-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Cv7ubA3xRzsIvOOAhWQLqBRhRKIms3CNERUUmDy8+emWqNhJ9uM2iqDl70z34tPs yP9msMC03unNUo2HfnDvSA== 0000950131-99-006364.txt : 19991117 0000950131-99-006364.hdr.sgml : 19991117 ACCESSION NUMBER: 0000950131-99-006364 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED FIRE & CASUALTY CO CENTRAL INDEX KEY: 0000101199 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 420644327 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 002-39621 FILM NUMBER: 99755095 BUSINESS ADDRESS: STREET 1: 118 SECOND AVE SE CITY: CEDAR RAPIDS STATE: IA ZIP: 52407 BUSINESS PHONE: 3193995700 MAIL ADDRESS: STREET 1: P O BOX 73909 CITY: CEDAR RAPIDS STATE: IA ZIP: 52407 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 1999 Commission File Number 2-39621 UNITED FIRE & CASUALTY COMPANY (Exact name of registrant as specified in its charter) Iowa 42-0644327 - --------------------------- --------------------------------- (State of Incorporation) (IRS Employer Identification No.) 118 Second Avenue, S.E. Cedar Rapids, Iowa 52407 - -------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (319) 399-5700 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO X --- --- As of November 3, 1999, 10,073,539 shares of common stock were outstanding. UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES INDEX
Part 1. Financial Information Item 1. Financial Statements Consolidated Balance Sheets as of September 30, 1999 (unaudited) and December 31, 1998 2 Unaudited Consolidated Statements of Operations for the three month periods ended September 30, 1999 and 1998 3 Unaudited Consolidated Statements of Operations for the nine month periods ended September 30, 1999 and 1998 4 Unaudited Consolidated Statements of Cash Flows for the nine month periods ended September 30, 1999 and 1998 5 Notes to Unaudited Consolidated Financial Statements 6 Report of Independent Public Accountants 12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 3. Quantitative and Qualitative Disclosures about Market Risk 18 Part II. Other Information 19
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES PART I: FINANCIAL INFORMATION Item 1. Financial Statements CONSOLIDATED BALANCE SHEETS (In thousands)
- -------------------------------------------------------------------------------------------------------------------------- ASSETS September 30, December 31, 1999 1998 Unaudited Audited - -------------------------------------------------------------------------------------------------------------------------- Investments Fixed maturities Held-to-maturity, at amortized cost (market value $328,825 in 1999 and $626,180 in 1998) $ 321,082 $ 591,237 Available-for-sale, at market (amortized cost $761,076 in 1999 and $320,171 in 1998) 742,399 321,966 Equity securities (cost $38,730 in 1999 and $23,450 in 1998) 115,155 111,076 Mortgage loans - 2,777 Policy loans 8,621 8,707 Other long-term investments, at market (cost $12,288 in 1999 and $11,517 in 1998) 14,686 14,368 Short-term investments 18,451 33,985 - -------------------------------------------------------------------------------------------------------------------------- $1,220,394 $1,084,116 Cash and Cash Equivalents 1,116 - Accrued Investment Income 17,853 16,130 Accounts Receivable 65,380 44,868 Deferred Policy Acquisition Costs 88,135 67,592 Property and Equipment 15,244 13,334 Reinsurance Receivables 36,055 12,910 Prepaid Reinsurance Premiums 3,145 2,923 Intangibles 9,070 817 Income Taxes Receivable 3,757 3,757 Other Assets 8,695 4,147 - -------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $1,468,844 $1,250,594 ========================================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Future policy benefits and losses, claims and settlement expenses Property and casualty insurance $ 338,425 $ 251,117 Life insurance 669,625 575,189 Unearned premiums 155,474 116,418 Accrued expenses and other liabilities 32,551 18,922 Employee benefit obligations 12,934 9,813 Deferred income taxes 13,808 22,853 - -------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES $1,222,817 $ 994,312 - -------------------------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Common stock $ 33,595 $ 33,639 Additional paid-in capital 7,606 7,927 Retained earnings 160,179 155,421 Accumulated other comprehensive income, net of tax 44,760 59,295 Treasury Stock (113) - - -------------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY $ 246,027 $ 256,282 - -------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,468,844 $1,250,594 ==========================================================================================================================
The Notes to Unaudited Consolidated Financial Statements are an integral part of these statements. 2 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data and number of shares)
- --------------------------------------------------------------------------------------------------------------------------- Three months ended September 30, 1999 1998 - --------------------------------------------------------------------------------------------------------------------------- Revenues Net premiums earned $ 70,501 $ 61,543 Investment income, net 19,272 16,964 Realized investment gains and other income 593 318 Commission and policy fee income 502 487 - --------------------------------------------------------------------------------------------------------------------------- 90,868 79,312 - --------------------------------------------------------------------------------------------------------------------------- Benefits, Losses and Expenses Losses and settlement expenses 47,900 53,685 Increase in liability for future policy benefits 1,527 (263) Amortization of deferred policy acquisition costs 14,334 12,168 Other underwriting expenses 9,367 13,103 Interest on policyholders' accounts 9,655 6,569 - --------------------------------------------------------------------------------------------------------------------------- 82,783 85,262 - --------------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes 8,085 (5,950) Federal income taxes (benefit) 1,687 (3,987) - --------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 6,398 $ (1,963) =========================================================================================================================== Earnings (loss) per common share $ 0.63 $ (0.19) =========================================================================================================================== Weighted average common shares outstanding 10,078,294 10,088,460 =========================================================================================================================== Cash dividends declared per common share $ 0.17 $ 0.17 ===========================================================================================================================
The Notes to Unaudited Consolidated Financial Statements are an integral part of these statements. 3 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data and number of shares)
- --------------------------------------------------------------------------------------------------------------------------- Nine months ended September 30, 1999 1998 - --------------------------------------------------------------------------------------------------------------------------- Revenues Net premiums earned $ 191,299 $ 180,820 Investment income, net 55,047 49,986 Realized investment gains and other income 1,927 21,741 Commission and policy fee income 1,480 1,442 - --------------------------------------------------------------------------------------------------------------------------- 249,753 253,989 - --------------------------------------------------------------------------------------------------------------------------- Benefits, Losses and Expenses Losses and settlement expenses 141,120 142,803 Increase in liability for future policy benefits 4,126 2,094 Amortization of deferred policy acquisition costs 37,447 35,251 Other underwriting expenses 32,376 30,951 Interest on policyholders' accounts 24,796 19,435 - --------------------------------------------------------------------------------------------------------------------------- 239,865 230,534 - --------------------------------------------------------------------------------------------------------------------------- Income before income taxes 9,888 23,455 Federal income taxes (benefit) (15) 3,926 Net Income $ 9,903 $ 19,529 =========================================================================================================================== Earnings per common share $ .98 $ 1.86 =========================================================================================================================== Weighted average common shares outstanding 10,083,729 10,495,773 =========================================================================================================================== Cash dividends declared per common share $ 0.51 $ 0.50 ===========================================================================================================================
The Notes to Unaudited Consolidated Financial Statements are an integral part of these statements. 4 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
- ---------------------------------------------------------------------------------------------------------------------- Nine months ended September 30, 1999 1998 - ---------------------------------------------------------------------------------------------------------------------- Cash Flows From Operating Activities Net income $ 9,903 $ 19,529 - ---------------------------------------------------------------------------------------------------------------------- Adjustments to reconcile net income to net cash provided by Operating activities Net bond discount accretion (197) (429) Depreciation and amortization 1,805 264 Realized investment gains (1,927) (21,741) Changes in: Accrued investment income (791) (853) Accounts receivable (7,130) (4,529) Deferred policy acquisition costs (16,153) (6,517) Reinsurance receivables (847) (1,269) Prepaid reinsurance premiums 3,048 878 Income taxes receivable/payable - (7,274) Other assets (2,856) (633) Future policy benefits and losses, claims and Settlement expenses 18,390 20,764 Unearned premiums 10,277 12,763 Accrued expenses and other liabilities (2,893) 4,217 Employee benefit obligations 3,121 580 Deferred income taxes 281 - Other, net 10,343 (3,400) - ---------------------------------------------------------------------------------------------------------------------- Total adjustments $ 14,471 $ (7,179) - ---------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities $ 24,374 $ 12,350 - ---------------------------------------------------------------------------------------------------------------------- Cash Flows From Investing Activities Proceeds from sale of available-for-sale investments $ 25,327 $ 53,117 Proceeds from call and maturity of held-to-maturity investments 25,429 64,627 Proceeds from call and maturity of available-for-sale investments 58,023 19,778 Proceeds from sale of other investments 93,419 31,464 Purchase of investments held-to-maturity (1,662) (10,877) Purchase of investments available-for-sale (208,192) (172,817) Purchase of other investments (75,810) (28,690) Proceeds from sale of property and equipment 937 2,275 Purchase of property and equipment (795) (1,391) Acquisition of property & casualty company, net of cash acquired (22,249) - - ---------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities $(105,573) $ (42,514) - ---------------------------------------------------------------------------------------------------------------------- Cash Flows From Financing Activities Policyholders' account balances Deposits to investment and universal life type contracts $ 139,264 $ 113,320 Withdrawals from investment and universal life type contracts (49,614) (51,848) Purchase and retirement of common stock (481) (26,723) Payment of cash dividends (6,854) (6,963) - ---------------------------------------------------------------------------------------------------------------------- Net cash provided by financing activities $ 82,315 $ 27,786 - ---------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Cash and Cash Equivalents $ 1,116 $ (2,378) Cash and Cash Equivalents at Beginning of Year - 2,378 - ---------------------------------------------------------------------------------------------------------------------- Cash and Cash Equivalents at End of Period $ 1,116 $ - ======================================================================================================================
The Notes to Unaudited Consolidated Financial Statements are an integral part of these statements. 5 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Note 1. Summary of Significant Accounting Policies In the opinion of the management of United Fire & Casualty Company and Subsidiaries (the "Company"), the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position, the results of operations, and cash flows for the periods presented. The results for the interim periods are not necessarily indicative of the results of operations that may be expected for the year. The financial statements contained herein should be read in conjunction with the Company's annual report on Form 10-K for the year ended December 31, 1998. The review report of Arthur Andersen LLP accompanies the unaudited consolidated financial statements included in Item 1 of Part I. The Company maintains its records in conformity with the accounting practices prescribed or permitted by the Insurance Department of the State of Iowa. To the extent that certain of these practices differ from generally accepted accounting principles ("GAAP"), adjustments have been made in order to present the accompanying financial statements on the basis of GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain amounts included in the financial statements for the previous year have been reclassified to conform with the financial statement presentation at September 30, 1999. For purposes of reporting cash flows, cash and cash equivalents include cash and non-negotiable certificates of deposit with original maturities of three months or less. Income taxes paid, net of refunds for the nine month periods ended September 30, 1999 and 1998 were $(295,000) and $11,200,000, respectively. There were no significant payments of interest through September 30, 1999 and 1998, other than interest credited to policyholders' accounts. 6 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Note 2. Investments A reconciliation of the amortized cost (cost for equity securities) to fair values of investments in held-to-maturity and available-for-sale fixed maturities, marketable equity securities and other long-term investments as of September 30, 1999 is as follows.
- ----------------------------------------------------------------------------------------------------------------------------- (Dollars in Thousands) - ----------------------------------------------------------------------------------------------------------------------------- September 30, 1999 Gross Gross Amortized Unrealized Unrealized Fair Type of Investment Cost Appreciation Depreciation Value - ----------------------------------------------------------------------------------------------------------------------------- Held-to-maturity Fixed Maturities Bonds United States Government, Government agencies and authorities Collateralized mortgage obligations $ 15,078 $ 29 $ 375 $ 14,732 Mortgage-backed securities 10,131 711 3 10,839 All others 1,796 260 - 2,056 States, municipalities and political 181,263 6,123 417 186,969 subdivisions Foreign 3,037 32 - 3,069 Public utilities 19,520 234 88 19,666 Corporate bonds Collateralized mortgage obligations 16,598 243 203 16,638 All other corporate bonds 73,659 1,554 357 74,856 - ----------------------------------------------------------------------------------------------------------------------------- Total held-to-maturity $321,082 $ 9,186 $ 1,443 $328,825 ============================================================================================================================= Available-for-sale Fixed Maturities Bonds United States Government, Government agencies and authorities Collateralized mortgage obligations $ 31,920 $ 90 $ 764 $ 31,246 Mortgage-backed securities 15,569 8 318 15,259 All others 40,549 160 671 40,038 States, municipalities and political subdivisions 88,517 1,152 3,471 86,198 Foreign 28,906 95 1,608 27,393 Public utilities 92,880 778 2,534 91,124 Corporate bonds Collateralized mortgage obligations 69,998 1,926 1,158 70,766 All other corporate bonds 392,737 2,336 14,698 380,375 - ----------------------------------------------------------------------------------------------------------------------------- Total available-for-sale fixed maturities $761,076 $ 6,545 $25,222 $742,399 - ----------------------------------------------------------------------------------------------------------------------------- Equity securities Common stocks Public utilities $ 9,633 $ 8,668 $ 179 $ 18,122 Banks, trust and insurance companies 12,735 43,489 563 55,661 All other common stocks 15,429 25,492 436 40,485 Nonredeemable preferred stocks 933 - 46 887 - ----------------------------------------------------------------------------------------------------------------------------- Total equity securities $ 38,730 $77,649 $ 1,224 $115,155 - ----------------------------------------------------------------------------------------------------------------------------- Total available-for-sale $799,806 $84,194 $26,446 $857,554 ============================================================================================================================= Other long-term investments $ 12,288 $ 2,509 $ 111 $ 14,686 =============================================================================================================================
7 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS The amortized cost and fair value of held-to-maturity and available-for-sale fixed maturities at September 30, 1999 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
- ---------------------------------------------------------------------------------------------------------------------- (Dollars in Thousands) - ---------------------------------------------------------------------------------------------------------------------- September 30, 1999 Held-to-maturity Available-for-sale - ---------------------------------------------------------------------------------------------------------------------- Amortized Fair Amortized Fair Cost Value Cost Value - ---------------------------------------------------------------------------------------------------------------------- Due in one year or less $ 9,821 $ 9,944 $ 16,974 $ 16,767 Due after one year through five years 64,028 65,741 179,822 179,239 Due after five years through ten years 76,975 79,469 264,529 254,161 Due after ten years 128,451 131,462 182,264 174,961 Mortgage-backed securities 10,131 10,839 15,569 15,259 Collateralized mortgage obligations 31,676 31,370 101,918 102,012 - ---------------------------------------------------------------------------------------------------------------------- $321,082 $328,825 $761,076 $742,399 ======================================================================================================================
Note 3. New Accounting Standards Effective January 1, 1998, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income", governing the reporting and presentation of comprehensive income and its components which includes traditional net income and items previously recorded directly in equity, such as the change in unrealized gains or losses on securities available-for-sale. In accordance with the interim reporting guidelines of SFAS No. 130, comprehensive income (loss) was $(4,632,000) and $2,330,000 for the nine months ended September 30, 1999 and 1998, respectively. Comprehensive loss was $(2,938,000) and $(8,102,000) for the three months ended September 30,1999 and 1998, respectively. The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" requiring that public businesses report financial and descriptive information about its reportable operating segments effective December 31, 1998. SFAS No. 131 did not have a material effect on the Company's Consolidated Financial Statements or Notes to Consolidated Financial Statements. Refer to Note 4 for interim disclosure. Effective January 1, 1998, the Company adopted SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." The new statement standardizes the disclosure requirements for these benefit plans and did not have a material effect on the Company's Consolidated Financial Statements or Notes to Consolidated Financial Statements. In June, 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", effective for all fiscal quarters of fiscal years beginning after June 15,1999. The new statement requires all derivatives (including certain derivative instruments embedded in other contracts) to be recorded on the balance sheet at fair value and establishes special accounting for certain types of hedges. The Company adopted SFAS No. 133 effective January 1, 1999. As part of the implementation, the Company reclassed a portion of its fixed income securities from the held-to-maturity category to the available-for-sale category, as of January 1, 1999. Refer to Note 5 for further disclosure. The Company adopted Statement of Position ("SOP") 97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related Assessments," effective January 1, 1999. The accounting guidance of this SOP focuses on the timing of recognition and measurement of liabilities for insurance-related assessments. Guidance is also provided on recording 8 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS assets representing future recoveries of assessments through premium tax offsets or policy surcharges. The SOP was issued to reduce diversity in practice and to improve comparability and disclosure. In accordance with SOP 97-3, the Company estimates its liabilities for insurance-related assessments, as opposed to recording the liability and expense when notified by insurance regulators. This change in timing did not have a material effect on the Company's Consolidated Financial Statements or Notes to Consolidated Financial Statements. SOP 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," was adopted by the Company effective January 1, 1999. This SOP requires that certain costs related to the development or purchase of internal-use software be capitalized and amortized over the estimated useful life of the software. The SOP also requires that costs related to the preliminary project stage and the post-implementation and operations stage of an internal-use computer software development project be expensed as incurred. The SOP changed the timing of the recognition of the Company's software development expenses and did not have a material effect on the Company's Consolidated Financial Statements or Notes to Consolidated Financial Statements. SOP 98-7, "Deposit Accounting: Accounting for Insurance and Reinsurance Contracts That Do Not Transfer Insurance Risk," is effective for financial statements for fiscal years beginning after June 15, 1999. The SOP provides guidance on accounting for insurance and reinsurance contracts that do not transfer insurance risk. The impact of adopting SOP 98-7 is not expected to have a material effect on the Company's Consolidated Financial Statements or Notes to Consolidated Financial Statements. Note 4. Segment Information The Company has two reportable business segments in its operations; property and casualty insurance and life insurance. The property and casualty segment has four locations from which it conducts its business. All offices target a similar customer base and market the same products using the same marketing strategies and are therefore aggregated. The life insurance segment operates from the Company's home office. The two segments are evaluated by management based on both a statutory and a GAAP basis. Results are analyzed based on profitability, expenses and return on equity. The basis for determining and analyzing segments and the measurement of segment profit has not changed from that reported in the Company's 1998 Form 10-K. The Company's selling location is used in allocating revenues between foreign and domestic, and as such, the Company has no revenues allocated to foreign countries. The following analysis is reported on a GAAP basis and is reconciled to the Company's Consolidated Financial Statements.
=============================================================================== (Dollars in Thousands) Property and Life Casualty Insurance Insurance Total - ------------------------------------------------------------------------------ September 30, 1999 - ------------------------------------------------------------------------------ Revenues $191,708 $ 58,225 $ 249,933 - ------------------------------------------------------------------------------ Intersegment eliminations (103) (77) (180) - ------------------------------------------------------------------------------ Total revenues $191,605 $ 58,148 $ 249,753 =============================================================================== Net income $ 3,152 $ 6,751 $ 9,903 =============================================================================== Assets $667,145 $801,699 $ 1,468,844 =============================================================================== September 30, 1998 - ------------------------------------------------------------------------------ Revenues $203,637 $ 50,546 $ 254,183 - ------------------------------------------------------------------------------ Intersegment eliminations (105) (89) (194) - ------------------------------------------------------------------------------ Total revenues $203,532 $ 50,457 $ 253,989 =============================================================================== Net income $ 12,677 $ 6,852 $ 19,529 =============================================================================== Assets $541,337 $672,702 $ 1,214,039 ===============================================================================
Depreciation expense and property and equipment acquisitions are reflected in the property and casualty insurance segment. 9 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Note 5. Derivative Instruments The Company adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," effective January 1, 1999. SFAS No. 133 cannot be applied retroactively. The new statement requires all derivatives (including certain derivative instruments embedded in other contracts) to be recorded on the balance sheet as either an asset or a liability at fair value and establishes special accounting for certain types of hedges. The Company has had limited involvement with derivative financial instruments, and does not engage in the derivative market for hedging purposes. The Company has written covered call options on its equity portfolio to generate additional portfolio income and does not use these instruments for hedging purposes. Covered call options are recorded at fair value and included in accrued expenses and other liabilities. Any income or gains or losses, including the change in the fair value of the covered call options is recognized currently in earnings and included in realized investment gains and other income. At September 30, 1999, covered call options were written on approximately two percent of the equity portfolio, compared to covered call options written on approximately four percent of the equity portfolio at December 31, 1998. In assessing the impact of any embedded derivative instruments, the Company has elected to apply SFAS No. 133 only to those instruments or contracts with embedded derivative instruments issued, acquired, or substantively modified by the Company after December 31, 1997. The Company has analyzed its financial instruments and contracts in accordance with SFAS No. 133 and determined there is no material effect on the Company's Consolidated Financial Statements. As part of the implementation of SFAS No. 133, the Company was allowed to reassess its held-to-maturity portfolio without "tainting" the remaining securities classified as held-to-maturity. The cumulative effect of the impact on the Company's Consolidated Financial Statements due to the reclassification of $246,623,000 of fixed-income securities from held-to-maturity to available- for-sale, as of January 1, 1999, increased the carrying value of available-for- sale fixed-income securities by approximately $9,250,000 and other comprehensive income by approximately $6,013,000, net of deferred income taxes. Note 6. Acquisition On August 10, 1999, the Company acquired American Indemnity Financial Corporation ("American Indemnity") as a wholly owned subsidiary for approximately $30,200,000 in cash in exchange for 1,962,410 shares of common stock. Common stockholders of American Indemnity received approximately $14.35 per share of common stock at the closing of the transaction and deferred consideration of up to $1.00 per share in two years, subject to adjustments relating to indemnities. An escrow account with a balance of $1,990,000 is included in the Company's consolidated balance sheets in other assets for payment of the deferred consideration. American Indemnity is a Galveston, Texas, based holding company that is made up of the following regional property and casualty insurance companies: American Indemnity Company, American Fire and Indemnity Company, Texas General Indemnity Company, and American Indemnity Lloyds. The American Indemnity insurers offer personal and commercial lines of insurance through independent agents. The transaction was accounted for using the purchase method of accounting. American Indemnity's results for the period August 10, 1999 through September 30, 1999 are included in the consolidated statements of operations for the three-month and nine-month periods ended September 30, 1999. The purchase price paid for American Indemnity has 10 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS been allocated to the assets acquired and liabilities assumed based on a preliminary determination of their values and the excess purchase price has been recorded as goodwill. The Company may adjust this purchase price allocation when a final determination of fair values is made. However, any adjustment is not expected to be material. Goodwill of approximately $9,100,000 will be amortized on a straight-line basis for a period of ten years. The following schedule summarizes the assets acquired and the liabilities assumed as of August 10, 1999.
- ---------------------------------------------------------------------------------------------------------------------- (Dollars in Thousands) - ---------------------------------------------------------------------------------------------------------------------- Assets acquired Fixed maturity securities $ 68,499 Equity securities 14,344 Other Assets 55,498 - ---------------------------------------------------------------------------------------------------------------------- Total assets acquired $138,341 ====================================================================================================================== Liabilities assumed Policy reserves and unearned premiums $102,483 Deferred income taxes (1,500) Other liabilities 18,237 - ---------------------------------------------------------------------------------------------------------------------- Total liabilities assumed $119,220 ====================================================================================================================== Net assets acquired 19,121 - ---------------------------------------------------------------------------------------------------------------------- Excess of acquisition cost over net assets acquired 9,100 - ---------------------------------------------------------------------------------------------------------------------- Total purchase price $ 28,221 ======================================================================================================================
In connection with the purchase, the Company developed a plan (the "exit plan") to close certain branches and involuntarily terminate certain employees of American Indemnity. A liability of $972,000 to reflect employee termination benefits and future contractual lease payments related to abandoned facilities was included in the allocation of the purchase price. During the third quarter of 1999, the Company reduced this liability by $49,000 for lease payments on the abandoned facilities. The exit plan is expected to be completed by the end of 1999. The following table presents the unaudited proforma results of operations for the three- and nine-month periods ended September 30, 1999 and 1998, had the acquisition occurred on January 1, 1998.
- ----------------------------------------------------------------------------------------------------------------------------- (Dollars in Thousands Except Per Share Data) - ----------------------------------------------------------------------------------------------------------------------------- Three months ended Nine months ended Three months ended Nine months ended September 30, 1999 September 30, 1999 September 30, 1998 September 30, 1998 Unaudited Unaudited Unaudited Unaudited - ----------------------------------------------------------------------------------------------------------------------------- Revenues $95,916 $287,111 $95,929 $306,315 Net income (loss) 4,930 6,267 (2,607) 14,695 Earnings (loss) per share 0.49 .62 (0.26) 1.40 - -----------------------------------------------------------------------------------------------------------------------------
The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the operating results that would have occurred had the acquisitions been consummated as of the above dates, nor are such operating results necessarily indicative of future operating results. 11 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - ---------------------------------------- To the Stockholders and Board of Directors of United Fire & Casualty Company: We have reviewed the accompanying consolidated balance sheet of UNITED FIRE & CASUALTY COMPANY (an Iowa corporation) AND SUBSIDIARIES as of September 30, 1999, and the related consolidated statements of operations for the three-month and nine-month periods ended September 30, 1999 and 1998, and the consolidated statements of cash flows for the nine-month periods ended September 30, 1999 and 1998. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above in order for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of United Fire & Casualty Company and Subsidiaries as of December 31, 1998, and, in our report dated February 17, 1999, we expressed an unqualified opinion on that statement. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 1998, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Arthur Andersen LLP Chicago, Illinois November 3, 1999 12 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion and Analysis contains forward-looking information as defined in the Private Securities Litigation Reform Act of 1995 and is therefore subject to certain risks and uncertainties. Actual results could differ materially from information within the forward-looking statements as a result of many factors, including, but not limited to, market conditions, competition, and natural disasters. RESULTS OF OPERATIONS Net income, including realized capital gains, was $6,398,000 or $.63 per share for the quarter ended September 30, 1999, compared to a net loss of $(1,963,000) or $(.19) per share for the same period in 1998. An improvement in property and casualty underwriting results was a contributing factor in the Company's third quarter earnings improvement. In addition, the Company's life segment continues to report profitable results. On a direct basis, the Company has had minimal exposure to catastrophes during the third quarter, including limited direct losses resulting from Hurricane Floyd. From an assumed reinsurance perspective, it is too early to determine what the Company's exposure to Hurricane Floyd will be. Early predictions of Floyd's potential devastation were much higher than actual experience. As a result, management feels that assumed losses from Hurricane Floyd will not have a material impact on the Company's results. On August 10, 1999, the Company acquired American Indemnity Financial Corporation ("American Indemnity") as a wholly owned subsidiary for approximately $30,200,000 in cash. Common stockholders of American Indemnity received approximately $14.35 per share at the closing of the transaction and deferred consideration of up to $1.00 per share in two years, subject to adjustments relating to indemnities. For the nine-month period ended September 30, 1999, the Company reported net income, including realized capital gains, of $9,903,000 or $.98 per share, compared to $19,529,000 or $1.86 per share for the same period in 1998. The 1998 results included $14,131,000 of realized capital gains (after tax), that resulted from the sale of equity securities. Property and casualty insurance segment For the three months ended September 30, 1999, the property and casualty segment earned $4,085,000, compared to a loss of $(4,439,000) for the third quarter of 1998. Net catastrophe losses resulted in charges against net income of $2,083,000 or $.21 per share, during the third quarter of 1999, compared to $3,577,000 or $.35 per share for the third quarter of 1998. These losses added five percent to the statutory combined ratio for the third quarter of 1999, bringing the total quarter statutory combined ratio to 110 percent. For the third quarter of 1998, catastrophe losses added 11 percent to the statutory combined ratio, bringing the total quarter statutory combined ratio to 126 percent. Premium volume for the property and casualty segment increased, after many quarters of stagnant growth. Premiums written by the property and casualty segment increased $10,414,000 or 19 percent between years for the three months ended September 30, 1999 and 1998. Of the premiums written increase, $7,393,000 is attributable to the acquisition of American Indemnity. The acquired subsidiary had premiums earned of $6,970,000 subsequent to the acquisition and losses and expenses incurred of $9,835,000. Included in the earned premiums is a write off of $2,057,000 due to unearned premium related to a canceled reinsurance contract. Subsequent to the purchase, the Company arranged for reinsurance coverage for American Indemnity under the Company's reinsurance program. 13 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The group's three-month underwriting expenses have decreased by $3,736,000, or 29 percent. Improved underwriting results have enabled the Company to defer a larger amount of acquisition expenses as opposed to an immediate charge to income, when compared to the same period in 1998. Through September 30, 1999, the property and casualty segment earned $3,151,000, compared to $12,677,000 through the first nine months of 1998. For the first nine months of 1999, net catastrophe losses resulted in charges against net income of $8,267,000 or $.82 per share, compared to $10,603,000 or $1.01 per share for the first nine months of 1998. These losses added seven percent to the 1999 nine-month statutory combined ratio bringing the total statutory combined ratio to 112 percent. Through the first nine months of 1998, catastrophe losses added ten percent to the statutory combined ratio, bringing the total statutory combined ratio to 115 percent. Premiums written increased by nine percent or $15,500,000 through September 30, 1999 when compared to the first nine months of 1998. Life insurance segment Through September 30, 1999, the life segment reported net income of $6,751,000, compared to $6,852,000 through the first nine months of 1998. Premiums earned increased by $2,891,000 or 17 percent, primarily due to the unearned premium on the Company's large block of credit life/A&H business beginning to earn out. Investment income increased by $5,520,000 or 17 percent between the two periods. Losses and settlement expenses decreased by $2,473,000 or 25 percent due to more favorable experience than last year when losses incurred for the year totaled $12,299,000 or a 27 percent increase over the prior year. The change in the liability for future benefits increased $2,032,000 or 97 percent primarily because annuity premium collected during the last six months has increased $31,689,000 compared to a $10,699,000 decrease the first three months of the year. The entire collected premium plus interest credited causes an increase in this liability. The large increase in the liability has been partially offset by the following three things: 1)relatively flat account balance changes for the universal life block, 2)a decrease in credit life premiums of $6,771,000 for the year and 3)most of the increase in traditional policies issued during 1998 and 1999 have been term policies. This type of policy carries a much lower reserve than the single premium whole life policies that the Company issued in a larger than usual volume in 1997 and 1998. As the balances in the annuity and universal life accounts increase by new premium so does the interest credited to these accounts. In 1999 the Company has credited $24,796,000 to these accounts which reflects a $5,361,000 or 28 percent increase over the same period in 1998. For the three months ended September 30, 1999, the life segment earned $2,313,000, compared to $2,475,000 for the third quarter of 1998. Premiums earned increased by $1,345,000 or 23 percent and investment income increased by $2,156,000 or 19 percent between the two periods, while losses and settlement expenses decreased by $1,624,000 or 46 percent. The increase in liability for future policy benefits grew by $1,790,000 and interest on policyholders' accounts increased by $3,087,000. Investment results Net investment income increased $5,061,000, or ten percent, through the first nine months of 1999, compared to the same period in 1998. Realized investment gains decreased by $19,814,000. A majority of the gains recognized through the first nine months of 1998 resulted from sales of equity securities. Proceeds from the sales in 1998 were used to repurchase 625,000 shares of the Company's common stock and to rebalance its equity portfolio. Net unrealized 14 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS appreciation, net of tax, decreased $14,535,000 through September 30, 1999 compared to December 31, 1998, due to the general increase in interest rates during 1999. Tax benefit The tax benefit of $15,000 for the nine-month period ended September 30, 1999, was due primarily to the deduction of municipal interest. As a result of this deduction, the Company had a net operating loss for tax purposes, which was carried back to 1997 and applied against income for that year, generating a tax refund. Stock options In February and April 1999, the Company granted options under a Nonqualified Employee Stock Option Plan to purchase an aggregate of 500 and 5,521 shares of common stock, respectively, at an exercise price of $29.25 and $26.12 per share, to officers and other employees. At the date of grant (measurement date), the market value of the Company's common stock was equal to or less than the exercise price on all options. At September 30, 1999, the market value of the Company's common stock was below the exercise price on all options. FINANCIAL CONDITION Investments The investment portfolio is comprised primarily of fixed maturity securities and equity securities. The Company's investment strategy is to invest principally in medium and long-term, high-quality securities. Fixed maturities, which the Company has the ability and intent to hold to maturity, are classified as held-to-maturity. The remaining fixed maturities and all of the Company's equity securities are classified as available-for-sale. Effective January 1, 1999, the Company reevaluated its investment classifications and transferred $246,623,000 of fixed-income securities from held-to-maturity to available-for-sale. This transfer was made in conjunction with the implementation of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which allowed a one-time adjustment in its classifications without the possibility of "tainting" the remaining securities classified as held-to-maturity. The impact on the Company's Consolidated Financial Statements as of January 1, 1999, due to the reclassification from held-to-maturity to available-for-sale increased the carrying value of available-for-sale fixed-income securities by approximately $9,250,000, increased other comprehensive income by approximately $6,013,000 and increased deferred income taxes by approximately $3,237,000. The Company has had limited involvement with derivative financial instruments, and does not engage in the derivative market for hedging purposes. The Company has investments in collateralized mortgage obligations, which account for 13 percent of the fixed-income portfolio at September 30, 1999, compared to 16 percent as of December 31, 1998. Other assets Deferred acquisition costs total $88,135,000 at September 30, 1999 and represent deferred underwriting and acquisition expenses associated with writing insurance policies. For the property and casualty segment, deferred acquisition costs are amortized over the life of the policies written to attain a matching of revenue to expenses. The life segment amortizes deferred acquisition costs over gross profits. For the nine months ended September 30, 1999, the Company's life segment has generated a $13,025,000 increase in deferred acquisition costs due to growth during the second quarter of 1999 in credit life and accident and health statutory premiums collected. The property and casualty 15 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS segment had an increase of $7,518,000 in deferred acquisition costs, due in large part to the acquisition. American Indemnity's deferred acquisition costs were calculated in a manner consistent with the methodology employed by the Company. Accounts receivable, which pertains to the property and casualty segment, are amounts due from insurance agents and brokers for premiums written, less commissions paid. The balance at September 30, 1999, of $65,380,000 has increased 46 percent from December 31, 1998. Accounts receivable from the agents of American Indemnity contributed $13,893,000 of the growth. Increased property and casualty premium writings is also contributing to growth in accounts receivable. The Company has not experienced problems with the collection of balances from its agents. Reinsurance receivables grew significantly due to balances owed American Indemnity by its reinsurance brokers. At September 30, 1999, American Indemnity had over $20,000,000 in receivables related to loss reserves prior to the purchase. This large volume reflects American Indemnity's prior low loss retention levels. Other assets increased by $4,548,000 due primarily to miscellaneous assets acquired in the purchase of American Indemnity, an escrow for deferred compensation related to the purchase, and to balances owed the Company from investment brokers for trades made and not yet settled. Liabilities The Company's largest liability is that of future policy benefits, which relates exclusively to the life segment. The liability increased by $94,436,000 or 16 percent between December 31, 1998, and September 30, 1999. Future policy benefits are increased immediately by the full premiums paid by policyholders for annuity products and most universal life products. As these product lines grow, the future policy benefits grow proportionately. Reserves for claims and settlement expenses, which relate primarily to the property and casualty segment, also increased through September 30, 1999, when compared to December 31, 1998. Direct and assumed reserves established for losses and expenses have increased $87,308,000, or 35 percent. Of this increase, $72,772,000 relates to the purchase of American Indemnity. At September 30, 1999, covered call options were written on approximately two percent of the equity portfolio, compared to approximately four percent of the equity portfolio at December 31, 1998. Stockholders' equity The Company's stockholders' equity decreased by $10,255,000 to $246,027,000 at September 30, 1999, compared to December 31, 1998. Net income of $9,903,000 increased equity, while net unrealized depreciation on the Company's available- for-sale securities and other long-term investments decreased equity by $14,535,000. The Company declared $5,142,000 in stockholders' dividends through September 30, 1999, and the Company purchased 18,328 shares of its common stock at a cost of $481,000 during the first nine months of 1999. Cash flow and liquidity Most of the cash the Company receives is generated from insurance premiums paid by policyholders and from investment income. Premiums are invested in assets maturing at regular intervals in order to meet the Company's obligations to pay policy benefits, claims and claim adjusting expenses. Net cash provided by the Company's operating activities was $24,374,000 through the first half of 1999, compared to $12,350,000 through the first nine months of 1998. Operating cash flows continue to be ample to meet obligations to policyholders. Short-term investments, composed of money market accounts and fixed-income securities, are available for the Company's short-term cash needs. In addition, the Company maintains a $20 million line of credit with a local bank. Under 16 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS the terms of the agreement, interest on outstanding notes is payable at the lender's prevailing prime rate less one percent. The Company had a balance payable on the line of credit of $1,875,000 as of September 30, 1999. Impact of Year 2000 The insurance industry is data intensive and utilizes computer technology extensively. The Year 2000 problem is, simply stated, the inability to correctly process dates after December 31, 1999. The Company recognizes that the Year 2000 problem is a major business issue in addition to a technical problem. In 1989, the Company issued a ten-year term bond policy. It was recognized then that the commonly used two digit year was going to be inadequate for processing beyond 1999. A plan was developed that would allow the information services department, through routine program and system maintenance, to gradually migrate to a four-digit year. By the mid-1990s the Company had progressed beyond the awareness phase and was well into the formal planning and execution/testing phases. Testing of the Company's "mission critical systems" was completed by December 31, 1998. Testing included present and future date testing which simulated critical dates in the Year 2000. The Company has successfully completed the move of all tested internal systems into production. The Company has reviewed all significant vendors, suppliers and agents to ensure that written statements of their readiness and commitment to a date for their Year 2000 compliance are received. The Company will continue to monitor the Year 2000 status of these entities and has developed a comprehensive contingency plan to reduce the possible disruption in business operations that may result from the failure of third parties with which the Company has business relationships to address their Year 2000 issues. Should a third party with whom the Company transacts business have a system failure due to not being Year 2000 compliant, the Company believes this could result in a delay in processing or reporting transactions of the Company, or a potential disruption in service to our customers. The failure of the Company's systems or the systems of its vendors to be compliant with the Year 2000 could result in the incorrect processing of critical financial and operational information. The Company is analyzing its processing in an effort to identify the nature and magnitude of problems that could result from such system errors. The Company has prepared a contingency plan that will detail alternative processing methods in the event that systems, including secondary systems, fail. This plan is available for review and has been forwarded to the Iowa Insurance Department. The Company is currently reviewing the systems and equipment of American Indemnity for Year 2000 compliance. The Company's home office staff has made several site visits to American Indemnity to ensure that all systems are compliant and tested by December 31, 1999. There are two American Indemnity systems which are not Year 2000 compliant. One of the systems, a software package for creating statutory annual filings, will be compliant by the end of year. The other system, commercial rating software, is being replaced by the Company's own systems, which are Year 2000 compliant. In the event that this conversion and testing would not take place by December 31, 1999, the Company has a plan of action to rate American Indemnity's commercial policies manually. American Indemnity's personal workstations are approximately 85 percent compliant, and will be 100 percent compliant by December 31, 1999. The Company is also addressing areas other than Information Technology to ensure Year 2000 compliance. An assessment has identified the non-IT assets that may be impacted by the Year 2000 problem and most of these problem areas have been corrected. Although there are a few items that remain, none were deemed critical and all will be compliant by the end of 1999. Expenses incurred in connection with programming and testing have been expensed as incurred and absorbed into normal operating expenses. Costs incurred through September 30, 1999, were approximately $1,400,000. The Company believes the remaining costs for the Year 2000 compliance will include salaries and overhead for existing personnel of approximately $100,000 and replacement of hardware of approximately $50,000. 17 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company has exposure to market risk arising from potential losses due to adverse changes in interest rates and market prices. The Company's primary market risk exposure is changes in interest rates, although the Company has some exposure to changes in equity prices and limited exposure to foreign currency exchange rates. The active management of market risk is integral to the Company's operations. Investment guidelines are in place that define the overall framework for managing the Company's market and other investment risks, including accountability and controls. In addition, the Company has specific investment policies for each of its subsidiaries that delineate the investment limits and strategies that are appropriate given each entity's liquidity, surplus, product and regulatory requirements. In response to market risk, the Company may respond by rebalancing its existing asset portfolio, or by changing the character of future investment purchases. Covered call options are written on several common stocks owned by the Company. Generally, the calls are written on stocks the Company views as over- priced relative to their market value. Writing of in-the-money calls at transaction date has not been done, but the Company is not restricted in any way from doing so. The practice of writing covered calls is considered a conservative equity strategy by market analysts. There have been no material changes in the Company's market risk or market risk factors from that reported in the Company's 1998 Form 10-K. 18 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) 11 - Computation of Earnings Per Common Share 27 - Financial Data Schedule SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. UNITED FIRE & CASUALTY COMPANY - ------------------------------------------------------------------------ (Registrant) November 3, 1999 - ------------------------------------------------------------------------ (Date) - ------------------------------------------------------------------------ John A. Rife President - ----------------------------------------------------------------------- K.G. Baker Vice President , Chief Financial Officer and Principal Accounting Officer 19 EX-11 2 COMPUTATION OF EARNINGS PER COMMON SHARE Exhibit 11. Computation of Earnings Per Common Share
- ------------------------------------------------------------------------------------------------------------------------ (Dollars in Thousands Except Per Share Data and Number of Shares) - ------------------------------------------------------------------------------------------------------------------------ Weighted Average Three-Month Periods Ended Number of Shares Net Earnings Per September 30, Outstanding Income Common Share - ------------------------------------------------------------------------------------------------------------------------ 1999 10,078,294 $ 6,398 $ .63 1998 10,088,460 (1,963) (.19) - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ (Dollars in Thousands Except Per Share Data and Number of Shares) - ------------------------------------------------------------------------------------------------------------------------ Weighted Average Nine-Month Periods Ended Number of Shares Net Earnings Per September 30, Outstanding Income Common Share - ------------------------------------------------------------------------------------------------------------------------ 1999 10,083,729 $ 9,903 $ .98 1998 10,495,773 19,529 1.86 - ------------------------------------------------------------------------------------------------------------------------
Computation of weighted average number of common and common equivalent shares:
- ------------------------------------------------------------------------------------------------- Three-Month Periods Ended September 30, 1999 1998 - ------------------------------------------------------------------------------------------------- Common shares outstanding beginning of the period 10,078,539 10,066,721 Weighted average of the common Shares purchased and retired or reissued (245) 21,739 - ------------------------------------------------------------------------------------------------- Weighted average number of common shares 10,078,294 10,088,460 ================================================================================================= - ------------------------------------------------------------------------------------------------- Nine-Month Periods Ended September 30, 1999 1998 - ------------------------------------------------------------------------------------------------- Common shares outstanding beginning of the period 10,091,721 10,727,322 Weighted average of the common Shares purchased and retired or reissued (7,992) (231,549) - ------------------------------------------------------------------------------------------------- Weighted average number of common shares 10,083,729 10,495,773 =================================================================================================
EX-27 3 FINANCIAL DATA SCHEDULE
7 1,000 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 742,399 321,082 328,825 115,155 0 0 1,220,394 1,116 36,055 88,135 1,468,844 1,008,050 155,474 0 0 0 0 0 33,595 212,658 1,468,844 191,299 55,047 1,927 1,480 145,246 37,447 57,172 9,888 (15) 9,903 0 0 0 9,903 .98 .98 0 0 0 0 0 0 0
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