net assets available for plan
benefits at beginning of year 2,160,663 2,015,877 4,028,437 6,214,333 1,730,946 16,150,256
---------- --------- --------- ---------- --------- ----------
Net assets available for plan
benefits at end of year $ 2,590,513 $3,070,922 $6,577,402 $ 9,885,013 $3,114,786 $25,238,636
========== ========= ========= ========== ========= ==========
11
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Schedule 1
AFLAC INCORPORATED 401(k) PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1996
Description Shares/Units Cost Current Value
- --------------- ------------ -------- -------------
Money Market Funds
- ------------------
Master Money Market
Fund 4,441 $ 4,441 $ 4,441
---------- ----------
Mutual Funds
- ------------
Washington Mutual
Investors Fund 329,124 5,932,499 8,076,699
American Balanced Fund 262,777 3,370,681 3,823,406
Fidelity Magellan Fund 46,785 3,347,050 3,773,183
---------- ----------
Total Mutual Funds 12,650,230 15,673,288
---------- ----------
Common Stocks
- -------------
AFLAC Incorporated* 355,887 7,316,892 15,214,169
---------- ----------
Total Investments $ 19,971,563 $ 30,891,898
=========== ===========
* Indicates party-in-interest per Erisa Section 406.
12
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<TABLE>
Schedule 2
AFLAC INCORPORATED 401(k) PLAN
Item 27d - Schedule of Reportable Transactions
Year Ended December 31, 1996
<CAPTION>
Purchase Selling Current Value of Asset Net
Description Price Price Cost on Transaction Date Gain/(Loss)
--------------- -------- --------- --------- ---------------------- -----------
<S> <C> <C> <C> <C> <C>
Purchases:
GIC Income Fund $ 467,049 $ - $ 467,049 $ 467,049 $ -
American Balanced Fund 926,154 - 926,154 926,154 -
Washington Mutual Investors Fund 1,085,873 - 1,085,873 1,085,873 -
AFLAC Incorporated Common Stock* 1,814,754 - 1,814,754 1,814,754 -
Fidelity Magellan Fund 1,319,715 - 1,319,715 1,319,715 -
Sales:
GIC Income Fund - 3,134,496 2,630,547 3,134,496 503,949
American Balanced Fund - 137,120 116,687 137,120 20,433
Washington Mutual Investors Fund - 169,084 124,007 169,084 45,077
AFLAC Incorporated Common Stock* - 956,958 556,506 956,958 400,452
Fidelity Magellan Fund - 258,244 225,863 258,244 32,381
* Indicates party-in-interest per Erisa Section 406.
13
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