Aflac 2008 Annual Report Download - page 96

92 Aflac Incorporated Annual Report for 2008
2008, $5 million in 2007 and $16 million in 2006. The accrued
retirement liability for the unfunded supplemental retirement
plans was $217 million at December 31, 2008, compared with
$204 million a year ago. The assumptions used in the valuation
of these plans were the same as for the funded plans.
Stock Bonus Plan: Aflac U.S. maintains a stock bonus plan
for eligible U.S. sales associates. Plan participants receive
shares of Aflac Incorporated common stock based on their
new annualized premium sales and their first-year persistency
of substantially all new insurance policies. The cost of this
plan, which is included in deferred policy acquisition costs,
amounted to $46 million in 2008, $45 million in 2007 and
$40 million in 2006.
13. COMMITMENTS AND CONTINGENT
LIABILITIES
We have three outsourcing agreements with IBM. The first
agreement provides mainframe computer operations and
support for Aflac Japan. It has a remaining term of seven years
and an aggregate remaining cost of ¥21.0 billion ($230 million
using the December 31, 2008, exchange rate). The second
agreement provides distributed computer mid-range server
operations and support for Aflac Japan. It has a remaining
term of seven years and an aggregate remaining cost of ¥26.7
billion ($293 million using the December 31, 2008, exchange
rate). The third agreement provides application maintenance
and development services for Aflac Japan. It has a remaining
term of four years and an aggregate remaining cost of ¥7.2
billion ($79 million using the December 31, 2008, exchange
rate).
We have an outsourcing agreement with Accenture to provide
application maintenance and development services for our
Japanese operation. The agreement has a remaining term of
six years with an aggregate remaining cost of ¥6.0 billion
($66 million using the December 31, 2008, exchange rate).
We lease office space and equipment under agreements
that expire in various years through 2019. Future minimum
lease payments due under non-cancelable operating leases at
December 31, 2008, were as follows:
(In millions)
2009 $ 63
2010 31
2011 14
2012 12
2013 12
Thereafter 41
Total future minimum lease payments $ 173
In a strategic marketing effort to continue to reach business
decision makers and the large and loyal NASCAR fan base to
grow our U.S. business, we have entered into an $84 million
agreement with Roush Fenway for the primary sponsorship
of racing driver Carl Edwards, starting in 2009 and continuing
through 2011. We plan to contract with co-sponsors during
the term of this agreement, which could reduce our total cost.
In 2005, we announced a multiyear building project for
additional office space in Columbus, Georgia. The initial phase
was completed in 2007 at a cost of $27 million. The second
phase of the expansion is to be completed in 2009 and is
expected to cost approximately $48 million.
We are a defendant in various lawsuits considered to be in the
normal course of business. Members of our senior legal and
financial management teams review litigation on a quarterly
and annual basis. The final results of any litigation cannot be
predicted with certainty. Although some of this litigation is
pending in states where large punitive damages, bearing little
relation to the actual damages sustained by plaintiffs, have
been awarded in recent years, we believe the outcome of
pending litigation will not have a material adverse effect on
our financial position, results of operations, or cash flows.
14. SUPPLEMENTARY INFORMATION
(In millions) 2008 2007 2006
Supplemental disclosures of
cash flow information:
Income taxes paid $ 765 $ 416 $ 569
Interest paid 27 26 15
Impairment losses included in realized investment
gains (losses) 752 22 1
Noncash financing activities:
Capitalized lease obligations 3 1 9
Dividends declared 131 – 91
Treasury stock issued for:
Associate stock bonus 43 38 35
Shareholder dividend reinvestment 20 19 15
Share-based compensation grants 2 2 2