AFLAC INC — Annual Report 1995

Jun 22, 1995

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, 1994 AFLAC INCORPORATED 401(k) PLAN (formerly AFLAC Incorporated 1990 401(k) Retirement 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 16, 1995 By: /s/ Martin A. Durant, III ---------------------------------- Martin A. Durant, III Senior Vice President, Corporate Services 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 4-10 Item 27a - Schedule of Assets Held for Investment Purposes 11 Item 27d - Schedule of Reportable Transactions 12 ii KPMG Peat Marwick LLP Certified Public Accountants One Peachtree Center Suite 2000 303 Peachtree Street, N.E. Atlanta, Georgia 30308 Telefax (404) 222-3451 (404) 222-3000 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, 1994 and 1993, 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 upon 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, 1994 and 1993, 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 made 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 April 28, 1995 1 AFLAC INCORPORATED 401(k) PLAN Statements of Net Assets Available for Plan Benefits December 31, 1994 and 1993 1994 1993 ---------- ---------- Assets: Investments (Note 5): Money market funds $ 7,120 $ 142,077 Mutual funds (cost $7,206,332 in 1994, $4,860,693 in 1993) 7,242,906 5,256,093 AFLAC Incorporated common stock (cost $4,772,598 in 1994, $3,125,746 in 1993) 5,736,546 3,662,649 Common trust funds (cost $1,830,418 in 1994, $1,674,256 in 1993) 2,054,995 1,808,922 ---------- ---------- Total investments 15,041,567 10,869,741 ---------- ---------- Receivables: Employee contributions 2,966 1,748 AFLAC Incorporated 1,282,236 1,122,097 Accrued interest and dividends - 44 Other - 3,610 ---------- ---------- Total receivables 1,285,202 1,127,499 ---------- ---------- Cash 503 3,367 ---------- ---------- Total assets 16,327,272 12,000,607 ---------- ---------- Liabilities: Excess employee contributions payable 97,516 98,957 Other 79,500 26,859 ---------- ---------- Total liabilities 177,016 125,816 ---------- ---------- Net assets available for plan benefits $16,150,256 $11,874,791 ========== ========== See accompanying Notes to Financial Statements. 2 AFLAC INCORPORATED 401(k) PLAN Statements of Changes in Net Assets Available for Plan Benefits Years ended December 31, 1994 and 1993 1994 1993 ---------- ---------- Contributions: Participant withholdings $ 3,003,665 $ 2,582,471 Participant transfers from other plans 41,171 169,526 AFLAC Incorporated matching 1,282,236 1,122,097 ---------- ---------- Total 4,327,072 3,874,094 Transfer from affiliated plan - 4,226,426 Interest and dividend income 423,698 352,019 Net realized gains on sale of investments 75,151 62,393 Net unrealized appreciation on investments 173,627 289,734 Distributions to participants (710,583) (312,727) Forfeitures (13,500) - ---------- ---------- Increase in net assets 4,275,465 8,491,939 Net assets available for plan benefits: Beginning of year 11,874,791 3,382,852 ---------- ---------- End of year $16,150,256 $11,874,791 ========== ========== See accompanying Notes to Financial Statements. 3 AFLAC INCORPORATED 401(k) PLAN Notes to Financial Statements December 31, 1994 and 1993 (1) DESCRIPTION OF THE PLAN The AFLAC Incorporated 401(k) Plan (formerly AFLAC Incorporated 1990 401(k) Retirement Plan) was approved by the Board of Directors of AFLAC Incorporated (the Company) on November 10, 1992, and became effective on January 1, 1993. The Plan was formed as a result of the merger of the AFLAC Incorporated 1991 401(k) Retirement Plan into the AFLAC Incorporated 1990 401(k) Retirement 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, 1994 and 1993, the Company's matching contribution was 50% of the first 6% of participants' contributions. (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. 4 AFLAC INCORPORATED 401(k) PLAN Notes to Financial Statements (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. 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 Columbus Bank and Trust Company. (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 sale of investments are calculated based on the difference between selling price and cost on an average cost basis. 5 AFLAC INCORPORATED 401(k) PLAN Notes to Financial Statements (3) FEDERAL INCOME TAXES The Company has filed an application for a tax determination letter with the Internal Revenue Service. If a favorable ruling is obtained, participants in the Plan will not be 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. The Company expects the plan will obtain a favorable tax determination ruling. (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 of the trust as of December 31, 1994 and 1993 and changes in net assets for the years ended December 31, 1994 and 1993 by investment fund. 6

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10 Schedule 1 AFLAC INCORPORATED 401(k) PLAN Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1994 Description Shares/Units Cost Current Value - --------------- ------------ -------- ------------- Money Market Funds - ------------------ Master Money Market Fund 7,120 $ 7,120 $ 7,120 ---------- ---------- Mutual Funds - ------------ Washington Mutual Fund 226,684 3,718,634 3,817,364 American Balanced Mutual Fund 158,074 1,899,295 1,896,891 Fidelity Magellan Mutual Fund 22,884 1,588,403 1,528,651 ---------- ---------- Total Mutual Funds 7,206,332 7,242,906 ---------- ---------- Common Stocks - ------------- AFLAC Incorporated* 179,267 4,772,598 5,736,546 ---------- ---------- Common Trust Fund - ----------------- GIC Income Fund 2,054,995 1,830,418 2,054,995 ---------- ---------- Total Investments $ 13,816,468 $ 15,041,567 =========== =========== * Indicates party-in-interest per Erisa Section 406. 11

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