-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, EYb7xvItPLltoomapyhWgIhbM3dV7Sxfxr9UxDGx/UB+7XeP8q7haCu5Xow8VlZx 5WTX881No4sSPQ99vQOZsw== 0000905870-95-000019.txt : 19950814 0000905870-95-000019.hdr.sgml : 19950814 ACCESSION NUMBER: 0000905870-95-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INVESTORS TITLE CO CENTRAL INDEX KEY: 0000720858 STANDARD INDUSTRIAL CLASSIFICATION: TITLE INSURANCE [6361] IRS NUMBER: 561110199 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11774 FILM NUMBER: 95561591 BUSINESS ADDRESS: STREET 1: 121 N COLUMBIA ST STREET 2: P O DRAWER 2687 CITY: CHAPEL HILL STATE: NC ZIP: 27514 BUSINESS PHONE: 9199682200 MAIL ADDRESS: STREET 1: 121 NORTH COLUMBIA STREET CITY: CHAPEL HILL STATE: NC ZIP: 27514 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended: June 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 0-11774 INVESTORS TITLE COMPANY (Exact name of registrant as specified in its charter) North Carolina 56-1110199 (State of Incorporation) (I.R.S. Employer) 121 North Columbia Street, Chapel Hill, North Carolina 27514 (Address of Principal Executive Offices) (Zip Code) (919) 968-2200 ( Registrant's Telephone Number Including Area Code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 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 Shares outstanding of each of the issuer's classes of common stock as of June 30, 1995: Common Stock, no par value 2,800,510 Class Shares Outstanding 1 INVESTORS TITLE COMPANY AND SUBSIDIARIES Index PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Balance Sheets as of June 30, 1995 and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . 3 Consolidated Statements of Income: Six Months and Three Months Ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . 4 Consolidated Statements of Cash Flows: Six Months Ended June 30, 1995 and 1994 . . . . . . . . . 5 Notes to Condensed Consolidated Financial Statements . . . . 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . 7 PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . 9 Item 4. Submission of Matters to a Vote of Security Holders 9 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 9 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Investors Title Company and Subsidiaries Consolidated Balance Sheets As of June 30, 1995 and December 31, 1994 (Unaudited) 6/30/95 12/31/94 Assets Cash and Cash Equivalents $ 2,742,702 $ 2,590,071 Investments: Held to maturity: Certificates of deposit 384,203 539,203 Bonds - at amortized cost 10,715,409 10,283,644 Available for sale - at market: Bonds, treasury note and redeemable preferred stocks 2,557,644 2,839,813 Common and nonredeemable preferred stocks 3,289,676 2,699,422 Total investments 16,946,932 16,362,082 Receivables: Premiums, net 1,262,884 1,057,228 Accrued interest and dividends 280,588 309,689 Recoveries of claims previously paid 322,358 375,061 Refundable income taxes 38,355 62,246 Other 69,174 43,982 Total receivables 1,973,359 1,848,206 Prepaid Expenses and Other Assets 658,837 370,890 Property Acquired in Settlement of Claims 280,500 170,600 Property-At Cost: Land 782,582 782,582 Buildings 1,291,776 1,228,375 Furniture and equipment 1,586,813 1,536,745 Automobiles 135,024 118,162 Total 3,796,195 3,665,864 Less accumulated depreciation 914,031 765,653 Property, net 2,882,164 2,900,211 Total Assets $ 25,484,494 $ 24,242,060 Liabilities and Stockholders' Equity Liabilities: Accounts payable and accrued liabilities $ 321,398 $ 663,124 Accrued vacation 336,735 336,735 Commissions and reinsurance payables 41,602 52,848 Premium taxes payable 28,766 Note payable 500,000 Income taxes payable: Current 81,233 Deferred 800,322 470,725 Total liabilities 1,581,290 2,052,198 Reserve for Possible Claims 3,694,850 3,635,850 Stockholders' Equity: Common stock-No par value (shares authorized,6,000,000; 2,855,744 and 2,855,744 shares issued and 2,800,510 1,252,552 1,263,318 and 2,812,062 shares outstanding, 1995 and 1994, respectively) Retained earnings 18,400,907 17,151,557 Net unrealized gain on investments (net of deferred taxes: 1995: $282,448; 1994: $72,876) 554,895 139,137 Total stockholders' equity 20,208,354 18,554,012 Total Liabilities and Stockholders' Equity $ 25,484,494 $ 24,242,060
3 Investors Title Company and Subsidiaries Consolidated Statements of Income June 30, 1995 and 1994 (Unaudited) For The Three For The Six Months Ended Months Ended June 30 June 30 1995 1994 1995 1994 Revenues: Underwriting income: Premiums written $3,773,439 $4,136,439 $6,894,750 $8,024,816 Less-premiums for reinsurance ceded 12,167 12,295 29,453 24,225 Underwriting income 3,761,272 4,124,144 6,865,297 8,000,591 Investment income- interest and dividends 297,189 263,074 581,169 496,706 Rental income 5,441 4,653 9,764 9,314 Gain on disposals of investments and property, net 27,841 8,113 46,538 2,092 Other 72,205 51,955 123,990 63,290 Total 4,163,948 4,451,939 7,626,758 8,571,993 Operating Expenses: Salaries 860,889 877,913 1,715,254 1,774,514 Commissions to agents 865,818 775,526 1,532,462 1,533,335 Provision for possible claims 336,482 350,199 586,573 838,681 Employee benefits and payroll taxes 272,413 252,424 550,319 670,640 Office occupancy and operations 446,411 517,840 868,396 959,844 Business development 132,302 128,126 245,659 236,731 Taxes, other than payroll and income 97,595 97,762 191,311 201,047 Professional fees 80,737 35,917 136,988 59,993 Interest expense 8,678 10,638 31,273 Other 32,989 4,368 62,682 38,241 Total 3,125,636 3,048,753 5,900,282 6,344,299 Income Before Income Taxes 1,038,312 1,403,186 1,726,476 2,227,694 Provision For Income Taxes: Current 275,350 446,010 242,870 676,900 Deferred 6,556 (13,781) 120,026 (14,459) Total 281,906 432,229 362,896 662,441 Net Income $ 756,406 $ 970,957 $1,363,580 $1,565,253 Net Income Per Share* $ 0.27 $ 0.34 $ 0.49 $ 0.55 Dividends Paid $ 57,116 $ 57,272 $ 114,230 $ 114,386 Dividends Per Share $ 0.02 $ 0.02 $ 0.04 $ 0.04 * Net income per share is computed based on the weighted average number of common and dilutive common equivalent shares outstanding(1995, 2,810,222 and 1994, 2,855,744 shares, respectively.) Common equivalent shares consist solely of stock options.
4 Investors Title Company and Subsidiaries Consolidated Statements of Cash Flows For the Six Months Ended June 30, 1995 and 1994 (Unaudited) 1995 1994 Operating Activities: Net income $1,363,580 $1,565,253 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 151,081 147,775 Amortization, net of accretion 34,001 30,826 Loss on disposals of property 1,019 3,428 Gain on sales of investments (47,556) (5,519) Provision (benefit) for deferred income taxes 120,026 (14,459) Provision for possible claims 586,573 838,681 Payments of claims, net of recoveries (527,573) (443,681) (Increase) decrease in receivables (149,044) 425,011 Increase in prepaid expenses and other assets (287,947) (225,216) Increase in assets acquired in settlement of claims (109,900) (121,100) Decrease in accounts payable and accrued liabilities (341,726) (81,390) Decrease in commissions and reinsurance payables (11,246) (72,701) Decrease in premium taxes payable (67,121) (77,128) Increase in income taxes payable - current 143,479 489,846 Net cash provided by operating activities 857,646 2,459,626 Investing Activities: Purchases of investments held to maturity (995,620) (1,640,789) Purchases of investments available for sale (462,212) (141,727) Proceeds from sales of investments held to maturity 1,142,979 588,500 Proceeds from sales of investments available for sale 368,887 244,891 Purchases of property (135,985) (180,295) Proceeds from sales of property 1,932 5,699 Net cash used in investing activities (80,019) (1,123,721) Financing Activities: Dividends paid (114,230) (114,386) Repurchases of common stock (10,766) Repayment of notes payable (500,000) (1,000,000) Net cash used in financing activities (624,996) (1,114,386) Net Increase in Cash and Cash Equivalents 152,631 221,519 Cash and Cash Equivalents, Beginning of Year 2,590,071 1,701,786 Cash and Cash Equivalents, End of Period $2,742,702 $1,923,305 Supplemental Disclosures of Cash Flow Information: Cash Paid During the Year for: Interest $14,476 $35,580 Income Taxes $104,612 $372,000 See notes to consolidated financial statements.
5 INVESTORS TITLE COMPANY AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements June 30, 1995 (Unaudited) Note 1 - Basis of Presentation The consolidated financial statements include Investors Title Company and its subsidiaries, and have been prepared in conformity with generally accepted accounting principles. In the opinion of management all necessary adjustments have been reflected for a fair presentation of the financial position, results of operations and cash flows in the accompanying unaudited consolidated financial statements. All such adjustments are of a normal recurring nature. Reference should be made to the "Notes to Consolidated Financial Statements" of the Registrant's Annual Report to Shareholders for the year ended December 31, 1994 for a description of accounting policies. Note 2 - Reinsurance The Company assumes and cedes reinsurance with other insurance companies in the normal course of business. Premiums assumed and ceded were $19,295 and $29,453, respectively for the six months ended June 30, 1995, and $31,502 and $24,225, respectively for the six months ended June 30, 1994. Note 3 - Reserve for Possible Claims Transactions in the reserve for possible claims for the six months ended June 30, 1995 were as follows: Balance, beginning of year $3,635,850 Provision, charged to operations 586,573 Recoveries 50,012 Payments of claims (577,585) Balance, June 30, 1995 $3,694,850 In management's opinion, the reserve is adequate to cover claim losses which might result from pending and possible claims. Note 4 - Leases Rent expense totaled $206,407 and $145,951, respectively for the six months ended June 30, 1995 and 1994. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The 1994 Form 10-K and the 1994 Annual Report should be read in conjunction with the following discussion since they contain important information for evaluating the Company's operating results and financial condition. Results of Operations: For the quarter ended June 30, 1995, premiums written decreased 9% to $3,773,439, investment income increased 13% to $297,189, revenues decreased 6% to $4,163,948, net income decreased 22% to $756,406 and net income per share decreased 21% to $.27 all compared to the same quarter in 1994. For the six months ended June 30, 1995, premiums written decreased 14% to $6,894,750, investment income increased 17% to $581,169, revenues decreased 11% to $7,626,758, net income decreased 13% to $1,363,580 and net income per share decreased 11% to $.49 all compared to the same period in 1994. From January until May 1995, premium volume declined primarily due to a cyclical downturn in the general market. Real estate activity and the Company's premium volume began to improve in June as interest rates declined. Operating expenses for the three months ended June 30, 1995 increased 3% primarily as a result of an increase in commissions and professional fees, partially offset by a reduction in office occupancy and operations. The increase in commissions is the result of the Company's expansion into new markets primarily through establishing new agency relationships. A scheduled regulatory audit and related costs contributed to the increase in professional fees. The decline in the Company's office occupancy and operations is primarily a result of the Company's continuing efforts to control overhead costs. Operating expenses for the six months ended June 30, 1995 decreased 7% primarily due to a reduction in salaries expenses, the provision for possible claims, employee benefits and payroll taxes, office occupancy and operations, partially offset by an increase in professional fees. The provision for possible claims was lower in 1995 compared to 1994 due to improved claims experience. These remaining operating expense declines were primarily due to the decrease in premium volume and the Company's cost control efforts. The provision for current income taxes declined in 1995 due to loss carrybacks related to the 1992 loss as well as a reduction in income. These carrybacks could not be utilized until 1995 as a result of recent tax legislation. The decline in the provision for current income taxes was partially offset by an increase in the provision for deferred income taxes. Deferred income taxes increased primarily as a result of an increase in the statutory unearned premium reserve which is deductible from taxable income but not expensed under generally accepted accounting principles. 7 Liquidity and Capital Resources: Net cash provided by operating activities for the six months ended June 30, 1995, amounted to $857,646 compared to $2,459,626 for the same six month period during 1994. This decrease is attributable to the decline in net income and a number of other factors, including a decrease in receivables that contributed to net cash in the first half of 1994 but not in 1995, a smaller increase in current federal taxes payable in 1995, a larger decrease in accounts payable and accrued liabilities in 1995, and a lower provision for possible claims in 1995 (which is added back to net income to reconcile net income to net cash). Cash flows from operations provided funds to repay the Company's $500,000 note payable in the first quarter of 1995. Investments increased primarily from funds retained in the business and increases in the market value of securities available for sale. The deferred income tax liability increased primarily due to an increase in the net unrealized gain on investments and the increase in the statutory unearned premium reserve described above. The Company continues to have plans to construct a five-story home office at 137 East Rosemary Street, Chapel Hill, the site of its former offices. However, no decision has been made as to when the Company will pursue construction of this facility. Management believes that funds generated from operations (primarily underwriting and investment income) will enable the Company to adequately meet its operating needs. In addition to operational liquidity, the Company maintains a high degree of liquidity within the investment portfolio in the form of short-term investments and other readily marketable securities. 8 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders Investors Title Company's Annual Meeting of Shareholders was held May 16, 1995. The proposals voted upon and the results of the voting were as follows: 1. Election of three Directors for a three-year term. Broker Non- For Against Abstentions Withheld Votes J. Allen Fine 2,311,548 N/A N/A 17,506 N/A David L. Francis 2,326,492 N/A N/A 2,562 N/A A. Scott Parker, Jr. 2,318,186 N/A N/A 10,868 N/A 2. Ratification of the selection of Deloitte & Touche LLP, Certified Public Accountants to audit the books and accounts of the Company for the calendar year ending December 31, 1995. Broker Non- For Against Abstentions Withheld votes 2,316,953 3,199 8,902 N/A N/A Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (27) Financial Data Schedule (b) Reports on Form 8-K There were no reports filed on Form 8-K for this quarter. 9 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed in its behalf by the undersigned hereunto duly authorized. INVESTORS TITLE COMPANY (Registrant) By: /s/J. Allen Fine J. Allen Fine President, Chairman By: /s/Elizabeth P. Bryan Elizabeth P. Bryan Vice President (Principal Accounting Officer) Dated: August 11, 1995 10 EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
7 *Not disclosed on a quarterly basis. 3-MOS 6-MOS DEC-31-1995 DEC-31-1995 JAN-01-1995 JAN-01-1995 MAR-31-1995 JUN-30-1995 2,500,451 2,557,644 10,557,522 10,775,433 0* 0* 3,136,953 3,289,676 0 0 0 0 16,559,105 16,946,932 2,542,249 2,742,702 0 0 0 0 24,399,314 25,484,494 3,584,850 3,694,850 0 0 41,599 41,602 0 0 0 0 1,253,212 1,252,552 0 0 0 0 18,023,760 18,955,802 24,399,314 25,484,494 3,104,025 6,865,297 283,980 581,169 17,991 47,556 56,814 132,736 250,091 586,573 0 0 2,524,555 5,313,709 688,164 1,726,476 80,990 362,896 607,174 1,363,580 0 0 0 0 0 0 607,174 1,363,580 .22 .49 .22 .49 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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