-----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, ErFsy8t9MNfWyS6nbDsJBYPQc+bfG159CMGhiYR1cJheEDlsYRqh/8Yec/KK+X4B +yobnJTzzEtdYAlkbm6WvA== 0000950144-96-002551.txt : 19960731 0000950144-96-002551.hdr.sgml : 19960731 ACCESSION NUMBER: 0000950144-96-002551 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOBILE AMERICA CORP CENTRAL INDEX KEY: 0000067199 STANDARD INDUSTRIAL CLASSIFICATION: 6331 IRS NUMBER: 591218935 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06764 FILM NUMBER: 96566656 BUSINESS ADDRESS: STREET 1: P O BOX 10729 CITY: JACKSONVILLE STATE: FL ZIP: 32247-0729 BUSINESS PHONE: 9043636339 MAIL ADDRESS: STREET 1: P O BOX 10729 CITY: JACKSONVILLE STATE: FL ZIP: 32247-0729 10-Q 1 MOBILE AMERICA CORPORATION FORM 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended March 31, 1996___________________ Commission File No. 0-6764 MOBILE AMERICA CORPORATION - - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Florida 59-1218935 - - ------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 100 Fortune Parkway, Jacksonville, Florida 32256 - - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (904) 363-6339 ---------------------------- N/A - - ------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report 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 . --- --- (APPLICABLE ONLY TO CORPORATE ISSUERS) There were 6,260,040 shares of common stock, par value $.025 per share, outstanding as of the close of business on May 10, 1996. 2 PART I MOBILE AMERICA CORPORATION INDEX
Financial Statements: Page Part I Consolidated Balance Sheet 1 Consolidated Statement of Operations 2 Consolidated Statements of Cash Flows 3 Consolidated Statement of Changes in Stockholders' Equity 4 Notes to Financial Statements 5-8 Management's Discussion and Analysis of the Consolidated Statements of Income 9 Exhibit 11 - Computations of Earnings Per Share 10 Part II Other Information, and Signatures 11
3 MOBILE AMERICA CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, 1996 and December 31, 1995
ASSETS 1996 1995 ------ ---- ---- Investments: Securities held to maturity $ 61,646,390 $ 52,460,555 at amortized cost (fair value $61,487,477 and $52,785,561) Securities available for sale (amortized cost $32,785,280 and $34,644,650 33,329,982 35,690,835 Notes receivable less unearned discount 2,176 2,650 Short-term investments 15,703,973 22,470,314 ------------ ------------ Total investments 110,682,521 110,624,354 ------------ ------------ Cash 2,717,000 6,510,457 Receivables: Insurance premiums 2,701,339 2,563,715 Accrued investment income and other 2,169,658 1,971,356 Reinsurance 31,147,172 33,822,126 ------------ ------------ Total receivables 36,018,169 36,357,197 ------------ ------------ Income taxes: Currently receivable - - Deferred 785,025 760,025 ------------ ------------ Total income taxes 785,025 760,025 ------------ ------------ Prepaid reinsurance premiums 21,760,639 24,260,694 Inventory of mobile homes 39,545 39,545 Deferred policy acquisition costs (3,109,967) (4,209,840) Property and Equipment: Land, at cost 356,970 356,970 Modular office equipment, at cost less accumulated depreciation of $7,982 and $7,982 3,000 3,000 Equipment and leasehold improvements at cost less accumulated depreciation and amortization of $2,002,422 and $1,953,916 608,946 630,458 ------------ ------------ Total property and equipment: 968,916 990,428 ------------ ------------ Equity in Pools and Associations 4,912,334 4,912,334 Other Assets 510,396 525,968 ------------ ------------ $175,284,578 $182,771,162 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995 ------------------------------------ ---- ---- Insurance loss reserves, including future policy benefits $ 51,128,125 $ 54,645,686 Unearned premiums 36,956,105 39,535,149 Reinsurance funds withheld and balances payable 23,568,888 26,120,505 Accrued expenses and other liabilities 18,076,871 15,639,062 Deferred income tax on net unrealized gains on securities available for sale 185,000 355,000 Unearned service fees 2,625,060 2,610,902 Note payable 12,000,000 12,000,000 Current income taxes payable 500,868 551,868 ------------ ------------ Total liabilities $145,040,917 $151,458,172 ------------ ------------ Stockholders' equity: Common stock, $.025 par value per share Authorized - 18,000,000 shares Issued - 6,720,396 shares 168,010 168,010 Preferred stock, $.10 par value per share Authorized - 500,000 shares Issued and outstanding - none - - Capital in excess of par value 2,686,060 2,686,060 Net unrealized appreciation on securities available for sale net of deferred income taxes 359,702 691,185 Net unrealized gains/(losses) on equity securities net of deferred taxes - - Treasury Stock at cost, 460,356 and 460,356 shares (420,944) (420,944) Retained Earnings 27,450,833 28,188,679 ------------ ------------ Total stockholders' equity 30,243,661 31,312,990 ------------ ------------ $175,284,578 $182,771,162 ============ ============ See notes to consolidated financial statements
4 MOBILE AMERICA CORPORATION AND SUBSIDIARIES UNAUDITED STATEMENT OF OPERATIONS QUARTERS ENDED MARCH 31, 1996 AND 1995
1996 1995 ---- ---- Revenues: Insurance premiums earned (net of premiums ceded of $13,691,933 and $13,970,523) $ 9,610,837 $ 7,209,877 Investment income 1,637,385 1,224,635 Equipment rentals - 21,359 Service fees earned 2,514,566 876,527 Other 11,499 - Sales of modular office equipment - 4,600 Net realized gains on investments 141,239 35,254 ----------- ----------- Total revenues 13,915,526 9,372,252 ----------- ----------- Expenses: Losses and loss adjustment expenses (net of reinsurance recoveries of $9,865,361 and $9,672,257) 6,717,512 5,852,417 Policy acquisition costs 1,688,494 (521,036) Salaries and wages 1,775,077 1,359,120 General and administrative 1,560,553 1,161,521 Cost of sales of modular office equipment - 44 Interest on note 255,500 - ----------- ----------- Total expenses 11,997,136 7,852,066 ----------- ----------- Income before provision for income taxes 1,918,390 1,520,186 Provision for income taxes: Current 510,000 600,659 Deferred (25,000) (209,000) ----------- ----------- Total provision for income taxes 485,000 391,659 ----------- ----------- Net income $ 1,433,390 $ 1,128,527 =========== =========== Earnings per share: Net income $ .23 $ .18 =========== =========== Weighted average number of common stock and common stock equivalents 6,260,040 6,264,040 =========== ===========
See accompanying notes to financial statements. -2- 5 MOBILE AMERICA CORPORATION AND SUBSIDIARIES UNAUDITED STATEMENTS OF CASH FLOWS QUARTERS ENDED MARCH 31, 1996 AND 1995
1996 1995 ---- ---- Cash Flows from Operating Activities: Net Income $ 1,433,390 $ 1,128,527 Adjustments to reconcile net income to net cash provided by operating activities: Provisions for depreciation 48,506 54,783 (Gain) loss on sale of investments (141,239) (35,254) Increase in insurance premiums receivable (137,624) (510,973) Increase in accrued investment income and other (198,302) (53,182) (Increase) decrease in deferred policy acquisition costs (1,099,873) 218,718 Decrease in prepaid expenses and other assets 15,572 100,341 Decrease in insurance loss reserves (3,517,561) (2,172,594) Decrease in unearned premiums (2,579,044) (893,855) Decrease in reinsurance funds held and balances payable (2,551,617) (1,067,903) Increase in accrued expenses and other liabilities 2,437,809 5,663,233 Increase (decrease) in current income taxes (51,000) 435,363 Decrease in deferred income taxes (25,000) (209,000) Decrease in reinsurance premiums receivable 2,674,954 362,136 Decrease in prepaid reinsurance premiums 2,500,055 781,289 Increase in unearned service fees 14,160 85,936 ------------ ---------- Net cash (used by) provided by operating activities (1,176,814) 3,887,565 ------------ ---------- Cash Flows from Investing Activities: Net change in short term investments 6,766,341 (1,483,653) Purchase of equity securities (729,531) (660,845) Sale of equity securities 470,785 605,675 Purchase of modular offices, equipment and leasehold improvements 31,594 140,032 Purchase of fixed maturities (16,828,908) (5,738,229) Sales of fixed maturities 9,848,438 4,023,906 Notes receivable 474 903 Sales of modular offices, equipment and leasehold improvements (4,600) - ------------ ---------- Net cash used in investing activities (445,407) (3,104,211) ------------ ---------- Cash Flows from Financing Activities: Dividends paid to shareholders (2,171,236) (946,223) ------------ ---------- Net cash used in financing activities (2,171,236) (946,223) ------------ ---------- Net decrease in cash (3,793,457) (162,869) Cash, beginning year 6,510,457 5,479,899 ------------ ---------- Cash, end of period $ 2,717,000 $ 5,317,030 =========== ===========
See notes to consolidated financial statements. -3- 6 MOBILE AMERICA CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY QUARTERS ENDED MARCH 31, 1996 AND 1995
1996 1995 ----------- ----------- Common Stock: No change during period $ 168,010 $ 168,010 ----------- ----------- Preferred Stock: No change during period - - ----------- ----------- Capital in excess of par value: No change during period 2,686,060 2,686,060 ----------- ----------- Net unrealized appreciation on securities available for sale: Balance at beginning of period 691,185 - Increase (decrease) (501,483) - Deferred taxes on unrealized gains 170,000 - ----------- ----------- Balance at end of period 359,702 - ----------- ----------- Net unrealized investment gains (losses) on equity securities: Balance at beginning of period - (158,099) Increase (decrease) - 94,868 Deferred taxes on unrealized gains - - ----------- ----------- Balance at end of period - (63,231) ----------- ----------- Treasury Stock: Balance at beginning of period (420,944) (388,441) Purchases - - ----------- ----------- Balance at end of period (420,944) (388,441) ----------- ----------- Retained earnings: Balance at beginning of period 28,188,679 23,306,761 Net income 1,433,390 1,128,527 Cash dividends $.35 and $.18 per share (2,171,236) (946,223) ----------- ----------- Balance at end of period 27,450,833 23,489,065 ----------- ----------- Total stockholders' equity at end of period $30,243,661 $25,891,463 =========== ===========
See notes to consolidated financial statements. -4- 7 MOBILE AMERICA CORPORATION NOTES TO FINANCIAL STATEMENTS QUARTERS ENDED MARCH 31, 1996 AND 1995 Note 1 In the opinion of the Registrant, the accompanying unaudited, consolidated, condensed financial statements contain all adjustments (consisting of only normal occurring accruals) necessary to present fairly its financial position as of March 31, 1996, and the results of its operations and statement of cash flow for the three months ended March 31, 1996. Note 2 The results of operations for the three months ended March 31, 1996 are not necessarily indicative of the results to be expected for the full year. Note 3 - Summary of Significant Accounting Policies (a) Basis of Financial Statement Presentation The consolidated financial statements have been prepared on the basis of generally accepted accounting principles which vary from statutory reporting practices prescribed or permitted for insurance companies by regulatory authorities. (b) Principles of Consolidation The accompanying consolidated financial statements include Mobile America Corporation (the Registrant) and its subsidiaries, all of which are wholly-owned. All significant intercompany transactions have been eliminated in consolidation. (c) Basis of Inventory Valuation Inventories are valued at the lower of cost or market, with cost being determined primarily under the specific identification method. (d) Method for Valuing Investments The Registrant implemented Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities" as of January 1, 1994. The Registrant classified its entire fixed maturity investment portfolio as "held to maturity". Accordingly, these investments are reported at amortized cost, adjusted for amortization of premiums or discounts and other than -5- 8 temporary declines in fair value. At December 29, 1995, the Registrant reassessed the appropriateness of the classifications of all securities held at that time and reclassified from the held to maturity category a portion of the Registrant's fixed maturity portfolio to the available for sale category. Classifying these securities as available for sale did not impact net income. Common Stock, redeemable preferred stock, bonds and notes not classified as held to maturity are reported at fair value, with unrealized gains and losses reported as a separate component of stockholders' equity. Fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar (e) Realized Investment Gains and Losses The cost of securities sold is based upon the specific identification method and any gains or losses are reflected in the accompanying statements of operations. (f) Deferred Policy Acquisition Costs The costs associated with acquiring new insurance contracts have been deferred. Such costs are being amortized over the premium paying period or in proportion to premiums earned on those contracts. (g) Depreciation and Amortization Depreciation and amortization of properties, equipment and leasehold improvements are calculated principally under the straight-line method based on the estimated useful life of the asset for financial reporting purposes. Maintenance and repairs are charged to expenses as incurred; additions and major betterments are capitalized and depreciated. At the time of retirement or other disposition of property, equipment or leasehold improvements, the accounts are relieved of the cost and the related accumulated depreciation and any gains or losses are reflected in income. -6- 9 (h) Insurance Contracts The insurance contracts accounted for in these financial statements include both short-duration contracts and long-duration contracts. Short-duration contracts provide insurance protection for a fixed period of short duration and enable the insurer to cancel the contract or to adjust the provisions at the end of any contract period. Most property-liability insurance contracts and certain term life insurance contracts, such as credit life insurance, are short-duration contracts. Long-duration contracts generally are not subject to unilateral changes in their provisions and require the performance of various functions and services, including insurance protection, for an extended period. Long-duration contracts include whole-life contracts and guaranteed renewable term life contracts. Accident and health insurance contracts may be short-duration or long-duration depending on whether the contracts are expected to remain in force for an extended period. The Company has not issued any participating policies. (I) Insurance Loss Reserves The liability for future policy benefits of long-duration contracts has been provided for on a net level premium method based on estimated investment yields, withdrawals, mortality, terminations, morbidity, and other assumptions which were appropriate at the time the contracts were issued. Such estimates were based on past experience as adjusted to provide for possible adverse deviation from the estimates. Interest assumptions are based on historical assumptions and experience, and range from 3% to 4.5% at March 31, 1996. The liabilities for unpaid claims of short-duration contracts and related adjustment expenses are determined using case basis evaluations and statistical analysis and represent estimates of the ultimate net cost of all reported and unreported claims relating to insured events which are unpaid at year-end. The liabilities include estimates of future trends in claims severity and frequency and other factors which could vary as the claims are ultimately settled. Although such -7- 10 estimates may vary, management believes that the liabilities for unpaid claims and related adjustment expenses are adequate. The estimates are continually reviewed, and as adjustments to these liabilities become necessary, they are reflected in current operations. (j) Recognition of Premium Revenues and Costs Premiums for long-duration contracts are recognized as revenues when due from the policyholders. A liability for the expected costs relating to such long-duration contracts is accrued over the current and expected renewal periods. Premiums for short-duration contracts are recognized as revenues over the period of the contract in proportion to the amount and duration of insurance protection provided. -8- 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Total consolidated revenues increased 48% to $13,915,526 in the first quarter 1996 from $9,372,252 for the first quarter 1995. Insurance premiums increased 25% for the first quarter 1996 over the first quarter 1995. This increase is due primarily to a 14% decrease in the reinsurance cession rate ,effective January 1, 1996, as well as a fourth quarter 1995 rate increase in the core personal injury protection and property damage liability business of the Registrant's principal property and casualty subsidiary. Investment income rose 34% from $1,224,635 for the first quarter 1995 to $1,637,385 for the first quarter 1996. This increase is attributable to an increase in invested assets, the migration of invested assets from lower-yielding short term investments to higher-yielding investments with an average maturity of three to four years and an overall increase in yields. Net realized gains on the sale of investments increased from $35,254 in the first quarter 1995 to $141,239 in the first quarter 1996. Service fees earned increased 187% from $876,527 in the first quarter 1995 to $2,514,566 in the first quarter 1996 due to the strong volume of policies administered for the State of Florida's joint underwriting associations as well as continued growth in the Registrant's premium finance business. Consolidated expenses increased 53% from $7,852,066 in the first quarter 1995 to $11,997,136 in the first quarter 1996. This increase is principally due to the reduction in both the reinsurance cession rate and the ceding commission rate itself. Both of these result in lower ceding commissions which offset policy acquisition costs. Interest on Note is generated from the $12,000,000 loan that was consummated in the fourth quarter 1995. Cash dividend and capital expenditure requirements continue to be provided by funds generated from operations. The Registrant maintains sufficient liquidity to meet operational needs. The Registrant's investment policy continues to emphasize high quality securities matched closely with the Registrant's short liability duration. -9- 12 Part II OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits: 11. Unaudited computations of earnings per share. 27. Financial Data Schedule (for SEC use only). (b) Reports on Form 8K No reports on Form 8K were filed for the quarter ended March 31, 1996. SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MOBILE AMERICA CORPORATION Registrant May 13, 1996 By /s/ Thomas L. Stinson --------- ------------------------- Date Thomas L. Stinson Vice President Financial Reporting -11- EX-11 2 UNAUDITED COMPUTATION OF EARNINGS 1 EXHIBIT II MOBILE AMERICA CORPORATION AND SUBSIDIARIES UNAUDITED COMPUTATIONS OF EARNINGS PER SHARE QUARTERS ENDED MARCH 31, 1996 AND 1995
1996 1995 ---------- --------- Net Income $1,433,390 $1,128,527 ========== ========== Common shares outstanding 6,260,040 6,264,040 Effect of weighting treasury stock acquired - - --------- ---------- Common and common equivalent shares used in computing earnings per share 6,260,040 6,264,040 ========== ========== Earnings per share $ .23 $ .18 ========== ==========
-10- EX-27 3 FINANCIAL DATA SCHEDULE
7 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF MOBILE AMERICA FOR THE THREE MONTHS MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 33,329,982 61,646,390 61,487,477 0 0 356,970 110,682,521 2,717,000 31,147,172 (3,109,967) 175,284,578 51,128,125 36,956,105 0 0 12,000,000 0 0 168,010 30,075,651 175,284,578 9,610,837 1,637,385 141,239 2,526,065 6,717,512 1,688,494 3,591,130 1,918,390 485,000 1,433,390 0 0 0 1,433,390 .23 .23 20,808,027 6,568,240 197,722 1,111,871 6,492,965 19,965,414 0
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