-----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, F9XVhmcfTHFegVTah1MHeDRGn8T78plxwSCCAf7lcxNf/J9dbRIE7uLcciprWEyu zLrYRECstH85rtlOStItOQ== 0000703701-99-000012.txt : 19990817 0000703701-99-000012.hdr.sgml : 19990817 ACCESSION NUMBER: 0000703701-99-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASCENT ASSURANCE INC CENTRAL INDEX KEY: 0000703701 STANDARD INDUSTRIAL CLASSIFICATION: ACCIDENT & HEALTH INSURANCE [6321] IRS NUMBER: 731165000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10873 FILM NUMBER: 99689884 BUSINESS ADDRESS: STREET 1: 110 WEST SEVENTH STREET STREET 2: STE 300 CITY: FORT WORTH STATE: TX ZIP: 76102 BUSINESS PHONE: 8178783306 MAIL ADDRESS: STREET 1: 110 WEST SEVENTH STREET STREET 2: SUITE 300 CITY: FORT WORTH STATE: TX ZIP: 76102 FORMER COMPANY: FORMER CONFORMED NAME: WESTBRIDGE CAPITAL CORP DATE OF NAME CHANGE: 19920703 10-Q 1 06/1999 10-Q 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 QUARTERLY PERIOD ENDED JUNE 30, 1999 Commission File Number 1-8538 ASCENT ASSURANCE, INC. --------------------------- (Exact name of Registrant as specified in its Charter) DELAWARE 73-1165000 - ------------------------ ------------------------------------ (State of Incorporation) (I.R.S. Employer Identification No.) 110 WEST SEVENTH STREET, SUITE 300, FORT WORTH, TEXAS 76102 - -------------------------------------------------------- --------- (Address of Principal Executive Offices) (Zip Code) 817-878-3300 ---------------------------------------------------- (Registrant's Telephone Number, including Area Code) N/A -------------------------------------------------------------------------- (Former Name, 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_____ Indicate, by check mark whether the Registrant has filed all reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES X NO___ Common Stock - Par Value $.01 6,500,000 Shares Outstanding at August 13, 1999
ASCENT ASSURANCE, INC. INDEX TO FORM 10-Q - ------------------------------------------------------------------------------- PAGE NO. PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS Ascent Assurance, Inc. Condensed Consolidated Balance Sheets at June 30, 1999 and March 31, 1999.................................................................. 3 Westbridge Capital Corp. Condensed Consolidated Balance Sheet at December 31, 1998................................................................................. 4 Ascent Assurance, Inc. Condensed Consolidated Statement of Income for the Three Months Ended June 30, 1999............................................................. 5 Westbridge Capital Corp. Condensed Consolidated Statements of Income for the Three Months Ended March 31, 1999 and June 30, 1998 and for the Six Months Ended June 30, 1998................................................................... 6 Ascent Assurance, Inc. Condensed Consolidated Statement of Cash Flows for the Three Months Ended June 30, 1999............................................................. 7 Westbridge Capital Corp. Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1999 and June 30, 1998 and for the Six Months Ended June 30, 1998................................................................... 8 Notes to Condensed Consolidated Financial Statements................................................... 9 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General................................................................................................ 16 Business Overview...................................................................................... 16 Operating Results...................................................................................... 17 Financial Condition.................................................................................... 19 Liquidity, Capital Resources and Statutory Capital and Surplus......................................... 21 Year 2000.............................................................................................. 24 Forward-Looking Statements............................................................................. 26 PART II - OTHER INFORMATION ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................................................... 27 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K....................................................................... 28
ASCENT ASSURANCE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) JUNE 30, 1999 MARCH 31, 1999 ------------------- ------------------- (in thousands, except share data) ASSETS Investments: Fixed Maturities: Available-for-sale, at market value (amortized cost $112,214 and $116,352) $ 109,204 $ 116,352 Equity securities, at market 2,250 2,275 Other investments 468 516 Short-term investments 7,210 7,789 ------------------- ------------------- Total Investments 119,132 126,932 Cash 2,155 2,210 Accrued investment income 2,156 2,169 Receivables from agents, net of allowance for doubtful accounts of $6,424 and $6,358 6,938 8,182 Deferred policy acquisition costs 16,383 15,039 Deferred tax asset, net 8,374 7,347 Other assets 8,013 7,916 ------------------- ------------------- TOTAL ASSETS $ 163,151 $ 169,795 =================== =================== LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY Liabilities: Policy liabilities and accruals: Future policy benefits $ 55,760 $ 54,738 Claim reserves 38,386 41,068 ------------------- ------------------- Total policy liabilities and accruals 94,146 95,806 Accounts payable and other liabilities 16,636 18,541 Notes payable 3,509 5,088 ------------------- ------------------- Total Liabilities 114,291 119,435 ------------------- ------------------- Redeemable convertible preferred stock 23,257 23,257 ------------------- ------------------- Stockholders' Equity: Common stock ($.01 par value, 30,000,000 shares authorized; 6,500,000 shares issued) 65 65 Capital in excess of par value 27,103 27,038 Accumulated other comprehensive income, net of tax (1,972) - Retained Earnings 407 - ------------------- ------------------- Total Stockholders' Equity 25,603 27,103 ------------------- ------------------- TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY $ 163,151 $ 169,795 =================== ===================
See Notes to Condensed Consolidated Financial Statements.
WESTBRIDGE CAPITAL CORP. (NOW, ASCENT ASSURANCE, INC.) CONDENSED CONSOLIDATED BALANCE SHEET (Audited) DECEMBER 31, 1998 ----------------------- (in thousands, except ASSETS share data) Investments: Fixed Maturities: Available-for-sale, at market value (amortized cost $119,167) $ 122,864 Equity securities, at market 2,575 Other investments 598 Short-term investments 5,393 ----------------------- Total Investments 131,430 Cash 278 Accrued investment income 2,372 Receivables from agents, net of allowance for doubtful accounts of $6,592 9,860 Deferred policy acquisition costs 14,177 Other assets 11,624 ----------------------- TOTAL ASSETS $ 169,741 ======================= LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT Liabilities: Policy liabilities and accruals: Future policy benefits $ 53,871 Claim reserves 44,116 ----------------------- Total policy liabilities and accruals 97,987 Accounts payable and other liabilities 14,807 Accrued interest and dividends payable 11,377 Notes payable 6,192 Senior subordinated notes, net of unamortized discount, due 2002 19,523 Convertible subordinated notes, due 2004 70,000 ----------------------- Total Liabilities 219,886 ----------------------- Redeemable Preferred Stock 11,935 ----------------------- Stockholders' (Deficit) Equity: Common stock ($.10 par value, 30,000,000 shares authorized; 7,035,809 shares issued) 703 Capital in excess of par value 37,641 Accumulated other comprehensive income, net of tax 3,911 Deficit (104,335) ----------------------- Total Stockholders' Deficit (62,080) ----------------------- TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT $ 169,741 =======================
See Notes to Condensed Consolidated Financial Statements.
ASCENT ASSURANCE, INC. CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited) THREE MONTHS ENDED JUNE 30, 1999 -------------------- (in thousands, except per share data) REVENUES: Premiums: First-year $ 3,903 Renewal 25,671 -------------------- 29,574 Net investment income 2,333 Fee and service income 3,871 Net realized loss on investments (63) -------------------- 35,715 -------------------- BENEFITS, CLAIMS AND EXPENSES: Benefits and claims 21,733 Amortization of deferred policy acquisition costs 865 Commissions 4,139 General and administrative expenses 5,971 Taxes, licenses and fees 1,293 Interest expense on notes payable 93 -------------------- 34,094 -------------------- Income before income taxes 1,621 Federal income tax expense (567) -------------------- NET INCOME $ 1,054 ==================== Preferred stock dividends 647 -------------------- INCOME APPLICABLE TO COMMON STOCKHOLDERS $ 407 ==================== BASIC AND DILUTED NET INCOME PER COMMON SHARE $ .06 ==================== WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 6,500 ==================== Diluted 6,530 ====================
See Notes to Condensed Consolidated Financial Statements.
WESTBRIDGE CAPITAL CORP. (NOW, ASCENT ASSURANCE, INC.) CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) THREE MONTHS THREE MONTHS SIX MONTHS ENDED ENDED ENDED MARCH 31, 1999 JUNE 30, 1998 JUNE 30, 1998 ------------------- ------------------- ------------------- (in thousands, except per share data) REVENUES: Premiums: First-year $ 3,121 $ 4,659 $ 11,690 Renewal 26,827 30,592 61,000 ------------------- ------------------- ------------------- 29,948 35,251 72,690 Net investment income 2,562 3,192 6,358 Fee and service income 4,039 4,037 8,099 Net realized gain on investments 41 267 529 ------------------- ------------------- ------------------- 36,590 42,747 87,676 ------------------- ------------------- ------------------- BENEFITS, CLAIMS AND EXPENSES: Benefits and claims 21,799 25,412 53,848 Amortization of deferred policy acquisition costs 1,194 713 1,948 Commissions 5,002 8,708 18,199 General and administrative expenses 6,635 6,892 13,900 Taxes, licenses and fees 1,059 1,443 2,731 Interest expense on notes payable 119 235 527 Interest expense on retired/canceled debt 507 1,889 3,777 Reorganization expense - 1,084 2,100 ------------------- ------------------- ------------------- 36,315 46,376 97,030 ------------------- ------------------- ------------------- Income (loss) before income taxes 275 (3,629) (9,354) Federal income tax (expense) benefit (67) 480 1,239 ------------------- ------------------- ------------------- NET INCOME (LOSS) $ 208 $ (3,149) $ (8,115) =================== =================== =================== Preferred stock dividends - (62) 409 =================== =================== =================== INCOME APPLICABLE TO COMMON STOCKHOLDERS $ 208 $ (3,087) $ (8,524) =================== =================== =================== BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE $ .03 $ (.48) $ (1.36) =================== =================== =================== WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 7,032 6,381 6,289 =================== =================== =================== Diluted 7,032 6,381 6,289 =================== =================== ===================
See Notes to Condensed Consolidated Financial Statements.
ASCENT ASSURANCE, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) THREE MONTHS ENDED JUNE 30, 1999 ------------------- (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,054 Adjustments to reconcile net income to cash provided by (used for) operating activities: Amortization of deferred policy acquisition costs 864 Decrease in receivables from agents 1,244 Addition to deferred policy acquisition costs (2,208) Decrease in other assets 1,066 Decrease in policy liabilities and accruals (1,660) Decrease in accounts payable and other liabilities (2,552) Increase in deferred income taxes, net (1,027) Other, net 1,405 ------------------- Net Cash Used For Operating Activities (1,814) ------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from investments sold: Fixed maturities, called or matured 807 Fixed maturities, sold 6,563 Other investments, sold or matured 58 Cost of investments acquired (2,927) Software, equipment, and other (1,163) ------------------- Net Cash Provided By Investing Activities 3,338 ------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of notes payable 1,408 Repayment of notes payable (2,987) ------------------- Net Cash Used For Financing Activities (1,579) ------------------- Decrease In Cash During Period (55) Cash at Beginning of Period 2,210 ------------------- Cash at End of Period $ 2,155 ===================
See Notes to Condensed Consolidated Financial Statements.
WESTBRIDGE CAPITAL CORP. (NOW, ASCENT ASSURANCE, INC.) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) THREE MONTHS THREE MONTHS SIX MONTHS ENDED ENDED ENDED MARCH 31, 1999 JUNE 30, 1998 JUNE 30, 1998 ------------------- ------------------- ------------------ (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Income (loss) applicable to common stockholders $ 208 $ (3,087) $ (8,524) Adjustments to reconcile net income to cash provided by (used for) operating activities Amortization of deferred policy acquisition costs 1,194 713 1,948 Decrease in receivables from agents 1,678 2,560 5,152 Addition to deferred policy acquisition costs (2,056) (549) (1,263) (Increase) decrease in other assets (1,007) 1,307 (517) Decrease in policy liabilities and accruals (2,181) (2,405) (3,391) Increase in accounts payable and other 4,428 2,840 4,914 liabilities Increase in deferred income taxes, net (1,070) - - Other, net 1,308 (493) (313) ------------------- ------------------- ------------------ Net Cash Provided By (Used For) Operating Activities 2,502 886 (1,994) ------------------- ------------------- ------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from investments sold: Fixed maturities, called or matured 2,215 1,872 5,126 Fixed maturities, sold 4,904 7,116 11,343 Other investments, sold or matured 139 1,871 1,936 Cost of investments acquired (5,851) (6,474) (10,429) Other (873) (604) (763) ------------------- ------------------- ------------------ Net Cash Provided By Investing Activities 534 3,781 7,213 ------------------- ------------------- ------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Retirement of senior subordinated debentures (15,167) - - Issuance of notes payable 911 1,599 2,974 Repayment of notes payable (2,015) (4,526) (7,022) Issuance of preferred stock 15,167 - - ------------------- ------------------- ------------------ Net Cash Used For Financing Activities (1,104) (2,927) (4,048) ------------------- ------------------- ------------------ Increase in Cash During Period 1,932 1,740 1,171 Cash at Beginning of Period 278 461 1,030 ------------------- ------------------- ------------------ Cash at End of Period $ 2,210 $ 2,201 $ 2,201 =================== =================== ==================
See Notes to Condensed Consolidated Financial Statements. ASCENT ASSURANCE, INC. (FORMERLY, WESTBRIDGE CAPITAL CORP.) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1 - REORGANIZATION EFFECTIVE MARCH 24, 1999 On September 16, 1998, Westbridge Capital Corp. ("Westbridge") commenced its reorganization by filing a voluntary petition for relief under Chapter 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"), along with a disclosure statement (as amended, the "Disclosure Statement") and a proposed plan of reorganization (as amended, the "Plan"). The filing of the Disclosure Statement and Plan culminated months of negotiations between Westbridge and an ad hoc committee (the "Creditors' Committee") of holders of its 11% Senior Subordinated Notes due 2002 (the "Senior Notes") and its 7-1/2% Convertible Subordinated Notes due 2004 (the "Convertible Notes"). The Disclosure Statement was approved by entry of an order by the Bankruptcy Court on October 30, 1998. Following the approval of the Plan by the holders of allowed claims and equity interests, the Bankruptcy Court confirmed the Plan on December 17, 1998. The Plan became effective March 24, 1999 (the "Effective Date"). On the Effective Date, Westbridge's certificate of incorporation and by-laws were amended and restated in their entirety and pursuant thereto, Westbridge changed its corporate name to "Ascent Assurance, Inc." ("Ascent"). References herein to the "Company" shall mean for all periods on or prior to March 31, 1999, Westbridge and its subsidiaries, and for all periods on or after the close of business on March 31, 1999, Ascent and its subsidiaries. The following summary of the Plan omits certain information set forth in the Plan. Any statements contained herein concerning the Plan are not necessarily complete, and in each such instance reference is made to the Plan, a copy of which is incorporated by reference to Exhibit 2 of Westbridge's Current Report on Form 8-K which was filed with the Securities and Exchange Commission on December 29, 1998. Each such statement is qualified in its entirety by such reference. The Plan provided for the recapitalization of certain old debt and equity interests in Westbridge and the issuance of new equity securities and warrants. Key terms of the Plan included the following: CANCELLATION OF EXISTING SECURITIES. Pursuant to the Plan, the following securities of Westbridge were canceled as of the Effective Date: (i) $23.3 million aggregate principal amount and all accrued and unpaid interest on, the Senior Notes, (ii) $77.3 million aggregate principal amount and all accrued and unpaid interest on, the Convertible Notes, (iii) $13.2 million aggregate liquidation preference of and all accrued and unpaid dividends on, Westbridge's Series A Convertible Redeemable Exchangeable Preferred Stock (the "Old Preferred Stock"), (iv) Westbridge's Common Stock, par value $.10 per share (the "Old Common Stock"), (v) all outstanding warrants to purchase Old Common Stock, (vi) all outstanding unexercised stock options to purchase Old Common Stock, and (vii) all unvested grants of restricted Old Common Stock. NEW EQUITY CAPITAL STRUCTURE. Pursuant to Ascent's Amended and Restated Certificate of Incorporation, the total number of shares of capital stock Ascent has the authority to issue is 30,040,000, consisting of 30,000,000 shares of common stock, par value $.01 per share (the "New Common Stock") and 40,000 shares of preferred stock, par value $.01 per share, all of which are designated Series A Convertible Preferred Stock (the "New Preferred Stock"). DISTRIBUTIONS UNDER THE PLAN CASH DISTRIBUTION To the holders of Senior Notes other than Credit Suisse First Boston Corporation ("CSFB"), cash payments totaling approximately $15.2 million, which equaled the total Allowed 11% Senior Note Claims (as defined in the Plan) held by creditors other than CSFB, were distributed subject to completion of the exchange of securities as contemplated by the Plan. In order to provide the Company with sufficient funds to make the cash distribution to the holders of the Allowed 11% Senior Notes under the Plan, an affiliate of CSFB (the "CSFB Affiliate") purchased all of the shares of the New Preferred Stock which were not otherwise distributed under the Plan. ISSUANCE OF NEW SECURITIES Pursuant to the Plan and the purchase of New Preferred Stock, 6,500,000 shares of New Common Stock and 23,257 shares of New Preferred Stock were issued, subject to the completion of the exchange requirements as contemplated by the Plan, on the Effective Date as follows: To holders of general unsecured claims and Convertible Notes as of December 10, 1998, 6,077,500 shares, and to management at the Effective Date, 32,500 shares, or in aggregate 94% of the New Common Stock issued on the Effective Date. Holders of general unsecured claims and Convertible Notes received their first distribution of shares in partial satisfaction and discharge of their allowed claims in April 1999. The remaining shares of New Common Stock are expected to be distributed by September 1999. To holders of Old Preferred Stock as of December 10, 1998, 260,000 shares, or 4%, of the New Common Stock issued on the Effective Date and Warrants ("New Warrants") to purchase an additional 277,505 shares, or 2%, of the New Common Stock issued on the Effective Date, on a fully diluted basis. To holders of Old Common Stock as of December 10, 1998, 130,000 shares, or 2%, of the New Common Stock issued on the Effective Date and New Warrants to purchase an additional 693,761 shares, or 5%, of the New Common Stock issued on the Effective Date, on a fully diluted basis. Fractional shares of New Common Stock will not be issued in connection with the Plan. As a result of this provision, certain holders of Old Common Stock received no distribution of New Common Stock or New Warrants under the Plan. To the CSFB Affiliate, in respect of the Senior Notes owned by CSFB as of December 10, 1998, 8,090 shares of New Preferred Stock which, together with the 15,167 additional shares of New Preferred Stock purchased by the CSFB Affiliate as described above, are convertible into 4,765,165 shares of the New Common Stock. As a result of the New Preferred Stock received by the CSFB Affiliate, together with the 3,093,998 shares of New Common Stock received by the CSFB Affiliate in respect of the Convertible Notes owned by CSFB, the CSFB Affiliate beneficially owns approximately 56.6% of the New Common Stock on an as converted basis, assuming the exercise of all New Warrants and issuance of New Common Stock reserved under the 1999 Stock Option Plan as discussed below. The New Preferred Stock has a stated value of $1,000 per share and a cumulative annual dividend rate of $102.50 per share payable in January of each year in cash or by the issuance of additional shares of New Preferred Stock. The New Preferred Stock is convertible at any time into 204.8897 shares of New Common Stock at an initial conversion price of $4.88 per share of New Common Stock, subject to customary anti-dilution adjustments. RESERVATION OF ADDITIONAL NEW COMMON STOCK In connection with the New Warrants described above, 971,266 shares of New Common Stock have been reserved for issuance upon the exercise of New Warrants. The New Warrants are exercisable at an initial exercise price of $9.04 per share of New Common Stock, subject to customary anti-dilution adjustments, and will expire on March 24, 2004. Pursuant to the Plan, up to 1,251,685 shares, or 10%, of the fully diluted number of shares of New Common Stock issued and outstanding on the Effective Date have been reserved for issuance to employees and directors, and up to 387,119 shares, or 3%, of the fully diluted number of shares of New Common Stock issued on the Effective Date have been reserved for issuance to the Company's marketing agents under the Company's 1999 Stock Option Plan, which was approved by the Company's shareholders. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INCLUDING FRESH START ACCOUNTING PRINCIPLES EFFECTIVE MARCH 31, 1999 FOR ASCENT BASIS OF PRESENTATION. The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and do not include all of the information and footnotes required by generally accepted accounting principles ("GAAP") for complete financial statements. Financial statements prepared in accordance with GAAP require the use of management estimates. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Certain reclassifications have been made to 1998 amounts in order to conform to 1999 financial statement presentation. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. FRESH START ADJUSTMENTS. In accordance with the American Institute of Certified Public Accountants' Statement of Position 90-7 ("SOP 90-7"), "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code," the Company adopted fresh start reporting effective March 31, 1999. Fresh start reporting requires the new reporting entity created on the reorganization effective date to determine a reorganization book value. The reorganization book value is allocated to the fair value of assets and liabilities similar to the purchase method of accounting under APB 16. As a result of the application of fresh start reporting, the financial statements of Ascent issued subsequent to the adoption of fresh start reporting will not be comparable with those of Westbridge prepared before adoption of fresh start accounting, including the historical financial statements of Westbridge in this quarterly report. With the adoption of fresh start accounting, the Company retained a fiscal accounting year ended on December 31 of each year. Ascent's reorganization book value was determined with the assistance of its financial advisors. The significant factors used in the determination of reorganization book value were analyses of industry, economic and overall market conditions, historical and projected performance of the Company, and certain financial analyses, including discounted future cash flows. The effects of the Plan and fresh start reporting on the Company's consolidated balance sheet as of March 31, 1999 are as follows (in thousands):
WESTBRIDGE Issue New Issue New Fresh Start ASCENT 03/31/1999 Preferred (a) Common (b) Adjustments(c) 03/31/1999 -------------- -------------- ---------------- ----------------- -------------- ASSETS Total investments $ 126,932 $ $ $ $ 126,932 Cash 2,210 2,210 Accrued investment income 2,169 2,169 Agent receivables, net 8,182 8,182 Deferred policy acquisition costs 15,039 15,039 Deferred tax asset, net 1,070 6,277 7,347 Other assets 13,504 (3,088) (2,500) 7,916 -------------- -------------- ---------------- ----------------- -------------- Total assets $ 169,106 $ - $ (3,088) $ 3,777 $ 169,795 ============== ============== ================ ================= ============== LIABILITIES, PREFERRED STOCK & EQUITY Policy liabilities and accruals $ 95,806 $ $ $ $ 95,806 Accounts payable and accruals 18,790 (249) 18,541 Notes payable 5,088 5,088 Accrued dividends 1,304 (1,304) - Accrued interest 10,518 (3,257) (7,261) - Senior subordinated notes, net 19,523 (19,523) - Convertible subordinated notes 70,000 (70,000) - -------------- -------------- ---------------- ----------------- -------------- Total liabilities 221,029 (22,780) (78,565) (249) 119,435 Old Series A preferred stock 11,935 (11,935) - New Series A preferred stock 23,257 23,257 -------------- -------------- ---------------- ----------------- -------------- Total preferred stock 11,935 23,257 (11,935) - 23,257 Old common stock 703 (703) - New common stock 65 65 Additional paid in capital 37,641 91,138 (101,741) 27,038 Accumulated other comprehensive income, net of tax 1,925 (1,925) - Retained earnings (104,127) (477) (3,088) 107,692 - -------------- -------------- ---------------- ----------------- -------------- Total equity (63,858) (477) 87,412 4,026 27,103 -------------- -------------- ---------------- ----------------- -------------- Total liabilities, preferred stock and equity $ 169,106 $ - $ (3,088) $ 3,777 $ 169,795 ============== ============== ================ ================= ==============
(a) Reflects issuance of 23,257 shares of New Preferred Stock to CFSB for $15.2 million in cash and exchange of Senior Notes held by CSFB, including accrued interest, for $8.1 million. Includes simultaneous retirement of Senior Notes held by holders other than CSFB, including accrued interest, for $15.2 million and write-off of unamortized debt discount of $0.5 million. (b) Reflects issuance of 6,500,000 shares of New Common Stock in exchange for Convertible Notes, Old Preferred Stock, Old Common Stock and settlement of general unsecured claims. Includes 32,500 shares of New Common Stock issued to management on the Effective Date, and includes write-off of unamortized debt issuance costs of $3.1 million. (c) Reflects adjustments to record assets and liabilities at fair market value and to set retained earnings to zero. INVESTMENTS. The Company's fixed maturity portfolio is classified as available-for-sale and is carried at estimated market value. Equity securities (common and nonredeemable preferred stocks) are also carried at estimated market value. With the application of fresh start reporting, the Company's marketable securities book values under GAAP were adjusted to equal the market values of such securities at March 31, 1999. Accordingly, the stockholders' equity section of Ascent's March 31, 1999 fresh start balance sheet reflects a zero balance in accumulated other comprehensive income. Changes in aggregate unrealized appreciation or depreciation on fixed maturity and equity securities subsequent to March 31, 1999 are reported directly in stockholders' equity, net of applicable deferred income taxes and, accordingly, will have no effect on current operations. DEFERRED POLICY ACQUISITION COSTS ("DPAC"). Policy acquisition costs consisting of commissions and other policy issue costs, which vary with and are primarily related to the production of new business, are deferred and amortized over periods not to exceed the estimated premium-paying periods of the related policies. Also included in DPAC is the cost of insurance purchased on acquired business. The amortization of these costs is based on actuarially estimated future premium revenues, and the amortization rate is adjusted periodically to reflect actual experience. Projected future levels of premium revenue are estimated using assumptions as to interest, mortality, morbidity and withdrawals consistent with those used in calculating liabilities for future policy benefits. No changes were made to DPAC assumptions for purposes of fresh start accounting. FUTURE POLICY BENEFITS. Liabilities for future policy benefits not yet incurred are computed primarily using the net level premium method including actuarial assumptions as to investment yield, mortality, morbidity, withdrawals, persistency and other assumptions which were appropriate at the time the policies were issued. Assumptions used are based on the Company's experience as adjusted to provide for possible adverse deviation. These estimates are periodically reviewed and compared with actual experience. If it is determined that future experience will probably differ significantly from that previously assumed, the estimates are revised and any adjustments reflected in current operations. No changes were made to such actuarial assumptions for purposes of fresh start accounting. CLAIM RESERVES. Claim reserves represent the estimated liabilities on claims reported plus claims incurred but not yet reported. These liabilities are subject to the impact of future changes in claim experience. As estimates are revised, any adjustments are reflected in current operations. No changes were made to claim reserve estimates for purposes of fresh start accounting. FEDERAL INCOME TAXES. The Company records income taxes based on the asset and liability approach, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequence of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The tax effect of future taxable temporary differences (liabilities) and future deductible temporary differences (assets) are separately calculated and recorded when such differences arise. A valuation allowance, reducing any recognized deferred tax asset, must be recorded if it is determined that it is more likely than not that such deferred tax asset will not be realized. The deferred tax asset at June 30 and March 31, 1999 is net of a valuation allowance of approximately $16.9 million related principally to net operating loss carryforwards ("NOLs") of Ascent's operating subsidiaries. In connection with its reorganization, the Company realized a non-taxable gain from the extinguishment of certain indebtedness for tax purposes, since the gain results from a reorganization under the Bankruptcy Code. However, the Company is required to reduce certain tax attributes of the holding company, including (i) NOLs, (ii) certain tax credits and (iii) tax bases in assets in an amount equal to such a gain on extinguishment. NOTE 3 - EARNINGS PER SHARE ("EPS") Basic EPS is calculated by dividing income attributable to common shareholders by the weighted average number of common shares outstanding ("average shares") during the period. To obtain net income attributable to common shareholders for EPS computations, preferred stock dividends are deducted from net income. Diluted EPS reflects the potential dilution of average shares that could occur if securities or other contracts to issue common stock were converted or exercised. The following table reflects the calculation of basic and diluted EPS:
ASCENT WESTBRIDGE ----------------- ------------------------------------------------------------ THREE MONTHS THREE MONTHS THREE MONTHS SIX MONTHS ENDED ENDED ENDED ENDED JUNE 30, 1999 MARCH 31, 1999 JUNE 30, 1998 JUNE 30, 1998 ----------------- ------------------- ---------------- ---------------- (Amounts in thousands, except per share amounts) Income (loss) applicable to common stockholders $ 407 $ 208 $ (3,087) $ (8,524) ================= ================ ================ ================= Basic and diluted earnings (loss) per share $ .06 $ .03 $ (.48) $ (1.36) ================= ================ ================ ================= Weighted average shares outstanding: Basic 6,500 7,032 6,381 6,289 ================= ================ ================ ================= Diluted 6,530 7,032 6,381 6,289 ================= =================== ================ =================
NOTE 4 - COMPREHENSIVE INCOME The Company's other comprehensive income consists of the unrealized appreciation (depreciation) of marketable securities held net of tax. Comprehensive income (loss), net of related tax, is as follows:
ASCENT WESTBRIDGE ----------------- ------------------------------------------------------------ THREE MONTHS THREE MONTHS THREE MONTHS SIX MONTHS ENDED ENDED ENDED ENDED JUNE 30, 1999 MARCH 31, 1999 JUNE 30, 1998 JUNE 30, 1998 ----------------- ------------------- ---------------- ---------------- (Amounts in thousands) Income (loss) applicable to common stockholders $ 407 $ 208 $ (3,087) $ (8,524) Other comprehensive loss Unrealized holding loss arising during period, net of tax (2,013) (1,959) 955 5,722 Reclassification adjustment of loss (gain) on sales of fixed maturity and equity securities included in net income, net of tax 41 (27) (53) (224) ----------------- ------------------- ---------------- ---------------- Comprehensive loss, net of tax $ (1,565) $ (1,778) $ (2,185) $ (3,026) ================= =================== ================ ================
NOTE 5 - COMMITMENTS AND CONTINGENCIES In the normal course of its business operations, the Company is involved in various claims and other business related disputes. In the opinion of management, the Company is not a party to any pending litigation the disposition of which would have a material adverse effect on the Company's business, financial position or its results of operations. NOTE 6 - IMPLEMENTATION OF NEW ACCOUNTING PRONOUNCEMENTS In December 1997, the Accounting Standards Executive Committee ("AcSEC") issued Statement of Position ("SOP") 97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related Assessments," which provides guidance on accounting for insurance-related assessments. The Company adopted SOP 97-3 on a prospective basis effective January 1, 1999. The adoption of SOP 97-3 did not have a material impact on the Company's results of operations, liquidity or financial position. In March 1998, AcSEC issued SOP 98-1, "Accounting for the Costs of Software Developed or Obtained for Internal Use," which requires capitalization of certain costs after the date of adoption in connection with developing or obtaining software for internal use. The Company adopted SOP 98-1 on a prospective basis effective January 1, 1999. The adoption of SOP 98-1 did not have a material impact on the Company's results of operations, liquidity or financial position. In 1998, the National Association of Insurance Commissioners ("NAIC") adopted the Codification of Statutory Accounting Principles guidance, which will replace the current Accounting Practices and Procedures manual as the NAIC's primary guidance on statutory accounting. The NAIC is now considering amendments to the Codification guidance that would also be effective upon implementation. The NAIC has recommended an effective date of January 1, 2001. The Codification provides guidance for areas where statutory accounting has been silent and changes current statutory accounting in certain areas. It is not known whether the insurance departments of the state of domicile of the Company's Insurance Subsidiaries will adopt the Codification or whether those insurance departments will make any changes to that guidance. The Company does not expect Codification guidance, if adopted, to materially impact statutory surplus. However, the actual effect of adoption could differ as changes are made to the Codification guidance, prior to its recommended effective date of January 1, 2001. NOTE 7 - SUBSEQUENT EVENTS In August 1999, the Company amended its $20 million revolving loan facility (the "Credit Agreement") with LaSalle Bank, National Association ("LaSalle"). The Credit Agreement was reduced to a $7.5 million facility and the termination date was extended to June 5, 2001 from June 5, 2000. Also, in July 1999, Ascent Management, Inc. ("AMI") entered into a $3.3 million term loan agreement with LaSalle secured by substantially all of AMI's assets and the guarantee of Ascent. Principal is payable in 60 equal monthly installments beginning January 31, 2000. ASCENT ASSURANCE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL In connection with its emergence from Chapter 11 bankruptcy proceedings on March 24, 1999, Westbridge Capital Corp. ("Westbridge") changed its corporate name to "Ascent Assurance, Inc." ("Ascent"). For additional information regarding the reorganization and adoption of fresh start accounting, see Notes 1 and 2 to the Condensed Consolidated Financial Statements included at Part 1, Item I. References herein to the "Company" shall mean for all periods on or prior to March 31, 1999, Westbridge Capital Corp. ("Westbridge") and its subsidiaries, and for all periods on or after the close of business on March 31, 1999, Ascent and its subsidiaries. This discussion updates the "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 1998 Report on Form 10-K and should be read in conjunction therewith. Statements contained in this analysis and elsewhere in this document that are not based on historical information are forward-looking statements and are based on management's projections, estimates and assumptions. Management cautions readers regarding its forward-looking statements (see "Forward-Looking Statements"). BUSINESS OVERVIEW The Company derives its revenue primarily from premiums from its accident and health insurance products and, to a significantly lesser extent, from fee and service income, income earned on invested assets and gains on the sales or redemptions of invested assets. The product lines currently marketed and underwritten by the Company's insurance subsidiaries are Medical Expense products and Specified Disease products. Medical Expense products are generally designed to reimburse insureds for eligible expenses incurred for hospital confinement, surgical expenses, physician services, outpatient services and the cost of medicines. Specified Disease products include indemnity policies for hospital confinement and convalescent care for treatment of specified diseases and "event specific" policies, which provide fixed benefits or lump sum payments upon diagnoses of certain types of internal cancer or other catastrophic diseases. Historically, the Company's insurance subsidiaries have also underwritten a significant amount of Medicare Supplement products. The underwriting of Medicare Supplement products was curtailed due to the relatively low margins for these products. Fee and service income is generated from (i) commissions received by the Company for sales of managed care and senior products underwritten primarily by unaffiliated managed care organizations, (ii) telemarketing services, and (iii) printing services. OPERATING RESULTS Results of operations for Ascent are reported for the three months ended June 30, 1999 and on a pro forma basis as if Ascent and Westbridge adopted fresh start accounting on January 1, 1999 and operated as a single entity for the six months ended June 30, 1999. The operating results for 1999 are compared to Westbridge's results of operation for the corresponding periods in 1998.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, -------------------------------- ------------------------------- 1999 1998 1999 1998 -------------- ------------- ------------- ------------- ASCENT WESTBRIDGE PRO FORMA WESTBRIDGE ASCENT Total premiums $ 29,574 $ 35,251 $ 59,522 $ 72,690 -------------- ------------- ------------- ------------- Benefits and claims 21,733 25,412 43,532 53,848 Commissions 2,163 5,779 4,553 12,298 Amortization of deferred policy acquisition costs 865 713 2,059 1,948 General and administrative expense 4,688 5,614 10,167 11,316 Taxes licenses and fees 1,293 1,443 2,352 2,731 -------------- ------------- ------------- ------------- Total underwriting expenses 30,742 38,961 62,663 82,141 -------------- ------------- ------------- ------------- UNDERWRITING RESULTS (1,168) (3,710) (3,141) (9,451) -------------- ------------- ------------- ------------- Fee and service income 3,871 4,037 7,910 8,099 Fee and service expenses (3,259) (4,207) (7,027) (8,485) -------------- ------------- ------------- ------------- FEE AND SERVICE RESULTS 612 (170) 883 (386) -------------- ------------- ------------- ------------- Net investment income 2,333 3,192 4,895 6,358 Net realized gain (loss) on investments (63) 267 (22) 529 Interest expense on notes payable (93) (235) (212) (527) Interest expense on retired/canceled debt - (1,889) - (3,777) Reorganization expenses - (1,084) - (2,100) -------------- ------------- ------------- ------------- INCOME (LOSS) BEFORE INCOME TAXES 1,621 (3,629) 2,403 (9,354) Income tax (expense) benefit (567) 480 (841) 1,239 -------------- ------------- ------------- ------------- NET INCOME (LOSS) $ 1,054 $ (3,149) $ 1,562 $ (8,115) ============== ============= ============= ============= UNDERWRITING RATIOS Benefits and claims 73.5% 72.1% 73.1% 74.1% Commissions 7.3% 16.4% 7.6% 16.9% Amortization of deferred policy acquisition costs 2.9% 2.0% 3.5% 2.7% General and administrative expenses 15.9% 15.9% 17.1% 15.6% Taxes, licenses and fees 4.4% 4.1% 4.0% 3.8%
OVERVIEW. Pre-tax income for the second quarter of 1999 was $1.6 million compared to a loss of $3.6 million for the second quarter of 1998. The increase in pre-tax income was primarily attributable to a $2.5 million improvement in underwriting results, a $1.8 million decline in interest expense on debt retired/canceled on March 24, 1999 and a $1.0 million decrease in reorganization expenses. For the first six months of 1999, pre-tax income was $2.4 million compared to a $9.4 million loss for the six months ended June 30, 1998. A $6.4 million improvement in underwriting results, a $1.3 million increase in fee and service results, a $3.8 million decrease in interest expense on debt retired/canceled and a $2.1 million decline in reorganization expenses were the principal contributors to the improvement in pre-tax income. The following narratives discuss the principal components of underwriting results and net investment income. PREMIUMS. Premiums, in thousands, for each major product line are set forth below:
Three Months Ended June 30, Six Months Ended June 30, -------------------------------- ----------------------------------- 1999 1998 1999 1998 --------------- ------------- --------------- ---------------- Ascent Westbridge Pro forma Westbridge Ascent Medical Expense: First-year $ 3,566 $ 3,696 $ 6,363 $ 9,406 Renewal 10,316 12,704 21,601 25,030 --------------- ------------- --------------- ---------------- Subtotal 13,882 16,400 27,964 34,436 --------------- ------------- --------------- ---------------- Specified Disease: First-year 340 520 637 1,063 Renewal 7,067 7,561 14,335 15,285 --------------- ------------- --------------- ---------------- Subtotal 7,407 8,081 14,972 16,348 --------------- ------------- --------------- ---------------- Medicare Supplement: First-year (5) 430 22 1,186 Renewal 8,157 10,144 16,291 20,339 --------------- ------------- --------------- ---------------- Subtotal 8,152 10,574 16,313 21,525 --------------- ------------- --------------- ---------------- Other 133 196 273 381 --------------- ------------- --------------- ---------------- Total Premium Revenue $ 29,574 $ 35,251 $ 59,522 $ 72,690 =============== ============= =============== ================
Total premiums decreased $5.7 million in the second quarter of 1999 as compared to the second quarter of 1998 due to a $0.8 million, or 16%, decrease in first year premiums and a $4.9 million, or 16%, decrease in renewal premiums. The decrease in first year premiums consists of a decrease in Medicare Supplement premiums of $0.5 million, or approximately 100%, and a decrease in Specified Disease premiums of $0.2 million, or 35%. The decrease in renewal premiums was comprised of a $2.4 million, or 19%, decrease in Medical Expense premiums, a $1.9 million, or 19%, decrease in Medicare Supplement premiums and $0.5 million, or 7%, decrease in Specified Disease premiums. For the six months ended June 30, 1999, total premiums decreased $13.2 million, or 18%, from the comparable period for 1998. The decrease resulted from a $4.7 million, or 40%, decrease in first year premiums and a decrease in renewal premiums of $8.5 million, or 14%. The decrease in first year premium was comprised of a $3.0 million, or 32%, decrease in Medical Expense premiums, a $1.2 million, or 98%, decrease in Medicare Supplement premiums and a $0.4 million, or 40%, decrease in Specified Disease premiums. The decrease in renewal premiums consists of a $4.0 million, or 20% decrease in Medicare Supplement premiums, a $3.4 million, or 14%, decrease in Medical Expense premiums and a $1.0 million, or 7%, decrease in Specified Disease premiums. In general, first year premiums declined due to the restructuring of the Company's marketing operation in mid-1998, which included the discontinuance of certain products. Renewal premiums declined due to the implementation of premium rate increases on less profitable blocks of business which decreased persistency. BENEFITS AND CLAIMS. Benefits and claims are comprised of claims paid, changes in claim reserves for claims incurred (whether or not reported) and changes in future policy benefit reserves. For the second quarter of 1999, the 1.4 percentage point increase in the ratio of benefits and claims to premium compared to the second quarter of 1998 was due primarily to unfavorable experience in the Major Medical and Specified Disease lines of business. For the six months ended June 30, 1999, the 1.0 percentage point decrease in the ratio of benefits and claims to premium in comparison to the six months ended June 30, 1998 was due to favorable experience in the Medicare Supplement line of business. COMMISSIONS. The 9.1 percentage point decrease in the ratio of commissions to premium improved underwriting results by approximately $2.7 million in the second quarter of 1999 as compared to 1998. For the six months ended June 30, 1999, the percentage point decrease of 9.3 percentage points in the ratio of commissions to premium from 1998 improved underwriting results by approximately $5.5 million. The improvement in the commission rate is attributable to the decrease in first-year premiums which carry a higher commission rate, the implementation of premium rate increases that are not commissionable and the consolidation of the company's marketing structure from fragmented general agency operations into a single career agency force in mid-1998. GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expenses are semi-variable with premium as a number of infrastructure costs are fixed. The 1.5 percentage point increase in the ratio of general and administrative expenses to premium for the six months ended June 30, 1999 as compared to 1998 is principally attributable to the decline in premium volume in 1999. INVESTMENT INCOME. Net investment income decreased by $0.9 million, or 27%, for the second quarter of 1999 as compared to 1998 and decreased by $1.5 million, or 23%, for the six months ended June 30, 1999 as compared to 1998 due to an 18% decrease in invested assets and decreased interest income from agent receivables. FINANCIAL CONDITION The following discussion provides management's assessment of financial condition at June 30, 1999 as compared to March 31, 1999, the date of adoption of fresh start accounting. INVESTMENTS. The following table summarizes the Company's fixed maturity securities, excluding short-term investments and certificates of deposit. All of the Company's fixed maturity securities are classified as available-for-sale and are carried at estimated market value. Estimated market value represents the closing sales prices of marketable securities. Investments in the debt securities of corporations are principally in publicly-traded bonds.
June 30, 1999 March 31, 1999 ---------------------------------- -------------------------------- Market Market FIXED MATURITY SECURITIES Value % Value % - ------------------------------------------- ----------------- ------------- --------------- ------------ (in thousands) (in thousands) U.S. Government and governmental agencies and authorities (except mortgage-backed) $ 11,378 10.4 $ 11,271 9.7 Finance 28,515 26.1 31,525 27.1 Public utilities 12,122 11.1 12,745 11.0 Mortgage-backed 6,517 6.0 7,349 6.3 States, municipalities and political subdivisions 1,940 1.8 1,543 1.3 All other corporate bonds 48,732 44.6 51,919 44.6 --------------- ------------- --------------- ------------ Total fixed maturity securities $ 109,204 100.0 $ 116,352 100.0 ================= ============= =============== ============
The following table indicates by rating the composition of the Company's fixed maturity securities portfolio, excluding short-term investments and certificates of deposit. Ratings are the lower of those assigned primarily by Standard & Poor's and Moody's, when available, and are shown in the table using the Standard & Poor's rating scale. Unrated securities are assigned ratings based on the applicable National Association of Insurance Commissioner's ("NAIC") designation or the rating assigned to comparable debt outstanding of the same issuer. NAIC 1 fixed maturity securities have been classified as "A" and NAIC 2 fixed maturity securities have been classified as "BBB".
June 30, 1999 March 31, 1999 -------------------------------- -------------------------------- COMPOSITION OF FIXED MATURITY Market Market SECURITIES BY RATING Value % Value % - --------------------------------------------- ----------------- ---------- ------------------ ---------- (in thousands) (in thousands) RATINGS Investment grade: U.S. Government and agencies $ 17,895 16.4 $ 17,677 15.2 AAA 2,111 1.9 2,902 2.5 AA 9,435 8.6 9,685 8.3 A 37,734 34.6 40,382 34.7 BBB 35,173 32.2 42,237 36.3 Non-Investment grade: BB 2,419 2.2 1,317 1.1 B and below 4,437 4.1 2,152 1.9 ----------------- ---------- ------------------ ---------- Total fixed maturity securities $ 109,204 100.0 $ 116,352 100.0 ================= ========== ================== ==========
The scheduled contractual maturities of the Company's fixed maturity securities, excluding short-term investments and certificates of deposit, at June 30, 1999 and March 31, 1999 are shown in the table below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.
June 30, 1999 March 31, 1999 -------------------------------- -------------------------------- COMPOSITION OF FIXED MATURITY Market Market SECURITIES BY MATURITY Value % Value % - --------------------------------------------- ----------------- ---------- ------------------ ---------- (in thousands) (in thousands) SCHEDULED MATURITY Due in one year or less $ 602 0.5 $ 712 0.6 Due after one year through five years 29,620 27.1 37,503 32.2 Due after five years through ten years 36,650 33.6 37,550 32.3 Due after ten years 35,815 32.8 33,238 28.6 Mortgage-backed securities 6,517 6.0 7,349 6.3 ----------------- ---------- ------------------ ---------- Total fixed maturity securities $ 109,204 100.0 $ 116,352 100.0 ================= ========== ================== ==========
CLAIM RESERVES. Claim reserves are established by the Company for benefit payments which have already been incurred by the policyholder but which have not been paid by the Company. Claim reserves totaled $38.4 million at June 30, 1999 as compared to $41.1 million at March 31, 1999. The process of estimating claim reserves involves the active participation of experienced actuarial consultants with input from the underwriting, claims, and finance departments. The inherent uncertainty in estimating claim reserves is increased when significant changes occur. Examples of such changes include: (1) changes in economic conditions; (2) changes in state or federal laws and regulations, particularly insurance reform measures; (3) changes in production sources for existing lines of business; and (4) writings of significant blocks of new business. Because claim reserves are estimates, management monitors reserve adequacy over time, evaluating new information as it becomes available and adjusting claim reserves as necessary. Such adjustments are reflected in current operations. Management considers many factors when setting reserves including: (1) historical trends; (2) current legal interpretations of coverage and liability; (3) loss payments and pending levels of unpaid claims; and (4) product mix. Based on these considerations, management believes that adequate provision has been made for the Company's claim reserves. Actual claims paid may deviate, perhaps substantially, from such reserves. FUTURE POLICY BENEFIT RESERVES. Future policy benefit reserves are established by the Company for benefit payments that have not been incurred but which are estimated to be incurred in the future. Future policy benefit reserves totaled $55.8 million at June 30, 1999 as compared to $54.7 million at March 31, 1999. Future policy benefit reserves are calculated according to the net level premium reserve method and are equal to the discounted present value of the Company's expected future policyholder benefits minus the discounted present value of its expected future net premiums. These present value determinations are based upon assumed fixed investment yields, the age of the insured(s) at the time of policy issuance, expected morbidity and persistency rates, and expected future policyholder benefits. In determining the morbidity, persistency rate, claim cost and other assumptions used in determining the Company's future policy benefit reserves, the Company relies primarily upon its own benefit payment history and upon information developed in conjunction with actuarial consultants and industry data. The Company's persistency rates have a direct impact upon its policy benefit reserves because the determinations for this reserve are, in part, a function of the number of policies in force and expected to remain in force to maturity. If persistency is higher or lower than expected, future policyholder benefits will also be higher or lower because of the different than expected number of policies in force, and the policy benefit reserves will be increased or decreased accordingly. In accordance with GAAP, the Company's actuarial assumptions are generally fixed, and absent materially adverse benefit experience, they are not generally adjusted. The Company monitors the adequacy of its policy benefit reserves on an ongoing basis by periodically analyzing the accuracy of its actuarial assumptions. The adequacy of the Company's policy benefit reserves may also be impacted by the development of new medicines and treatment procedures which may alter the incidence rates of illness and the treatment methods for illness and accident (such as out-patient versus in-patient care) or prolong life expectancy. Changes in coverage provided by major medical insurers or government plans may also affect the adequacy of the Company's reserves if, for example, such developments had the effect of increasing or decreasing the incidence rate and per claim costs of occurrences against which the Company insures. An increase in either the incidence rate or the per claim costs of such occurrences could result in the Company needing to post additional reserves, which could have a material adverse effect upon its business, financial condition or results of operations. LIQUIDITY, CAPITAL RESOURCES AND STATUTORY CAPITAL AND SURPLUS ASCENT. Ascent's principal assets consist of the capital stock of its operating subsidiaries and invested assets. Accordingly, Ascent's sources of funds are primarily comprised of dividends from its operating subsidiaries, advances and management fees from its non-insurance subsidiaries, and tax payments under a tax sharing agreement among Ascent and its subsidiaries. As of June 30, 1999, Ascent held approximately $7.4 million in unrestricted cash and invested assets. Dividends paid by the insurance subsidiaries are determined by and subject to the regulations of the insurance laws and practices of the insurance departments of their respective state of domicile. National Foundation Life Insurance Company ("NFL"), a Delaware domestic company, may not declare or pay dividends from any source other than earned surplus without the Delaware Insurance Commissioner's approval. The Delaware Insurance Code defines earned surplus as the amount equal to the unassigned funds as set forth in NFL's most recent statutory annual statement including surplus arising from unrealized gains or revaluation of assets. Delaware insurance companies may generally pay ordinary dividends or make distributions of cash or other property within any twelve month period with a fair market value equal to or less than the greater of 10% of surplus as regards policyholders as of the preceding December 31 or the net gain from operations for the twelve month period ending on the preceding December 31. During 1999, NFL is precluded from paying dividends without the prior approval of the Delaware Insurance Commissioner, as its December 31, 1998 earned surplus was negative. Further, NFL has agreed to obtain prior approval for any future dividends. National Financial Insurance Company ("NFIC") and American Insurance Company of Texas ("AICT"), Texas domestic companies, may make dividend payments from surplus profits or earned surplus arising from its business. The Texas Insurance Code defines earned surplus as unassigned surplus excluding any unrealized gains. Texas life insurance companies may generally pay ordinary dividends or make distributions of cash or other property within any twelve month period with a fair market value equal to or less than the greater of 10% of surplus as regards policyholders as of the preceding December 31 or the net gain from operations for the twelve month period ending on the preceding December 31. Any dividend exceeding the applicable threshold is considered extraordinary and requires prior approval of the Texas Insurance Commissioner. NFIC's and AICT's earned surplus at December 31, 1998 was negative, and as such, each company is precluded from paying dividends during 1999 without the prior approval of the Texas Insurance Commissioner. Freedom Life Insurance Company ("FLICA"), a Mississippi domestic company, may make dividend payments only from its actual net surplus computed as required by law in its statutory annual statement. Mississippi life insurance companies may generally pay ordinary dividends or make distributions of cash or other property within any twelve month period with a fair market value not exceeding the lesser of 10% of surplus as regards policyholders as of the preceding December 31 or the net gain from operations for the twelve month period ending on the preceding December 31. Any dividend exceeding the applicable threshold amount requires prior approval of the Mississippi Insurance Commissioner. FLICA is precluded from paying dividends to NFL during 1999 without the prior approval of the Mississippi Insurance Commissioner as it recorded a net loss from operations for the year ended December 31, 1998. Generally, all states require insurance companies to maintain statutory capital and surplus that is reasonable in relation to their existing liabilities and adequate to their financial needs. Delaware, Texas and Mississippi also maintain discretionary powers relative to the declaration and payment of dividends based upon an insurance company's financial position. In light of the statutory losses incurred by the insurance subsidiaries during 1997 and 1998, Ascent does not expect to receive any dividends from its insurance subsidiaries for the foreseeable future. In addition, as discussed further below, the insurance subsidiaries may require capital contributions from Ascent to maintain adequate statutory capital and surplus. INSURANCE SUBSIDIARIES. The primary sources of cash for the insurance subsidiaries are premiums and income on invested assets. Additional cash is periodically provided by capital contributions from Ascent and from the sale of short-term investments and could, if necessary, be provided through the sale of long-term investments and blocks of business. The insurance subsidiaries' primary uses for cash are benefits and claims, commissions, general and administrative expenses, and taxes, licenses and fees. During 1997 and 1998, the insurance subsidiaries experienced adverse loss ratios and declining persistency on certain old Medical Expense and Medicare Supplement products. During 1998, the insurance subsidiaries developed new insurance products with more stringent underwriting procedures and lower agent commissions. In addition, the insurance subsidiaries are implementing rate increases to the extent approved by state regulatory authorities or offering higher deductible benefit options on certain old lines of business in order to mitigate the effect of adverse claims experience on such old lines. The insurance subsidiaries also implemented a policyholder retention program designed to mitigate the impact of declining persistency on such old lines receiving rate increases. However, the Company expects that the insurance subsidiaries will continue to incur operating losses on these old lines of business (i) until such time as the necessary rate increases can be fully implemented and realized, and (ii) until sales of new products reach targeted production levels. There can be no assurance that the impact of any additional rate increases approved will result in consistent profitability on such old lines, or that targeted production levels will be reached and sustained. For the six months ended June 30, 1999 and 1998, the insurance subsidiaries received capital contributions totaling approximately $0.4 million and $4.4 million, respectively, from Ascent. To the extent that the insurance subsidiaries experience further statutory operating losses, additional capital may be required. In December 1992, the NAIC adopted the Risk-Based Capital for Life and/or Health Insurers Model Act ("the Model Act"). The Model Act provides a tool for insurance regulators to determine the levels of statutory capital and surplus an insurer must maintain in relation to its insurance and investment risks and whether there is a need for possible regulatory attention. The Model Act (or similar legislation or regulation) has been adopted in states where the insurance subsidiaries are domiciled. The Model Act provides four levels of regulatory attention, varying with the ratio of the insurance company's total adjusted capital (defined as the total of its statutory capital and surplus, asset valuation reserve and certain other adjustments) to its risk-based capital ("RBC"). If a company's total adjusted capital is less than 100 percent but greater than or equal to 75 percent of its RBC, or if a negative trend (as defined by the NAIC) has occurred and total adjusted capital is less than 125 percent of RBC (the "Company Action Level"), the company must submit a comprehensive plan aimed at improving its capital position to the regulatory authority proposing corrective actions. If a company's total adjusted capital is less than 75 percent but greater than or equal to 50 percent of its RBC (the "Regulatory Action Level"), the regulatory authority will perform a special examination of the company and issue an order specifying the corrective actions that must be followed. If a company's total adjusted capital is less than 50 percent but greater than or equal to 35 percent of its RBC (the "Authorized Control Level"), the regulatory authority may take any action it deems necessary, including placing the company under regulatory control. If a company's total adjusted capital is less than 35 percent of its RBC (the "Mandatory Control Level"), the regulatory authority must place the company under its control. The NAIC's requirements are effective on a state by state basis if, and when, they are adopted by the regulators in the respective states. The Insurance Departments of the States of Delaware and Mississippi have each adopted the NAIC's Model Act. At June 30, 1999, total adjusted capital for NFL, a Delaware domiciled company, and FLICA, a Mississippi domiciled company, exceeded the respective Company Action Levels. The Texas Department of Insurance ("TDI") has adopted its own RBC requirements, the stated purpose of which is to require a minimum level of statutory capital and surplus to absorb the financial, underwriting and investment risks assumed by an insurer. Texas' RBC requirements differ from those adopted by the NAIC in two principal respects: (i) they use different elements to determine minimum RBC levels in their calculation formulas and (ii) they do not stipulate "Action Levels" (like those adopted by the NAIC) where corrective actions are required. However, the Commissioner of the TDI does have the power to take similar corrective actions if a company does not maintain the required minimum level of statutory capital and surplus. NFIC and AICT are domiciled in Texas and must comply with Texas RBC requirements. At June 30, 1999, AICT's RBC exceeded the minimum level prescribed by the TDI; however, NFIC's RBC was below the minimum level prescribed by the TDI. As a result of the statutory losses sustained by the Insurance Subsidiaries during 1997 and 1998, material transactions are subject to approval by the department of insurance in each domiciliary state. CONSOLIDATED. The Company's consolidated net cash used for operations totaled $1.8 million for the second quarter 1999. The use of the cash from operations was primarily attributable to the payment of accrued reorganization expenses of $1.7 million and new system replacement costs of $2.2 million. This decrease was offset in part by the company generating net income from operations of $0.4 million for the second quarter of 1999 and a decrease in receivables of $1.9 million. Net cash provided by investing activities for the second quarter 1999 totaled $3.1 million. The cash provided by investment activities was used to fund operational and financing activities. Net cash used for financing activities totaled $1.6 million for the second quarter of 1999. In the ordinary course of operations, financing activities relate primarily to the net borrowings and repayments associated with the Company's receivables financing program. During the second quarter 1999, the Company paid approximately $3.0 million of principal and made new borrowings of $1.4 million. In the ordinary course of business, the Company advances commissions on policies written by its general agencies and their agents. The Company is reimbursed for these advances from the commissions earned over the respective policy's life. In the event that policies lapse prior to the time the Company has been fully reimbursed, the general agency or the individual agents, as the case may be, are responsible for reimbursing the Company for the balance of the commission advance. The Company finances a substantial part of its obligations to make commission advances through Ascent Funding, Inc. ("AFI") (formerly, Westbridge Funding Corp.), an indirect wholly owned subsidiary of Ascent. On June 6, 1997, AFI entered into a Credit Agreement (the "Credit Agreement") with LaSalle. This Credit Agreement provides AFI with a three year revolving loan facility (the "Receivables Financing"), the proceeds of which are used to purchase agent advance receivables from the Insurance Subsidiaries and certain affiliated marketing companies. In August 1999, the Company amended the Credit Agreement with LaSalle to reduce the revolving loan facility from $20 million to $7.5 million and extend the termination date to June 5, 2001 from June 5, 2000. Under this commission advancing program, the Company's receivables from subagents totaled approximately $6.9 million and approximately $3.5 million was outstanding under the Credit Agreement at June 30, 1999. AFI's obligations under the Credit Agreement are secured by liens upon substantially all of AFI's assets. Furthermore, Ascent has guaranteed AFI's obligations under the credit agreement, and has pledged all of the issued and outstanding shares of the capital stock of AFI, NFL and NFIC as collateral for that guaranty (the "Guaranty Agreement"). As of June 30, 1999, there were no events of default under the Credit or Guaranty Agreements. In July 1999, Ascent Management, Inc. ("AMI") received a $3.3 million term loan facility with LaSalle proceeds of which were used to fund system replacement costs. Advances under the term loan facility are secured by substantially all of AMI's assets and the Guaranty Agreement. Under the terms of the loan, principal is payable in 60 equal monthly installments beginning January 31, 2000. YEAR 2000 The Company has initiated an enterprise-wide program designed to determine whether all of its Information Technology ("I/T"), such as computer systems and related software applications, and non-I/T systems, such as facsimile machines and copy machines, will function properly as the millennium (the "Year 2000") approaches. The Year 2000 problem is pervasive and complex as virtually every computer operation will be affected in some way by the rollover of the two-digit year value to 00. The issue is whether computer systems will properly recognize date-sensitive information when the year changes to 2000. Systems that do not properly recognize such information could generate erroneous data or cause a system to fail. The Company is highly reliant upon computer systems and software, as are many of the Company's principal businesses with which it interacts. The Company's ability to service its policyholders and agents is dependent upon accurate and timely transaction reporting. Transaction reporting in turn is dependent upon the Company's highly complex interdependent computer hardware, software, telecommunications and desktop applications, and the information obtained from its critical business partners. The Company's overall Year 2000 remediation effort has focused on preparing the computer systems, infrastructure and facilities for the Year 2000. The following phases encompass the Year 2000 plan: (i) assessment of all internal and external business critical systems, including I/T and non-I/T systems, (ii) remediation or upgrading of business critical systems, (iii) testing of remediated and updated systems, (iv) implementation of remediated and updated systems, and (v) contingency planning. The Company has engaged certain outside vendors and dedicated certain employees on a full time basis to help in the full array of its Year 2000 efforts. This includes system assessment and monitoring advice, actual code remediation, communication and consultation with critical business partners and testing resources. Under the Company's enterprise-wide remediation program, the most effective I/T systems solution was to purchase a new, more modern, Year 2000 compliant policyholder and claim administration system. This replacement effort is well underway and targeted for implementation in November of 1999. The Company has also completed the assessment of its non-I/T systems and is currently testing those systems. The non-I/T systems were prioritized to remediate critical systems early in 1999 and non-critical systems later in the year. Another significant component of the Company's enterprise-wide remediation effort is to determine whether critical business partners and vendors are Year 2000 compliant. The assessment and testing of the Year 2000 readiness of these critical business partners and vendors have been integrated with the Company's I/T and non-I/T Year 2000 system strategies. As a part of this process, the Company has written letters and corresponded with its outside vendors and critical business partners to determine whether they are also prepared for the Year 2000. The Company's contingency plan is to make the existing I/T systems, which are to be replaced, Year 2000 compliant. This effort is currently in the testing phases of the project and is scheduled to be completed during the third quarter of 1999. The Company's contingency plan has identified and prioritized the Year 2000 exposures within the existing I/T systems. By remediating these I/T exposures on a priority basis, the Company is working to limit its Year 2000 contingency risk to lower priority I/T exposures in the event that the Company's most reasonably likely worst case Year 2000 scenario were to occur. The most reasonably likely worst case Year 2000 scenario would be that certain functions within the Company's existing I/T systems would incorrectly process policy information such as policy paid-to-dates, premium billings, commissions and claims. This scenario could have a material, adverse impact on the Company's ability to conduct its business. The Company expects to incur approximately $4.0 to $5.0 million in total charges related to computer hardware and software, infrastructure, and facilities enhancements necessary to prepare for the Year 2000, of which a portion may be capitalized. For the six months ended June 30, 1999, the Company incurred approximately $2.6 million in costs related to the Company's Year 2000 remediation plans. The majority of the Company's Year 2000 costs relate to computer hardware and software purchases and consulting fees, with the remainder of the costs to occur primarily in the third quarter of 1999. The Company expects its Year 2000 program to be completed in a timely manner; however, the Year 2000 computer problem creates risk for the Company from unforeseen problems in its own computer systems and from third parties with whom the Company deals on financial transactions. Such potential, unforeseen problems in the Company's and/or third parties' computer systems could have a material, adverse impact on the Company's ability to conduct its business. FORWARD-LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. The preceding statements and certain other statements contained in Part 1, Item 1 - Financial Statements and Part 1, Item 2 - - Management's Discussion and Analysis of Results of Operation and Financial Condition, are forward-looking statements. These forward-looking statements are based on the intent, belief or current expectations of the Company and members of its senior management team. While the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance, and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors known to management that could cause actual results to differ materially from those contemplated by the forward-looking statements in this Report include, but are not limited to: the effect of economic and market conditions further adverse developments with respect to the Company's liquidity position or operations of the Company's various businesses actions that may be taken by insurance regulatory authorities adverse developments in the timing or results of the Company's current strategic business plan the difficulty in controlling health care costs and integrating new operations the ability of the Company to realize anticipated general and administrative expense savings and overhead reductions from system replacement initiatives the ability of the Company to return the Company's operations to profitability and the possible negative effects of prospective health care reform. Additional factors that would cause actual results to differ materially from those contemplated within this report can also be found in the Company's reports to the Securities and Exchange Commission ("SEC") on Form 8-K during 1999 and Form 10-K for the year ended December 31, 1998. Subsequent written or oral statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements in this Report and those in the Company's reports previously filed with the SEC. Copies of these filings may be obtained by contacting the Company or the SEC. ASCENT ASSURANCE, INC. (FORMERLY, WESTBRIDGE CAPITAL CORP.) PART II ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On June 16, 1999, Ascent Assurance, Inc. held its annual meeting of shareholders. At the meeting, the shareholders elected two directors of the Company, ratified the selection of PricewaterhouseCoopers LLP as the Company independent accountants, and approved the 1999 Stock Option Plan. The shareholders elected John H. Gutfreund and Michael A. Kramer to serve on the Company's Board of Directors for a three year term expiring in 2002. The following table reflects the votes cast at the annual meeting:
For Against Withheld --------------- ---------------- ----------------- John F. Gutfreund 5,851,773 0 2,951 Michael A. Kramer 5,851,775 0 2,949 Total Votes Cast: 5,854,724
Directors whose terms continued and the years in which their term expires are as follows: Director Term Expiration --------------------------- -------------------- Richard H. Hershman 2000 Patrick J. Mitchell 2001 Robert A. Peiser 2000 James K. Steen 2001 Paul E. Suckow 2001 The Company's Board of Directors selected the firm of PricewaterhouseCoopers LLP as the independent accountants of the Company for 1999. At the annual meeting, the shareholders ratified the Board of Director's selection. Out of the total votes cast; 5,850,629 voted for; 2,448 voted against; and 1,647 abstained from voting. The 1999 Stock Option Plan ("Plan") was the final item voted upon by the shareholders at the annual meeting. This Plan provides for stock option grants of Common Stock to certain officers, directors and agents of the Company and its subsidiaries. The shareholders approved the Plan by 3,914,053 votes for the Plan over 162,243 votes against, 20,656 votes abstained, and 1,757,772 non-votes. ASCENT ASSURANCE, INC. (FORMERLY, WESTBRIDGE CAPITAL CORP.) PART II ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS The following exhibits are filed herewith. Exhibits incorporated by reference are indicated in the parentheses following the description. 2.1 First Amended Plan of Reorganization of Westbridge Capital Corp. Under Chapter 11 of the Bankruptcy Code, dated as of October 30, 1998 (incorporated by reference to Exhibit 2 to the Company's Form 8-K filed on September 21, 1998). 2.2 Amended Disclosure Schedule Accompanying the First Amended Plan of Reorganization of Westbridge Capital Corp. under Chapter 11 of the Bankruptcy Code (incorporated by reference to Exhibit 2 to the Company's Form 8-K filed on September 21, 1998). 2.3 Findings of Fact, Conclusions of Law, and Order confirming the First Amended Plan of Reorganization of Westbridge Capital Corp. dated October 30, 1998, as modified (incorporated by reference to Exhibit 2 to the Company's Form 8-K filed on December 29, 1998). 3.1 Second Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on March 24, 1999 (incorporated by reference to Exhibit 3.1 to the Company's Form 8-A filed on March 25, 1999). 3.2 Amended and Restated By-Laws of the Company, effective as of March 24, 1999 (incorporated by reference to Exhibit 3.2 to the Company's Form 8-A filed on March 25, 1999). 4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company's Form 8-A filed on March 25, 1999). 4.2 Form of Warrant Certificate, included in the Form of Warrant Agreement (incorporated by reference to Exhibit 4.2 to the Company's Form 8-A filed on March 25, 1999). 4.3 Form of Warrant Agreement dated as of March 24, 1999, between the Company and LaSalle National Bank, as warrant agent (incorporated by reference to Exhibit 4.3 to the Company's Form 8-A filed on March 25, 1999). 4.4 Form of Preferred Stock Certificate (incorporated by reference to Exhibit 4.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998). 10.1 First Amendment to Guaranty Agreement dated as of March 24, 1999 between Westbridge Capital Corp. in favor of LaSalle National Bank (incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998). 10.2 Registration Rights Agreement dated as of March 24, 1999 between the Company and Special Situations Holdings, Inc. - Westbridge (incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998). 10.3 1999 Stock Option Plan dated as of March 24, 1999 (incorporated by reference to the Company's Schedule 14A filed with the Commission on April 30, 1999) 27.1 Financial Data Schedule (included in electronic filing only). (b) REPORTS ON FORM 8-K No reports on Form 8-K were filed during the quarter ended June 30, 1999. FORM 10-Q 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. ASCENT ASSURANCE, INC. /S/ CYNTHIA B. KOENIG Cynthia B. Koenig Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Dated at Fort Worth, Texas August 13, 1999 EX-27 2 ARTICLE 7 FDS FOR 10-Q
7 1,000 3-MOS DEC-31-1999 JUN-30-1999 109,204 0 0 2,250 171 0 119,132 2,155 0 16,383 163,151 94,146 0 0 0 3,509 23,257 0 65 25,538 163,151 29,574 2,333 (63) 3,871 21,733 865 5,971 1,621 567 1,054 0 0 0 407 .06 .06 0 0 0 0 0 0 0
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