-----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, VCg2UkccqJM1SyOF6sLZBwC3YqGC6eid20d/gLUjiaJbU9+qAKo0y4mCeO8uhm6g qsKf7ZQgCiKPReA2ZpvR9g== 0000898430-95-001525.txt : 19950814 0000898430-95-001525.hdr.sgml : 19950814 ACCESSION NUMBER: 0000898430-95-001525 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: US FACILITIES CORP CENTRAL INDEX KEY: 0000798085 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 330097221 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15196 FILM NUMBER: 95561905 BUSINESS ADDRESS: STREET 1: 650 TOWN CENTER DR STE 1600 CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 7145491600 MAIL ADDRESS: STREET 1: 650 TOWN CENTER DRIVE STREET 2: STE 1600 CITY: COSTA MESA STATE: CA ZIP: 92626-1925 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [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: 0-15196 US FACILITIES CORPORATION ------------------------- (Exact name of Registrant as specified in its charter) DELAWARE 33-0097221 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 650 Town Center Drive, Suite 1600, Costa Mesa, CA 92626 -------------------------------------------------------- (Address of principal executive offices) (Zip code) (714)549-1600 ------------- (Registrant's telephone number, including area code) Not applicable -------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- Number of shares outstanding of each class of the Registrant's Common Stock as of August 9, 1995: Common Stock, par value $.01 per share: 5,623,098 Common Stock Purchase Rights: 5,623,098 INDEX
Part I FINANCIAL INFORMATION Item 1. FINANCIAL INFORMATION Consolidated Financial Statements: Condensed Balance Sheets as of June 30, 1995 and December 31, 1994............................. 3 Income Statements for the Quarters and Six Months Ended June 30, 1995 and 1994........... 4 Statements of Stockholders' Equity for the Six Months Ended June 30, 1995 and 1994............... 5 Condensed Statements of Cash Flows for the Six Months Ended June 30, 1995 and 1994....... 6 Notes to Consolidated Financial Statements.......... 7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..................................... 8 Part II OTHER INFORMATION Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................ 14 Item 6. EXHIBITS and REPORTS ON FORM 8-K............... 15 SIGNATURES......................................................... 17
2 PART I FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Consolidated Financial Statements: US FACILITIES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (000 omitted)
JUNE 30, 1995 DEC. 31, 1994 ------------- ------------- ASSETS: Investments, at market (amortized cost $137,279 at June 30, 1995, $137,072 at December 31, 1994) $142,398 $133,075 Cash and invested cash 9,652 4,502 Restricted cash and short term investments 24,431 21,340 Accrued investment income 2,470 1,844 Receivables: Reinsurance losses and reserves 15,704 14,301 Premiums 16,746 9,434 Prepaid reinsurance premiums 4,744 3,950 Deferred income taxes 405 3,277 Other assets 6,791 8,014 -------- -------- Total assets $223,341 $199,737 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Insurance liabilities: Amounts due insurance companies $ 25,043 $ 20,418 Losses and loss adjustment expenses 75,450 69,647 Unearned premiums 17,866 14,613 Note payable 25,000 25,000 Accounts payable and accrued expenses 3,374 6,980 -------- -------- Total liabilities 146,733 136,658 STOCKHOLDERS' EQUITY 76,608 63,079 -------- -------- Total liabilities and stockholders' equity $223,341 $199,737 ======== ========
See accompanying notes to consolidated financial statements. 3 US FACILITIES CORPORATION CONSOLIDATED INCOME STATEMENTS (000 omitted except for per share data) ---------------------------------------
Quarter Ended Six Months Ended June 30 June 30 ----------------- ---------------- 1995 1994 1995 1994 ------- ------- ------- ------- Revenues: Premiums earned $30,641 $24,394 $57,336 $47,218 Commissions and fees 6,828 6,341 13,248 12,405 Net investment income 2,411 1,402 4,575 2,800 Realized investment gains 52 48 232 231 ------- ------- ------- ------- Total revenues 39,932 32,185 75,391 62,654 ------- ------- ------- ------- Operating Expenses: Losses and loss adjustment expenses incurred 20,459 16,706 38,099 34,173 Policy acquisition expenses 9,485 8,122 18,245 16,201 General and administrative expenses 3,871 4,501 7,961 8,998 Other 547 -- 1,242 -- Interest 547 1 1,089 3 ------- ------- ------- ------- 34,909 29,330 66,636 59,375 Unusual charges: Expenses related to unsolicited takeover proposal -- 1,504 -- 1,504 Restructuring expenses -- 654 -- 654 ------- ------- ------- ------- Total operating expenses 34,909 31,488 66,636 61,533 ------- ------- ------- ------- Income before income taxes 5,023 697 8,755 1,121 Income tax expense (benefit) 1,174 (64) 1,984 (240) ------- ------- ------- ------- Net Income $ 3,849 $ 761 $ 6,771 $ 1,361 ======= ======= ======= ======= Net income per common and common equivalent share $ 0.67 $ 0.13 $ 1.19 $ 0.23 ======= ======= ======= ======= Weighted average number of common and common equivalent shares outstanding during period 5,774 6,049 5,675 5,993 ------- ------- ------- -------
See accompanying notes to consolidated financial statements. 4 US FACILITIES CORPORATION STATEMENTS OF STOCKHOLDERS' EQUITY (000 omitted)
Net unrealized Common Paid in gain(loss) Retained Treasury stock capital on securities earnings stock Total ---------- -------- -------------- --------- -------- -------- Balance at December 31, 1993 $59 $43,156 $ 443 $20,306 $ (631) $63,333 Cumulative effect of adoption of SFAS 115 at January 31, 1994 - - 3,838 - - 3,838 Net income - - - 1,361 - 1,361 Exercise of stock options - 368 - - 300 668 Unrealized investment loss, net - - (4,737) - - (4,737) --- ------- ------- ------- ------- ------- Balance at June 30, 1994 $59 $43,524 $ (456) $21,667 $ (331) $64,463 === ======= ======= ======= ======= ======= Balance at December 31, 1994 $59 $44,261 $(2,637) $26,544 $(5,148) $63,079 Net income - - - 6,771 - 6,771 Exercise of stock options - (124) - - 1,428 1,304 Dividends paid - - - (551) - (551) Unrealized investment gain, net - - 6,005 - - 6,005 --- ------- ------- ------- ------- ------- Balance at June 30, 1995 $59 $44,137 $ 3,368 $32,764 $(3,720) $76,608 === ======= ======= ======= ======= =======
See accompanying notes to consolidated financial statements 5 US FACILITIES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (000 omitted)
Six Months Ended June 30, ------------------------- 1995 1994 -------- ------- Cash provided by operating activities $ 4,252 $ 4,070 -------- ------- Cash flows from investing activities: Purchases of fixed maturity investments (72,386) (7,968) Purchases of equity securities (1,924) (6,138) Proceeds from sales of investment securities 54,568 10,223 Net sales (purchases) of short-term investments 20,011 (934) Purchases of property and equipment (124) (125) -------- ------- Cash provided by (used in) investing activities 145 (4,942) -------- ------- Cash flows from financing activities: Dividends paid (551) --- Exercise of stock options 1,304 669 -------- ------- Cash provided by financing activities 753 669 -------- ------- Net increase (decrease) in cash and invested cash 5,150 (203) Cash and invested cash at beginning of period 4,502 2,851 -------- ------- Cash and invested cash at end of period $ 9,652 $ 2,648 ======== ======= Supplemental Disclosure of Cash Flow Information: Interest paid $ 1,078 $ 0 ======== ======= Income taxes paid $ 1,780 $ 530 ======== =======
See accompanying notes to consolidated financial statements. 6 US FACILITIES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. GENERAL. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the six months ended June 30, 1995 are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Registrant's 1994 Annual Report to Stockholders. 2. OTHER. Other expenses include $547,000 incurred in the second quarter of 1995 resulting from the closure of the Registrant's US MedCare Review operations effective May 31,1995. Results for the 1995 six month period also include an expense of $695,000 pertaining to the resignation of the Registrant's former Chief Executive Officer. 7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Results of Operations - --------------------- The Registrant's consolidated revenues for the second quarter ended June 30, 1995 increased 24% to $39,932,000 from $32,185,000 in the 1994 quarter, and increased 20% to $75,391,000 for the first six months of 1995 from $62,654,000 for the 1994 period. Consolidated net income for the second quarter of 1995 increased 406% to $3,849,000 from $761,000 for the second quarter of 1994, and for the first six months of 1995 increased 398% to $6,771,000 from $1,361,000 in the 1994 six month period. The 1995 results reflect improvements in profitability in each of the Registrant's business segments resulting from growth in revenues due to increased marketing efforts, lower claims cost and the effect of the Registrant's cost control programs which began during 1994. The Registrant incurred an expense of $547,000 in the second quarter of 1995 resulting from the closure of its US MedCare Review ("USMCR") operations effective May 31,1995. Results for the 1995 six month period also include an expense of $695,000 pertaining to the resignation of the Registrant's former Chief Executive Officer. Net income for the 1994 six month period was negatively impacted by several events. The Registrant became the target of an unsolicited take-over proposal and involved in a proxy contest with Fidelity National Financial, Inc. ("Fidelity National"). The expenses of responding to those issues reduced the Registrant's pretax income by $1,504,000 for the quarter and six months ended June 30, 1994. The Registrant also posted a non-recurring restructuring charge during the second quarter of 1994 which reduced pretax income by $654,000. In addition to the unusual expenses noted above, claims incurred as a result of the Northridge, California earthquake in January 1994 reduced pre-tax income by $2,100,000 for the six month period ended June 30, 1994. Consolidated net investment income increased 72% to $2,411,000 in the 1995 quarter compared to $1,402,000 in the 1994 quarter, and increased 63% to $4,575,000 for the 1995 six month period from $2,800,000 in the 1994 six month period, reflecting continuing growth in USF RE's asset base and generally higher rates of interest earned on securities purchased during the latter part of 1994 and the first quarter of 1995. Additionally, during 1995 the Registrant invested new funds in taxable bonds rather than tax-exempt bonds. Tax-exempt bonds continue to account for the major portion of the investment portfolio. 8 Consolidated general and administrative expenses declined 14% to $3,871,000 in the 1995 quarter from $4,501,000 in the 1994 quarter, and decreased 12% to $7,961,000 for the 1995 six month period from $8,998,000 in the 1994 six month period, primarily due to cost savings realized from a restructuring involving closings of branch offices, reductions in personnel, and expense controls implemented during the second half of 1994. Income tax as a percentage of pre-tax income fluctuates depending on the proportion of tax-exempt investment income to total pre-tax income. Business Segments - ----------------- The Registrant conducts business primarily in two segments: (a) Medical stop-loss and employee benefit products, which includes all commission and fee-based revenues of the Registrant and reinsurance of 50% of the medical stop-loss business generated by the Registrant's wholly owned subsidiary, USBenefits Insurance Services, Inc. ("USBenefits"). USBenefits acts as the underwriting manager and marketing organization for medical stop-loss coverages issued for The Continental Insurance Company, an unaffiliated party which during the second quarter of 1995 became a member of the CNA Insurance Companies Group. USBenefits also markets other employee benefits related products. (b) Property and casualty insurance and reinsurance underwriting conducted by the Registrant's wholly-owned subsidiaries, USF RE INSURANCE COMPANY ("USF RE") and USF Insurance Company ("USFIC"). Business lines included in this segment are property/casualty reinsurance assumed nationwide from unaffiliated insurance companies, primarily through reinsurance intermediaries, and surplus lines insurance underwritten by USFIC. During the second quarter of 1995 USF RE ceased writing new business in its plate glass insurance line of business, which line accounted for 5% of earned premiums in 1994. The tables set forth below present pre-tax operating information for each of the Registrant's business segments and for its holding company operations (including realized gains) for the quarters and six month periods ended June 30, 1995 and 1994: 9
Quarter Ended Six Months Ended June 30 June 30 1995 1994 %Change 1995 1994 %Change ------------------------------------------------------- Stop-Loss and Employee - ---------------------- Benefit Products - ---------------- (000 omitted) Revenue: Premiums earned $21,366 $18,977 13 % $40,938 $37,271 10 % Commissions & fees 6,828 6,341 8 % 13,248 12,405 7 % Investment income 876 547 60 % 1,620 1,066 52 % ------- ------- ------- ------- Total Revenues 29,070 25,865 12 % 55,806 50,742 10 % ------- ------- ------- ------- Expenses: Losses & loss adjustment 13,855 12,651 10 % 26,678 25,139 6 % Policy acquisition 7,272 6,160 18 % 13,694 12,353 11 % General and administrative 2,816 3,292 (14)% 5,863 6,869 (15)% ------- ------- ------- ------- Total Expenses 23,943 22,103 8 % 46,235 44,361 4 % ------- ------- ------- ------- Income before income taxes $ 5,127 $ 3,762 36 % $ 9,571 $ 6,381 50 % ======= ======= ======= =======
Medical stop-loss production increased 10% in the 1995 quarter and 9% in the 1995 six month periods over the 1994 comparable periods, generating the indicated gains in premiums earned and commissions and fees revenues. The changes in medical stop-loss production were primarily due to strong retention of in-force accounts and continuing growth in new business. The increase in profitability of medical stop-loss is due, in part, to the declining rate of increase in the cost of healthcare over the prior year, reduction in general and administrative expenses and improved underwriting selection. The increases in acquisition expenses are primarily related to the additional revenues produced.
Quarter Ended Six Months Ended June 30 June 30 -------------------------- ------------------------------ 1995 1994 %Change 1995 1994 %Change --------------------------- ------------------------------ Property and - ------------ Casualty Underwriting - --------------------- (000 omitted) Revenue: Premiums earned $ 9,275 $5,417 71 % $16,398 $ 9,947 65% Investment income 1,530 855 79 % 2,937 1,734 69% ------- ------ ------- -------- Total revenues 10,805 6,272 72 % 19,335 11,681 66% ------- ------ ------- -------- Expenses: Losses & loss adjustment 6,604 4,055 63 % 11,421 9,034 26% Policy Acquisition 2,213 1,962 13 % 4,551 3,848 18% General and Administrative 714 918 (22)% 1,605 1,612 - ------- ------ ------- -------- Total Expenses 9,531 6,935 37 % 17,577 14,494 21% ------- ------ ------- -------- Income (loss) before income taxes $1,274 $( 663) - $ 1,758 $( 2,813) - ====== ====== ======= ========
10 The increases in premiums earned during the 1995 periods as compared to the 1994 periods result from the continued growth of USF RE's property/casualty reinsurance operations due to marketing efforts, increased production from its client base, and an increase in statutory surplus. Also contributing to this increase was growth in surplus lines premium writings as USFIC expanded its operations into additional states. The increases in losses and loss adjustment expenses in 1995 resulted directly from the increase in earned premiums, while the second quarter of 1994 was affected by an abnormal frequency of large claims. For the six months ended June 30, 1994, losses and loss adjustment expenses includes $2.1 million of claims incurred as a result of the Northridge, California earthquake in January 1994. Increases in policy acquisition expenses, which include commissions and a portion of general and administrative expenses, result from the increases in earned premiums, and vary depending on the mix of business written and the total amount of general and administrative expenses.
Quarter Ended Six Months Ended June 30 June 30 ------------------------- --------------------------- 1995 1994 %Change 1995 1994 %Change ------------------------- --------------------------- Holding Company Operations - -------------------------- (000 omitted) Revenues: Investment income $ 5 $ - - $ 18 $ - - Realized gains 52 48 8 % 232 231 - ------ ------ ------ ------ Total revenues 57 48 19 % 250 231 8 % Expenses: General and administrative 341 291 17 % 493 517 (5)% Expenses related to unsolicited takeover proposal - 1,504 - - 1,504 - Restructuring - 654 - - 654 - Other 547 - - 1,242 - - Interest 547 1 - 1,089 3 - ------ ------ ------ ------ Total expenses 1,435 2,450 (41)% $2,824 $2,678 5 % ------ ------ ------ ------ Loss before income taxes $(1,378) $(2,402) (43)% $(2,574) $(2,447) 5 % ======= ======= ======= =======
The increase in interest expense resulted from a $25,000,000 bank loan obtained by the Registrant in December 1995. Of this amount, $20,000,000 was contributed to the surplus of USF RE and USFIC to support additional growth in both medical stop-loss and property/casualty premiums in 1995 and beyond. Accounting Policies - ------------------- Statement of Financial Accounting Standards No. 107, "Disclosures About Fair Value of Financial Instruments," will be adopted by the Registrant for the year ending December 31,1995. Adoption is not expected to have a material effect on the financial statements of the Registrant. 11 Inflation - --------- The healthcare marketplace has been subject to the effects of increasing costs for provider services. Such growth in the costs of healthcare tends to generate not only increases in premiums for medical stop-loss coverage, resulting in greater revenues, but also higher claim payments. Inflation can negatively impact insurance and reinsurance operations by causing higher claim settlements than may have originally been estimated, while not necessarily allowing an immediate increase in premiums to a level necessary to maintain profit margins. The Registrant makes no explicit provisions for inflation, but trends are considered when setting underwriting terms and claim reserves. Such reserves are subjected to a continuing review process to assess their adequacy and are adjusted as deemed appropriate. Overall economic trends also affect interest rates, which in turn affect investment income and the market value of the Registrant's investment portfolio. Liquidity and Financial Resources - --------------------------------- The Registrant utilizes cash from operations and maturing investments to meet its insurance obligations to policyholders and claimants. Primary sources of cash from operations include premium collections, investment income and commissions and fees. The principal uses of cash from operations are for premium payments to insurance companies, payments of claims under insurance and reinsurance contracts, and operating expenses such as salaries, commissions, taxes and general overhead. The Registrant anticipates that it will continue to generate sufficient cash flow from operations to cover its short-term (1 to 18 months) and long-term (18 months to 3 years) liquidity needs. While the Registrant currently has no immediate plans for significant capital outlays, it is contemplating acquisition opportunities that complement its business operations. The Registrant invests primarily in the highest grades of bonds, equities, certificates of deposit and other short-term instruments. At June 30, 1995, 99% of its investment portfolio was rated A or better. All such securities are carried at quoted market values as of the balance sheet date. Other than as discussed above, the Registrant is not aware of any known trends, events or uncertainties that have had or are reasonably likely to have a material effect on the Registrant's liquidity, capital resources or operations. 12 Legislative and Regulatory Developments. - --------------------------------------- Healthcare legislation, which was extensively considered but not adopted by Congress during 1994, has been taken up by the 1995 Congress. As with prior efforts, such legislation concerns government regulation and control of the financing and delivery of healthcare. Among the items being considered are proposals concerning the scope of the preemptive provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Some of these proposals would reinforce the ERISA preemption of state regulation of self-insured plans, while others would permit states the authority to regulate specific aspects of self- insured plans. At the present time, some states are seeking to implement their own healthcare legislation. Many of these state initiatives have focused on small group health plans (50 employees or less), which currently account for approximately 14% of the Registrant's medical stop-loss premiums. Other state efforts include attempts to regulate self-insured plans directly or indirectly by regulating companies providing stop-loss coverage. In addition, the National Association of Insurance Commissioners has drafted a "model law" that would seek to indirectly regulate self-insured plans by imposing conditions on medical stop-loss policies issued to self-insured employers that could affect the ability of certain employers to self-insure their health plans. Among such conditions is a requirement that stop-loss policies contain a minimum specific attachment point of $20,000. Presently, self-insured plans with specific attachment points of less than $20,000 account for approximately 18% of the Registrant's medical stop-loss premiums. The draft NAIC Model Law is expected to be submitted for adoption by the NAIC at its September meeting. Thereafter, it must be adopted by legislative action in each state before it can become law in such state. The Registrant does not know at this time the extent to which the federal or state legislative or regulatory initiatives discussed above will be adopted, or what impact they would have on the Company's business. Management believes that changes to the healthcare system which ultimately may be adopted will continue to recognize employers' self-insurance of healthcare benefits as a viable and cost effective method of financing healthcare. Accordingly, management believes that its stop-loss products will continue to be an appropriate component to assure the solvency of self-insured plans, and will remain a source of revenues to the Registrant. 13 PART II OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The Registrant's 1995 Annual Meeting of Stockholders ("Annual Meeting") was held on May 24, 1995 in Costa Mesa, California. A total of 4,925,840 shares were present at the Annual Meeting in person or by proxy, representing 88.7% of the 5,552,798 shares of the Registrant's $.01 par value common stock issued and outstanding on the record date, March 31, 1995, and eligible to vote. (b) (i) The Registrant's stockholders were asked to elect three of the Registrant's nine directors who would serve for a term of three years expiring at the 1998 Annual Meeting of Stockholders. Management nominated David L. Cargile, Charles L. Schultz and Howard S. Singer for the three directorships. All of management's nominees were elected as directors at the Annual Meeting and no individuals were nominated in opposition to management's slate of directors. (ii) Set forth below are the results of the voting for the director nominees as reported by the Inspector of Elections for the Registrant's Annual Meeting. There were no broker non-votes.
Name For Withhold - --------------------- --------- -------- David L. Cargile 4,537,217 388,623 Charles L. Schultz 4,533,817 392,023 Howard S. Singer 4,537,317 388,523
(iii) The names of the directors who are continuing in office are as follows: Jonathan D. DuBois, Bernard H. Ross, Kenneth C. Tyler, John A. Allison, John F. Kooken and L. Steven Medgyesy. (c) In addition to the election of directors, the Registrant's stockholders were asked to consider two other matters. (i) Stockholders were asked to consider a resolution to amend the Registrant's 1991 Employee Stock Option Plan to increase the number of shares authorized for issuance under the Plan. The affirmative vote of the holders of a majority of the shares of the Registrant's common stock voting on this proposal was required for adoption. The proposal was adopted by the Registrant's stockholders at the Annual Meeting. The results of the vote on this proposal as reported by the Inspector of Elections is set forth below. There were no broker non-votes. 14 For Against Abstain - --- ------- ------- 4,198,854 664,712 7,739 (ii) Stockholders were also asked to ratify the selection by the Board of Directors of KPMG Peat Marwick to continue to serve as the Registrant's independent auditors for the fiscal year ending December 31, 1995, unless in the opinion of the Board of Directors, KPMG Peat Marwick is not in a position to continue providing its services to the Registrant or the continuation of the audit relationship is inappropriate. The affirmative vote of the holders of a majority of the shares of the Registrant's common stock voting on this proposal was required for its adoption. The proposal was adopted by the Registrant's stockholders at the Annual Meeting. The results of the vote on this proposal as reported by the Inspector of Elections is set forth below. There were no broker non-votes. For Against Abstain - --- ------- ------- 4,648,814 272,486 4,539 Item 6. EXHIBITS and REPORTS ON FORM 8-K. (a) The following is a list of exhibits required to be filed as part of this Form 10-Q by Item 601 of Regulation S-K: 3.1, 4.1 Restated Certificate of Incorporation, as amended, as presently in effect. Filed as Exhibits 3.1 and 3.1.1 to the Registrant's Form S-1 Registration Statement declared effective by the Securities and Exchange Commission on October 31, 1986 (the "Registration Statement"), and incorporated herein by this reference; and as Exhibit 3 to the Registrant's Current Report on Form 8-K dated May 24, 1990, and incorporated herein by this reference. 3.2, 4.2 Bylaws of US Facilities Corporation, as amended, as presently in effect. Filed as Exhibit 4.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, and incorporated herein by this reference. 4.3 Stock Certificate of US Facilities Corporation. Filed as Exhibit 4.1 to the Registrant's Registration Statement, and incorporated herein by this reference. 15 4.4 Rights Agreement. Filed as Exhibit 2 to the Registrant's Current Report on Form 8-K dated May 24, 1990, and incorporated herein by this reference. 4.5 First Amendment to Rights Agreement. Filed as Exhibit 1 to the Registrant's Current Report on Form 8-K dated January 16, 1992, and incorporated herein by this reference. 4.6 Second Amendment to Rights Agreement. Filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated April 29, 1994, and incorporated herein by this reference. 11 US Facilities Corporation and Subsidiaries Computation of Earnings Per Share. 15 Independent Auditors' letter regarding unaudited interim financial information. 27 Financial Data Schedules (b) No current reports on Form 8-K were filed by the Registrant during the quarter ended June 30, 1995. 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. US FACILITIES CORPORATION Date: August 9, 1995 By: /S/ DAVID L. CARGILE -------------------------- DAVID L. CARGILE Chairman of the Board, President and Chief Executive Officer Date: August 9, 1995 By: /S/ MARK BURKE -------------------------- MARK BURKE Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) 17 EXHIBIT INDEX 4.1 Restated Certificate of Incorporation, as amended, as presently in effect. Filed as Exhibits 3.1 and 3.1.1 to the Registrant's Form S-1 Registration Statement declared effective by the Securities and Exchange Commission on October 31, 1986 (the "Registration Statement"), and incorporated herein by this reference; and as Exhibit 3 to the Registrant's Current Report on Form 8-K dated May 24, 1990, and incorporated herein by this reference. 4.2 Bylaws of US Facilities Corporation, as amended, as presently in effect. Filed as Exhibit 4.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, and incorporated herein by this reference. 4.3 Stock Certificate of US Facilities Corporation. Filed as Exhibit 4.1 to the Registrant's Registration Statement, and incorporated herein by this reference. 4.4 Rights Agreement. Filed as Exhibit 2 to the Registrant's Current Report on Form 8-K dated May 24, 1990, and incorporated herein by this reference. 4.5 First Amendment to Rights Agreement. Filed as Exhibit 1 to the Registrant's Current Report on Form 8-K dated January 16, 1992, and incorporated herein by this reference. 4.6 Second Amendment to Rights Agreement. Files as Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated April 29, 1994, and incorporated herein by this reference. 11 US Facilities Corporation and Subsidiaries Computation of Earnings Per Share. 15 Independent Auditors' letter regarding unaudited interim financial information. 27 Financial Data Schedules
18 EX-11 2 COMPUTATION OF EARNINGS EXHIBIT 11 US FACILITIES CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE The computation of per share income is based upon the weighted average number of common and common equivalent shares outstanding during each quarter ended June 30, as follows:
Quarter Ended Six Months Ended June 30 June 30 ----------------- ------------------ 1995 1994 1995 1994 ------ ------ ------ ------ (000 omitted, except per share data) Net income $3,849 $ 761 $6,771 $1,361 ====== ====== ====== ====== Weighted average shares outstanding during the period 5,571 5,777 5,506 5,761 Common stock equivalent shares 203 272 169 232 ------ ------ ------ ------ Common and common stock equivalent shares out- standing for purposes of calculating income per share 5,774 6,049 5,675 5,993 Incremental shares to reflect full dilution 51 11 85 51 ------ ------ ------ ------ Total shares for purpose of calculating fully diluted income per share 5,825 6,060 5,760 6,044 ====== ====== ====== ====== Net income per common and common equivalent share $ 0.67 $ 0.13 $ 1.19 $ 0.23 ====== ====== ====== ======
EX-15 3 AUDITORS' REVIEW REPORT EXHIBIT 15 Independent Auditors' Review Report ----------------------------------- The Board of Directors and Shareholders US Facilities Corporation: We have reviewed the condensed consolidated balance sheet of US Facilities Corporation and subsidiaries as of June 30, 1995, and the related consolidated income statements for the three-month and six-month periods ended June 30, 1995 and 1994, and the related consolidated statements of stockholders' equity and condensed consolidated statements of cash flows for the six-month periods ended June 30, 1995 and 1994. These consolidated financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of US Facilities Corporation and subsidiaries as of December 31, 1994, and the related consolidated income statements, statements of stockholders' equity and cash flows for the year then ended (not presented herein); and in our report dated February 17, 1995, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1994, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ KPMG PEAT MARWICK LLP Los Angeles, California July 27, 1995 EX-27 4 FINANCIAL DATA SCHEDULE
7 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS 6-MOS DEC-31-1995 DEC-31-1995 APR-01-1995 JAN-01-1995 JUN-30-1995 JUN-30-1995 0 0 0 0 0 0 0 0 0 0 0 0 0 142,398 0 34,083 0 15,704 0 0 0 223,341 0 75,450 0 17,866 0 0 0 0 0 25,000 0 0 0 0 0 0 0 0 0 223,341 30,641 57,366 2,411 4,575 52 232 6,828 13,248 20,459 38,099 9,485 18,245 3,871 7,961 5,023 8,755 1,174 1,984 0 0 0 0 0 0 0 0 3,849 6,771 0.67 1.19 0.67 1.19 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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