Aflac 2008 Annual Report Download - page 91

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(In thousands of shares) 2008 2007 2006
Common stock - issued:
Balance, beginning of year 658,604 655,715 654,522
Exercise of stock options and issuance of restricted shares 1,431 2,889 1,193
Balance, end of year 660,035 658,604 655,715
Treasury stock:
Balance, beginning of year 172,074 163,165 155,628
Purchases of treasury stock:
Open market 23,201 11,073 10,265
Other 146 559 55
Dispositions of treasury stock:
Shares issued to AFL Stock Plan (1,523) (1,400) (1,461)
Exercise of stock options (413) (1,206) (1,240)
Other (65) (117) (82)
Balance, end of year 193,420 172,074 163,165
Shares outstanding, end of year 466,615 486,530 492,550
Outstanding share-based awards are excluded from
the calculation of weighted-average shares used in the
computation of basic earnings per share. The following
table presents the approximate number of stock options
to purchase shares, on a weighted-average basis, that were
considered to be anti-dilutive and were excluded from the
calculation of diluted earnings per share at December 31:
(In thousands) 2008 2007 2006
Anti-dilutive stock options 2,179 1,695 1,795
The weighted-average shares used in calculating earnings per
share for the years ended December 31 were as follows:
(In thousands of shares) 2008 2007 2006
Weighted-average outstanding shares used for
calculating basic EPS 473,405 487,869 495,614
Dilutive effect of share-based awards 5,410 6,102 6,213
Weighted-average outstanding shares used for
calculating diluted EPS 478,815 493,971 501,827
Share Repurchase Program: Under share repurchase
authorizations from our board of directors, we purchased 23.2
million shares of our common stock in 2008, funded with
internal capital. The total 23.2 million shares was comprised of a
12.5 million share purchase through an affiliate of Merrill Lynch,
Pierce, Fenner & Smith Incorporated (Merrill Lynch) and a 10.7
million share purchase through Goldman, Sachs & Co. (GS&Co.).
On February 4, 2008, we entered into an agreement for an
accelerated share repurchase (ASR) program with Merrill
Lynch. Under the agreement, we purchased 12.5 million
shares of our outstanding common stock at $60.61 per share
for an initial purchase price of $758 million. The shares were
acquired as a part of previously announced share repurchase
authorizations by our board of directors and are held in
treasury. The ASR program was settled during the second
quarter of 2008, resulting in a purchase price adjustment of
$40 million, or $3.22 per share, paid to Merrill Lynch based
upon the volume-weighted average price of our common stock
during the ASR program period. The total purchase price for
the 12.5 million shares was $798 million, or $63.83 per share.
On August 26, 2008, we entered into an agreement for a
share repurchase program with GS&Co. Under the agreement,
which had an original termination date of February 18, 2009,
we paid $825 million to GS&Co. for the repurchase of a
variable number of shares of our outstanding common stock
over the stated contract period. On October 2, 2008, due
to market conditions, we took early delivery of 10.7 million
shares, which we hold in treasury, at a total purchase price of
$683 million, or $63.87 per share. We also received unused
funds of $142 million from GS&Co.
As of December 31, 2008, a remaining balance of 32.4 million
shares were available for purchase; 2.4 million shares are
the remainder from a board authorization in 2006 and 30.0
million shares were authorized by the board of directors for
purchase in January 2008.
Voting Rights: In accordance with the Parent Company’s
articles of incorporation, shares of common stock are generally
entitled to one vote per share until they have been held by the
same beneficial owner for a continuous period of 48 months,
at which time they become entitled to 10 votes per share.
10. SHARE-BASED TRANSACTIONS
As of December 31, 2008, the Company has outstanding
share-based awards under two long-term incentive
compensation plans.
The first plan, which expired in February 2007, is a stock option
plan which allowed grants for incentive stock options (ISOs)
to employees and non-qualifying stock options (NQSOs) to
employees and non-employee directors. The options have a
term of 10 years and generally vest after three years. The strike
price of options granted under this plan is equal to the fair
market value of a share of the Company’s common stock at
the date of grant. Options granted before the plan’s expiration
date remain outstanding in accordance with their terms.
The second long-term incentive compensation plan allows
awards to Company employees for ISOs, NQSOs, restricted
stock, restricted stock units, and stock appreciation rights.
Non-employee directors are eligible for grants of NQSOs,
restricted stock, and stock appreciation rights. Generally, the
awards vest based upon time-based conditions or time- and
performance-based conditions. Performance-based vesting
conditions generally include the attainment of goals related
to Company financial performance. As of December 31, 2008,
approximately 20.7 million shares were available for future
grants under this plan, and the only performance-based
awards issued and outstanding were restricted stock awards.