AFLAC Incorporated Announces Third Quarter Results, Declares Fourth Quarter Cash Dividend
October 26 2004 - 5:05PM
PR Newswire (US)
AFLAC Incorporated Announces Third Quarter Results, Declares Fourth
Quarter Cash Dividend COLUMBUS, Ga., Oct. 26 /PRNewswire-FirstCall/
-- AFLAC Incorporated today reported its third quarter results.
Total revenues, which reflected a stronger average yen/dollar
exchange rate, were $3.3 billion in the third quarter, or 13.3%
higher than a year ago. Net earnings were $301 million, or $.58 per
diluted share, compared with $237 million, or $.45 per diluted
share, a year ago. Net earnings in the third quarter of 2004
included a gain of $6 million, or $.01 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 third quarter of 2003, net earnings
included a loss of $2 million, or $.01 per diluted share, from the
effect of SFAS 133. Realized investment losses were $.01 per
diluted share in the third quarters of 2004 and 2003. 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
third quarter were $299 million, compared with $245 million a year
ago. On a per-share basis, operating earnings rose 23.4% to $.58
per diluted share, compared with $.47 per share in the third
quarter of 2003. Excluding the benefit of $.02 per share from the
stronger yen to the dollar, operating earnings per share increased
19.1% for the quarter. For the first nine months of 2004, total
revenues rose 14.3% to $9.8 billion. Net earnings were $881
million, or $1.70 per diluted share, compared with $723 million, or
$1.38 per share, a year ago. Operating earnings were $886 million,
or $1.71 per diluted share, compared with $728 million, or $1.39
per share, in 2003. Excluding the benefit of $.07 per share from
the stronger yen, operating earnings per share increased 18.0% for
the first nine months of 2004. The board of directors declared the
fourth quarter cash dividend. The fourth quarter dividend of $.095
per share is payable on December 1, 2004, to shareholders of record
at the close of business on November 12, 2004. Commenting on the
company's results, Chairman and Chief Executive Officer Daniel P.
Amos stated: "Overall, we are very pleased with our financial
performance for the third quarter and first nine months of 2004.
Yet, we are disappointed that we did not produce better sales
growth in Japan and the United States. "AFLAC Japan's total new
annualized premium sales in the third quarter declined 2.9% from a
year ago to 28.6 billion yen, or $260 million. For the nine months,
total new annualized premium sales were down .4% to 89.2 billion
yen, or $818 million. Sales growth in the quarter was again
impacted by sharp declines in Rider MAX conversions and
significantly lower sales from Dai-ichi Mutual Life, compared with
2003. Conversions were down 54.3% from a year ago, and sales
through Dai-ichi dropped 32.0%. Excluding conversions and the
contribution from Dai-ichi, sales were up 4.5% for the quarter and
5.4% for the nine months. We currently expect fourth quarter sales
to increase at a low-single-digit rate, which will result in flat
sales to a slight increase for the full year. "AFLAC U.S. produced
total new annualized premium sales in the third quarter of $270
million, or 2.7% above the third quarter of 2003. For the first
nine months, new sales were up 7.6% to $843 million. Although we
believe the rate of sales growth in the fourth quarter will improve
compared with the third quarter, we still expect a low- to
mid-single-digit sales increase for the remaining three months of
the year. Therefore, we do not expect to meet our full-year sales
objective of a 10% to 12% increase in 2004. New sales in the third
quarter were negatively impacted by the hurricanes that devastated
areas of the Southeast. Sales in Florida and Alabama were
especially soft compared with their rates of sales growth in the
first half of the year. However, we believe the overall weak sales
growth primarily resulted from the sweeping changes we made to our
sales management team last year. Those changes are continuing to
impact recruiting, productivity and, consequently, sales. "We
expect new agent recruiting in the United States to improve as
sales coordinators who were promoted at the start of the year
become better adjusted to the responsibilities of their new
positions. We also believe we can improve retention and
productivity of sales associates as we continue to intensely focus
on recently adopted training initiatives. Ultimately, we believe
these actions will lead to better recruiting and faster sales
growth in the United States. We are also encouraged about the
outlook for our operations in Japan. Although we have seen a
proliferation of supplemental insurance products in recent years,
AFLAC is still the best branded company for the sale of cancer life
and medical insurance, which represent our top two product
categories in Japan. We also plan to introduce a new medical
insurance product in early 2005 to extend our leadership position.
"Most important, our financial performance continues to be strong.
The financial results of AFLAC U.S. and AFLAC Japan have met or
exceeded expectations throughout the year. With our consolidated
year-to-date operating earnings running ahead of target, we plan to
spend more on marketing expenses in the fourth quarter to stimulate
sales. As a result, we expect to produce fourth quarter operating
earnings per diluted share of approximately $.57 before the impact
of the yen. If the yen/dollar exchange rate averages 110 in the
fourth quarter, reported operating earnings will likely be $.56 per
diluted share. "Clearly, we are very confident that full-year
operating earnings per diluted share will increase 17% in 2004,
excluding the impact of the yen. Our goal is to increase operating
earnings per diluted share by 15% in 2005 and 2006 before currency
translation. We also believe our earnings targets for the next two
years are achievable. Our ability to generate strong earnings
growth despite slow sales growth reflects the underlying strength
and resilience of our operations and business model. We remain
committed to providing valued products and services to our
customers, and solid growth for our shareholders." 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 312,900 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 in America" 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 third quarter report to shareholders can be found on the
investor relations page of aflac.com. AFLAC Incorporated will
webcast its third quarter conference call on the investor relations
page of aflac.com at 9 a.m. (EDT), Wednesday, October 27. AFLAC
INCORPORATED AND SUBSIDIARIES CONSOLIDATED SUMMARY OF EARNINGS
(UNAUDITED -- IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)
THREE MONTHS ENDED SEPTEMBER 30, 2004 2003 % Change Total revenues
$3,321 $2,931 13.3% Operating earnings 299 245 22.4 Reconciling
items, net of tax: Realized investment gains (losses) (4) (6) SFAS
133 6 (2) Net earnings 301 237 26.9 Operating earnings per share -
diluted .58 .47 23.4 Reconciling items, net of tax: Realized
investment gains (losses) (.01) (.01) SFAS 133 .01 (.01) Net
earnings per share - diluted .58 .45 28.9 Net earnings per share -
basic .59 .46 28.3 Cash dividends paid per share .095 .08 18.8
Shares used to compute earnings per share (000): Basic 506,599
513,385 (1.3) Diluted 515,576 521,212 (1.1) NINE MONTHS ENDED
SEPTEMBER 30, Total revenues $9,834 $8,600 14.3% Operating earnings
886 728 21.7 Reconciling items, net of tax: Realized investment
gains (losses) (2) (16) SFAS 133 (6) 11 Japan pension obligation
transfer 3 - Net earnings 881 723 21.9 Operating earnings per share
- diluted 1.71 1.39 23.0 Reconciling items, net of tax: Realized
investment gains (losses) (.01) (.03) SFAS 133 (.01) .02 Japan
pension obligation transfer .01 - Net earnings per share - diluted
1.70 1.38 23.2 Net earnings per share - basic 1.73 1.41 22.7 Cash
dividends paid per share .285 .22 29.5 Shares used to compute
earnings per share (000): Basic 508,286 513,888 (1.1) Diluted
517,591 522,793 (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 (Logo:
http://www.newscom.com/cgi-bin/prnh/20010525/AFLACLOGO )
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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