-----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, GmdExg42Zp+Bc3nxAnqC4xiGDvBuiFtTcjR17aLgjvlCYlhJ82h0JSeSlgrDEhQg 9NuTsEl+IHalPj8U4a8XXQ== 0000054727-96-000042.txt : 19960508 0000054727-96-000042.hdr.sgml : 19960508 ACCESSION NUMBER: 0000054727-96-000042 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19951231 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960507 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNAMERICA INC CENTRAL INDEX KEY: 0000054727 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 860176061 STATE OF INCORPORATION: MD FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-04618 FILM NUMBER: 96557297 BUSINESS ADDRESS: STREET 1: 1 SUNAMERICA CENTER CITY: LOS ANGELES STATE: CA ZIP: 90067-6022 BUSINESS PHONE: 3107726000 FORMER COMPANY: FORMER CONFORMED NAME: KAUFMAN & BROAD INC DATE OF NAME CHANGE: 19890515 FORMER COMPANY: FORMER CONFORMED NAME: KAUFMAN & BROAD BUILDING CO DATE OF NAME CHANGE: 19711006 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________________ FORM 8-K/A AMENDMENT NO. 1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) FEBRUARY 29, 1996, PREVIOUSLY REPORTED AS NOVEMBER 10, 1995 AS FILED ON MARCH 15, 1996 SUNAMERICA INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) MARYLAND 1-4618 86-0176061 (STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.) 1 SUNAMERICA CENTER LOS ANGELES, CALIFORNIA 90067-6022 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's telephone number, including area code (310) 772-6000 The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Current Report on Form 8-K, dated and filed March 15, 1996, as set forth in the pages attached hereto: Item 7. Financial Statements, Pro Forma Financial Information and Exhibits is amended in its entirety. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits ------------------------------------------------------------------ (a) The financial statements of Ford Life Insurance Company ("Ford Life") are included herein as Exhibits 99.1 and 99.2 and include the following: Audited Financial Statements (Exhibit 99.1) Report of Independent Accountants Statement of Income and of Earnings Retained for Use in the Business for the Years Ended December 31, 1995, 1994 and 1993 Balance Sheet at December 31, 1995 and 1994 Statement of Stockholder's Equity for the Years Ended December 31, 1995, 1994 and 1993 Statement of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993 Notes to Financial Statements Unaudited Interim Financial Statements (Exhibit 99.2) Report of Independent Accountants Condensed Statement of Income for the Three Months Ended December 31, 1995 and 1994 Condensed Balance Sheet at December 31, 1995 and 1994 Condensed Statement of Cash Flows for the Three Months Ended December 31, 1995 and 1994 Footnotes to Condensed Financial Statements (b) Unaudited Pro Forma Financial Information The unaudited pro forma condensed balance sheet set forth herein as Exhibit 99.5 gives effect to the acquisition of Ford Life as if it had occurred on December 31, 1995, the date of SunAmerica Inc.'s ("SunAmerica") most recently filed balance sheet. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits ------------------------------------------------------------------ (Continued) ----------- The unaudited pro forma condensed income statement set forth herein as Exhibit 99.6 gives effect to the acquisition as if it had been consummated on October 1, 1995, the beginning of SunAmerica's most recently reported fiscal quarter. The unaudited pro forma condensed consolidated balance sheet and the unaudited pro forma condensed consolidated income statement as of and for the year ended September 30, 1995, the date of SunAmerica's most recently completed fiscal year end, have been previously filed as part of a Current Report on Form 8-K, dated and filed as of December 12, 1995 and amended on December 14, 1995 and May 7, 1996. Pro forma adjustments are based upon available information and certain assumptions that management of SunAmerica believes are reasonable in the circumstances. The unaudited pro forma consolidated financial information should be read in conjunction with the audited consolidated financial statements and related notes contained in SunAmerica's 1995 Annual Report on Form 10-K, the unaudited consolidated financial statements and related notes contained in SunAmerica's Quarterly Report on Form 10-Q for the quarter ended December 31, 1995, and the audited financial statements and related notes and the unaudited interim financial statements and related notes pertaining to Ford Life contained elsewhere in this Current Report on Form 8-K. The acquisition is accounted for as a purchase in accordance with generally accepted accounting principles. Under purchase accounting, the total purchase price is allocated to the acquired assets and liabilities based on their fair values. Allocation of the purchase price is subject to valuations and other studies that are not complete. Accordingly, the final allocation may be different from the amounts reflected herein. However, management of SunAmerica does not believe such differences will be material. (c) Exhibits 10.1 Stock Purchase Agreement between The American Road Insurance Company and SunAmerica Inc., dated as of November 10, 1995, is incorporated herein by reference to Exhibit 10.1 to the Company's Form 8-K, filed on December 12, 1995 and amended on December 14, 1995 and May 7, 1996. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits ------------------------------------------------------------------ (Continued) ----------- 27.1 Financial Data Schedule for Ford Life Insurance Company (Year Ended December 31, 1995) 27.2 Financial Data Schedule for Ford Life Insurance Company (Three Months Ended December 31, 1995) 99.1 Audited Financial Statements and Report of Independent Accountants as of and for the Three Years Ended December 31, 1995, 1994 and 1993 for Ford Life Insurance Company 99.2 Unaudited Interim Financial Statements and Report of Independent Accountants as of and for the Three Months Ended December 31, 1995 and 1994 for Ford Life Insurance Company 99.3 Pro Forma Unaudited Condensed Balance Sheet at September 30, 1995, giving effect to the acquisition of Ford Life Insurance Company, is incorporated here- in by reference to Exhibit 99.3 to the Company's Form 8-K, filed on December 12, 1995 and amended on December 14, 1995 and May 7, 1996 99.4 Pro Forma Unaudited Condensed Income Statement for the year ended September 30, 1995, giving effect to the acquisition of Ford Life Insurance Company, is incorporated herein by reference to Exhibit 99.4 to the Company's Form 8-K, filed on December 12, 1995 and amended on December 14, 1995 and May 7, 1996 99.5 Pro Forma Unaudited Condensed Balance Sheet at December 31, 1995, giving effect to the acquisition of Ford Life Insurance Company 99.6 Pro Forma Unaudited Condensed Income Statement for the Three Months Ended December 31, 1995, giving effect to the acquisition of Ford Life Insurance Company 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 hereunto duly authorized. SUNAMERICA INC. Date: May 7, 1996 By: /s/ SCOTT L. ROBINSON ----------------------------- Scott L. Robinson Senior Vice President and Controller LIST OF EXHIBITS FILED ---------------------- Exhibit Number - -------- 27.1 Financial Data Schedule for Ford Life Insurance Company (Year Ended December 31, 1995) 27.2 Financial Data Schedule for Ford Life Insurance Company (Three Months Ended December 31, 1995) 99.1 Audited Financial Statements and Report of Independent Accountants as of and for the Three Years Ended December 31, 1995, 1994 and 1993 for Ford Life Insurance Company 99.2 Unaudited Interim Financial Statements and Report of Independent Accountants as of and for the Three Months Ended December 31, 1995 and 1994 for Ford Life Insurance Company 99.5 Pro Forma Unaudited Condensed Balance Sheet at December 31, 1995, giving effect to the acquisition of Ford Life Insurance Company 99.6 Pro Forma Unaudited Condensed Income Statement for the Three Months Ended December 31, 1995, giving effect to the acquisition of Ford Life Insurance Company EX-99.1 2 FORD LIFE INSURANCE COMPANY 1995 AUDIT OF FINANCIAL STATEMENTS REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholder of Ford Life Insurance Company: We have audited the balance sheet of Ford Life Insurance Company at December 31, 1995 and 1994, and the related statements of income and of earnings retained for use in the business, stockholder's equity and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on 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 financial position of Ford Life Insurance Company at December 31, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. As discussed in Note 1 to the financial statements, Ford Life changed its method of accounting for investments as of January 1, 1994. /s/ Coopers & Lybrand L.L.P. Coopers & Lybrand L.L.P. Detroit, Michigan January 26, 1996 1 FORD LIFE INSURANCE COMPANY STATEMENT OF INCOME AND OF EARNINGS RETAINED FOR USE IN THE BUSINESS (in thousands)
FOR THE YEARS ENDED DECEMBER 31 ------------------------------- 1995 1994 1993 --------- --------- --------- Revenue Premiums earned $ 38,295 $ 40,526 $ 43,974 Investment and other income 213,727 152,526 152,897 -------- -------- -------- Total revenue 252,022 193,052 196,871 -------- -------- -------- Expenses Losses incurred 18,087 20,585 25,588 Amortization of deferred acquisition costs 32,845 16,649 50,799 Interest credited on annuities 175,061 115,037 69,982 Interest on short-term borrowings 1,480 4,928 - Operating expenses 24,101 15,605 16,340 -------- -------- -------- Total expenses 251,574 172,804 162,709 -------- -------- -------- Income before income taxes 448 20,248 34,162 Provision for income taxes 2,050 6,526 13,024 -------- -------- -------- Net income (loss) (1,602) 13,722 21,138 Earnings retained for use in the business Beginning of year 199,363 185,641 164,503 -------- -------- -------- End of year $197,761 $199,363 $185,641 ======== ======== ========
The accompanying notes are an integral part of the financial statements. 2 FORD LIFE INSURANCE COMPANY BALANCE SHEET (in thousands)
DECEMBER 31 ------------------------ ASSETS 1995 1994 ----------- ----------- Cash and cash equivalents $ 171,537 $ 212,195 Investment securities Available for sale at market 2,976,557 2,376,237 Held to maturity, at amortized cost 2,095 2,102 Investment income due and accrued 46,875 42,834 Reinsurance receivables Affiliated companies 36,322 38,140 Other 4,372 5,933 Accounts receivable Affiliated companies 2,841 4,306 Other 722 927 Agents' balances receivable 6,564 7,548 Prepaid reinsurance premiums 92,971 101,042 Deferred income taxes 14,146 68,723 Deferred acquisition costs Annuity contracts 79,118 172,137 Insurance policies 27,442 29,627 Other 1,719 1,884 ----------- ----------- Total assets $ 3,463,281 $ 3,063,635 =========== =========== LIABILITIES AND STOCKHOLDER'S EQUITY LIABILITIES Unearned premiums $ 151,310 $ 163,181 Annuity contracts 3,006,003 2,726,576 Unpaid losses 45,111 50,170 Federal taxes payable 9,491 - Accounts payable Affiliated companies 5,620 5,595 Other 11,637 4,471 Deferred income and other liabilities 1,460 2,047 ----------- ----------- Total liabilities 3,230,632 2,952,040 ----------- ----------- STOCKHOLDER'S EQUITY Capital stock, par value $12.50 a share, 200,000 shares authorized, issued and outstanding 2,500 2,500 Paid-in surplus (contributions by stockholder) 21,859 21,859 Unrealized (loss) gain on investments, net of taxes of $6,589 in 1995 and $(59,068) in 1994 12,318 (109,587) Foreign currency translation adjustments (1,789) (2,540) Earnings retained for use in the business 197,761 199,363 ----------- ----------- Total stockholder's equity 232,649 111,595 ----------- ----------- Total liabilities and stockholder's equity $ 3,463,281 $ 3,063,635 =========== ===========
The accompanying notes are an integral part of the financial statements. 3 FORD LIFE INSURANCE COMPANY STATEMENT OF STOCKHOLDER'S EQUITY for the years ended December 31, 1995, 1994 and 1993 (in thousands)
FOREIGN EARNINGS UNREALIZED CURRENCY RETAINED FOR TOTAL CAPITAL PAID-IN GAINS/(LOSSES) TRANSLATION USE IN THE STOCKHOLDER'S STOCK SURPLUS ON INVESTMENTS ADJUSTMENTS BUSINESS EQUITY ------- -------- -------------- ----------- -------------- ------------- Balances, January 1, 1993 $ 2,500 $ 10,500 $ 18 $ (595) $ 164,503 $ 176,926 Contribution by stockholder 1,359 1,359 Change in unrealized gains, net of tax 43 43 Change in foreign currency translation (744) (744) Net income 21,138 21,138 ------- -------- -------- -------- --------- --------- Balances, December 31, 1993 2,500 11,859 61 (1,339) 185,641 198,722 Contribution by stockholder 10,000 10,000 Change in accounting principle, adoption of SFAS 115, net of tax 25,200 25,200 Change in foreign currency translation (1,201) (1,201) Change in unrealized gains (losses), net of tax (134,848) (134,848) Net income 13,722 13,722 ------- -------- -------- -------- --------- --------- Balances, December 31, 1994 2,500 21,859 (109,587) (2,540) 199,363 111,595 Change in unrealized gains (losses), net of tax 121,905 121,905 Change in foreign currency translation 751 751 Net income (loss) (1,602) (1,602) ------- -------- -------- -------- --------- --------- Balances, December 31, 1995 $ 2,500 $ 21,859 $ 12,318 $ (1,789) $ 197,761 $ 232,649 ======= ======== ======== ======== ========= =========
The accompanying notes are an integral part of the financial statements. 4 FORD LIFE INSURANCE COMPANY STATEMENT OF CASH FLOWS (in thousands)
FOR THE YEARS ENDED DECEMBER 31 ------------------------------------- 1995 1994 1993 ----------- ----------- ----------- Cash flows from operating activities Net income (loss) $ (1,602) $ 13,722 $ 21,138 Adjustments to reconcile net income to net cash used in operating activities: Interest credited to annuity contracts 176,089 125,296 77,794 Deferred income taxes (10,798) 4,947 (12,611) Amortization of discounts on investments (79) (15) (357) Losses (gains) on sale of investments 10,106 23,184 (44,627) Changes in Unearned premiums (11,871) (3,061) (15,813) Unpaid losses (5,059) (4,315) 4,718 Deferred acquisition costs (7,400) (74,895) (19,813) Reinsurance receivables, affiliate 1,818 865 (6,534) Reinsurance receivables, other 1,561 712 306 Prepaid reinsurance premiums 8,071 1,167 6,467 Other assets (1,222) (18,881) (3,938) Other liabilities 16,097 (30,146) 16,938 ----------- ----------- ----------- Net cash provided by operating activities 175,711 38,580 23,668 ----------- ----------- ----------- Cash flows from investing activities Acquisition of investments: Held-to-maturity - (681) * Available for sale (2,306,563) (3,231,656) * ----------- ----------- ----------- Total acquisitions of investments (2,306,563) (3,232,337) (3,803,818) Proceeds from investment sales and maturities: Sales of available for sale 1,986,332 2,285,526 * Maturities of available for sale 527 411 * ----------- ----------- ----------- Total proceeds from investment sales and maturities 1,986,859 2,285,937 3,124,884 ----------- ----------- ----------- Net cash used in investing activities (319,704) (946,400) (678,934) ----------- ----------- ----------- Cash flows provided by financing activities Receipts from annuity contracts 267,214 1,105,706 789,863 Payment of annuity benefits (163,879) (102,472) (46,719) Contribution by stockholder - 10,000 - ----------- ----------- ----------- Net cash provided by financing activities 103,335 1,013,234 743,144 ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents (40,658) 105,414 87,878 Cash and cash equivalents, beginning of year 212,195 106,781 18,903 ----------- ----------- ----------- Cash and cash equivalents, end of year $ 171,537 $ 212,195 $ 106,781 =========== =========== =========== Supplementary cash flow information Income taxes paid (refunded) $ 3,317 $ (4,098) $ 32,246 Interest paid 1,840 4,928 -
*Securities were not separately identified as held-to-maturity or available for sale in prior years. The accompanying notes are an integral part of the financial statements. 5 FORD LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES: a. BUSINESS: Ford Life Insurance Company ("Ford Life") offers single premium and flexible premium deferred annuity contracts (generally without life contingencies) through financial institutions, general agents and brokers. Ford Life also issues credit life and credit disability insurance covering purchasers of vehicles financed by Ford Motor Credit Company ("Ford Credit") and other financial institutions. b. AFFILIATES: Ford Life is a wholly owned subsidiary of The American Road Insurance Company ("TARIC"), which is a wholly owned indirect subsidiary of Ford Motor Company ("Ford"). c. CASH EQUIVALENTS: Ford Life considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. d. INVESTMENTS: Ford Life adopted Statement of Financial Accounting Standards No. 115 ("SFAS 115"), "Accounting for Certain Investments in Debt and Equity Securities," as of January 1, 1994. Under SFAS 115, the Company's investments in equity and debt securities were divided into two portfolios, available-for-sale and held-to-maturity, based upon the Company's ability and intent to hold the securities to maturity. Available-for-sale securities are recorded at fair value with unrealized gains and losses, net of applicable income taxes, excluded from income and reported in a separate component of stockholder's equity. Held-to-maturity securities are recorded at amortized cost. For the year ended December 31, 1993, marketable equity securities were recorded at market value, with unrealized gains and losses, net of applicable taxes, recorded directly in stockholder's equity. Realized gains and losses on the sale of investments are included in investment and other income. The cost of investments sold generally is determined on a specific security basis for debt securities. 6 NOTES TO FINANCIAL STATEMENTS, CONTINUED 1. ACCOUNTING POLICIES, CONTINUED: e. DEFERRED ACQUISITION COSTS: Costs incurred in the acquisition of annuity contracts, consisting primarily of commissions, are deferred and amortized over the life of the related contracts using the interest method. Anticipated returns from the investment of annuity contract receipts, including any unrealized gains or losses on available for sale securities, are considered in determining the amortization of such costs. Costs of acquiring new credit life and disability business are deferred and amortized over the terms of the related policies on the same bases on which premiums are earned. Deferred acquisition costs for both annuity and credit life and disability business are reviewed to determine that the unamortized portion of such costs does not exceed recoverable amounts after considering anticipated investment income. f. PREMIUMS: The liability for unearned premiums represents the amount of premiums applicable to the unexpired terms of the credit life and disability policies in force. Premiums are earned over the policy periods based on amounts at risk, primarily using the sum-of-the-digits method. g. ANNUITIES: The liability for annuity contracts reflects deposits received and interest credited, less related withdrawals including surrender charges. At December 31, 1995 and 1994, the weighted average interest rate on annuity contracts outstanding was 5.9 and 6.3 percent, respectively. The interest rates offered are guaranteed for periods of either one or five years. Interest credited to annuity account balances is recognized as expense; surrender charges are recognized as a reduction of interest credited to annuitants. h. UNPAID LOSSES: The liability for unpaid losses includes provisions for reported insurance losses and an estimate of unreported losses based on past experience. i. FOREIGN CURRENCY TRANSLATION: Assets and liabilities of the Canadian branch are translated at current exchange rates, and the effects of these translation adjustments are accumulated in a separate component of stockholder's equity. The change in this account results from translation adjustments accumulated during the year. 7 NOTES TO FINANCIAL STATEMENTS, CONTINUED 1. ACCOUNTING POLICIES, CONTINUED: j. DERIVATIVE FINANCIAL INSTRUMENTS: Ford Life has entered into agreements to manage exposure to fluctuations in interest rates related to annuity contracts. Interest rate exposure exists because the interest rate payable on annuity contracts is reset annually whereas interest rates on related investments are generally fixed. Ford Life has interest rate swap agreements with Ford Credit. The differential paid or received on interest rate swap agreements is recognized on the accrual basis as an adjustment to interest credited to annuities. For 1995, a differential of $6.9 million was paid and for 1994, a differential of $766 thousand was received related to interest rate swap agreements. Ford Life also had an option from a third party to enter into an interest rate swap agreement ("swaption"). The purchase price was capitalized and amortized to interest credited to annuities over the life of the swaption, which expired during 1995. All derivative instruments are classified as "held for purposes other than trading"; company policy specifically prohibits the use of derivatives for speculative purposes. k. ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS: The preparation of financial statements in conformity with generally accepted accounting principles 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. l. FINANCIAL STATEMENT RECLASSIFICATIONS: Certain amounts in prior year financial statements have been reclassified to conform with the 1995 presentation. 8 NOTES TO FINANCIAL STATEMENTS, CONTINUED 2. INVESTMENT AND OTHER INCOME: Investment and other income is comprised of the following:
1995 1994 1993 ---------- --------- --------- (in thousands) Interest on debt securities and cash equivalents $ 222,758 $ 172,228 $ 103,515 Dividends on marketable equity securities 5 149 154 Net (loss) gains on sales of investments (10,106) (23,184) 44,624 ---------- --------- --------- Total investment income 212,657 149,193 148,293 Less investment expense 2,535 1,731 1,359 ---------- --------- --------- Net investment income 210,122 147,462 146,934 Other income, primarily ceding fees 3,605 5,064 5,963 ---------- --------- --------- Investment and other income $ 213,727 $ 152,526 $ 152,897 ========== ========= =========
9 NOTES TO FINANCIAL STATEMENTS, CONTINUED 3. INVESTMENT SECURITIES: At December 31, 1995 and 1994, the amortized cost and estimated market values of investment securities were as follows:
1995 ------------------------------------------------ GROSS GROSS ESTIMATED AMORTIZED UNREALIZED UNREALIZED MARKET ISSUER COST GAINS LOSSES VALUE ------ ---------- ---------- ---------- ----------- Held to maturity: U. S. government and agencies $ 2,095 $ 173 $ - $ 2,268 ----------- ---------- ---------- ----------- Available for sale: U. S. government and agencies 151,966 3,042 - 155,008 Municipal securities 26,000 1,174 - 27,174 Foreign governments 28,278 534 (13) 28,799 Corporate securities 1,863,549 73,764 (3,658) 1,933,655 Mortgage-backed securities 815,852 18,500 (2,431) 831,921 ----------- ---------- ----------- ----------- Total available for sale 2,885,645 97,014 (6,102) 2,976,557 ----------- ---------- ----------- ----------- Total investments in securities $ 2,887,740 $ 97,187 $ (6,102) $ 2,978,825 =========== ========== =========== ===========
1994 -------------------------------------------------- GROSS GROSS ESTIMATED AMORTIZED UNREALIZED UNREALIZED MARKET ISSUER COST GAINS LOSSES VALUE ------ --------- ---------- ---------- --------- Held to maturity: U. S. government and agencies $ 2,102 $ 9 $ (55) $ 2,056 ----------- --------- ----------- ---------- Available for sale: U. S. government and agencies 78,369 15 (4,928) 73,456 Municipal securities 42,580 - (3,696) 38,884 Foreign governments 93,151 80 (9,534) 83,697 Corporate securities 1,642,860 383 (127,107) 1,516,136 Mortgage-backed securities 717,568 255 (54,656) 663,167 Equity securities 938 - (41) 897 ----------- ----- ---------- ----------- Total available for sale 2,575,466 733 (199,962) 2,376,237 ----------- ----- ---------- ----------- Total investments in securities $ 2,577,568 $ 742 $ (200,017) $ 2,378,293 =========== ===== ========== ===========
Proceeds from sales of investments in available for sale securities during 1995 and 1994, and securities held for investment in 1993 were $1,986.3 million, $2,285.5 million and $3,124.3 million, respectively. Gross gains of $15.3, $9.2 and $51.7 million and gross losses of $25.4, $32.4 and $7.1 were realized on those sales in 1995, 1994 and 1993, respectively. 10 NOTES TO FINANCIAL STATEMENTS, CONTINUED 3. INVESTMENT SECURITIES, CONTINUED: The amortized cost and estimated market value of investments in debt securities at December 31, 1995, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
HELD TO MATURITY AVAILABLE FOR SALE --------------------- ----------------------- ESTIMATED ESTIMATED AMORTIZED MARKET AMORTIZED MARKET COST VALUE COST VALUE ---------- --------- ----------- ----------- (in thousands) Due in one year or less - - $ 19,677 $ 20,025 Due after one year through five years $ 1,613 $ 1,684 1,162,790 1,209,700 Due after five years through ten years 186 209 496,753 521,108 Due after ten years 296 375 390,573 393,803 Mortgage-backed securities - - 815,852 831,921 ------- ------- ---------- ---------- $ 2,095 $ 2,268 $2,885,645 $2,976,557 ======= ======= ========== ==========
4. SHORT-TERM BORROWINGS: During 1995 and 1994, as part of its investment strategy, Ford Life entered into repurchase agreements and dollar roll transactions to increase its return on investments and improve liquidity. These transactions are accounted for as collateralized borrowings. The maximum amount of outstanding agreements at any month-end during 1995 and 1994 was $66.5 and $95.9 million, respectively, and the average amount of outstanding agreements was $35.8 and $56.6 million during 1995 and 1994, respectively. There were no outstanding agreements as of December 31, 1995 or 1994. 11 NOTES TO FINANCIAL STATEMENTS, CONTINUED 5. DEFERRED ACQUISITION COSTS: Following is an analysis of changes in deferred acquisition costs:
1995 1994 1993 ---------- --------- -------- (in thousands) Balance, beginning of year $ 201,764 $ 96,269 $ 75,825 Additions Commissions paid 32,638 82,051 62,235 Premium taxes (32) 977 1,029 Interest bonus 7,639 8,516 7,979 --------- --------- -------- Net additions 40,245 91,544 71,243 Adjustment related to unrealized (gains) losses on investments (102,604) 30,600 - Amortization of acquisition costs (32,845) (16,649) (50,799) --------- --------- -------- Balance, end of year $ 106,560 $ 201,764 $ 96,269 ========= ========= ========
6. REINSURANCE: Ford Life cedes most of its credit disability insurance business, as written, to American Road for a ceding fee. In addition, Ford Life cedes and assumes credit life and credit disability insurance business to and from other affiliates. Reinsurance ceding fees received and ceding commissions paid are deferred and earned or amortized over the terms of the related policies on the same bases on which the related premiums are earned. Amounts deductible from losses incurred in connection with insurance ceded to affiliated and unaffiliated companies were (in millions): 1995 - $31.0 and $3.9; 1994 - $33.0 and $7.5; 1993 - $43.8 and $10.9. Amounts added to losses incurred relating to reinsurance assumed from certain of its affiliates were (in millions): 1995 - $1.2; 1994 - $2.6; 1993 - $4.8. 12 NOTES TO FINANCIAL STATEMENTS, CONTINUED 6. REINSURANCE, CONTINUED: The effect of reinsurance on premiums written and earned is as follows (in millions):
1995 1994 1993 --------------- --------------- --------------- WRITTEN EARNED WRITTEN EARNED WRITTEN EARNED ------- ------ ------- ------ ------- ------ Direct $ 86.6 $ 96.9 $100.7 $102.5 $ 99.2 $109.6 Assumed from American Road and affiliates 2.2 3.9 4.4 6.1 4.3 9.3 Ceded to American Road and affiliates (43.4) (49.3) (49.5) (49.9) (48.5) (52.7) Nonaffiliates (11.1) (13.2) (17.4) (18.2) (20.0) (22.2) ------ ------ ------ ------ ------ ------ Net premiums $ 34.3 $ 38.3 $ 38.2 $ 40.5 $ 35.0 $ 44.0 ====== ====== ====== ====== ====== ======
In 1993, Ford Life assumed all insurance in force and other outstanding liabilities from Vista Life Insurance Company of Texas, an affiliate. Ford Life received assets of $8.1 million, an amount equal to the liabilities assumed, in consideration for this assumption. Ford Life also guaranteed all of the outstanding liabilities of Vista Life Insurance Company of Texas as of April 1, 1993. Concurrent with this reinsurance transaction, Ford Life received a $1.4 million capital contribution from American Road. Reinsurance contracts do not relieve Ford Life from its obligations to policyholders. Failure of reinsurers to honor their obligations could result in losses to Ford Life. Therefore, Ford Life evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurance insolvencies. Ford Life holds collateral that relates to balances recorded as reinsurance receivables and prepaid reinsurance premiums, for nonaffiliates, in the form of trust balances, custodial balances and letters of credit approximating $11.7 million at December 31, 1995. 13 NOTES TO FINANCIAL STATEMENTS, CONTINUED 7. UNPAID LOSSES:
1995 1994 1993 -------- -------- -------- Balance at January 1 $ 50,170 $ 54,485 $ 48,636 Less reinsurance receivables 44,073 45,650 39,422 -------- -------- -------- 6,097 8,835 9,214 -------- -------- -------- Incurred related to: Current year 19,542 22,812 27,245 Prior years (1,455) (2,227) (1,657) -------- -------- -------- Total incurred 18,087 20,585 25,588 -------- -------- -------- Paid related to: Current year 15,160 17,447 19,619 Prior years 4,607 5,876 6,348 -------- -------- -------- Total paid 19,767 23,323 25,967 -------- -------- -------- Net balance at December 31 4,417 6,097 8,835 Plus reinsurance receivables 40,694 44,073 45,650 -------- -------- -------- Balance at December 31 $ 45,111 $ 50,170 $ 54,485 ======== ======== ========
The liability for unpaid claims and claim adjustment expenses is calculated using factors, such as average claim amount, morbidity tables and IBNR factors, which are applied to statistical amounts of premium in force, policies in force and open claim counts. As a result of decreases in new business production over the last several years, the in-force premium and policy counts, as well as paid losses, have been on the decline. 14 NOTES TO FINANCIAL STATEMENTS, CONTINUED 8. INCOME TAXES: Ford Life joins with American Road and Ford Holdings in filing consolidated United States income tax returns. Pursuant to an agreement with Ford Holdings, income tax liabilities or credits are allocated to Ford Life in accordance with Ford Life's contribution to Ford Holdings' consolidated tax position. The provision for income taxes consisted of the following:
1995 1994 1993 ---------- ------- -------- (in thousands) Currently (refundable) payable Federal $ 12,058 $ 757 $ 24,901 Foreign 110 618 664 State 680 204 70 -------- ------- -------- Total currently (refundable) payable 12,848 1,579 25,635 Deferred, primarily federal (10,798) 4,947 (12,611) -------- ------- -------- Provision for income taxes $ 2,050 $ 6,526 $ 13,024 ======== ======= ========
Deferred income taxes, on a SFAS No. 109 basis, reflect the estimated future tax effect of temporary differences between the amount of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. The components of deferred income tax assets and liabilities as of December 31 were are as follows:
1995 1994 ----------------------- ---------------------- DEFERRED DEFERRED DEFERRED DEFERRED TAX TAX TAX TAX ASSETS LIABILITIES ASSETS LIABILITIES ---------- ----------- --------- ----------- (in thousands) Unrealized gain/loss on securities - $ 6,589 $ 59,068 - Unearned premium reserves $ 8,705 - 10,654 - Deferred acquisition costs - 49,959 - $ 47,228 Annuity reserve 64,186 - 47,220 - All other 844 3,041 711 1,702 -------- -------- --------- -------- Total deferred taxes $ 73,735 $ 59,589 $ 117,653 $ 48,930 ======== ======== ========= ========
The effective tax rate was 458 percent in 1995, 32 percent in 1994 and 38 percent in 1993. Differences between the effective tax rates and the U. S. statutory tax rate principally were the result of investment income not subject to tax or subject to tax at reduced rates, the impact of foreign and state income taxes and the revision of estimated income tax expense for prior years. 15 NOTES TO FINANCIAL STATEMENTS, CONTINUED 9. FINANCIAL INSTRUMENTS: The estimated fair value of financial instruments held by Ford Life at December 31, and the valuation techniques used to estimate the fair value are described below. In accordance with SFAS No. 107, insurance contracts have been excluded from this analysis.
1995 1994 --------------------- -------------------- ESTIMATED ESTIMATED BOOK FAIR BOOK FAIR VALUE VALUE VALUE VALUE ---------- --------- --------- --------- (in thousands) ASSETS Cash and cash equivalents $ 171,537 $ 171,537 $ 212,195 $ 212,195 Investment securities 2,978,652 2,978,825 2,378,339 2,378,293 Accrued interest and dividends 46,875 46,875 42,834 42,834 LIABILITIES Accounts payable 26,748 26,748 10,066 10,066 DERIVATIVE INSTRUMENTS Interest rate instruments Swap contracts 55 (40,386) 83 3,527 Swaption - - 1,844 1,844
a. CASH AND CASH EQUIVALENTS: The book value approximates fair value because of the short maturity of these instruments. b. INVESTMENT SECURITIES: The fair value of substantially all securities was estimated based on quoted market prices for those securities. For securities for which there were no quoted market prices, the estimate of fair value was based on similar types of securities that are traded in the market. c. ACCRUED INTEREST AND DIVIDENDS: The book value approximates fair value because accrued amounts are expected to be received within one year. 16 NOTES TO FINANCIAL STATEMENTS, CONTINUED 9. FINANCIAL INSTRUMENTS, CONTINUED: d. ACCOUNTS PAYABLE: The book value approximates fair value because amounts are expected to be paid within one year. e. DERIVATIVE INSTRUMENTS: The estimated fair value of interest rate swap and swaption contracts are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and counterparties' credit standing. Information with respect to Ford Life's interest rate swap and swaption contracts is summarized as follows:
NOTIONAL OR CONTRACT AMOUNT ----------- 1995 1994 COUNTERPARTY ----- ------ ------------ (in millions) Interest rate swaps Matures 1997, receive fixed-pay floating $ 5 - Ford Credit Matures 1998, receive fixed-pay floating 10 - Ford Credit Matures 1998, receive fixed-pay floating 20 - Ford Credit Matures 1999, receive fixed-pay floating 10 $ 10 Ford Credit Matures 1999, receive floating-pay fixed 500 500 Ford Credit Matures 1999, receive fixed-pay floating 20 - Ford Credit Matures 2000, receive fixed-pay floating 10 10 Ford Credit Matures 2002, receive fixed-pay floating 10 10 Ford Credit Swaption, exercisable 1995, matured 1995, receive floating-pay fixed - 1,870 Third party
10. TRANSACTIONS WITH AFFILIATED COMPANIES: Ford and certain subsidiaries provide Ford Life with technical and administrative advice and services for which Ford Life paid the following (in thousands): 1995 - $8,129; 1994 - $5,857; 1993 - $5,960. 17 NOTES TO FINANCIAL STATEMENTS, CONTINUED 10. TRANSACTIONS WITH AFFILIATED COMPANIES, CONTINUED: All of the liabilities of Ford Life are guaranteed by TARIC, its parent. All related credit risk is guaranteed by Ford Credit. See other Notes for additional information regarding transactions with affiliated companies. 11. DIVIDEND RESTRICTION: Payment of dividends by Ford Life to a company within its holding company system is regulated by the State of Michigan. Under Michigan regulation all dividends must be reported to the Michigan Insurance Commissioner prior to payment. 12. LITIGATION AND CLAIMS: Various legal actions, governmental proceedings and other claims are pending or may be instituted or asserted in the future against Ford Life. Some of these matters involve or may involve class actions, compensatory, punitive, or antitrust or other treble damage claims in very large amounts, or other requested relief. Litigation is subject to many uncertainties, the outcome of individual litigated matters is not predictable with assurance, and it is reasonable possible that some of the foregoing matters could be decided unfavorable to Ford Life. Although the amount of liability at December 31, 1995 with respect to actions, governmental proceedings and claims cannot be ascertained, Ford Life believes that any resulting liability should not materially affect the financial statements of Ford Life at December 31, 1995. 13. STATUTORY NET INCOME AND STOCKHOLDER'S EQUITY: Generally accepted accounting principles differ in certain respects from statutory accounting practices prescribed or permitted by insurance regulatory authorities. Statutory net income (loss) was (in thousands): 1995 - $14,444; 1994 - ($17,145); 1993 - $11,887. Statutory stockholder's equity was (in thousands) $113,443 and $96,256 at December 31, 1995 and 1994, respectively. Ford Life, domiciled in Michigan, prepares its statutory financial statements in accordance with accounting practices prescribed or permitted by the Michigan Insurance Bureau. Prescribed statutory accounting practices include a variety of publications of the National Association of Insurance Commissioners ("NAIC"), as well as state laws, regulations and general administrative rules. 18 NOTES TO FINANCIAL STATEMENTS, CONTINUED 14. SUBSEQUENT EVENT: On February 29, 1996, TARIC sold all of the outstanding stock of the Company to SunAmerica Inc. ("Sun") for cash of $172.5 million. Prior to February 29, 1996, all of the Company's credit life and disability business was ceded to affiliates. The following table provides information about the credit life and disability business at December 31, 1995 that was ceded to affiliates.
DECEMBER 31, 1995 -------------- (in thousands) Cash and investments $ 26,069 Deferred acquisition costs 27,442 Other assets 145,080 Unearned premiums, net of reinsurance 151,310 Loss reserves, net of reinsurance 45,111 Other liabilities 16,306 Total revenues 45,239 Total expenses 48,229
19 EX-99.2 3 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholder of Ford Life Insurance Company: We have reviewed the condensed statements of income and cash flows for the three-month periods ended December 31, 1995 and 1994. 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 accompanying condensed financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet at December 31, 1995 and 1994 and the related statements of income and of earnings retained for use in the business and cash flows for the years then ended (not presented herein); and in our reports dated January 26, 1996 and January 27, 1995, we expressed unqualified opinions on those financial statements. In our opinion, the information set forth in the accompanying condensed balance sheet at December 31, 1995 and 1994 is fairly stated in all material respects in relation to the financial statements from which it has been derived. /s/ Coopers & Lybrand L.L.P. Coopers & Lybrand L.L.P. Detroit, Michigan March 21, 1996 FORD LIFE INSURANCE COMPANY CONDENSED STATEMENT OF INCOME for the periods ended December 31, 1995 and 1994 (in thousands)
THREE THREE MONTHS MONTHS ENDED ENDED DEC 31, DEC 31, 1995 1994 ------ ------- (Unaudited) (Unaudited) Revenues Premiums earned $ 9,214 $ 10,122 Interest income 57,102 51,795 Net loss on sales of investments (380) (14,568) Other income - 6 ------- ------- Total revenues 65,936 47,355 ------- ------- Expenses Losses incurred 4,440 4,441 Amortization of deferred acquisition costs 5,522 362 Interest credited on annuities 44,733 34,862 Other expenses 7,644 5,825 ------- ------- Total expenses 62,339 45,490 ------- ------- Income before income taxes 3,597 1,865 Provision (benefit) for income taxes 1,393 (228) ------- ------- Net income $ 2,204 $ 2,093 ======= =======
The accompanying notes are an integral part of the financial statements. FORD LIFE INSURANCE COMPANY CONDENSED BALANCE SHEET (in thousands)
DEC 31, DEC 31, ASSETS 1995 1994 ----------- ----------- Cash and cash equivalents $ 171,537 $ 212,195 Investment securities Available for sale, at market 2,976,557 2,376,237 Held to maturity, at amortized cost 2,095 2,102 Investment income due and accrued 46,875 42,834 Reinsurance balances and other assets 145,511 159,780 Deferred income taxes 14,146 68,723 Deferred acquisition costs 106,560 201,764 ---------- ---------- Total assets $3,463,281 $3,063,635 ========== ========== LIABILITIES AND STOCKHOLDER'S EQUITY Liabilities Unearned premiums $ 151,310 $ 163,181 Annuity contracts 3,006,003 2,726,576 Unpaid losses 45,111 50,170 Accounts payable and other liabilities 28,208 12,113 ---------- ---------- Total liabilities 3,230,632 2,952,040 ---------- ---------- Stockholder's equity Capital stock, par value $12.50 a share, 200,000 shares authorized, issued and outstanding 2,500 2,500 Paid-in surplus (contribution by stockholder) 21,859 21,859 Unrealized gain (loss) on investments, net of taxes 12,318 (109,587) Foreign currency translation adjustments (1,789) (2,540) Earnings retained for use in the business 197,761 199,363 ---------- ---------- Total stockholder's equity 232,649 111,595 ---------- ---------- Total liabilities and stockholder's equity $3,463,281 $3,063,635 ========== ==========
The accompanying notes are an integral part of the financial statements. FORD LIFE INSURANCE COMPANY CONDENSED STATEMENT OF CASH FLOWS for the periods ended December 31, 1995 and 1994 (in thousands)
THREE THREE MONTHS MONTHS ENDED DEC ENDED DEC 31, 1995 31, 1994 ----------- ---------- (Unaudited) (Unaudited) Cash flows from operating activities Cash flows from operating activities before loss on sale of investments in securities $ 30,056 $(13,173) Loss on sale of investments in securities 380 14,568 -------- -------- Net cash provided by operating activities 30,436 1,395 -------- -------- Cash flows from investing activities Acquisition of investments, available for sale (64,572) (825,390) Proceeds from investments sales and maturities, available for sale 129,945 625,040 -------- -------- Net cash provided by (used in) investing activities 65,373 (200,350) -------- -------- Cash flows from financing activities Receipts from annuity contracts 11,902 280,902 Payment of annuity benefits (48,251) (33,978) Capital contribution - 10,000 -------- -------- Net cash (used in) provided by financing activities (36,349) 256,924 -------- -------- Net increase in cash and cash equivalents 59,460 57,969 Cash and cash equivalents, September 30 112,077 154,226 -------- -------- Cash and cash equivalents, December 31 $171,537 $212,195 ======== ========
The accompanying notes are an integral part of the financial statements. FORD LIFE INSURANCE COMPANY FOOTNOTES TO CONDENSED FINANCIAL STATEMENTS 1. Ford Life Insurance Company ("FLIC") is a wholly owned subsidiary of The American Road Insurance Company ("TARIC"). TARIC was a wholly owned indirect subsidiary of Ford Motor Company. 2. The financial data presented herein are unaudited, but in the opinion of management reflect all adjustments necessary for fair presentation of such information. 3. The condensed balance sheet at December 31, 1995 and 1994 was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. 4. On February 29, 1996, TARIC sold FLIC to SunAmerica Inc. ("Sun") for cash of $172.5 million. Prior to closing, all of FLIC's lines of business, except for annuities, were ceded (reinsured) with other subsidiaries of TARIC. As of December 31, 1995, FLIC's balance sheet and income statement reflect the following assets, liabilities, equity, revenues and expenses related to credit life and disability business which were ceded subsequent to year end:
DECEMBER 31, 1995 -------------- (000s omitted) Total assets $ 198,591 Total liabilities 212,727 Total revenues for the three months ended December 31, 1995 10,012 Total expenses for the three months ended December 31, 1995 11,282
EX-99.5 4 SUNAMERICA INC. PRO FORMA CONDENSED BALANCE SHEET DECEMBER 31, 1995 (IN THOUSANDS - UNAUDITED)
Historical financial information as reported Pro forma adjustments -------------------------- ----------------------------- Elimination of Purchase SunAmerica Ford Life Ford Life's credit accounting Pro forma At 12/31/95 At 12/31/95 life business adjustments combined ---------- ---------- ------------- ----------- ---------- Assets Investments $11,587,108 $ 3,150,189 $ (26,069) $ (172,500) (1) $14,538,728 Variable annuity assets 5,454,132 - - - 5,454,132 Deferred acquisition costs 532,941 106,560 (27,442) 9,104 (2) 621,163 Other assets 270,172 192,386 (145,080) - 317,478 ----------- ----------- ------------- ---------- ----------- Total assets $17,844,353 $ 3,449,135 $ (198,591) $ (163,396) $20,931,501 =========== =========== ============= ========== =========== Liabilities and shareholders' equity Reserves for fixed annuity contracts $ 5,486,957 $ 3,006,003 $ - $ 69,000 (3) $ 8,561,960 Reserves for guaranteed investment contracts 3,683,168 - - - 3,683,168 Trust deposits 427,788 - - - 427,788 Unearned premiums - 151,310 (151,310) - - Other liabilities 281,652 73,319 (59,743) 72,457 (4) 367,685 Variable annuity liabilities 5,454,132 - - - 5,454,132 Long-term notes and debentures 539,835 - - - 539,835 Deferred income taxes 167,188 (14,146) (1,674) (58,068) (5) 93,300 Preferred securities of grantor trusts 237,631 - - - 237,631 Shareholders' equity 1,566,002 232,649 14,136 (246,785) (6) 1,566,002 ------------ ------------ -------------- ---------- ----------- Total liabilities and shareholders' equity $ 17,844,353 $ 3,449,135 $ (198,591) $ (163,396) $20,931,501 ============ ============ ============== ========== =========== Footnotes to the Pro Forma Condensed Balance Sheet appear on the following page. SUNAMERICA INC. PRO FORMA CONDENSED BALANCE SHEET DECEMBER 31, 1995 (IN THOUSANDS - UNAUDITED) (CONTINUED) Note (1) - To record the contractual purchase price. Note (2) - To adjust deferred acquisition costs to $88,222 of excess purchase price, computed as follows: Ford Life's equity at December 31, 1995, after cession of credit life business $ 246,785 Write off Ford Life's deferred acquisition costs, net of related deferred taxes (51,427) Eliminate deferred tax liability, related to book/tax difference on investments, due to election to use Section 338(h)(10) of the Internal Revenue Code 31,680 Adjust reserves for fixed annuity contracts to estimated market value, net of tax (44,850) Record acquisition taxes and other costs, net of tax (67,032) Record deferred taxes on excess purchase price (30,878) ------------- Purchase accounting adjusted equity 84,278 Purchase price 172,500 ------------- Excess purchase price $ 88,222 ============= Note (3) To adjust reserves for fixed annuity contracts to estimated market value. Note (4) - To record $56,957 of Federal taxes payable resulting from the election to use Section 338(h)(10) of the Internal Revenue Code and $15,500 of other acquisition costs. Note (5) - To adjust net deferred tax asset, at 35%, as follows: Tax effect of adjustment made to deferred acquisition costs $ (3,187) Elimination of tax effect of book/tax difference on investments 31,680 Tax effect of market value adjustment of reserves for fixed annuity contracts 24,150 Tax effect of liability for acquisition and conversion costs 5,425 ------------- Adjustment to net deferred tax asset $ 58,068 ============= Note (6) - To eliminate Ford Life's adjusted equity, after cession of credit life business.
EX-99.6 5 SUNAMERICA INC. PRO FORMA CONDENSED INCOME STATEMENT FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 (IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS - UNAUDITED)
Historical financial information as reported Pro forma adjustments -------------------------------- ---------------------------------- SunAmerica Ford Life Elimination of three months three months Ford Life's credit Other Pro Forma ended 12/31/95 ended 12/31/95 life business adjustments combined -------------- -------------- -------------- ----------- ----------- Investment income $ 253,990 $ 57,102 $ (1,212) $ (2,700) (1) $ 307,180 Interest expense (151,864) (44,733) - - (196,597) -------------- ------------- -------------- ----------- ----------- Net investment income 102,126 12,369 (1,212) (2,700) 110,583 Net realized investment gains (losses) 1,404 (380) 837 - 1,861 Fee income 49,549 - - - 49,549 Premiums earned - 9,214 (9,214) - - Losses incurred - (4,440) 4,440 - - General and administrative expenses (44,098) (7,644) 3,066 - (48,676) Amortization of deferred acquisition costs (19,002) (5,522) 3,425 1,597 (2) (19,502) Other income, net 2,607 - (422) - 2,185 ------------- ------------- --------------- ----------- ----------- Pretax income 92,586 3,597 920 (1,103) 96,000 Income tax (expense) benefit (27,800) (1,393) 350 393 (3) (28,450) ------------- ------------- --------------- ----------- ----------- Net income $ 64,786 $ 2,204 $ 1,270 $ (710) $ 67,550 ============= ============= =============== =========== =========== Net income per share $ 0.94 $ 0.98 ============= =========== Operating net income per share (4) $ 0.93 $ 0.97 ============= =========== Footnotes to the Pro Forma Condensed Income Statement appear on the following page. SUNAMERICA INC. PRO FORMA CONDENSED INCOME STATEMENT FOR THE THREE MONTHS ENDED DECEMBER 31, 1995 (IN THOUSANDS, EXCEPT PERCENTAGES) (CONTINUED) Note (1) - To reflect lost interest income on the $172,500 purchase price at SunAmerica's average short-term portfolio yield of 6-1/4%. Note (2) - To eliminate Ford Life's recorded amortization and to reflect pro forma amortization of $500 based on the deferred acquisition cost arising from this transaction, Ford Life's realized gross profits for the three months ended December 31, 1995 after elimination of the credit life business, and SunAmerica's projection of estimated future gross profits for Ford Life. Note (3) - Related tax effects which approximate the statutory rate of 35%. Note (4) - Operating net income per share excludes after-tax net realized investment gains and losses, and represents a common performance measure used by financial analysts.
EX-27.1 6
7 1,000 12-MOS DEC-31-1995 JAN-01-1995 DEC-31-1995 2,976,557 2,095 2,268 0 0 0 2,978,652 171,537 0 106,560 3,463,281 3,051,114 151,310 0 0 0 0 0 2,500 230,149 3,463,281 38,295 210,122 (10,106) 3,605 193,148 32,845 24,101 448 2,050 0 0 0 0 (1,602) 0 0 50,170 19,542 (1,455) 15,160 4,607 45,111 0
EX-27.2 7
7 1,000 3-MOS DEC-31-1995 OCT-01-1995 DEC-31-1995 2,976,557 2,095 0 0 0 0 2,978,652 171,537 0 106,560 3,463,281 3,051,114 151,310 0 0 0 0 0 2,500 230,149 3,463,281 9,214 57,102 (380) 0 49,173 5,522 7,644 3,597 1,393 0 0 0 0 2,204 0 0 0 0 0 0 0 0 0
-----END PRIVACY-ENHANCED MESSAGE-----