AFLAC Incorporated Announces Second Quarter Results, Declares Third Quarter Cash Dividend
July 27 2004 - 5:06PM
PR Newswire (US)
AFLAC Incorporated Announces Second Quarter Results, Declares Third
Quarter Cash Dividend COLUMBUS, Ga., July 27 /PRNewswire-FirstCall/
-- AFLAC Incorporated today reported its second quarter results.
Total revenues, which reflected a stronger average yen/dollar
exchange rate, were $3.2 billion in the second quarter, or 13.0%
higher than a year ago. Net earnings were $265 million, or $.51 per
diluted share, compared with $248 million, or $.48 per diluted
share, a year ago. Net earnings in the second quarter of 2004
included a loss of $23 million, or $.04 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. In the second quarter of 2003, net earnings
benefited by $13 million, or $.03 per diluted share, from the
effect of SFAS 133. Realized investment losses were $.01 per
diluted share in the second quarters of 2004 and 2003. (Logo:
http://www.newscom.com/cgi-bin/prnh/20010525/AFLACLOGO ) 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 in the
second quarter were $291 million, compared with $240 million a year
ago. On a per-share basis, operating earnings rose 21.7% to $.56
per diluted share, compared with $.46 per share in the second
quarter of 2003. Excluding the benefit of $.02 per share from the
stronger yen to the dollar, operating earnings per share increased
17.4% for the quarter. For the six months of 2004, total revenues
rose 14.9% to $6.5 billion. Net earnings were $581 million, or
$1.12 per diluted share, compared with $486 million, or $.93 per
share, for the first six months of 2003. Operating earnings for the
six months were $587 million, or $1.13 per diluted share, compared
with $483 million, or $.92 per share, in 2003. The board of
directors declared the third quarter cash dividend. The third
quarter dividend of $.095 per share is payable on September 1,
2004, to shareholders of record at the close of business on August
13, 2004. Commenting on the company's second quarter and first-half
results, Chairman and Chief Executive Officer Daniel P. Amos
stated: "Overall, we are pleased with our results so far 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 U.S. produced total new annualized premium
sales in the second quarter of $281 million, or 6.4% above the
second quarter of 2003. Accident/disability remained the principal
contributor to new sales in the quarter, accounting for
approximately 52% of second quarter sales. For the six months, new
sales were up 10.0% to $573 million. Our first-half sales results
were in line with our annual sales target of a 10% to 12% increase.
And we believe the changes we made to our coordinator base and
training in past quarters will enable us to achieve our target for
the full year. "AFLAC Japan's total new annualized premium sales in
the second quarter declined 2.3% from a year ago to 32.2 billion
yen, or $294 million. For the six months, total new annualized
premium sales were up .9% to 60.5 billion yen, or $557 million.
Sales growth continued to be impacted by significant declines in
Rider MAX conversions and sales from Dai-ichi Mutual Life, compared
with 2003. Excluding conversions and the contribution from
Dai-ichi, sales were up 2.5% for the quarter and 5.8% for the first
six months. We indicated in the first quarter that we expect better
sales growth in the second half of the year. We continue to believe
our sales growth will improve. However, based on our first-half
sales results, it appears that sales will likely be up 3% to 7% for
the full year. "Although we are disappointed that our sales results
were not better in Japan, we are convinced that we will see better
growth in the second half of the year. EVER continues to be the
best-selling stand-alone medical product in Japan's life insurance
industry and we will introduce two new products in August. We are
also encouraged that investment yields in Japan have risen
significantly this year, which should benefit future investment
income growth. And the persistency of our Japanese business has
improved to its highest level since the end of 2001. Even though we
view 2004 as a transition year for AFLAC U.S., we still expect to
see double-digit sales growth for the year. With the significant
changes we made to our sales force infrastructure and training
programs last year, and a renewed focus on new agent recruiting
this year, we believe we are positioning AFLAC U.S. for even faster
sales growth in 2005. "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 15% excluding the impact of foreign currency translation. And
in May we established a 2006 objective of a 15% increase in
operating earnings per diluted share before the effect of currency.
We believe our earnings objectives reflect the opportunities we see
for continued growth and our strong competitive position in both
the United States and Japan. More importantly, we believe our
objectives are achievable." 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 307,600 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 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 second quarter report to shareholders can be found on
the investor relations page of aflac.com. AFLAC Incorporated will
webcast its second quarter conference call on the investor
relations page of aflac.com at 9:00 a.m. (EDT), Wednesday, July 28.
AFLAC INCORPORATED AND SUBSIDIARIES CONSOLIDATED SUMMARY OF
EARNINGS (UNAUDITED -- IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE
AMOUNTS) THREE MONTHS ENDED JUNE 30, 2004 2003 % Change Total
revenues $3,233 $2,861 13.0% Operating earnings 291 240 21.5
Reconciling items, net of tax: Realized investment gains (losses)
(3) (5) SFAS 133 (23) 13 Net earnings 265 248 6.7 Operating
earnings per share - diluted .56 .46 21.7 Reconciling items, net of
tax: Realized investment gains (losses) (.01) (.01) SFAS 133 (.04)
.03 Net earnings per share - diluted .51 .48 6.3 Net earnings per
share - basic .52 .48 8.3 Cash dividends paid per share .095 .07
35.7 Shares used to compute earnings per share (000): Basic 508,353
513,728 (1.0) Diluted 517,860 522,713 (1.0) SIX MONTHS ENDED JUNE
30, Total revenues $6,513 $5,669 14.9% Operating earnings 587 483
21.4 Reconciling items, net of tax: Realized investment gains
(losses) 3 (10) SFAS 133 (12) 13 Japan pension obligation transfer
3 - Net earnings 581 486 19.5 Operating earnings per share -
diluted 1.13 .92 22.8 Reconciling items, net of tax: Realized
investment gains (losses) - (.02) SFAS 133 (.02) .03 Japan pension
obligation transfer .01 - Net earnings per share - diluted 1.12 .93
20.4 Net earnings per share - basic 1.14 .94 21.3 Cash dividends
paid per share .19 .14 35.7 Shares used to compute earnings per
share (000): Basic 509,138 514,144 (1.0) Diluted 518,607 523,588
(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:
Analyst 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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