-----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, MbqywPoIZuzYcUmthj+C0wiz9YlYElbS6J234h5Rq3778qLJCeOVpn/aKfgXFDay I7+676opzQ/Sjg3MSszbqw== 0000950152-03-006823.txt : 20030715 0000950152-03-006823.hdr.sgml : 20030715 20030715135120 ACCESSION NUMBER: 0000950152-03-006823 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20030715 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PICO HOLDINGS INC /NEW CENTRAL INDEX KEY: 0000830122 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 942723335 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-36383 FILM NUMBER: 03786886 BUSINESS ADDRESS: STREET 1: 875 PROSPECT ST STREET 2: STE 301 CITY: LA JOLLA STATE: CA ZIP: 92037 BUSINESS PHONE: 6194566022 MAIL ADDRESS: STREET 1: 875 PROSPECT ST STREET 2: STE 301 CITY: LA JOLLA STATE: CA ZIP: 92037 FORMER COMPANY: FORMER CONFORMED NAME: CITATION INSURANCE GROUP DATE OF NAME CHANGE: 19940527 11-K 1 l02095ae11vk.txt PICO HOLDINGS, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington DC 20549 FORM 11-K (Mark One) (X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the plan year ended September 30, 2002 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to ---------- ---------- Commission File Number: 0-18786 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: PICO HOLDINGS, INC. EMPLOYEES 401(k) RETIREMENT PLAN AND TRUST B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: PICO HOLDINGS, INC. 875 PROSPECT STREET, SUITE 301 LA JOLLA, CALIFORNIA 92037 Index to Exhibits appears on Page 11 Page 1 of 12 pages REQUIRED INFORMATION -------------------- The following financial statements and schedules for PICO Holdings, Inc. Employees 401(k) Retirement Plan and Trust are being filed herewith: Signature Independent Auditors' Report Financial Statements: Statements of Net Assets Available for Benefits, September 30, 2002 and 2001 Statement of Changes in Net Assets Available for Benefits for the Year Ended September 30, 2002 Notes to the Financial Statements Supplemental Schedules: Schedule H Item 4i - Schedule of Assets as of September 30, 2002 Index to Exhibits Exhibit 1 - Consent of Independent Auditors 2 SIGNATURE --------- The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. PICO HOLDINGS, INC. EMPLOYEES 401(k) RETIREMENT PLAN AND TRUST /s/ Maxim C. W. Webb ------------------------------------------ Date: July 15, 2003 Chief Financial Officer and Treasurer 3 INDEPENDENT AUDITORS' REPORT PICO Holdings, Inc. Employees 401(k) Retirement Plan and Trust Columbus, Ohio We have audited the accompanying statements of net assets available for benefits of PICO Holdings, Inc. Employees 401(k) Retirement Plan and Trust (the "Plan") as of September 30, 2002 and 2001, and the related statement of changes in net assets available for benefits for the year ended September 30, 2002. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of September 30, 2002 and 2001, and the changes in net assets available for benefits for the year ended September 30, 2002, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 5 to the financial statements, on March 31, 2003, approximately 51% of plan participants were terminated as a result of PICO Holdings, Inc.'s sale of Sequoia Insurance Company. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule identified in the index is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. Such supplemental schedule has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. /s/ DELOITTE & TOUCHE LLP April 1, 2003 4 PICO HOLDINGS, INC. EMPLOYEES 401(k) RETIREMENT PLAN AND TRUST STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS SEPTEMBER 30, 2002 AND 2001 - --------------------------------------------------------------------------------
ASSETS 2002 2001 INVESTMENTS: Mutual funds $5,829,450 $5,875,227 Common stock, PICO Holdings, Inc. 739,052 646,614 Cash 5,361 1,826 ---------- ---------- Total investments 6,573,863 6,523,667 RECEIVABLES: Employer's matching contributions 10,773 10,267 Participants' contributions 11,550 10,463 Employer's profit sharing contributions 467,791 461,911 ---------- ---------- Total receivables 490,114 482,641 ---------- ---------- NET ASSETS AVAILABLE FOR BENEFITS $7,063,977 $7,006,308 ========== ==========
See notes to financial statements. 5 PICO HOLDINGS, INC. EMPLOYEES 401(k) RETIREMENT PLAN AND TRUST STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS YEAR ENDED SEPTEMBER 30, 2002 - -------------------------------------------------------------------------------- ADDITIONS: Additions to net assets attributed to interest and dividends $ 143,801 Contributions: Employer 815,384 Participants 363,336 Rollovers 969 ----------- Total additions 1,323,490 DEDUCTIONS: Net depreciation in fair value of investments (686,585) Deductions from net assets attributed to benefits paid to participants (579,236) ----------- Total deductions (1,265,821) ----------- NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 57,669 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 7,006,308 ----------- End of year $ 7,063,977 ===========
See notes to financial statements. 6 PICO HOLDINGS, INC. EMPLOYEES 401(k) RETIREMENT PLAN AND TRUST NOTES TO FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2002 AND 2001 - -------------------------------------------------------------------------------- 1. DESCRIPTION OF PLAN The following description of the PICO Holdings, Inc. Employees 401(k) Retirement Plan and Trust (the "Plan") provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. GENERAL--The Plan is a defined contribution 401(k) profit sharing plan covering eligible employees, as defined in the Plan Agreement, of PICO Holdings, Inc. (the "Plan Sponsor"). The Plan was adopted to provide retirement benefits to employees of the Plan Sponsor. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA") and has been determined to be qualified for tax-exempt status by the Internal Revenue Service ("IRS"). CONTRIBUTIONS--Each year, participants may contribute up to the maximum allowed by law of pretax annual compensation, as defined in the Plan, not to exceed $8,500 (based on Section 401(a)(17) compensation limit of $170,000 as indexed). The Plan Sponsor matches 100% of the elective deferral of base compensation that a participant contributes to the Plan. The Plan Sponsor's matching contribution does not begin until the first day of the quarter after an employee completes one year of service. Additional amounts which represent profit sharing, as defined in the Plan, may be contributed at the option of the Plan Sponsor's Board of Directors. PARTICIPANT ACCOUNTS--Each participant's account is credited with the participant's contributions, employer matching contributions, earnings as applicable, and allocations of (a) the Plan Sponsor's discretionary profit sharing contributions and (b) Plan earnings, and debited for withdrawals as applicable. Forfeited balances of terminated participants' nonvested accounts are used to first reinstate previously forfeited account balances of reemployed participants and any remainder will be used to reduce the Plan Sponsor's discretionary profit sharing contribution for the current or subsequent Plan year in which the forfeiture occurs. VESTING--Participants are immediately vested in their contributions, the employer matching contributions, plus earnings thereon. Vesting in the Plan Sponsor's discretionary profit sharing contribution portion of their accounts plus actual earnings thereon is based on years of credited service in accordance with the following schedule:
YEARS OF SERVICE PERCENTAGE Less than three 0% 3 20% 4 40% 5 60% 6 80% 7 or more 100%
7 INVESTMENT OPTIONS--Upon enrollment in the Plan, a participant may direct 100% of elective deferrals, employer match and discretionary profit sharing amounts. A participant chooses from a number of different mutual fund options. In addition, participants are able to invest in the stock of PICO Holdings, Inc., the Plan Sponsor. LOANS TO PARTICIPANTS--Loans to participants are not permitted under the Plan, and no loans were outstanding at September 30, 2002 and 2001. PAYMENT OF BENEFITS--Upon termination of service, a participant may elect to receive either a lump-sum amount equal to the value of the participant's vested interest in his or her account, or annual installments. If the value of the participants' account is $5,000 or less, the Trustee shall distribute the entire vested account to the participant. Amounts payable to such participants at September 30, 2002 and 2001 were $4,570 and $82,389, respectively. PLAN TERMINATION--While the Plan Sponsor has not expressed any intent to discontinue the Plan or their contributions thereto, they have the right to do so at any time, subject to the provisions of ERISA. In the event of partial or total termination of the Plan, participants' account balances become fully vested and the disposition of the net assets must be made for the benefit of the participants or their beneficiaries. TAX STATUS--The Internal Revenue Service has determined and informed the Plan Sponsor by a letter dated December 7, 1994, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code ("IRC"). Although the Plan has been amended since receiving the determination letter, the Plan Sponsor, the Plan administrator and the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. On September 27, 2002, the Plan Sponsor requested the issuance of a new determination letter for the amended and restated Plan, effective October 1, 1997. No determination letter has been received. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION--The accounting records of the Plan are maintained on the accrual basis. Purchases and sales of securities are recorded on the trade date. Interest income is recorded as earned and dividend income is recorded on the ex-dividend date. INVESTMENT VALUATION--Investments are valued as follows: mutual funds, money market funds and PICO Holdings, Inc. common stock fund are valued at quoted market prices. ADMINISTRATIVE EXPENSES--The Plan's expenses are paid by the Plan Sponsor. USE OF ESTIMATES--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of net assets and the changes in net assets during the reporting period and disclosure of contingent assets at the date of the financial statements. Actual results could differ from those estimates. INVESTMENT RISK--The Plan utilizes various investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values 8 of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits. 3. INVESTMENTS The Plan's investments which exceeded 5% of net assets available for benefits as of September 30 consisted of the following:
2002 2001 Smith Barney Money Market--Government Portfolio $1,590,954 $1,827,049 Strong Government Securities 784,066 635,752 PICO Holdings, Inc., Common Stock 739,052 646,614 American Century Ultra Fund 685,188 711,112 Royce Premier Fund 493,394 400,290 Neuberger Berman Focus Trust Fund 489,807 Dreyfus Founders Discovery Fund 351,388
4. RELATED PARTY TRANSACTIONS Plan investments include common stock of PICO Holdings, Inc. and Smith Barney Money Market Government Portfolio. PICO Holdings, Inc. is the Plan Sponsor and Salomon Smith Barney is the Plan Custodian and record keeper. The Plan Sponsor pays all administrative expenses of the Plan. 5. SUBSEQUENT EVENT PARTIAL PLAN TERMINATION--On March 31, 2003, PICO Holdings, Inc. sold its wholly-owned subsidiary Sequoia Insurance Company. As a result, Sequoia employees who were participants in the Plan were terminated and became fully vested. Approximately 51% of the active participants have been terminated as a result of this partial plan termination. ****** 9 PICO HOLDINGS, INC. EMPLOYEES 401(k) RETIREMENT PLAN AND TRUST SCHEDULE H ITEM 4i--SUPPLEMENTAL SCHEDULE OF ASSETS SEPTEMBER 30, 2002 - --------------------------------------------------------------------------------
NUMBER FAIR OF MARKET DESCRIPTION SHARES COST VALUE INVESTMENTS--MUTUAL FUNDS: ABN AMRO Montag & Caldwell Growth--N Share 5,373 $ 153,583 $ 96,074 American Century Ultra Fund 33,345 1,234,141 685,188 Citi S&P 500 Index Funds 18,948 243,196 158,215 Credit Suisse Warburg Pincus 10,980 107,560 109,028 Dreyfus Emerging Markets 13,991 161,691 144,064 Dreyfus Founders Discovery Fund 18,360 680,173 344,839 Dreyfus Premier Core Value 16,244 454,802 331,264 Dreyfus US Treasury Long 860 13,282 14,049 Gabelli Growth Fund 8,208 309,768 147,585 Gabelli Global Growth Fund 1,938 38,021 20,403 ING GNMA Income Fund 11,080 93,732 100,715 INVESCO Health Sciences 4,584 226,797 183,169 Mercury HW International Value 1,116 25,784 17,607 Neuberger Berman Focus Trust Fund 19,427 618,340 273,722 Royce Premier Fund 54,019 554,934 493,394 Scudder International Fund 11,439 556,584 335,114 Smith Barney Money Market--Government Portfolio 1,590,954 1,590,954 1,590,954 Strong Government Securities 68,523 719,910 784,066 ---------- ---------- Total Mutual Funds 7,783,252 5,829,450 ---------- ---------- PICO Holdings, Inc., Common Stock 67,185 812,451 739,052 ---------- ---------- TOTAL $8,595,703 $6,568,502 ========== ==========
10 PICO HOLDINGS, INC. EMPLOYEES 401(k) RETIREMENT PLAN & TRUST ANNUAL REPORT ON FORM 11-K FOR PLAN YEAR ENDED SEPTEMBER 30, 2002 INDEX TO THE EXHIBITS --------------------- Exhibit Number Description -------------- ----------- 1 Consent of Deloitte & Touche LLP, Independent Auditors 11 EX-1 3 l02095aexv1.txt EX-1 CONSENT OF D&T Exhibit 1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statements No. 3333-32045 and No. 3333-36881 of PICO Holdings, Inc. on Forms S-8 of our report dated April 1, 2003 appearing in this Annual Report on Form 11-K of the PICO Holdings, Inc. Employees 401(k) Retirement Plan and Trust for the year ended September 30, 2002. DELOITTE & TOUCHE LLP Columbus, Ohio July 10, 2003 12 -----END PRIVACY-ENHANCED MESSAGE-----