-----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, P5nIFQRdGa22k+CqJyjjqe11U1B9Y3TrwNrY8IkYUUJRqC9z/KE3t3b/1jeiYBd3 DPC/fqCad1lINH1VK48Jsw== 0000950152-96-001944.txt : 19960502 0000950152-96-001944.hdr.sgml : 19960502 ACCESSION NUMBER: 0000950152-96-001944 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960501 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROGRESSIVE CORP/OH/ CENTRAL INDEX KEY: 0000080661 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 340963169 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09518 FILM NUMBER: 96554587 BUSINESS ADDRESS: STREET 1: 6300 WILSON MILLS RD CITY: MAYFIELD VILLAGE STATE: OH ZIP: 44143 BUSINESS PHONE: 2164615000 MAIL ADDRESS: STREET 1: 6300 WILSON MILLS RD CITY: MAYFIELD VILLAGE STATE: OH ZIP: 44143 10-Q 1 PROGRESSIVE CORPORATION 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 1O-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 --------------------------------------------- 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 1-9518 --------------------------------------------- THE PROGRESSIVE CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Ohio 34-0963169 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6300 Wilson Mills Road, Mayfield Village, Ohio 44143 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (216) 461-5000 ------------------------------------------------------ (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 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Shares, $1.00 par value: 72,243,975 outstanding at March 31, 1996 2 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements. The Progressive Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Three months ended March 31, 1996 1995 % Change - ------------------------------------------------------------------------------------------------------------ (millions - except per share amounts) NET PREMIUMS WRITTEN $810.2 $ 686.9 18 =============================== REVENUES Premiums earned $732.0 $ 624.3 17 Investment income 52.7 44.8 18 Net realized gains on security sales 4.9 15.4 (68) Service revenues 9.4 9.3 1 ------------------------------ Total revenues 799.0 693.8 15 ------------------------------ EXPENSES Losses and loss adjustment expenses 525.4 436.9 20 Policy acquisition costs 120.1 106.6 13 Other underwriting expenses 41.0 44.0 (7) Investment expenses 1.8 2.1 (14) Service expenses 9.3 8.4 11 Interest expense 14.3 14.3 -- ------------------------------ Total expenses 711.9 612.3 16 ------------------------------ NET INCOME Income before income taxes 87.1 81.5 7 Provision for income taxes 23.8 20.8 14 ------------------------------ Net income $ 63.3 $ 60.7 4 ============================== PER SHARE Primary $ .82 $ .79 4 Fully diluted .82 .79 4 WEIGHTED NUMBER AVERAGE EQUIVALENT SHARES Primary 74.6 74.0 1 Fully diluted 74.6 74.1 1
See notes to consolidated financial statements. 2 3 The Progressive Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS (unaudited)
March 31, December 31, --------------------------------------------- 1996 1995 1995 - ----------------------------------------------------------------------------------------------------------------- (millions) ASSETS Investments: Held-to-maturity: Fixed maturities, at amortized cost (market: $329.0) $ -- $ 321.0 $ -- Available-for-sale: Fixed maturities, at market (amortized cost: $3,112.1, $2,219.0 and $2,729.5) 3,120.4 2,201.8 2,772.9 Equity securities, at market Preferred stocks (cost: $327.9, $286.0 and $379.4) 329.9 282.5 382.3 Common stocks (cost: $337.8, $148.4 and $277.6) 368.6 156.9 310.0 Short-term investments, at amortized cost (market: $248.5, $298.5 and $302.8) 248.5 298.5 302.8 --------------------------------------------- Total investments 4,067.4 3,260.7 3,768.0 Cash 13.9 15.2 16.2 Accrued investment income 41.3 36.5 39.8 Premiums receivable, net of allowance for doubtful accounts of $19.0, $16.4 and $19.2 721.9 574.4 649.9 Reinsurance recoverables 333.7 387.7 338.1 Prepaid reinsurance premiums 78.5 77.0 70.5 Deferred acquisition costs 186.2 170.9 181.9 Income taxes 54.1 88.4 58.3 Property and equipment, net of accumulated depreciation of $133.6, $121.4 and $128.7 165.1 149.2 159.2 Other assets 24.6 90.9 70.6 --------------------------------------------- Total assets $5,686.7 $4,850.9 $5,352.5 ============================================= LIABILITIES AND SHAREHOLDERS' EQUITY Unearned premiums $1,295.8 $1,093.1 $1,209.6 Loss and loss adjustment expense reserves 1,653.8 1,486.0 1,610.5 Policy cancellation reserve 37.5 43.3 40.8 Accounts payable and accrued expenses 517.1 310.9 339.9 Funded debt 675.9 675.7 675.9 --------------------------------------------- Total liabilities 4,180.1 3,609.0 3,876.7 --------------------------------------------- Shareholders' equity: 9 3/8% Serial Preferred Shares, Series A (issued and outstanding, 3.2, 3.5 and 3.4) 78.4 85.8 83.6 Common Shares, $1.00 par value (treasury shares of 10.9, 11.2 and 11.0) 72.2 71.8 72.1 Paid-in capital 380.0 368.9 374.8 Net unrealized appreciation (depreciation) on investment securities 26.6 (7.9) 51.1 Retained earnings 949.4 723.3 894.2 --------------------------------------------- Total shareholders' equity 1,506.6 1,241.9 1,475.8 --------------------------------------------- Total liabilities and shareholders' equity $5,686.7 $4,850.9 $5,352.5 =============================================
See notes to consolidated financial statements. 3 4 The Progressive Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three months ended March 31, 1996 1995 - ---------------------------------------------------------------------------------------------------------- (millions) CASH FLOWS FROM OPERATING ACTIVITIES Net income $63.3 $ 60.7 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5.2 4.8 Net realized gains on security sales (4.9) (15.4) Changes in: Unearned premiums 86.2 56.4 Loss and loss adjustment expense reserves 43.3 51.6 Accounts payable and accrued expenses 29.7 (12.5) Policy cancellation reserve (3.3) (4.0) Prepaid reinsurance premiums (8.0) 6.2 Reinsurance recoverables 4.4 (8.0) Premiums receivable (72.0) (32.0) Deferred acquisition costs (4.3) (9.3) Income taxes 17.3 2.4 Other, net 2.2 8.8 ----------------------------- Net cash provided by operating activities 159.1 109.7 CASH FLOWS FROM INVESTING ACTIVITIES Purchases: Available-for-sale: fixed maturities (1,663.8) (752.9) equity securities (178.8) (249.8) Sales: Available-for-sale: fixed maturities 1,174.5 510.8 equity securities 161.2 288.1 Maturities, paydowns, calls and other: Held-to-maturity: fixed maturities -- 16.0 Available-for-sale: fixed maturities 98.8 164.4 equity securities 17.9 9.1 Net (purchases) sales of short-term investments 54.3 (19.4) (Receivable) payable on securities 193.7 (68.9) Purchase of property and equipment (11.1) (11.6) ------------------------------ Net cash used in investing activities (153.3) (114.2) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from exercise of stock options 3.3 6.3 Tax benefit from exercise of stock options 2.4 6.1 Payments on funded debt (.1) (.1) Dividends paid to shareholders (5.9) (6.0) Acquisition of treasury shares (7.8) -- ------------------------------ Net cash provided by (used in) financing activities (8.1) 6.3 ------------------------------ Increase (decrease) in cash (2.3) 1.8 Cash, January 1 16.2 13.4 ------------------------------ Cash, March 31 $13.9 $ 15.2 ==============================
See notes to consolidated financial statements. 4 5 The Progressive Corporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1 Supplemental Cash Flow Information -- The Company paid income taxes of $0 and $6.5 million for the periods ended March 31, 1996 and 1995, respectively. Total interest paid was $6.6 million for both periods which ended March 31, 1996 and 1995, respectively. NOTE 2 Funded debt at March 31 consisted of:
1996 1995 -------------------------------- -------------------------------- Market Market Cost Value Cost Value ----------- ---------- ----------- ----------- 6.60% Notes $198.7 $195.3 $198.6 $182.5 7% Notes 148.3 142.5 148.2 130.8 8 3/4% Notes 29.3 32.0 29.1 31.2 10% Notes 149.5 170.5 149.4 165.3 10 1/8% Subordinated Notes 149.4 171.1 149.3 165.7 Other Funded debt .7 .7 1.1 1.1 ----------- ---------- ----------- ----------- $675.9 $712.1 $675.7 $676.6 =========== ========== =========== ===========
NOTE 3 On March 31, 1996, the Company paid a quarterly dividend of $.055 per Common Share and a regular quarterly dividend of approximately $.59 per share on the 9 3/8% Serial Preferred Shares, Series A, to shareholders of record as of the close of business on March 8, 1996. Both dividends were declared by the Board of Directors on February 9, 1996. On April 16, 1996, the Company called for redemption, on May 31, 1996, all of its outstanding 9 3/8% Serial Preferred Shares, Series A. SEE MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS for further discussion. On April 26, 1996, the Board of Directors declared a quarterly dividend of $.055 per Common Share, payable June 30, 1996, to shareholders of record as of the close of business on June 14, 1996. NOTE 4 Certain amounts in the consolidated financial statements for prior periods were reclassified to conform with the 1996 presentation. NOTE 5 The consolidated financial statements reflect all normal recurring adjustments which were, in the opinion of management, necessary to present a fair statement of the results for the interim periods. The results of operations for the period ended March 31, 1996, are not necessarily indicative of the results expected for the full year. 5 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATIONS For the first quarter 1996, operating income, which excludes net realized gains and losses on security sales, was $60.2 million, or $.78 per share, compared to $50.7 million, or $.66 per share, last year. The combined ratio was 93.8, compared to 94.1 for the first quarter 1995. Net premiums written increased 18% over the first quarter 1995, primarily reflecting an increase in unit sales. Premiums earned, which are a function of the amount of premiums written in the current and prior periods, increased 17% for the quarter. Service revenue increased 1% to $9.4 million for the quarter. Claim costs, which represent actual and estimated future payments to or for our policyholders, as well as loss estimates for future assignments and assessments under state-mandated assigned risk programs, increased as a percentage of premiums earned to 72% for the quarter, compared to 70% in 1995. Policy acquisition costs and other underwriting expenses as a percentage of premiums earned decreased to 22% for the first quarter, compared to 24% in 1995. Service expenses increased 11% for the quarter, primarily reflecting an increase in loss adjustment expense reserves. Recurring investment income (interest and dividends) increased 18% for the quarter, primarily reflecting an increase in the average investment portfolio. The Company had net realized gains on security sales of $4.9 million for the quarter, compared to $15.4 million in the first quarter of 1995. At March 31, 1996, the Company's portfolio had $41.1 million in total unrealized gains, compared to $78.7 million at December 31, 1995, primarily reflecting an increase in interest rates as evidenced by the 3-year treasury note yield increasing from 5.2% to 5.9% during the quarter. The Company continues to invest in fixed maturity, equity and short-term securities. The majority of the portfolio was in short-term and intermediate-term, investment-grade fixed-income securities ($3,276.4 million, or 80.6%, at March 31, 1996 and $2,617.0 million, or 80.3%, at March 31, 1995). Long-term investment-grade fixed-income securities represented $86.1 million, or 2.1%, and $53.7, or 1.6%, of the total investment portfolio at March 31, 1996 and 1995, respectively. The duration of the fixed-income portfolio was 2.8 years at March 31, 1996, compared to 1.9 years at March 31, 1995. Equity investments are comprised of preferred stocks ($329.9 million, or 8.1%, in 1996 and $282.5 million, or 8.7%, in 1995), and common stocks ($368.6 million, or 9.1%, in 1996 and $156.9 million, or 4.8%, in 1995). The increase in common stocks reflects the Company's objective to increase its position in common stock investments to 15% of the entire portfolio and to optimize value and further diversify the portfolio through foreign equity investments. As of March 31, 1996 and 1995, the non-investment-grade fixed-income securities of the Company were $6.4 million, or .1%, and $150.6 million, or 4.6%, respectively, of the total investment portfolio. 6 7 The Company's financial instruments with off-balance-sheet risk had a net market value of $2.6 million as of March 31, 1996, compared to a $.6 million loss as of March 31, 1995. The weighted average annualized fully taxable equivalent book yield of the portfolio was 6.7% and 6.8% for the quarters ended March 31, 1996 and 1995, respectively. FINANCIAL CONDITION Progressive's insurance operations create liquidity by collecting and investing premiums written from new and renewal business in advance of paying claims. For the three months ended March 31, 1996, operations generated a positive cash flow of $159.1 million. During the first quarter, 51,960 Common Shares were repurchased in conjunction with various employee benefit plans at an average cost of $44.95 per share and 216,000 9 3/8% Serial Preferred Shares, Series A, were repurchased in the open market at an average cost of $25.64 per share. On April 16, 1996, the Company called for redemption, on May 31, 1996, all of its outstanding 9 3/8% Serial Preferred Shares, Series A. The redemption will be made at the redemption price of $25.00 per share plus accrued but unpaid dividends through the redemption date. From and after the redemption date, dividends will cease to accrue on the Preferred Shares. The Company may fund the redemption through operating cash flows or by issuing notes or other debt securities in a partial take-down under its $200 million shelf registration, which became effective March 29, 1996. On April 26, 1996, the Board of Directors reset, at 6 million, the Company's authorization to repurchase Common Shares from time to time in the open market or otherwise when opportunities exist to buy at attractive prices or for purposes which are otherwise in the best interest of the Company. The acquired shares may be used in connection with employee stock benefit plans, held for other purposes or retired. RECENT DEVELOPMENTS During the first quarter, the Company finalized its plans to reorganize its operating structure to bring the Company closer to its customers and deliver better, faster service. The new structure is organized around five processes (product, brand, buying, ownership and claims), each led by a process leader, and is designed to enhance the Company's distribution channels, enable quicker implementation of product and process improvements, and continue the Company's efforts to reduce operating expenses through streamlined work flow. As part of the reorganization, the Company created a ten person Policy Team, which will be the focal point for setting companywide policy, strategy and priorities. The Policy Team consists of -- Alan Bauer (Buying), Chuck Chokel (Chief Financial Officer), Allan Ditchfield (Chief Information Officer), Tom Forrester (Ownership), Willy Graves (Claims), Daniel Lewis (South Florida Community Manager), Peter Lewis (Chief Executive Officer), Bob McMillan (Product), Glenn Renwick (Brand) and Tiona Thompson (Chief Human Resources Officer). All Policy Team members will report to Peter Lewis. 7 8 PART II - OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders. At the April 26, 1996 Annual Meeting of the Shareholders of the Company, 69,630,628 Common Shares were represented in person or by proxy. At the meeting, the shareholders elected the eight directors named below, each to serve for a term of one year. The votes cast for each director were as follows:
For Withheld ---------- -------- Milton N. Allen 69,415,955 214,673 B. Charles Ames 69,430,635 199,993 Stephen R. Hardis 69,438,985 191,643 Janet Hill 69,441,156 189,472 Peter B. Lewis 69,404,053 226,575 Norman S. Matthews 69,434,943 195,685 Donald B. Shackelford 69,412,867 217,761 Paul B. Sigler 69,434,017 196,611
ITEM 5. Other Information. The form of Non-Qualified Stock Option Agreement (single award) and form of Non-Qualified Stock Option Agreement (multiple awards) under The Progressive Corporation 1989 Incentive Plan (collectively "NQSO Agreement Forms") are filed as Exhibits 10(B) and 10(C), respectively, to this Form 10-Q in order to supplement and amend the Company's Form S-8 Registration Statement No. 33-33240, filed with the Securities and Exchange Commission (the "Commission") on January 31, 1990, and Form S-8 Registration Statement No. 33-64210, filed with the Commission on June 10, 1993 (collectively, the "Registration Statements"). The Registration Statements incorporate by reference this Form 10-Q and, upon the filing of this Form 10-Q with the Commission, the NQSO Agreement Forms shall be incorporated into said Registration Statements as Exhibits 4(b)(2) and 4(b)(3) thereto, respectively. ITEM 6. Exhibits and Reports on Form 8-K. (a) Exhibits: See exhibit index on page 10. (b) Reports on Form 8-K during the quarter ended March 31, 1996: None 8 9 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. THE PROGRESSIVE CORPORATION --------------------------- (Registrant) Date: May 1, 1996 BY: /s/ DAVID M. SCHNEIDER --------------------- ---------------------- David M. Schneider Secretary Date: May 1, 1996 BY: /s/ CHARLES B. CHOKEL --------------------- --------------------- Charles B. Chokel Treasurer and Chief Financial Officer 9 10
EXHIBIT INDEX ------------- Exhibit No. Form 1O-Q Under Reg. Exhibit S-K, Item 601 No. Description of Exhibit ------------- --------- ---------------------- (10) 10(A) The Progressive Corporation 1996 Process Management Bonus Plan (10) 10(B) Form of Non-Qualified Stock Option Agreement under The Progressive Corporation 1989 Incentive Plan (single award) (10) 10(C) Form of Non-Qualified Stock Option Agreement under The Progressive Corporation 1989 Incentive Plan (multiple awards) (11) 11 Computation of Earnings Per Share (12) 12(A) Computation of Ratio of Earnings to Fixed Charges (12) 12(B) Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Share Dividend Requirements (27) 27 Financial Data Schedule
10 EX-10.A 2 EXHIBIT 10(A) 1 EXHIBIT NO. 10(A) ----------------- THE PROGRESSIVE CORPORATION 1996 PROCESS MANAGEMENT BONUS PLAN 2 THE PROGRESSIVE CORPORATION 1996 PROCESS MANAGEMENT BONUS PLAN 1. The Progressive Corporation and its subsidiaries ("Progressive") have created the 1996 Process Management Bonus Plan (the "Plan") to provide Process Leaders with incentives to foster teamwork, and provide strong leadership and performance, in the pursuit of Progressive's process improvement objectives. 2. The Plan will be administered by or under the direction of the Executive Compensation Committee (the "Committee") of the Board of Directors. Progressive's Process Leaders are eligible to be selected for participation in the Plan. Progressive's Chief Executive Officer ("CEO") will select the individuals who will participate in the Plan with respect to each Plan year ("participants"). Plan years shall coincide with Progressive's fiscal years. The individuals who have been selected to participate in the Plan for 1996 are identified on Exhibit A hereto. 3. Subject to the following sentence, the amount of the process management bonus earned by any participant under the Plan for any Plan year ("Process Management Bonus") will be determined by application of the following formula: Process Management Bonus = Paid Salary x Target Percentage x Performance Factor The Process Management Bonus payable to any participant with respect to any Plan year may not exceed $300,000.00. 4. The salary rate of each Plan participant for any Plan year shall be as established or approved by the Committee (or by the CEO with respect to any participants who are not executive officers) no later than ninety (90) days after commencement of such Plan year. For purposes of the Plan, "salary" and "Paid Salary" shall include (a) regular, vacation, sick, holiday and funeral pay received by the participant during the Plan year for work or services performed by the participant as an officer or employee of Progressive; (b) merit cash awards based on performance that "exceeds" expectations that are paid during the Plan year and (c) retroactive payments of any of the foregoing items paid during the same Plan year. For purposes of the Plan, "salary" and "Paid Salary" shall not include any (a) short-term or long-term disability payments, (b) discretionary bonus payments or (c) the earnings replacement component of any worker's compensation award. Notwithstanding the foregoing, if the sum of the regular, vacation, sick, holiday and funeral pay received by a participant during a Plan year exceeds his/her salary range maximum for that Plan year, then his/her Paid Salary for that Plan year shall equal his/her salary range maximum, plus any merit cash awards received by such participant during that Plan year. 5. The Target Percentage for all participants in the Plan shall be forty percent (40%) for the 1996 Plan year and for each Plan year thereafter until otherwise determined by the Committee. 3 6. The Performance Factor ---------------------- A. General ------- The Performance Factor, which measures process management performance, shall be determined annually for each participant by evaluating (a) the contribution made by such participant, in terms of leadership, performance and teamwork, as a member of his/her assigned Process Team and Progressive's Policy Team, and (b) the performance of such participant's Process Team (or other function assigned for purposes of this Plan) in meeting its assigned objectives for the Plan year, as approved by the Policy Team. B. Basis of Evaluation ------------------- For purposes of the Plan, and in accordance with the Process Management Bonus Matrix set forth below, process management performance for a given Plan year will be evaluated as follows: (1) The Policy Team will evaluate the results of each Process Team for that Plan year against criteria and by a process mutually developed and agreed to by all Policy Team members. (2) The Policy Team, through a peer review process, will evaluate the process management contribution of each Process Leader, as well as his/her overall contributions to the Policy Team. Process Leaders are expected to demonstrate leadership, teamwork and innovation within their respective process areas and with respect to specific areas of cost reduction and/or service improvement and as a member of the Policy Team. A participant that demonstrates the expected level of leadership, teamwork, innovation and achievement of assigned process performance objectives will earn a Performance Management Bonus Matrix score of 1.0. Such score can vary from 0 to 2.0, depending on performance. 4 C. Process Management Bonus Matrix ------------------------------- Process management performance results will be measured by the following Bonus Matrix: Process Team Performance: - ------------ Exceeds 0 .75 1.25 1.50 2.0 Meet/Exceeds 0 .675 1.125 1.25 1.75 Meets 0 .50 1.00 1.125 1.50 Meets/DNM 0 .25 .50 .675 1.0 Does Not Meet 0 0 0 0 0 No Some Sustained Extraordinary World Class Significant Significant Significant Process/Team Profit/Volume Individual Process/Team Process/Team Process/Team Leadership & producing break- Contribution: Contribution Contributions Contributions Innovation throughs - -------------
Process Team performance is expected to at least "meet" objectives, while individual participants are expected to make at least "sustained significant contributions" to their assigned Process Teams. The Process Management Bonus Matrix may be changed or adjusted from year to year by the CEO, subject to Paragraph 3 hereof. 7. The Process Management Bonus earned for any Plan year shall be paid to participants as soon as practicable after the results for the Plan year have been determined, but no later than March 1 of the immediately following year. The provisions of this Paragraph shall be subject to Paragraph 8 hereof. Process Management Bonuses payable under this Plan may not be deferred under The Progressive Corporation Executive Deferred Compensation Plan. 8. Unless otherwise determined by the Committee, in order to be entitled to receive a Process Management Bonus for any Plan year, the participant must be employed by Progressive on the date designated for payment thereof. Process Management Bonus payments made to participants will be net of any legally required deductions for federal, state and local taxes and other items. 9. The right to any Process Management Bonus hereunder shall not be transferred, assigned or encumbered by any participant. Nothing herein shall prevent any participant's interest hereunder from being subject to involuntary attachment, levy or other legal process. 10. The Plan shall be administered by or under the direction of the Committee. The Committee shall have the authority to adopt, alter and repeal such rules, guidelines, procedures and practices governing the Plan as it shall, from time to time, in its sole discretion deem advisable. 5 The Committee shall have full authority to determine the manner in which the Plan will operate. Subject to the foregoing, the CEO shall have full authority to interpret the provisions of the Plan and to make all determinations thereunder. All such interpretations and determinations shall be final and binding on Progressive, all Plan participants and all other parties. No such interpretation or determination shall be relied on as a precedent for any similar action or decision. 11. The Plan may be terminated, amended or revised, in whole or in part, at any time and from time to time by the Committee, in its sole discretion. 12. The Plan will be unfunded and all payments due under the Plan shall be made from Progressive's general assets. 13. Nothing in the Plan shall be construed as conferring upon any person the right to become or remain a participant in the Plan or to remain employed by Progressive, nor shall the Plan limit Progressive's right to discipline or discharge any of its officers or employees or change their job duties or compensation. 14. Progressive shall have the unrestricted right to set off against or recover out of any bonuses or other sums owed to any participant under the Plan any amounts owed by such participant to Progressive. 15. This Plan shall be effective for 1996 and for each year thereafter, unless and until terminated by or with the approval of the Committee. 16. This Plan shall be interpreted and construed in accordance with the laws of the State of Ohio. 6 1996 Process Management Bonus Plan Participants ----------------------------------------------- Process Leaders --------------- Alan Bauer Tom Forrester Willy Graves Bob McMillan Glenn Renwick EXHIBIT A EX-10.B 3 EXHIBIT 10(B) 1 EXHIBIT NO. 10(B) ----------------- FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT UNDER THE PROGRESSIVE CORPORATION 1989 INCENTIVE PLAN (SINGLE AWARD) 2 NON-QUALIFIED STOCK OPTION AGREEMENT ------------------------------------ This Agreement (the "Agreement") is made as of the _____ day of _______________, 19_____, between The Progressive Corporation, an Ohio corporation (the "Company"), and [NAME] (the "Optionee"). The Company hereby grants Optionee an option (the "Option") to purchase Common Shares, $1.00 par value, (the "Common Shares") of the Company for a per share purchase price of $_________ (the "Option Price"). The Option has been granted pursuant to The Progressive Corporation 1989 Incentive Plan (as amended and restated) (the "Plan") and shall include and be subject to all provisions of the Plan, which are hereby incorporated herein by reference, and shall be subject to the following provisions of this Agreement: 1. TERM. The Option shall become exercisable on _______________ (the "Vesting Date") and may be exercised, in whole or in part, at any time thereafter until _______________ (the "Expiration Date"), on which date the Option shall expire and no longer be exercisable. 2. METHOD OF EXERCISE. Subject to Section 1 above, the Option shall be exercisable from time to time by written notice (in form approved or furnished by the Company) to the Committee which shall: (a) state that the Option is thereby being exercised, the number of Common Shares with respect to which the Option is being exercised, each person in whose name any certificates for the Common Shares should be registered and his or her address and social security number; (b) be signed by the person or persons entitled to exercise the Option and, if the Option is being exercised by anyone other than the Optionee, be accompanied by proof satisfactory to counsel for the Company of the right of such person or persons to exercise the Option under the Plan and all applicable laws and regulations; and (c) be accompanied by such representations, warranties and agreements, in form and substance satisfactory to counsel for the Company, with respect to the investment intent of such person or persons exercising the Option as the Company may request. 3. PAYMENT OF PRICE. Upon exercise of the Option, the Company shall deliver a certificate or certificates for the Common Shares purchased thereunder to the specified person or persons at the specified time upon receipt of the full purchase price for such Common Shares: (a) by certified or bank cashier's check, or (b) by any other method of payment or combination thereof authorized by the Plan. 3 4. TRANSFERABILITY. The Option shall not be transferable by the Optionee other than by will or by the laws of descent and distribution. Subject to the following sentence, during the lifetime of the Optionee, the Option shall be exercisable (subject to any other applicable restrictions on exercise) only by the Optionee for his or her own account. Upon the death or disability of the Optionee, the Option shall be exercisable (subject to any other applicable restrictions on exercise) only by the Optionee's estate (acting through its fiduciary) or by the Optionee's duly authorized legal representative, during the period and to the extent authorized in the Plan. 5. TERMINATION OF EMPLOYMENT. If the employment of the Optionee by the Company (or any of its Subsidiaries or Affiliates) terminates: (a) due to involuntary termination without cause or due to retirement (with the employer's approval, but subject to Section 5(e) below), the Option may be exercised to the extent exercisable at the date of such termination, during the lesser of (i) two months after such date , or (ii) the balance of the Option's term; (b) due to death or disability, the provisions of Section 5(b)(6) or 5(b)(7) of the Plan, as applicable, shall apply; (c) due to resignation by the Optionee (other than by reason of a Qualified Retirement, as provided at Section 5(e) below), the Optionee may exercise the Option, to the extent of the lesser of (A) the number of Common Shares as to which the Option is exercisable on the date the Optionee ceases to be an employee or (B) the number of Common Shares as to which the Option was exercisable ninety days prior to such date, reduced by any Common Shares acquired by exercise of the Option within such ninety day period, at any time within two (2) months after the date that the Optionee ceases to be an employee (but in no event after expiration of the original term of the Option) and the Option shall not be or become exercisable as to any additional Common Shares after the date that the Optionee ceases to be an employee; (d) due to termination for cause, the Option and all rights to purchase Common Shares thereunder shall immediately terminate; and (e) due to a Qualified Retirement (as defined below), the following provisions shall apply (subject in all cases to Section 5(e)(v) hereof): (i) if the Option has vested and is exercisable as of the Qualified Retirement Date (as defined below), the Option shall not terminate upon the retirement of the Optionee, and, to the extent that it has not been previously exercised, may be exercised by the Optionee, in whole or in part, at any time between the Qualified Retirement Date and the Expiration Date; 4 (ii) subject to Section 5(e)(iii) hereof, if the Option is not vested and exercisable as of the Qualified Retirement Date, the Option shall not terminate in its entirety upon the retirement of the Optionee; instead, the Option (A) shall remain in effect with respect to fifty percent (50%) of the Common Shares which are subject to the Option as of the Qualified Retirement Date and, as to such Common Shares, shall vest and become exercisable on the Vesting Date and may be exercised by the Optionee, in whole or in part, at any time between the Vesting Date and the Expiration Date, and (B) shall terminate, effective as of the Qualified Retirement Date, with respect to the remaining fifty percent (50%) of the Common Shares that are subject to the Option as of the Qualified Retirement Date; (iii) notwithstanding Section 5(e)(ii) above, if the Option is not vested and exercisable as of the Qualified Retirement Date, but has a Vesting Date which is no later than four (4) months after the Qualified Retirement Date, then, notwithstanding the Optionee's retirement, the full Option (or, if the Option is subject to installment vesting, that portion thereof which is scheduled to vest on such Vesting Date) shall remain in effect, shall vest on such Vesting Date and may be exercised by the Optionee, in whole or in part, at any time between such Vesting Date and the Expiration Date; (iv) if the Optionee dies after the date of his or her retirement and has not exercised the Option, in whole or in part, prior to his or her death, the Optionee's estate shall have the right to exercise the Option as to (A) all Common Shares, if any, as to which the Option has vested and is exercisable as of the date of the Optionee's death, plus (B) the additional Common Shares, if any, as to which the Option would have become exercisable within one (1) year from the date of the Optionee's death pursuant to Section 5(e)(ii) and/or (iii) hereof, as applicable, but for the death of the Optionee, at any time during the one (1) year period beginning on the date of the Optionee's death (or such other period as the Committee may specify), and the balance of the Option shall terminate as of the date of the Optionee's death; (v) if the Committee determines that the Optionee is or has engaged in any Disqualifying Activity (as defined below), then (1) to the extent that the Option has vested and is exercisable as of the Disqualification Date (as defined below), the Optionee shall have the right to exercise the Option during the lesser of two months from the Disqualification Date or the balance of the Option's term and (2) to the extent that the Option is not vested and exercisable as of the Disqualification Date, the Option shall terminate as of such date. Any determination by the Committee, which may act upon the recommendation of the Chief Executive Officer or other senior officer of the Company, that the Optionee is or has engaged in any Disqualifying Activity, and as to the Disqualification Date, shall be final and conclusive. 5 (vi) As used in this Section 5(e), the following terms are defined as follows: (A) QUALIFIED RETIREMENT - any termination of the Optionee's employment with the Company or its Subsidiaries for any reason (other than death, Disability or an involuntary termination for Cause) if, at or immediately prior to the date of such termination, the Optionee satisfies both of the following conditions: (1) the Optionee shall be 55 years of age or older; and (2) the sum of the Optionee's age and completed years of service as an employee of the Company or its Subsidiaries (disregarding fractions, in both cases) shall total 70 or more. (B) QUALIFIED RETIREMENT DATE - the date as of which the Optionee's employment with the Company or its Subsidiaries shall terminate pursuant to a Qualified Retirement. (C) DISQUALIFYING ACTIVITY - means and includes each of the following acts or activities: (1) directly or indirectly serving as a principal, shareholder, partner, director, officer, employee or agent of, or as a consultant, advisor or in any other capacity to, any business or entity which competes with the Company or its Subsidiaries in any business or activity then conducted by the Company or its Subsidiaries to an extent deemed material by the Committee; or (2) any disclosure by the Optionee, or any use by the Optionee for his or her own benefit or for the benefit of any other person or entity (other than the Company or its Subsidiaries), of any confidential information or trade secret of the Company or its Subsidiaries to an extent deemed material by the Committee; or (3) any material violation of any of the provisions of the Company's Code of Conduct or any agreement between the Optionee and the Company; or (4) making any other disclosure or taking any other action which is determined by the Committee to be materially detrimental to the business, prospects or reputation of the Company or its Subsidiaries. 6 The ownership of less than 2% of the outstanding voting shares of a publicly traded corporation which competes with the Company or its Subsidiaries shall not constitute a Disqualifying Activity. (D) DISQUALIFICATION DATE - the date of any determination by the Committee that the Optionee is or has engaged in any Disqualifying Activity. 6. RESTRICTIONS ON EXERCISE. The Option is subject to all restrictions set forth in this Agreement or in the Plan. As a condition to any exercise of the Option, the Company may require the Optionee or his successor to make any representation and warranty to comply with any applicable law or regulation or to confirm any factual matters requested by counsel for the Company. 7. TAXES. The Optionee hereby agrees that he or she shall pay to the Company, in cash, any federal, state and local taxes of any kind required by law to be withheld with respect to the Option granted to him or her hereunder or the exercise thereof. If the Optionee does not make such payment to the Company, the Company shall have the right to deduct from any payment of any kind otherwise due to the Optionee from the Company (or from any Subsidiary or Affiliate of the Company), any federal, state and local taxes of any kind required by law to be withheld with respect to the Option, the exercise thereof or the Common Shares to be purchased by the Optionee under this Agreement. The Option shall not be treated as an incentive stock option under Section 422 or any successor Section thereto of the Internal Revenue Code of 1986, as amended. 8. DEFINITIONS. Unless otherwise defined in this Agreement, capitalized terms will have the same meanings given them in the Plan. THE PROGRESSIVE CORPORATION DATE OF GRANT: _________, 19____ BY: _____________________________________ TITLE: _____________________________________ 7 ACCEPTANCE OF AGREEMENT ----------------------- The Optionee hereby: (a) acknowledges receiving a copy of the Plan Description dated _______________ (the "Plan Description") relating to the Plan, and represents that he or she is familiar with all of the material provisions of the Plan, as set forth in the Plan Description; (b) accepts this Agreement and the Option granted to him or her under this Agreement subject to all provisions of the Plan and this Agreement; and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee relating to the Plan, this Agreement or the Option granted hereunder. Optionee: _________________________________________ Date: _______________________________, 19____ EX-10.C 4 EXHIBIT 10(C) 1 EXHIBIT NO. 10(C) ----------------- FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT UNDER THE PROGRESSIVE CORPORATION 1989 INCENTIVE PLAN (MULTIPLE AWARDS) 2 NON-QUALIFIED STOCK OPTION AGREEMENT ------------------------------------ This Agreement (the "Agreement") is made as of the _______ day of __________________, 19_____, between The Progressive Corporation, an Ohio corporation (the "Company"), and [NAME] (the "Optionee"). The Company hereby grants Optionee an option (the "Option") to purchase Common Shares, $1.00 par value, (the "Common Shares") of the Company for a per share purchase price of $____________ (the "Option Price"). The Option has been granted pursuant to The Progressive Corporation 1989 Incentive Plan (as amended and restated) (the "Plan") and shall include and be subject to all provisions of the Plan, which are hereby incorporated herein by reference, and shall be subject to the following provisions of this Agreement: 1. TERM. The Option shall become exercisable as follows: ___________ Common Shares may be purchased on or after _______________ and until _______________, at which date the right to purchase such Common Shares shall expire. ___________ Common Shares may be purchased on or after _______________ and until _______________, at which date the right to purchase such Common Shares shall expire. ___________ Common Shares may be purchased on or after _______________ and until _______________, at which date the right to purchase such Common Shares shall expire. The dates set forth above on or after which the Option, or any part thereof, may be exercised and specified numbers of Common Shares may be purchased hereunder are referred to herein as "Vesting Dates" and the dates set forth above as of which such stock purchase rights expire are referred to herein as "Expiration Dates." 2. Method of Exercise. Subject to Section 1 above, the Option shall be exercisable from time to time by written notice (in form approved or furnished by the Company) to the Committee which shall: (a) state that the Option is thereby being exercised, the number of Common Shares with respect to which the Option is being exercised, each person in whose name any certificates for the Common Shares should be registered and his or her address and social security number; (b) be signed by the person or persons entitled to exercise the Option and, if the Option is being exercised by anyone other than the Optionee, be accompanied by proof satisfactory to counsel for the Company of the right of such person or persons to exercise the Option under the Plan and all applicable laws and regulations; and 3 (c) be accompanied by such representations, warranties and agreements, in form and substance satisfactory to counsel for the Company, with respect to the investment intent of such person or persons exercising the Option as the Company may request. 3. PAYMENT OF PRICE. Upon exercise of the Option, the Company shall deliver a certificate or certificates for the Common Shares purchased thereunder to the specified person or persons at the specified time upon receipt of the full purchase price for such Common Shares: (a) by certified or bank cashier's check, or (b) by any other method of payment or combination thereof authorized by the Plan. 4. TRANSFERABILITY. The Option shall not be transferable by the Optionee other than by will or by the laws of descent and distribution. Subject to the following sentence, during the lifetime of the Optionee, the Option shall be exercisable (subject to any other applicable restrictions on exercise) only by the Optionee for his or her own account. Upon the death or disability of the Optionee, the Option shall be exercisable (subject to any other applicable restrictions on exercise) only by the Optionee's estate (acting through its fiduciary) or by the Optionee's duly authorized legal representative, during the period and to the extent authorized in the Plan. 5. TERMINATION OF EMPLOYMENT. If the employment of the Optionee by the Company (or any of its Subsidiaries or Affiliates) terminates: (a) due to involuntary termination without cause or due to retirement (with the employer's approval, but subject to Section 5(e) below), the Option may be exercised to the extent exercisable at the date of such termination, during the lesser of (i) two months after such date , or (ii) the balance of the Option's term; (b) due to death or disability, the provisions of Section 5(b)(6) or 5(b)(7) of the Plan, as applicable, shall apply; (c) due to resignation by the Optionee (other than by reason of a Qualified Retirement, as provided at Section 5(e) below), the Optionee may exercise the Option, to the extent of the lesser of (A) the number of Common Shares as to which the Option is exercisable on the date the Optionee ceases to be an employee or (B) the number of Common Shares as to which the Option was exercisable ninety days prior to such date, reduced by any Common Shares acquired by exercise of the Option within such ninety day period, at any time within two (2) months after the date that the Optionee ceases to be an employee (but in no event after expiration of the original term of the Option) and the Option shall not be or become exercisable as to any additional Common Shares after the date that the Optionee ceases to be an employee; (d) due to termination for cause, the Option and all rights to purchase Common Shares thereunder shall immediately terminate; and (e) due to a Qualified Retirement (as defined below), the following provisions shall apply (subject in all cases to Section 5(e)(v) hereof): 4 (i) if and to the extent that any Option Installment (as defined below) has vested and is exercisable as of the Qualified Retirement Date (as defined below), such Option Installment shall not terminate upon the retirement of the Optionee, but may be exercised by the Optionee, in whole or in part, at any time between the Qualified Retirement Date and the Expiration Date applicable thereto; (ii) subject to Section 5(e)(iii) hereof, if and to the extent that any Option Installment is not vested and exercisable as of the Qualified Retirement Date, such Option Installment (A) shall remain in effect with respect to fifty percent (50%) of the Common Shares covered thereby and, as to such Common Shares, shall vest and become exercisable on the Vesting Date applicable thereto and may be exercised by the Optionee, in whole or in part, at any time between the Vesting Date and Expiration Date applicable thereto, and (B) shall terminate, effective as of the Qualified Retirement Date, with respect to the remaining fifty percent (50%) of the Common Shares covered by such Option Installment; (iii) notwithstanding Section 5(e)(ii) above, if and to the extent that any Option Installment is not vested and exercisable as of the Qualified Retirement Date, but has a Vesting Date which is no later than four (4) months after the Qualified Retirement Date, then, notwithstanding the Optionee's retirement, the Option Installment which is scheduled to vest on such Vesting Date shall remain in effect, shall vest on such Vesting Date and may be exercised by the Optionee, in whole or in part, at any time between such Vesting Date and the applicable Expiration Date; (iv) if the Optionee dies after the date of his or her retirement and has not exercised the Option, in whole or in part, prior to his or her death, the Optionee's estate shall have the right to exercise the Option as to (A) all Common Shares, if any, as to which the Option has vested and is exercisable as of the date of the Optionee's death, plus (B) the additional Common Shares, if any, as to which the Option would have become exercisable within one (1) year from the date of the Optionee's death pursuant to Sections 5 (e)(ii) and/or (iii) hereof, as applicable, but for the death of the Optionee, at any time during the one (1) year period beginning on the date of the Optionee's death (or such other period as the Committee may specify), and the balance of the Option shall terminate as of the date of the Optionee's death; 5 (v) if the Committee determines that the Optionee is or has engaged in any Disqualifying Activity (as defined below), then (1) to the extent that the Option has vested and is exercisable as of the Disqualification Date (as defined below), the Optionee shall have the right to exercise the Option during the lesser of two months from the Disqualification Date or the balance of the Option's term and (2) to the extent that the Option is not vested and exercisable as of the Disqualification Date, the Option shall terminate as of such date. Any determination by the Committee, which may act upon the recommendation of the Chief Executive Officer or other senior officer of the Company, that the Optionee is or has engaged in any Disqualifying Activity, and as to the Disqualification Date, shall be final and conclusive. (vi) As used in this Section 5(e), the following terms are defined as follows: (A) QUALIFIED RETIREMENT - any termination of the Optionee's employment with the Company or its Subsidiaries for any reason (other than death, Disability or an involuntary termination for Cause) if, at or immediately prior to the date of such termination, the Optionee satisfies both of the following conditions: (1) the Optionee shall be 55 years of age or older; and (2) the sum of the Optionee's age and completed years of service as an employee of the Company or its Subsidiaries (disregarding fractions, in both cases) shall total 70 or more. (B) QUALIFIED RETIREMENT DATE - the date as of which the Optionee's employment with the Company or its Subsidiaries shall terminate pursuant to a Qualified Retirement. (C) DISQUALIFYING ACTIVITY - means and includes each of the following acts or activities: (1) directly or indirectly serving as a principal, shareholder, partner, director, officer, employee or agent of, or as a consultant, advisor or in any other capacity to, any business or entity which competes with the Company or its Subsidiaries in any business or activity then conducted by the Company or its Subsidiaries to an extent deemed material by the Committee; or 6 (2) any disclosure by the Optionee, or any use by the Optionee for his or her own benefit or for the benefit of any other person or entity (other than the Company or its Subsidiaries), of any confidential information or trade secret of the Company or its Subsidiaries to an extent deemed material by the Committee; or (3) any material violation of any of the provisions of the Company's Code of Conduct or any agreement between the Optionee and the Company; or (4) making any other disclosure or taking any other action which is determined by the Committee to be materially detrimental to the business, prospects or reputation of the Company or its Subsidiaries. The ownership of less than 2% of the outstanding voting shares of a publicly traded corporation which competes with the Company or its Subsidiaries shall not constitute a Disqualifying Activity. (D) DISQUALIFICATION DATE - the date of any determination by the Committee that the Optionee is or has engaged in any Disqualifying Activity. (E) OPTION INSTALLMENT - if the Option consists of multiple awards, each with a separate Vesting Date and Expiration Date, any one of such awards. 6. RESTRICTIONS ON EXERCISE. The Option is subject to all restrictions set forth in this Agreement or in the Plan. As a condition to any exercise of the Option, the Company may require the Optionee or his successor to make any representation and warranty to comply with any applicable law or regulation or to confirm any factual matters requested by counsel for the Company. 7. TAXES. The Optionee hereby agrees that he or she shall pay to the Company, in cash, any federal, state and local taxes of any kind required by law to be withheld with respect to the Option granted to him or her hereunder or the exercise thereof. If the Optionee does not make such payment to the Company, the Company shall have the right to deduct from any payment of any kind otherwise due to the Optionee from the Company (or from any Subsidiary or Affiliate of the Company), any federal, state and local taxes of any kind required by law to be t withheld with respect to the Option, the exercise thereof or the Common Shares to be purchased by the Optionee under this Agreement. The Option shall not be treated as an incentive stock option under Section 422 or any successor Section thereto of the Internal Revenue Code of 1986, as amended. 7 8. DEFINITIONS. Unless otherwise defined in this Agreement, capitalized terms will have the same meanings given them in the Plan. THE PROGRESSIVE CORPORATION DATE OF GRANT: _________, 19____ BY: _______________________________________ TITLE: _______________________________________ 8 ACCEPTANCE OF AGREEMENT ----------------------- The Optionee hereby: (a) acknowledges receiving a copy of the Plan Description dated _______________ (the "Plan Description") relating to the Plan, and represents that he or she is familiar with all of the material provisions of the Plan, as set forth in the Plan Description; (b) accepts this Agreement and the Option granted to him or her under this Agreement subject to all provisions of the Plan and this Agreement; and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee relating to the Plan, this Agreement or the Option granted hereunder. Optionee: _________________________________________ Date: ______________________________, 19____ EX-11 5 EXHIBIT 11 1 EXHIBIT NO. 11 -------------- COMPUTATION OF EARNINGS PER SHARE 2 EXHIBIT 11 THE PROGRESSIVE CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (millions - except per share amounts) (unaudited)
Three Months Ended March 31, ---------------------------------------------------------------- 1996 1995 -------------------------- ------------------------------- Per Per Amount Share Amount Share ------------ ------ -------------- ---------- PRIMARY: Net income $63.3 $60.7 Less: Preferred stock dividends (2.2) (2.1) ----------- -------------- Income available to common shareholders $61.1 $.82 $58.6 $.79 =========== ======= ============== ========== Average shares outstanding 72.2 71.5 Net effect of dilutive stock options 2.4 2.5 ----------- -------------- Total 74.6 74.0 =========== ============== FULLY DILUTED: Net income $63.3 $60.7 Less: Preferred stock dividends (2.2) (2.1) =========== ============== Income available to common shareholders $61.1 $.82 $58.6 $.79 =========== ======= ============== ========== Average shares outstanding 72.2 71.5 Net effect of dilutive stock options 2.4 2.6 ----------- -------------- Total 74.6 74.1 =========== ==============
EX-12.A 6 EXHIBIT 12(A) 1 EXHIBIT NO. 12(A) ----------------- COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES 2 EXHIBIT 12(A) THE PROGRESSIVE CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (millions) (unaudited)
Three Months Ended March 31, ---------------------------------------- 1996 1995 ------------ ----------- Income before income taxes $ 87.1 $81.5 ------------ ----------- Fixed Charges: Interest and amortization on indebtedness 14.3 14.3 Portion of rents representative of the interest factor 1.1 .9 ------------ ----------- Total fixed charges 15.4 15.2 ------------ ----------- Total income available for fixed charges $102.5 $96.7 ============ =========== Ratio of earnings to fixed charges 6.7 6.4 ============ ===========
EX-12.B 7 EXHIBIT 12(B) 1 EXHIBIT NO. 12(B) ----------------- COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED SHARE DIVIDEND REQUIREMENTS 2 EXHIBIT 12(B) THE PROGRESSIVE CORPORATION COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED SHARE DIVIDEND REQUIREMENTS (millions) (unaudited)
Three Months Ended March 31, ------------------------------------------ 1996 1995 ----------- ------------ Income before income taxes $ 87.1 $81.5 ----------- ------------ Fixed Charges: Interest and amortization on indebtedness 14.3 14.3 Portion of rents representative of the interest factor 1.1 .9 ----------- ------------ Total fixed charges 15.4 15.2 ----------- ------------ Preferred share dividend requirements 2.6 2.8 ----------- ------------ Total fixed charges and preferred share dividend requirements 18.0 18.0 ----------- ------------ Total income available for fixed charges and preferred share dividend requirements $102.5 $96.7 =========== ============ Ratio of earnings to combined fixed charges and preferred share dividend requirements 5.7 5.4 =========== ============
EX-27 8 EXHIBIT 27
7 This schedule contains summary financial information extracted from the consolidated balance sheets and statements of income and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 3,120,400 0 0 698,500 0 0 4,067,400 13,900 333,700 186,200 5,686,700 1,653,800 1,295,800 0 0 675,900 72,200 0 78,400 1,356,000 5,686,700 732,000 50,900 4,900 9,400 525,400 120,100 41,000 87,100 23,800 63,300 0 0 0 63,300 .82 .82 0 0 0 0 0 0 0
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