SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period from April 1, 1998 to June 30, 1998
Commission File No. 0-3978
UNICO AMERICAN CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 95-2583928
(State or other jurisdiction of (I.R.S. Employee
incorporation or organization) Identification No.)
23251 Mulholland Drive, Woodland Hills, California 91364
(Address of Principal Executive Offices) (Zip Code)
(818) 591-9800
Registrant's telephone number
Securities registered pursuant to Section 12(b)of the Act:
None
(Title of each class)
Securities registered pursuant to Section 12(g)of the Act:
Common Stock, No Par Value
(Title of Class)
No Change
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
6,220,672
Number of shares of common stock outstanding as of August 10, 1998
1
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
UNICO AMERICAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30 December 31
1998 1997
---- ----
ASSETS
<S> <C> <C>
Investments
Available for sale:
Fixed maturities, at market value (amortized cost: June 30,
1998 $93,364,741; December 31, 1997 $86,106,571) $95,344,780 $87,965,590
Equity securities at market (cost: June 30, 1998 $0;
December 31, 1997 $230,460) - 223,100
Short-term investments, at cost 6,358,069 6,137,495
----------- ----------
Total Investments 101,702,849 94,326,185
Cash 183,391 55,768
Accrued investment income 1,850,050 1,807,364
Premiums and notes receivable, net 6,131,141 7,404,606
Reinsurance recoverable:
Paid losses and loss adjustment expenses 164,241 56,379
Unpaid losses and loss adjustment expenses 1,360,470 1,413,603
Prepaid reinsurance premiums 22,189 945,563
Deferred policy acquisition costs 5,079,264 4,886,684
Property and equipment (net of accumulated depreciation) 206,116 203,709
Deferred income taxes 665,901 1,005,865
Other assets 521,514 836,658
----------- -----------
Total Assets $117,887,126 $112,942,384
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Unpaid losses and loss adjustment expenses $42,170,299 $42,004,851
Unearned premiums 20,255,956 21,673,009
Advance premiums 1,305,774 1,368,114
Funds held as security for performance 714,682 723,066
Accrued expenses and other liabilities 3,606,575 2,095,567
Income taxes payable 291,611 16,993
Dividends payable 435,447 -
---------- ----------
Total Liabilities $68,780,344 $67,881,600
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, no par - authorized 10,000,000 shares, issued and outstanding
shares 6,220,672 at June 30, 1998
and 6,153,706 at December 31, 1997 2,886,952 2,838,058
Accumulated other comprehensive income:
Net unrealized gains on investments classified as available for sale 1,306,826 1,222,095
Retained earnings 44,913,004 41,000,631
---------- ----------
Total Stockholders' Equity $49,106,782 $45,060,784
---------- ----------
Total Liabilities and Stockholders' Equity $117,887,126 $112,942,384
=========== ===========
</TABLE>
See notes to unaudited consolidated financial statements.
2
<PAGE>
UNICO AMERICAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Insurance Company Revenues
Premium earned $10,415,497 $10,689,663 $20,970,307 $20,786,826
Premium ceded 1,600,108 1,598,378 2,771,136 2,554,001
---------- ---------- ---------- ----------
Net premium earned 8,815,389 9,091,285 18,199,171 18,232,825
Net investment income 1,350,677 1,190,632 2,660,462 2,345,148
Net realized investment gains 16,230 - 16,230 919
Other income 105 45 1,063 160
---------- ---------- ---------- ----------
Total Insurance Company Revenues 10,182,401 10,281,962 20,876,926 20,579,052
Other Revenues from Insurance Operations
Gross commissions and fees 1,316,134 1,478,723 2,785,379 2,897,459
Investment income 54,520 34,759 103,613 69,713
Finance charges and late fees earned 254,765 301,857 517,918 591,925
Other income 3,601 3,553 5,129 6,354
---------- ---------- ---------- ----------
Total Revenues 11,811,421 12,100,854 24,288,965 24,144,503
---------- ---------- ---------- ----------
EXPENSES
Losses and loss adjustment expenses 4,394,980 4,921,938 9,194,681 9,896,411
Policy acquisition costs 2,396,532 2,599,119 5,025,638 5,239,049
Salaries and employee benefits 992,116 935,663 2,041,737 1,860,076
Commissions to agents/brokers 235,611 294,485 480,538 569,461
Other operating expenses 501,145 619,809 1,129,871 1,353,436
--------- --------- ---------- ----------
Total Expenses 8,520,384 9,371,014 17,872,465 18,918,433
--------- --------- ---------- ----------
Income Before Taxes 3,291,037 2,729,840 6,416,500 5,226,070
Income Tax Provision 1,106,927 845,256 2,068,680 1,576,332
--------- --------- --------- ---------
Net Income $2,184,110 $1,884,584 $4,347,820 $3,649,738
========= ========= ========= =========
PER SHARE DATA:
Basic Shares Outstanding 6,179,592 6,132,138 6,167,441 6,110,901
Basic Earnings Per Share $0.35 $0.31 $0.70 $0.60
Diluted Shares Outstanding 6,440,927 6,328,350 6,432,800 6,329,570
Diluted Earnings Per Share $0.34 $0.30 $0.68 $0.58
</TABLE>
See notes to unaudited consolidated financial statements
3
<PAGE>
UNICO AMERICAN CORPORATION AND SUBSIDIARIES
STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $2,184,110 $1,884,584 $4,347,820 $3,649,738
Other changes in comprehensive income
net of tax:
Unrealized gains (losses) on securities
classified as available-for-sale arising
during the period 160,968 631,822 84,731 (253,328)
Less: reclassification adjustment for
gains included in net income (10,712) - (10,712) (607)
--------- --------- --------- ---------
Comprehensive Income $2,334,366 $2,516,406 $4,421,839 $3,395,803
========= ========= ========= =========
</TABLE>
See notes to unaudited consolidated financial statements
4
<PAGE>
UNICO AMERICAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30,
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $4,347,820 $3,649,738
Adjustments to reconcile net income to net cash from operations
Depreciation and amortization 49,396 41,343
Bond amortization, net 324,269 243,559
Net realized (gain) on sale of securities (16,230) (919)
Changes in assets and liabilities
Premium, notes and investment income receivable 1,230,779 677,565
Reinsurance recoverable (554,729) 635,370
Prepaid reinsurance premiums 923,374 314,653
Deferred policy acquisitions costs (192,580) (139,782)
Other assets 315,144 24,130
Reserve for unpaid losses and loss adjustment expenses 665,448 1,075,525
Unearned premium reserve (1,417,053) 374,864
Funds held as security and advanced premiums (70,724) 2,653
Accrued expenses and other liabilities 1,511,008 (365,461)
Income taxes current/deferred 570,933 78,035
--------- ---------
Net Cash Provided from Operations 7,686,855 6,611,273
--------- ---------
Investing Activities
Purchase of fixed maturity investments (14,376,864) (8,688,530)
Proceeds from maturity of fixed maturity investments 6,774,600 3,098,000
Purchase of equity securities - cost - (1,019,500)
Proceeds from sale of equity securities 246,690 20,959
Net increase (decrease) in short-term investments (200,749) 671,987
Additions to property and equipment (51,803) (33,708)
--------- ---------
Net Cash (Used) by Investing Activities (7,608,126) (5,950,792)
--------- ---------
Financing Activities
Proceeds from issuance of common stock 48,894 359
Repayment of note payable - bank - (250,000)
------ -------
Net Cash Provided (Used) by Financing Activities 48,894 (249,641)
------ -------
Net increase in cash 127,623 410,840
Cash at beginning of period 55,768 82,637
------- -------
Cash at End of Period $183,391 $493,477
======= =======
Supplemental cash flow information Cash paid during the period for:
Interest $121 $21,697
Income taxes $1,448,336 $1,380,000
</TABLE>
See notes to unaudited consolidated financial statements
5
<PAGE>
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Nature of Business
Unico American Corporation ("Unico") is an insurance holding company. Unico and
its subsidiaries, all of which are wholly owned (the "Company"), provide,
primarily in California, property, casualty, health and life insurance, and
related premium financing.
Principles of Consolidation
The accompanying unaudited consolidated financial statements include the
accounts of Unico American Corporation and its subsidiaries. All significant
inter-company accounts and transactions have been eliminated in consolidation.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") for interim
financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three and six months ended June 30, 1998, are not necessarily
indicative of the results that may be expected for the year ending December 31,
1998. Quarterly financial statements should be read in conjunction with the
financial statements and related notes in the Company's 1997 Annual Report on
Form 10-K as filed with the Securities and Exchange Commission.
Recently Issued Accounting Standards
The Company has adopted Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting Comprehensive Income," which establishes standards for the
reporting and displaying of comprehensive income and its components. All items
required to be recognized as components of comprehensive income must be reported
in a financial statement that is displayed with the same prominence as other
financial statements. SFAS No. 130 became effective for financial statements
with fiscal years beginning after December 15, 1997.
NOTE 2 - INCENTIVE STOCK OPTION PLAN
- ------------------------------------
The Company's 1985 stock option plan provided for the grant of "incentive stock
options" to officers and key employees. The plan covers an aggregate of
1,500,000 shares of the Company's common stock (subject to adjustment in the
case of stock splits, reverse stock splits, stock dividends, etc.). As of June
30, 1998, there were 286,366 options outstanding of which 216,035 were currently
exercisable. During the quarter ended June 30, 1998, options on 82,327 shares of
common stock were exercised. There are no additional options available for
future grant under the 1985 plan.
6
<PAGE>
UNICO AMERICAN CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 3 - EARNINGS PER SHARE
- ---------------------------
The following table represents the reconciliation of the numerators and
denominators of the Company's basic earnings per share and diluted earnings per
share computations reported on the Consolidated Statements of Operations for the
three months ended June 30, 1998 and 1997, and for the six months ended June 30,
1998 and 1997:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic Earnings Per Share
Net income numerator $2,184,110 $1,884,584 $4,347,820 $3,649,738
========= ========= ========= =========
Weighted average shares outstanding
denominator 6,179,592 6,132,138 6,167,441 6,110,901
========= ========= ========= =========
Basic Earnings Per Share $0.35 $0.31 $0.70 $0.60
Diluted Earnings Per Share
Net income numerator $2,184,110 $1,884,584 $4,347,820 $3,649,738
========= ========= ========= =========
Weighted average shares outstanding
denominator 6,179,592 6,132,138 6,167,441 6,110,901
Effect of diluted securities 261,335 196,212 265,359 218,669
--------- --------- --------- ---------
Diluted shares outstanding denominator 6,440,927 6,328,350 6,432,800 6,329,570
========= ========= ========= =========
Diluted Earnings Per Share $0.34 $0.30 $0.68 $0.58
</TABLE>
7
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(a) Liquidity and Capital Resources:
Due to the nature of the Company's business (insurance and insurance services)
and whereas Company growth does not normally require material reinvestments of
profits into property or equipment, the cash flow generated from operations
usually results in improved liquidity for the Company.
Crusader Insurance Company ("Crusader"), the Company's property and casualty
insurance company, generates a significant amount of cash as a result of its
holdings of unearned premium reserves and reserves for loss payments. Crusader's
loss and loss adjustment expense payments are the most significant cash flow
requirement of the Company. These payments are continually monitored and
projected to ensure that the Company has the liquidity to cover these payments
without the need to liquidate its investments. As of June 30, 1998, the Company
had cash and cash investments of $99,906,201 (at amortized cost) of which
$94,452,001 (95%) were investments of Crusader.
As of the quarter ended June 30, 1998, the Company had invested $93,364,741 (at
amortized cost) or 94% of its invested assets in fixed maturity obligations. In
accordance with Statement of Financial Accounting Standard No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," the Company is required
to classify its investments in debt and equity securities into one of three
categories: held-to-maturity, available-for-sale or trading securities. Although
all of the Company's investments are classified as available-for-sale, the
Company's investment guidelines place primary emphasis on buying and holding
high-quality investments. The balance of the Company's investments was in
high-quality, short-term investments that include a U.S. treasury bill, bank
money market accounts, certificates of deposit, commercial paper and a
short-term treasury money market fund.
The Company's investments in fixed maturity obligations of $93,364,741 (at
amortized cost) include $35,476,613 (38%) of pre-refunded state and municipal
tax exempt bonds, $14,579,098 (16%) of U.S. treasury securities, $43,009,030
(46%) in high-quality industrial bonds and $300,000 of certificates of deposit.
The tax exempt interest income earned for the three months and six months ended
June 30, 1998, was $419,206 and $865,953, respectively. The tax exempt interest
income earned for the three months and six months ended June 30, 1997, was
$449,546 and $904,162, respectively.
The Company's investment policy limits investments in any one company. This
limit was raised from $1,000,000 to $1,500,000 in 1997. This limitation excludes
bond premiums paid in excess of par value and U.S. Government or U.S. Government
guaranteed issues. All of the Company's investments are high-grade investment
quality; all state and municipal tax exempt fixed maturity investments are
pre-refunded issues, and all certificates of deposit are FDIC insured.
On May 1, 1998, the Board of Directors declared a ($0.07) per share cash
dividend payable on August 14, 1998, to shareholders of record at the close of
business on July 31, 1998.
Although material capital expenditures may also be funded through borrowings,
the Company believes that its cash and short-term investments at June 30, 1998,
net of trust restriction of $2,557,954, statutory deposits of $2,725,000, and
dividend restriction between Crusader and Unico plus the cash to be generated
from operations, should be sufficient to meet its operating requirements during
the next twelve months without the necessity of borrowing funds.
There are no material commitments for capital expenditures as of the date of
this report.
Year 2000. The Year 2000 issue is the result of computer programs being written
utilizing two digits rather than four digits to define a year. Any computer
programs which have date sensitive software utilizing a two digit year would
recognize a year of "00" as 1900 rather than 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities. The Company has assessed its Year
2000 issues and is in the process of making any necessary modifications to its
computer systems. This project is estimated to be completed by the end of 1998,
prior to any anticipated impact on the Company's operating systems. Portions of
this project have been completed and tested as of June 30, 1998. The cost of
this project has been charged to current operations as incurred and will not
have a material effect on the Company's results of operation or financial
position.
8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
While the Year 2000 considerations are not expected to materially impact the
Company's internal operations, they may have an effect on some of the Company's
agents and brokers, suppliers, financial institutions and others with whom the
Company conducts business, and thus indirectly affect the Company. It is not
possible to quantify the aggregate cost to the Company with respect to external
Year 2000 problems, if any, although the Company does not presently anticipate
it will have a material adverse impact on its business.
(b) Results of Operations:
All comparisons made in this discussion are comparing the three and six months
ended June 30, 1998, to the three and six months ended June 30, 1997, unless
otherwise indicated.
The Company's net income increased $299,526 (16%) to $2,184,110 for the three
months and $698,082 (19%) to $4,347,820 for the six months ended June 30, 1998,
compared to net income of $1,884,584 for the three months and $3,649,738 for the
six months ended June 30, 1997. Total revenues decreased $289,433 (2%) for the
three months and increased $144,462 (1%) for the six months ended June 30, 1998,
when compared to the three and six months ended June 30, 1997.
Premium earned before reinsurance decreased $274,166 (3%) to $10,415,497 for the
three months and increased $183,481 (1%) to $20,970,307 for the six months ended
June 30, 1998, compared to the three and six months ended June 30, 1997.
Crusader's Commercial Package business represents approximately 97% of insurance
premiums earned as of June 30, 1998, compared to 96% as of June 30, 1997.
Premium written before reinsurance decreased $2,240,253 (20%) to $9,239,511 for
the three months and decreased $1,608,437 (8%) for the six months ended June 30,
1998, compared to the three and six months ended June 30, 1997. This decrease in
written premium is primarily due to a change in the marketing strategy for the
states of Washington and Oregon. The Company began marketing direct to retail
agents and brokers in these states, and ceased marketing through its former
General Agent. While this has resulted in a temporary reduction in premium
written, the Company expects the long-term result to be increased revenues with
reduced acquisition expense.
Ceded premium earned was 15% of gross earned premium for the three months and
13% of gross earned premium for the six months ended June 30, 1998, compared to
15% for the three months and 12% for the six months ended June 30, 1997.
Net investment income, excluding realized investment gains, increased $179,806
(15%) to $1,405,197 for the three months and $349,214 (14%) to $2,764,075 for
the six months ended June 30, 1998, compared to investment income of $1,225,391
for the three months and $2,414,861 for the six months ended June 30, 1997. This
increase was primarily due to a 15% increase (at amortized cost) in invested
assets.
Gross commission and fee income decreased $162,589 (11%) to $1,316,134 for the
three months and decreased $112,080 (4%) to $2,785,379 for the six months ended
June 30, 1998, compared to the three and six months ended June 30, 1997. This
decrease for the three and six months consisted of the following:
Three months Six months
Workers' compensation program $ (34,202) $ 36,431
Daily automobile rental insurance program (901) 17,406
Service fee income (80,833) (59,551)
Commercial automobile insurance program (24,098) (68,943)
Health and life insurance program (22,555) (37,423)
-------- --------
Net decrease in commission and fee income $(162,589) $(112,080)
======== =========
Losses and loss adjustment expenses were 50% of net premium earned for the three
months and 51% of net premium earned for the six months ended June 30, 1998,
compared to 54% of net premium earned for the three and six months ended June
30, 1997. This decrease was primarily due to the favorable development of prior
period losses.
9
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Policy acquisition costs consist of commissions, premium taxes, inspection fees,
and certain other underwriting costs which are related to the production of
Crusader insurance policies. These costs include both Crusader expenses and
allocated expenses of other Unico subsidiaries. Crusader's reinsurers pay
Crusader a ceding commission, which is primarily a reimbursement of the
acquisition cost related to the ceded premium. Policy acquisition costs, net of
ceding commission, are deferred and amortized as the related premiums are
earned. These costs were 27% of net premium earned for the three months and 28%
of net premium earned for the six months ended June 30, 1998, compared to 29% of
net premium earned for the three months and six months ended June 30, 1997.
Salaries and employee benefits increased $56,453 (6%) to $992,116 for the three
months and increased $181,661 (10%) to $2,041,737 for the six months ended June
30, 1998, compared to salary and employee benefits of $935,663 for the three
months and $1,860,076 for the six months ended June 30, 1997.
Commissions to agents/brokers decreased $58,874 (20%) to $235,611 for the three
months and decreased $88,923 (16%) to $480,538 for the six months ended June 30,
1998, compared to the three and six months ended June 30, 1997. The decrease is
primarily due to related decreases in revenue in the health and life program and
to the sale of the commercial automobile program to a non-affiliated third party
in June, 1997.
Other operating expenses decreased $118,664 (19%) for the three months and
$223,565 (17%) for the six months ended June 30, 1998, compared to the three and
six months ended June 30, 1997. This decrease was primarily due to a $255,000
reduction in interest expense payable due to a settlement of federal income tax
issues for the fiscal years ended March 31, 1990, through March 31, 1994, which
were under appeal.
Income tax provision increased 2.6% to 33.6% of income before taxes for the
three months and increased 2.0% to 32.2% of income before taxes for the six
months ended June 30, 1998, compared to the three months and six months ended
June 30, 1997. This increase was primarily due to a federal income tax payment
of $64,441 in full settlement of all issues under appeal regarding the Company's
federal income tax returns for the fiscal years ended March 31, 1990, through
March 31, 1994.
The effect of inflation on net income of the Company during the three and six
months ended June 30, 1998, and 1997 was not significant.
Forward looking statements
Information contained in this discussion, other than historical information, are
considered "forward looking statements" and may be subject to change based on
various important factors and uncertainties. Some, but not all, of the factors
and uncertainties that may cause actual results to differ significantly from
those expected in any forward looking statements are disclosed in the Company's
1997 Form 10-K as filed with the Securities and Exchange Commission. Further,
the statements herein concerning the effects of the Company's stated expectation
as to the long-term results of marketing in the states of Washington and Oregon
directly to retail agents and brokers rather than through the Company's former
general agent are forward looking statements which involve risks and
uncertainties that could cause actual results to differ materially from these
forward looking statements. With respect to the statement concerning the effects
of the change in marketing in the states of Washington and Oregon, factors which
would cause the actual results to differ materially include the Company's
ability to effectively market to retail agents and brokers in those states, the
willingness of the retail agents and brokers in those states to deal directly
with the Company, and general economic conditions and competition in those
states.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) During the quarter ended June 30, 1998, the Company issued an aggregate
of 61,784 shares of its common stock upon exercise of employee stock options
granted under the Unico American Corporation Employee Incentive Stock Option
Plan. These shares were issued to an aggregate of three employees of the
Company. Of these shares, 4,065 shares were issued in exchange for $14,227.50 in
cash, 5,000 shares were issued in exchange for $17,500.00 in cash, and 73,262
shares were issued in exchange for 20,543 shares of common stock and $11.25 in
cash. These shares were acquired for investment and without a view to the public
distribution or resale thereof, and the issuance thereof was exempt from the
registration requirements under the Securities Act of 1933, as amended, under
Section 4(2) thereof as transactions not involving a public offering.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
(a) On June 5, 1998, the Company held its Annual Meeting of Stockholders.
(b) Proxies for the meeting were solicited pursuant to Regulation 14 under the
Securities Exchange Act of 1934; there was no solicitation in opposition to
nominees of the Board of Directors as listed in the Proxy Statement and all
such nominees were elected.
(c) At the meeting, the following persons were elected by the vote indicated
(there were no abstentions or broker non-votes) as directors to serve until
the next meeting of shareholders and until their successors are duly
elected and qualified.
Name For Against or Withheld
Erwin Cheldin 5,414,584 50,200
Lester A. Aaron 5,414,584 50,200
Cary L. Cheldin 5,414,584 50,200
George C. Gilpatrick 5,414,584 50,200
Roger H. Platten 5,414,584 50,200
David A. Lewis 5,414,584 50,200
Bernard R. Gans 5,414,584 50,200
ITEM 5 - OTHER INFORMATION
In July 1998, David E. Driscoll was elected a Director of the Registrant to fill
a vacancy created by the resignation of Bernard R. Gans. Mr. Gans resigned for
personal reasons. Mr. Driscoll is a partner in the Riverside, California, law
firm of Foster, Driscoll & Reynolds that specializes in insurance defense
matters.
If a shareholder desires to submit a proposal for consideration at the Company's
1999 Annual Meeting of Shareholders and to have the proposal set forth in the
Proxy Statement and form of Proxy for such meeting in accordance with Rule 14a-8
of the Securities and Exchange Commission, such proposal should be received by
the Company no later than December 21, 1998. If a shareholder proposal is
otherwise presented at the Company's 1999 Annual Meeting of Shareholders,
proxies solicited by the Company for such Annual Meeting will confer upon the
proxy holders' discretionary authority to vote on any matter so presented at the
meeting of which the Company did not have notice prior to March 6, 1999.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
None
11
<PAGE>
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 there unto authorized.
UNICO AMERICAN CORPORATION
Date: August 13, 1998 By: /s/ Erwin Cheldin
------------------
Erwin Cheldin
Chairman of the Board, President and Chief
Executive Officer, (Principal Executive Officer)
Date: August 13, 1998 By: /s/ Lester A. Aaron
--------------------
Lester A. Aaron
Treasurer, Chief Financial Officer, (Principal
Accounting and Principal Financial Officer)
12
<PAGE>
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