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The Parent Company and Aflac have a five-year senior unsecured revolving credit facility agreement with a syndicate
of financial institutions that provides for borrowings of up to 55.0 billion yen or the equivalent of yen in U.S. dollars on a
revolving basis. This credit agreement provides for borrowings in Japanese yen or the equivalent of Japanese yen in U.S.
dollars on a revolving basis. Borrowings bear interest at a rate per annum equal to, at our option, either (a) a eurocurrency
rate determined by reference to the LIBOR for the interest period relevant to such borrowing adjusted for certain additional
costs or (b) a base rate determined by reference to the highest of (1) the federal funds effective rate plus ½ of 1%, (2) the
rate of interest for such day announced by Mizuho Bank, Ltd. as its prime rate and (3) the eurocurrency rate for an interest
period of one month plus 1.00%, in each case plus an applicable margin. The applicable margin ranges between .79%
and 1.275% for eurocurrency rate borrowings and 0.0% and .275% for base rate borrowings, depending on the Parent
Company’s debt ratings as of the date of determination. In addition, the Parent Company and Aflac are required to pay a
facility fee on the commitments ranging between .085% and .225%, also based on the Parent Company’s debt ratings as
of the date of determination. Borrowings under the amended and restated credit facility may be used for general corporate
purposes, including a capital contingency plan for the operations of the Parent Company and Aflac. The amended and
restated credit facility requires compliance with certain financial covenants on a quarterly basis and will expire on the
earlier of (a) September 18, 2020, or (b) the date the commitments are terminated pursuant to an event of default, as such
term is defined in the credit agreement. As of December 31, 2016, we did not have any borrowings outstanding under our
55.0 billion yen revolving credit agreement.
The Parent Company and Aflac have an uncommitted bilateral line of credit with a third party that provides for
borrowings in the amount of $50 million. Borrowings will bear interest at the rate quoted by the bank and agreed upon at
the time of making such loan and will have up to a three-month maturity period. There are no related facility fees, upfront
expenses or financial covenant requirements. Borrowings under this credit agreement may be used for general corporate
purposes. As of December 31, 2016, we did not have any borrowings outstanding under our $50 million credit agreement.
We were in compliance with all of the covenants of our notes payable and lines of credit at December 31, 2016. No
events of default or defaults occurred during 2016 and 2015.
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10. INCOME TAXES
The components of income tax expense (benefit) applicable to pretax earnings for the years ended December 31
were as follows:
(In millions)
Foreign
U.S.
Total
2016:
Current
$ 650
$ 234
$ 884
Deferred
136
388
524
Total income tax expense
$ 786
$ 622
$ 1,408
2015:
Current
$ 1,063
$ 225
$ 1,288
Deferred
42
(1)
41
Total income tax expense
$ 1,105
$ 224
$ 1,329
2014:
Current
$ 995
$ 84
$ 1,079
Deferred
125
336
461
Total income tax expense
$ 1,120
$ 420
$ 1,540
The Japan income tax rate for the fiscal year 2014 was 33.3%. The rate was reduced to 30.8% for the fiscal year
2015 and reduced to 28.8% for the fiscal year 2016.
Income tax expense in the accompanying statements of earnings varies from the amount computed by applying the
expected U.S. tax rate of 35% to pretax earnings. The principal reasons for the differences and the related tax effects for