AFLAC Incorporated Announces First Quarter Results, Reports Record Operating Earnings, Declares Second Quarter Cash Dividend
April 27 2004 - 5:07PM
PR Newswire (US)
AFLAC Incorporated Announces First Quarter Results, Reports Record
Operating Earnings, Declares Second Quarter Cash Dividend COLUMBUS,
Ga., April 27 /PRNewswire-FirstCall/ -- AFLAC Incorporated today
reported its first quarter results. Total revenues, which benefited
from foreign currency translation, were $3.3 billion in the first
quarter, or 16.8% higher than a year ago. Net earnings, which also
reflected the stronger yen to the dollar during the quarter, were
$315 million, or $.61 per diluted share, compared with $237
million, or $.45 per diluted share, a year ago. (Logo:
http://www.newscom.com/cgi-bin/prnh/20010525/AFLACLOGO ) Net
earnings in the first quarter of 2004 included realized investment
gains of $6 million, or $.01 per share, compared with realized
investment losses of $7 million, or $.01 per diluted share, a year
ago. Net earnings in the first quarter also included a gain of $11
million, or $.02 per diluted share, from the change in fair value
of the interest rate component of the cross-currency swaps related
to the company's senior notes, as required by SFAS 133. The impact
of SFAS 133 in the first quarter of 2003 was insignificant. And net
earnings in the first quarter of 2004 also reflected a one-time
gain of $3 million, or $.01 per diluted share, as a result of the
transfer of certain AFLAC Japan pension obligations to the Japanese
government. We believe that an analysis of operating earnings, a
non-GAAP financial measure, is vitally important to an
understanding of AFLAC's underlying profitability drivers. We
define operating earnings as the profits we derive from our
operations before realized investment gains and losses, the change
in the fair value of the interest rate component of cross-currency
swaps as required by SFAS 133, and nonrecurring items. Management
uses operating earnings to evaluate the financial performance of
AFLAC's insurance operations because realized gains and losses, the
impact of SFAS 133 and nonrecurring items tend to be driven by
general economic conditions and events and therefore obscure the
underlying fundamentals and trends in AFLAC's insurance operations.
Operating earnings were a record $295 million, compared with $244
million a year ago. On a per-share basis, operating earnings rose
23.9% to $.57 per diluted share, compared with $.46 per share in
the first quarter of 2003. Excluding the benefit of $.03 per share
from the stronger yen to the dollar, operating earnings per share
increased 17.4% for the quarter. The board of directors declared
the second quarter cash dividend. The second quarter dividend of
$.095 per share is payable on June 1, 2004, to shareholders of
record at the close of business on May 14, 2004. Commenting on the
company's first quarter results, Chairman and Chief Executive
Officer Daniel P. Amos stated: "Overall, we are very encouraged
with our start in 2004. We are especially pleased that operating
earnings per share growth before currency translation was in line
with our annual target of a 17% increase. "AFLAC Japan's total new
annualized premium sales were in line with our expectations, but
slightly below our annual objective. Total new sales rose 4.7% to
28.3 billion yen, or $264 million. Our sales results continued to
benefit from the strong demand for our medical product called EVER.
Sales from stand-alone medical products rose 34% in the quarter and
accounted for 33% of total new sales. Sales growth was impacted in
the first quarter by an expected decline in Rider MAX conversions.
Excluding conversions, sales were up 7.8% in the first quarter.
Sales comparisons to last year were also affected by a lower sales
contribution from Dai-ichi Mutual Life. However, sales growth from
our traditional sales channels rose 6.2%. We expect sales growth in
the second half of the year to benefit from new promotional
campaigns and product enhancements, and we believe that a 5% to 10%
increase in new sales in yen is a reasonable expectation for the
year. "In the United States, total new annualized premium sales
growth continued to improve. Total new annualized premium sales
increased 13.8% to $292 million in the first quarter. We believe
U.S. sales benefited from last year's expansion and enhancement of
our sales management infrastructure, as well as newly implemented
training programs. Accident/disability remained the principal
contributor to new sales in the quarter, accounting for
approximately 52% of first quarter sales. Sales of other products,
including cancer expense, hospital indemnity coverage and dental
insurance, also rose at a strong pace and were solid contributors
to sales in the quarter. For the full year, our objective is a 10%
to 12% increase in AFLAC U.S. sales. "As we look ahead, we remain
enthusiastic about the opportunities in the United States. The U.S.
market is vast and underpenetrated. We believe we can tap into that
potential by the continued expansion of our distribution system and
broadening of our product line. At the same time, we expect
continued solid growth in AFLAC Japan's business. We believe
AFLAC's affordable products, which provide consumers with "living"
benefits, are perfectly suited to the needs of an aging Japanese
population. "Our goal for 2004 is to increase operating earnings
per diluted share 17% excluding the impact of the yen. For 2005 our
objective is to increase operating earnings per diluted share by
15% excluding the impact of foreign currency translation. We
believe these financial objectives are a reasonable reflection of
the growth opportunities we see in the two largest insurance
markets in the world." AFLAC Incorporated (NYSE:AFL) is an
international holding company. A Fortune 500(R) company, AFLAC
insures more than 40 million people worldwide. It is a leading
writer of insurance products marketed at the worksite in the United
States, offering policies to employees at more than 294,600 payroll
accounts. The company insures one out of four Japanese households
and is the largest life insurer in Japan in terms of individual
insurance policies in force. In July 2003, Fortune named AFLAC to
its list of "America's 50 Best Companies for Minorities." In
January 2004, AFLAC was included in Fortune magazine's list of "The
100 Best Companies to Work for" for the sixth consecutive year.
Also in January 2004, AFLAC was named to Forbes magazine's
"Platinum 400 List of Best Big Companies in America" for the fifth
consecutive year. In March 2004, Fortune magazine included AFLAC in
its annual listing of "America's Most Admired Companies." AFLAC's
Internet address is aflac.com. A copy of AFLAC's First Quarter
Report to Shareholders can be found on the investor relations page
of aflac.com. AFLAC Incorporated will webcast its first quarter
conference call on the investor relations page of aflac.com at 9:00
a.m. (EDT), Wednesday, April 28. AFLAC INCORPORATED AND
SUBSIDIARIES CONSOLIDATED SUMMARY OF EARNINGS (UNAUDITED -- IN
MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS) THREE MONTHS
ENDED MARCH 31, 2004 2003 % Change Total revenues $3,280 $2,807
16.8% Operating earnings 295 244 21.2 Reconciling items, net of
tax: Realized investment gains (losses) 6 (7) SFAS 133 11 - Japan
pension obligation transfer 3 - Net earnings 315 237 32.9 Operating
earnings per share - diluted .57 .46 23.9 Reconciling items, net of
tax: Realized investment gains (losses) .01 (.01) SFAS 133 .02 -
Japan pension obligation transfer .01 - Net earnings per share -
diluted .61 .45 35.6 Net earnings per share - basic .62 .46 34.8
Cash dividends paid per share .095 .07 35.7 Shares used to compute
earnings per share (000): Basic 509,924 514,565 (.9) Diluted
519,355 524,468 (1.0) The Private Securities Litigation Reform Act
of 1995 provides a "safe harbor" to encourage companies to provide
prospective information, so long as those informational statements
are identified as forward-looking and are accompanied by meaningful
cautionary statements identifying important factors that could
cause actual results to differ materially from those discussed. We
desire to take advantage of these provisions. This document
contains cautionary statements identifying important factors that
could cause actual results to differ materially from those
projected herein, and in any other statements made by company
officials in oral discussions with the financial community and
contained in documents filed with the Securities and Exchange
Commission (SEC). Forward-looking statements are not based on
historical information and relate to future operations, strategies,
financial results or other developments. Furthermore,
forward-looking information is subject to numerous assumptions,
risks, and uncertainties. In particular, statements containing
words such as "expect," "anticipate," "believe," "goal,"
"objective," "may," "should," "estimate," "intends," "projects," or
similar words as well as specific projections of future results,
generally qualify as forward-looking. AFLAC undertakes no
obligation to update such forward-looking statements. We caution
readers that the following factors, in addition to other factors
mentioned from time to time in our reports filed with the SEC,
could cause actual results to differ materially from those
contemplated by the forward-looking statements: legislative and
regulatory developments; assessments for insurance company
insolvencies; competitive conditions in the United States and
Japan; new product development; ability to attract and retain
qualified sales associates; ability to repatriate profits from
Japan; changes in U.S. and/or Japanese tax laws or accounting
requirements; credit and other risks associated with AFLAC's
investment activities; significant changes in interest rates;
fluctuations in foreign currency rates; deviations in actual
experience from pricing and reserving assumptions; level and
outcome of litigation; downgrades in the company's credit rating;
changes in rating agency policies or practices; subsidiary's
ability to pay dividends to parent company; and general economic
conditions in the United States and Japan. Analyst and investor
contact - Kenneth S. Janke Jr., (800) 235-2667 - option 3, FAX:
(706) 324-6330, or Media contact - Laura Kane, (706) 596-3493, FAX:
(706) 320-2288, or
http://www.newscom.com/cgi-bin/prnh/20010525/AFLACLOGO
http://photoarchive.ap.org/ DATASOURCE: AFLAC Incorporated CONTACT:
Analysts and investors, Kenneth S. Janke Jr., +1-800-235-2667,
option 3, or fax, +1-706-324-6330, or , or Media, Laura Kane,
+1-706-596-3493, or fax, +1-706-320-2288, or , both of AFLAC
Incorporated Web site: http://www.aflac.com/
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