<PAGE>1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-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 June 30, 1995 or
_____________
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ____________ to ____________
Commission file number 1-5683
______
USLIFE Corporation
______________________________________________________________________
(Exact name of registrant as specified in its charter)
New York 13-2578598
___________________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
125 Maiden Lane, New York, New York 10038
___________________________________ ___________________
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code (212) 709-6000
_______________
NONE
______________________________________________________________________
Former name, former address and former fiscal year, if changed since
last report.
Indicate by checkmark 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
_______ _______
The number of shares outstanding of the Registrant's Common Stock as
of August 2, 1995 was 22,912,944.
<PAGE>2
USLIFE Corporation
INDEX
Page No.
________
Part I - Financial Information:
Consolidated Balance Sheets -
June 30, 1995 and December 31, 1994.................... 3
Summary Statements of Consolidated Net Income -
For the Six Months and Three Months Ended
June 30, 1995 and 1994................................. 5
Statements of Consolidated Cash Flows -
For the Six Months Ended June 30, 1995 and 1994........ 6
Notes to Financial Statements.......................... 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 12
Other Financial Information............................ 26
Part II - Other Information.............................. 27
Signatures............................................... 30
<PAGE>3
<TABLE>
USLIFE Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
June 30, 1995 and December 31, 1994
(Dollar amounts in thousands except per share data)
<CAPTION>
June 30, 1995 December 31, 1994
_____________ _________________
<S> <C> <C>
Assets
______
Cash:
On hand and in demand accounts............. $ 49,554 $ 51,878
Restricted funds held in escrow, etc. ..... 2,528 1,653
__________ __________
52,082 53,531
__________ __________
Invested assets (Notes 1 and 2):
Fixed maturities available for sale, at
market (cost, June 30, 1995, $5,420,822;
December 31, 1994, $5,190,230)............ 5,672,606 4,937,867
Equity securities, at market (cost,
June 30, 1995, $5,722; December
31, 1994, $5,344)......................... 5,291 4,583
Mortgage loans............................. 302,489 319,618
Policy loans............................... 284,057 283,088
Real estate................................ 31,153 41,688
Other long term investments................ 6,936 7,400
Short term investments..................... 84,989 129,335
__________ __________
Total invested assets.................... 6,387,521 5,723,579
__________ __________
Total cash and invested assets........... 6,439,603 5,777,110
__________ __________
Deferred policy acquisition costs
(Note 2)................................... 708,711 793,145
Other receivables (net)...................... 345,531 331,035
Property and equipment (net of accumulated
depreciation of $39,606 at June 30, 1995
and $37,367 at December 31, 1994).......... 11,472 11,953
Prepaid expenses, deferred charges and
other assets............................ 90,891 91,019
__________ __________
Total assets............................ $7,596,208 $7,004,262
========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>4
<TABLE>
<CAPTION>
June December
30, 1995 31, 1994
__________ __________
<S> <C> <C>
Liabilities and Equity Capital
______________________________
Liabilities:
Future policy benefits................................... $1,584,316 $1,531,996
Policyholder account balances............................ 3,724,079 3,641,393
Supplementary contracts without life contingencies....... 19,620 8,329
Policyholder dividend accumulations...................... 20,214 20,178
Policy and contract claims............................... 146,368 155,048
Other policy and contract liabilities.................... 32,771 31,265
Notes payable............................................ 227,700 196,500
Long term debt........................................... 349,425 349,360
Federal income taxes (current and deferred).............. 59,737 (69,018)
Accounts payable and accrued liabilities................. 266,906 250,577
__________ __________
Total liabilities................................... 6,431,136 6,115,628
__________ __________
Deferred income.......................................... 8,390 10,746
__________ __________
Equity Capital:
Preferred stock, $4.50 Series A Convertible, $1.00
par value; authorized and outstanding, 4,484
shares (December 31, 1994, 4,653 shares)........... 448 465
Preferred stock, $5.00 Series B Convertible, $1.00
par value; authorized and outstanding, 1,862
shares (December 31, 1994, 2,003 shares)........... 93 100
Preferred stock, undesignated, $1.00 par value;
authorized 10,793,654 shares, issued; none
(December 31, 1994; none).......................... 0 0
Common stock, par value $1.00 per share, authorized
60,000,000 shares, issued: 38,312,966 shares
(December 31, 1994, 38,310,490 shares)............. 38,313 38,310
Paid-in surplus.......................................... 134,787 131,823
Net unrealized gains (losses) on securities (Note 2)..... 86,475 (156,248)
Retained earnings........................................ 1,245,425 1,210,078
__________ __________
1,505,541 1,224,528
Less: Treasury stock, at cost - June 30, 1995:
15,412,443 Common shares; December 31, 1994:
15,493,148 Common shares........................ 340,738 339,972
Deferred compensation............................. 8,121 6,668
__________ __________
Total Equity Capital..................................... 1,156,682 877,888
__________ __________
Total liabilities and Equity Capital..................... $7,596,208 $7,004,262
========== ==========
Equity Capital per share (Note 3)........................ $49.99 $38.15
====== ======
</TABLE>
<PAGE>5
<TABLE>
USLIFE Corporation and Subsidiaries
Summary Statements of Consolidated Net Income (Unaudited)
For the Six Months and Three Months Ended June 30, 1995 and 1994
(Amounts in thousands except per share)
<CAPTION>
Six Months Ended June 30 Three Months Ended June 30
____________________________ ____________________________
1995 1994 1995 1994
______ ______ ______ ______
<S> <C> <C> <C> <C>
REVENUES:
Premiums................................................. $ 489,221 $ 485,894 $ 256,485 $ 258,698
Other considerations..................................... 114,514 92,237 56,630 47,707
Net investment income.................................... 242,148 226,213 121,810 114,794
Realized gains on investments............................ 467 495 70 92
Other income............................................. 15,670 14,758 8,196 7,584
__________ __________ __________ __________
Total revenues........................................ 862,020 819,597 443,191 428,875
__________ __________ __________ __________
BENEFITS AND EXPENSES:
Benefits to policyholders and beneficiaries.............. 356,428 366,077 175,901 185,815
Commissions, net of deferred expenses.................... 74,127 70,646 36,725 34,967
Other expenses and taxes, net of deferred expenses....... 92,259 85,137 46,702 43,671
Increase in liability for future policy benefits......... 56,091 32,589 39,985 28,907
Interest credited to policyholder account balances....... 103,280 94,470 52,327 47,688
Amortization of deferred policy acquisition costs........ 81,726 78,389 40,743 40,739
Interest expense......................................... 19,631 16,566 9,960 8,585
Dividends to policyholders............................... 1,694 1,849 833 926
__________ __________ __________ __________
Total benefits and expenses........................... 785,236 745,723 403,176 391,298
__________ __________ __________ __________
Income from operations before Federal income taxes.......... 76,784 73,874 40,015 37,577
Provision for income taxes.................................. 26,327 26,086 13,848 13,413
__________ __________ __________ __________
Net income.................................................. $ 50,457 $ 47,788 $ 26,167 $ 24,164
========== ========== ========== ==========
Net income per share (Note 4)............................... $ 2.18 $ 2.08 $ 1.13 $ 1.05
========== ========== ========== ==========
Dividends per share:
Common................................................... $ .66 $ .62 $ .33 $ .31
========== ========== ========== ==========
Preferred Series A....................................... $ 2.25 $ 2.25 $ 1.125 $ 1.125
========== ========== ========== ==========
Preferred Series B....................................... $ 2.50 $ 2.50 $ 1.25 $ 1.25
========== ========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>6
<TABLE>
USLIFE Corporation and Subsidiaries
Statements of Consolidated Cash Flows (Unaudited)
For the Six Months Ended June 30, 1995 and 1994
(Amounts in Thousands)
<CAPTION>
Six Months Ended June 30
____________________________
1995 1994
____ ____
<S> <C> <C>
Cash flows from operating activities:
Net income.............................................. $ 50,457 $ 47,788
Adjustments to reconcile net income to net cash
provided by operating activities:
Change in liability for future policy benefits........ 48,114 26,804
Interest credited to policyholder account balances.... 103,280 94,470
Amounts assessed from policyholder account balances... (79,683) (70,658)
Additions to deferred policy acquisition costs........ (116,432) (95,099)
Amortization of deferred policy acquisition costs..... 81,726 78,389
Additions to deferred charges......................... (3,001) (3,153)
Deferred Federal income taxes......................... (2,284) (7,809)
Depreciation and amortization......................... 6,482 6,220
Change in amounts due policyholders................... 4,613 11,738
Change in other liabilities and amounts receivable.... (6,236) 8,217
Net realized capital gains............................ (467) (495)
Change in restricted cash............................. (875) (942)
Change in current Federal income tax liability........ 341 (1,606)
Other, net............................................ (4,101) (727)
___________ ___________
Total adjustments................................ 31,477 45,349
___________ ___________
Net cash provided by operating activities... 81,934 93,137
___________ ___________
Cash flows from investing activities:
Change in policy loans.................................. (969) (420)
Proceeds from investments sold, redeemed or matured:
Fixed maturities.................................... 230,045 376,245
Equity securities................................... 291 169
Mortgage loan principal receipts.................... 26,236 30,479
Real estate......................................... 8,276 1,673
Other long term investments......................... 583 114
Expenditures for property and equipment................. (1,893) (1,883)
Cost of investments purchased:
Fixed maturities.................................... (461,103) (642,878)
Mortgage loans...................................... (5,706) (6,101)
Real estate......................................... (814) (626)
Other long term investments......................... (15) (105)
Net sales or (purchases) of short term investments.. 44,346 (20,793)
Other, net............................................ 1,736 (201)
___________ ___________
Net cash used in investing activities....... (158,987) (264,327)
___________ ___________
Cash flows from financing activities:
Increase in notes payable............................. 31,200 145,000
Repayment of long term debt........................... -- (100,000)
Dividends to shareholders............................. (15,110) (14,140)
Acquisition of treasury stock......................... (4,548) (1,787)
Change in policyholder account balances............... 58,988 135,131
Other, net............................................ 4,199 3,705
___________ ___________
Net cash provided by financing activities... 74,729 167,909
___________ ___________
Net change in cash.................................. (2,324) (3,281)
Cash at beginning of year............................. 51,878 60,321
___________ ___________
Cash at end of period................................. $ 49,554 $ 57,040
=========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>7
USLIFE Corporation and Subsidiaries
Notes to Financial Statements
Note 1. Change in Accounting Principles
Effective as of January 1, 1995, the Company adopted Statement of
Financial Accounting Standards No. 114 ("SFAS 114"), entitled
"Accounting by Creditors for Impairment of a Loan," as modified
by FASB Statement No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures."
These Statements require a writedown to fair value, as defined by
Statement No. 114, for certain mortgage loans and similar
investments where impairment results in a change in repayment
terms. The adoption of these Statements did not have a material
impact on the Company's reported financial position or results of
operations.
Note 2. Investments
The Company's investment management policies include continual
monitoring and evaluation of securities market conditions and
circumstances relating to its investment holdings which may
result in the selection of investments for sale prior to
maturity. Securities may also be sold as part of the Company's
asset/liability management strategy in response to changes in
interest rates, resultant prepayment risk, and similar factors.
Accordingly, the Company's entire Fixed Maturity portfolio is
classified as "available for sale" and is carried in the
accompanying balance sheets at market value. The Company's
investments in preferred stocks (other than redeemable preferred
stocks) and common stocks ("Equity Securities") are also carried
at market value in the accompanying balance sheets. Unrealized
gains and losses on "available for sale" securities, except those
relating to a reduction in value determined to be other than
temporary, are recorded as direct charges or credits to "Net
unrealized gains (losses) on securities" included in Equity
Capital. The cost and market value of the Company's consolidated
investments in Fixed Maturities and Equity Securities at June 30,
1995 and December 31, 1994 are presented below:
<PAGE>8
<TABLE>
<CAPTION>
Net
Unrealized
Adjusted Gain
Cost Market (Loss)
___________ _________ __________
(Amounts in Thousands)
<S> <C> <C> <C>
June 30, 1995:
Fixed Maturities......................... $5,420,822 $5,672,606 $ 251,784
Equity Securities........................ 5,722 5,291 (431)
__________
251,353
Adjustment of deferred policy acquisition
costs relating to market value
adjustment for certain fixed maturities (113,319)
Adjustment of certain policyholder
liabilities relating to market value
adjustment for certain fixed maturities (4,995)
Tax effect............................... (46,564)
__________
Net unrealized gain on securities
included in Equity Capital............. $ 86,475
==========
December 31, 1994:
Fixed Maturities......................... $5,190,230 $4,937,867 $(252,363)
Equity Securities........................ 5,344 4,583 (761)
__________
(253,124)
Adjustment of deferred policy acquisition
costs relating to market value
adjustment for certain fixed maturities 5,821
Adjustment of certain policyholder
liabilities relating to market value
adjustment for certain fixed maturities 6,921
Tax effect............................... 84,134
__________
Net unrealized loss on securities
included in Equity Capital............. $(156,248)
==========
</TABLE>
Short term investments are carried at cost, which approximates
market value. Real estate is carried at the lower of depreciated
cost or net realizable value. Depreciation is calculated on a
straight line basis with useful lives varying based on the type
of building. Policy loans and mortgages, other than those with a
decline in value determined to be other than temporary, are
stated at the aggregate of unpaid principal balances. Other long
term investments are stated at the lower of cost or estimated net
realizable value.
At June 30, 1995, consolidated invested assets included $251
million (at market; adjusted cost $240 million) of less than
investment grade corporate securities, based on ratings assigned
by recognized rating agencies and insurance regulatory
authorities. Based on market value, these securities represent
3% of consolidated total assets at that date. Approximately $21
million of these investments (at adjusted cost which approximates
market) are in default at June 30, 1995. Also at June 30, 1995,
the book value of mortgage loans included in consolidated total
assets which were 60 days or more delinquent or in foreclosure
was approximately $6 million, and the book value of property
acquired through foreclosure of mortgage loans was approximately
$17 million.
<PAGE>9
Note 3. Equity Capital Per Share
Equity Capital per share was determined by dividing total Equity
Capital by the number of common shares and common equivalent
shares outstanding at the end of the period. The number of
common shares and common equivalent shares for this purpose has
been determined on the same basis as that for income per share
(see Note 4 of Notes to Financial Statements), except amounts are
based on the number of shares outstanding at the end of the
period. As of June 30, 1995 and December 31, 1994, the number of
such shares used for this purpose was 23.136 million and 23.010
million, respectively.
Note 4. Income Per Share
Income per share was computed by dividing the income applicable
to common and common equivalent shares by the weighted average
number of common and common equivalent shares outstanding during
each period. The weighted average number of common and common
equivalent shares was determined by using the average number of
common shares outstanding during each period, net of reacquired
(treasury) shares from the date of acquisition; by converting the
shares of the Series A and Series B Preferred Stock to their
equivalent common shares, and by calculating the number of shares
issuable on exercise of those common stock options with exercise
prices lower than the market price of the common stock, reduced
by the number of shares assumed to have been purchased with the
proceeds from the exercise of the options. Fully diluted income
per share is the same as income per share data indicated. The
following table sets forth the computations of income per share
for the six and three month periods ended June 30, 1995 and 1994:
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30
__________________ __________________
1995 1994 1995 1994
____ ____ ____ ____
(Shares and Amounts in Thousands
except Per Share data)
<S> <C> <C> <C> <C>
Net income......................................... $ 50,457 $ 47,788 $ 26,167 $ 24,164
======== ======== ======== ========
Weighted average common shares
outstanding, net of treasury shares.............. 22,871 22,755
Add - common share equivalents of:
Preferred Stock - Series A....................... 36 39
Preferred Stock - Series B....................... 15 16
Outstanding stock options - treasury stock method 184 171
______ ______
Total common shares and common equivalent shares... 23,106 22,981
====== ======
Net income per share............................... $ 2.18 $ 2.08 $ 1.13 $ 1.05
====== ====== ====== ======
</TABLE>
<PAGE>10
Note 5. Reinsurance
The Company's life insurance subsidiaries reinsure with other
companies portions of the risks they underwrite and assume
portions of risks on policies underwritten by other companies.
The life insurance subsidiaries generally reinsure risks over
$1.5 million as well as selected risks of lesser amounts.
Amounts paid or deemed to have been paid for reinsurance
contracts are recorded as reinsurance receivables, and the cost
of reinsurance related to long-duration contracts is accounted
for over the life of the underlying reinsured policies using
assumptions consistent with those used to account for the
underlying policies. The Company is contingently liable with
respect to insurance ceded in the event any reinsurer is unable
to meet the obligations which have been assumed. Reinsurance
receivable and recoverable amounts included in "Other
receivables" in the accompanying Consolidated Balance Sheets are
as follows:
June 30, December
1995 31, 1994
_________ _________
(Amounts in Thousands)
Reinsurance receivables - paid claims... $ 5,252 $ 8,865
Other reinsurance recoverable amounts... 131,581 128,252
________ ________
$136,833 $137,117
======== ========
The effect of reinsurance on premiums, other considerations, and
benefits to policyholders and beneficiaries, is as follows:
<TABLE>
<CAPTION>
Six Months Ended June 30 Three Months Ended June 30
___________________________ ___________________________
1995 1994 1995 1994
________ ________ ________ ________
(Amounts in Thousands)
<S> <C> <C> <C> <C>
Premiums, before reinsurance ceded......... $526,276 $524,756 $275,480 $280,816
Premiums ceded............................. 37,055 38,862 18,995 22,118
________ ________ ________ ________
Net premiums............................... $489,221 $485,894 $256,485 $258,698
======== ======== ======== ========
Other considerations, before reinsurance
ceded................................... $122,429 $ 99,311 $ 60,515 $ 51,291
Other considerations ceded................. 7,915 7,074 3,885 3,584
________ ________ ________ ________
Net other considerations................... $114,514 $ 92,237 $ 56,630 $ 47,707
======== ======== ======== ========
Benefits to policyholders and beneficiaries,
before reinsurance recoveries............ $379,926 $397,764 $186,984 $201,722
Reinsurance recoveries..................... 23,498 31,687 11,083 15,907
________ ________ ________ ________
Benefits to policyholders and beneficiaries,
net of reinsurance recoveries............ $356,428 $366,077 $175,901 $185,815
======== ======== ======== ========
</TABLE>
<PAGE>11
Note 6. Subsequent Event
On July 25, 1995, the Board of Directors of USLIFE Corporation
approved a 3-for-2 split of the Company's common stock ($1.00 par
value). As a result of this action, one additional share of
USLIFE common stock will be distributed on or about September 22,
1995 for each two shares held, to shareholders of record at the
close of business on September 1, 1995. There will be no change
in the par value per share of the common stock.
<PAGE>12
USLIFE Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Financial Condition
___________________
The liquidity requirements of the Company are met primarily
by cash flows from operations of the life insurance
subsidiaries and accumulated funds at the subsidiary level.
These internal sources of liquidity are complemented by such
external sources as available bank lines of credit and
revolving credit agreements and the ability of the Company
to utilize capital markets for intermediate and long-term
financing.
Premium and investment income as well as maturities and
sales of invested assets provide the primary sources of cash
available for liquidity requirements at the life insurance
subsidiaries, while cash is applied by such subsidiaries to
payment of policy benefits and loans, costs of acquiring new
business (principally commissions), and operating expenses,
as well as purchases of new investments. Excluding the
impact of changes in accounts payable and receivable and
amounts due policyholders, all of which are subject to
random fluctuations from the timing of securities
transaction settlements, claims payments and similar
matters, net cash provided by operating activities of the
life insurance subsidiaries for the first half of 1995 was
$99.7 million.
On a consolidated basis, net cash provided by operating
activities amounted to $81.9 million for the first half of
1995, compared to $93.1 million for the corresponding period
of 1994. As indicated above, these amounts reflect changes
in accounts that are subject to random timing fluctuations.
Excluding the impact of changes in these accounts, net cash
provided by consolidated operating activities amounted to
$83.6 million in the first half of 1995 versus $73.2 million
in the corresponding 1994 period.
First half 1995 cash flows from operating activities
included $48.1 million from the change in liability for
future policy benefits, versus $26.8 million in the
corresponding 1994 period, reflecting increased sales of
term insurance and single premium immediate annuities in the
first half of 1995.
Interest credited to policyholder account balances increased
to $103.3 million in the first half of 1995 versus $94.5
<PAGE>13
million in the corresponding 1994 period, reflecting the
aggregate increase in policyholder account balances from
$3.5 billion at June 30, 1994 to $3.7 billion at June 30,
1995. The portion of policyholder account balances relating
to individual annuities was approximately $1.82 billion at
June 30, 1995 versus $1.76 billion at June 30, 1994, with
the balance relating to universal life insurance contracts.
As discussed under "Results of Operations," increases in
rates of interest offered on substantially all of the
Company's deferred annuities, initiated during the second
half of 1994 and effective for renewing contracts either at
contract anniversary or January 1, 1995, were also a factor
in the first half 1995 increase in interest credited to
policyholder account balances.
Interest rates credited on universal life and individual
annuity contracts may be adjusted periodically by the
Company. Subject to any applicable surrender charges, the
Company's universal life insurance products and individual
annuities may be surrendered by the holder. A cash
surrender value, based on contractual terms, is also
available to the policyholder upon surrender of many of the
Company's traditional individual life insurance policies
under which cash values are accumulated. Such surrenders
are influenced by various factors including economic
conditions, available alternative investment returns,
competition for investment and insurance funds, and
perceived financial strength of the insurer. These
contracts are generally supported by the Company's
investment portfolios, which are primarily comprised of
investment grade, publicly traded corporate bonds.
Substantially all of the Company's interest sensitive life
insurance and annuity contracts provide for imposition of a
surrender charge in the event of policy surrender during a
specified initial period commencing with contract inception,
typically ten to fifteen years for universal life insurance
and five to seven years for individual annuities, with the
significance of this charge often subject to reduction over
the applicable period or during the later portion thereof.
The Company's investment portfolios are continually
monitored to determine whether the distribution of
investment maturities is considered appropriate for expected
levels of policy surrenders. The Company's fixed maturity
investments may be sold prior to maturity as part of the
Company's asset/liability management strategy and are
classified as "available for sale." Adjustments to the
investment maturity distribution, if necessary, may also be
accomplished by actions concerning the investment of
incoming funds and/or reinvestment of the proceeds of
securities matured or redeemed.
<PAGE>14
The Company monitors its surrenders on a monthly basis. Any
material deviation or emerging trend is traced to the
product line and agency of record, and remedial action is
taken where appropriate. If an acceleration of surrenders
were experienced, the cash flow requirements associated with
such surrenders could conceivably require the Company to
liquidate a portion of the underlying security investments
prior to maturity, at then-prevailing market prices. Any
additional cash flow requirements would be met through the
sources of liquidity described earlier.
Net additions to deferred policy acquisition costs amounted
to $34.7 million in the 1995 period versus $16.7 million in
the 1994 period. The increase of approximately $18 million
came primarily from greater individual life insurance sales
in the 1995 period. New annualized premiums for traditional
individual life products (primarily term insurance)
increased $9.9 million or 41% over the corresponding 1994
period, while sales of interest-sensitive life insurance
products increased $8.5 million or 30% over that period.
Net cash used in investing activities amounted to $159.0
million in the first half of 1995, compared to $264.3
million in the corresponding 1994 period. The decrease
reflected a reduced level of individual annuity sales and a
greater level of surrenders on these contracts during the
first half of 1995, both of which affected the increase in
policyholder account balances.
Individual annuity gross deposits decreased from $117
million in the first half of 1994 to $73 million in the
first half of 1995, as a result of various factors including
the negative impact on sales of declining interest rates
offered on these contracts during the first half of 1995.
Individual annuity surrender benefits increased to $118
million in the first half of 1995 versus $83 million in the
corresponding 1994 period, reflecting the greater volume of
annuity contracts in force and increased interest rates
available to consumers on certain alternative investments.
It should be noted that the major portion of these
surrenders resulted in imposition of a surrender charge by
the Company as contractually permitted and consequently,
these surrenders did not have an adverse impact upon first
half 1995 consolidated results of operations.
Reflecting the above factors, the increase in policyholder
account balances amounted to $59.0 million in the first half
of 1995, versus $135.1 million in the corresponding 1994
period, despite the aforementioned increase in interest
sensitive life insurance sales.
The $230.0 million and $376.2 million disposals of fixed
maturity investments included in cash flows from investing
<PAGE>15
activities for the first half of 1995 and 1994 included,
respectively, $37 million and $179 million (at cost) of
securities which were called for redemption by the
respective issuers prior to maturity. Fixed maturity
disposals also reflected sales of certain securities as part
of the Company's asset/liability management strategy with
objectives including maintenance of an appropriate
relationship of asset yields and maturities to current
policy liabilities, as well as sales of certain non-
performing securities for which reserves had previously been
established. Substantially all of the proceeds from fixed
maturities sold or redeemed were directed to investment
grade fixed maturity investments.
Net cash flows provided by consolidated financing activities
amounted to $74.7 million in the first half of 1995 versus
$167.9 million in the corresponding 1994 period, reflecting
the smaller 1995 period increase in policyholder account
balances discussed above.
Cash flows from financing activities for the first half of
1994 reflected a refinancing transaction in which the
Company borrowed $100 million in May 1994, classified as
notes payable, under a revolving credit agreement, and
utilized the proceeds to repay $100 million "current
maturities of long term debt" under an expiring credit
facility. Notes payable increased $31 million in the first
half of 1995 and $45 million in the corresponding 1994
period (excluding the refinancing transaction). These
increases in notes payable related primarily to working
capital requirements.
At June 30, 1995, the Company had lines of credit with seven
banks amounting to $60 million, all of which was unused.
However, at that date, the Company had outstanding short
term borrowings with four banks, negotiated independently of
such lines to take advantage of more favorable interest
rates, in the aggregate amount of $77.7 million. The
Company's remaining short term borrowings at June 30, 1995
consisted of $150 million outstanding under a revolving
credit agreement with The Bank of New York. In April 1995,
the term of the latter agreement was extended to April 1996.
Also at June 30, 1995, the Company had available a bank
revolving credit agreement which provides term loan
borrowing facilities up to $100 million, under which no
borrowings were outstanding. In February 1995, the term of
this agreement was extended to February 1997.
The Company's short term borrowings are utilized primarily
for working capital requirements.
Long term debt at June 30, 1995 includes a $150 million non-
callable issue of 6.75% Notes due 1998 and a $150 million
<PAGE>16
non-callable issue of 6.375% Notes due 2000. The Company
has filed a shelf registration statement which permits the
issuance of up to $150 million principal amount of debt
securities subject to management's discretion as to timing
and amount of issues thereunder. The Company's remaining
long term debt at June 30, 1995 consists of a $50 million
issue of 9.15% Notes due 1999 which permits early repayment
at the option of the Company, commencing in 1996.
While it is currently anticipated that the major portion of
the long term debt will be repaid using bank borrowings or
the net proceeds of debt and/or equity or combination
securities to be issued at future dates, determination of
the timing and amount of such repayments, borrowings and
securities issues will be dependent upon future market
conditions, future cash flows, and other unforeseen
circumstances.
Consolidated interest expense increased to $19.6 million in
the first half of 1995 from $16.6 million in the
corresponding 1994 period, primarily as a result of an
increase of more than 200 basis points in interest rates
applicable to the Company's short term borrowings.
Dividends paid on the Company's outstanding stock issues
amounted to $15.1 million in the first half of 1995 versus
$14.1 million in the first half of 1994, reflecting the
increase in common stock quarterly dividends per share from
31 cents to 33 cents in late 1994. On July 25, 1995 the
Board of Directors declared a quarterly dividend of 35 cents
per share on USLIFE common stock, representing a 2 cent
increase. This dividend is payable September 1, 1995 to
shareholders of record on August 15, 1995.
Results of Operations
_____________________
Six Months Ended June 30, 1995 compared to
Six Months Ended June 30, 1994
For the six months ended June 30, 1995, net income amounted
to $50.5 million versus $47.8 million for the comparable
period of 1994, an increase of $2.7 million or 5.6%.
Net income for the first half of 1995 and 1994 included net
capital gain transactions with an after-tax impact of $303
thousand and $320 thousand, respectively. Capital gains and
losses during the first half of 1995 reflect disposals of
non-performing securities with adjusted cost of
approximately $12 million, as well as several real estate
properties that were acquired through foreclosure, with
<PAGE>17
aggregate cost of approximately $19 million. Since reserves
had been previously recorded to recognize the reduction in
value of these investments, these disposals did not have a
material impact on current reported results. The net
capital gains reported for the 1994 period reflected $12.6
million pre-tax gains on disposals of fixed maturity
investments, which were essentially offset by additions to
valuation reserves for certain investments with loss
exposure.
Excluding the capital gains and losses discussed above,
consolidated after-tax income amounted to $50.2 million for
the first half of 1995 versus $47.5 million for the
corresponding 1994 period, an increase of $2.7 million or
5.7%. On a similar basis, after-tax income of the life
insurance subsidiaries increased $5.4 million or 8.2%. Also
on a similar basis, after-tax corporate charges (including
the operating results of USLIFE's servicing units) amounted
to $20.9 million in the first half of 1995 versus $18.2
million for the comparable 1994 period, resulting in a
negative comparative impact of approximately $3 million on
after-tax consolidated results that partially offset the
improvement in life insurance subsidiary results.
The improvement in life insurance subsidiary results came
primarily from increases in pre-tax profits from the
individual life and annuity product line as well as credit
insurance and employer/association group life insurance
products, partially offset by less favorable results from
the employer/association group health insurance line.
The negative variance in corporate charges reflected
increased interest expense at the corporate level. The
Company's consolidated interest expense, which increased to
$19.6 million in the first half of 1995 from $16.6 million
in the corresponding 1994 period, relates to borrowings at
the parent company level for general corporate purposes
including treasury stock repurchases. As discussed under
"Financial Condition," an increase of more than 200 basis
points in interest rates applicable to the Company's short
term borrowings was the primary cause of the increase in
interest expense for the first half.
A discussion of the Company's various product lines,
excluding the impact of capital gains and losses which are
previously discussed, follows.
Individual life and annuity pre-tax profits, including
income attributable to capital and surplus, amounted to
$103.0 million for the first half of 1995 versus $92.7
million for the corresponding 1994 period. The increase of
$10.3 million or 11.1% reflected contributions from major
sources of profit including mortality experience, investment
<PAGE>18
income, and voluntary policy termination experience
("persistency").
A pre-tax profit of $215 thousand was reported for credit
life insurance coverages for the first half of 1995, versus
a pre-tax loss of $97 thousand in the corresponding 1994
period. The favorable variance of $312 thousand came
primarily from improved mortality experience during the
second quarter of 1995 which offset adverse mortality
fluctuations experienced in a number of large accounts
during the first quarter.
Pre-tax profits from the Company's group life insurance
lines of business amounted to $3.6 million for the first
half of 1995, versus $1.1 million for the corresponding 1994
period, for a positive variance of $2.5 million.
Pre-tax income from employer/association group life
insurance products increased approximately $1.1 million,
from $1.8 million in the first half of 1994 to $2.9 million
in the 1995 period, on improved mortality experience.
A favorable variance of $1.4 million from the Company's
other group life insurance lines, including mortgage life
insurance and specialty coverages, accompanied the improved
employer/association group life results. The improvement in
these lines reflected the impact on 1994 period results of
poor mortality experience on a certain group accidental
death coverage program which was subsequently terminated.
The Company's group health insurance lines of business
reported a pre-tax loss of approximately $2 million for the
first half of 1995 versus a pre-tax profit of $4.2 million
for the corresponding 1994 period. The negative variance of
about $6 million was primarily attributed to the
employer/association group health insurance line, which
reported a pre-tax loss of $1.7 million for the 1995 period
versus a pre-tax profit of $3.8 million a year ago.
Premium revenues on employer/association group health
insurance products declined from $205 million in the first
half of 1994 to $181 million in the 1995 period, with the
decline primarily attributed to small group major medical
cases. Since the major portion of the Company's major
medical business has consisted primarily of "indemnity"
coverages, a shift in market emphasis to managed care
products arising from legislation in New York and New Jersey
resulted in a reduction of new sales as well as erosion of
business in force. The Company's decision in late 1993 to
restrict major medical sales to states where it has a
significant amount of in-force business also contributed to
the decline in revenues.
<PAGE>19
Although the Company has initiated expense reduction
measures to alleviate the impact of reduced group health
revenues, the revenue decline outpaced reductions in
overhead and other expenses during the first half, resulting
in a reported pre-tax loss. Continuing this strategy of
expense reduction, the Company is in process of
consolidating its claims offices. Although this action is
expected to result in certain transition costs prior to
realization of intended cost savings, it is not anticipated
to have a material adverse impact on consolidated results of
operations for the year 1995. The Company has refined its
"ancillary" group products, such as long-term disability and
dental insurance, with goals including an increase in the
proportion of group business from non-major medical lines,
and is introducing new managed care products and networks in
several states with the objective of improving its
competitive position.
Total revenues of the life insurance subsidiaries in the
1995 period amounted to $851.5 million, an increase of $42.2
million or 5.2% over the same period of 1994, primarily on
increases of $23.8 million (or 4.1%) and $15.8 million (or
7.2%) in premiums and considerations and net investment
income, respectively.
The increase in premiums and considerations came primarily
from the individual life insurance and annuity product line
and the credit life and disability lines, with declining
employer/association group health premiums a partial offset
as previously discussed.
Premiums and other considerations from individual life
insurance and annuity products amounted to $246 million in
the 1995 period, compared to $213 million in the 1994
period, with the increase from both interest sensitive and
traditional products and reflecting a larger base of in-
force business as well as increased sales during the first
half of 1995.
Net premium income on credit life and disability products
increased $6.7 million to $69.6 million in the first half of
1995, reflecting increased written premium for both credit
life and credit disability products.
Net investment income of the life insurance subsidiaries
increased $15.8 million, as noted above, reflecting a larger
investment base in the 1995 period and a modest increase in
overall yield. The pre-tax annualized yield was 7.94% in
the 1995 period as compared to 7.87% in the first half of
1994.
The increase in yield reflected disposals of certain lower
yielding securities, primarily during the latter portion of
1994, and reinvestment of proceeds in securities of similar
<PAGE>20
quality with higher available interest rates as part of the
Company's asset/liability management strategy. Disposals of
non-performing investments for which reserves were
previously established, as discussed under "Financial
Condition," were also a factor. While interest rates
available on investment securities have fluctuated in recent
quarters, the overall yield was marginally higher during the
first half of 1995 than the corresponding 1994 period. It
should be noted that the Company's interest sensitive life
insurance and annuity contracts are subject to periodic
adjustment of credited interest rates which are determined
by management based on factors including available market
interest rates and portfolio rates of return.
Total benefits and expenses of the life insurance
subsidiaries increased $35.3 million or 5.0% over the same
period of 1994.
Benefits to policyholders and beneficiaries amounted to
$356.4 million in the 1995 period, a decrease of $10.1
million versus the $366.5 million reported for the first
half of 1994. A $20.9 million decrease in
employer/association group health benefits, reflecting the
decline in volume on that line, was the primary cause of the
overall decrease in benefits. Volume related increases of
$8.2 million in death benefits on individual life insurance
products and $1.6 million on credit life and disability
benefits partially offset the impact of the decline in
employer/association group health benefits.
Interest credited to policyholder account balances increased
$8.8 million (or 9.3%) over the first half of 1994. This
increase reflected the greater volume of universal life-type
and individual annuity contracts in the 1995 period as well
as increases in rates of interest offered, initiated during
the second half of 1994, on substantially all of the
Company's deferred annuities. Increases in renewal rates of
interest on these annuities became effective January 1, 1995
or are effective at contract anniversary, based on type of
contract. Subsequently, during the first half of 1995, a
series of reductions in interest rates offered on newly
issued deferred annuity contracts were implemented, together
with various adjustments of credited interest rates on
renewing contracts.
Interest rates credited on the Company's deferred annuity
contracts, exclusive of first year increments on certain
products, typically ranged from 4.5% to 4.8% during the 1994
period and from 4.8% to 5.5% during the 1995 period,
depending on type of contract and period of issue. Interest
rates credited on the Company's universal life insurance
contracts typically ranged from 6.0% to 7.0% during both the
1994 and 1995 periods. Reductions in credited interest
rates, generally amounting to 25 basis points, are being
<PAGE>21
implemented during the third quarter of 1995 with respect to
the major portion of the Company's universal life insurance
policies in force as well as certain newly issued policies.
The prospective impact of rate adjustments for interest
sensitive products on reported results will be dependent
upon future sales, surrender levels, and investment
portfolio yield.
An increase in future policy benefits of $56.1 million was
recorded for the 1995 period, versus $32.6 million for the
corresponding 1994 period, with the $23.5 million variance
primarily associated with the increase in premiums on
traditional individual life insurance coverages.
Amortization of deferred policy acquisition costs increased
to $81.7 million in the 1995 period from $78.4 million in
the corresponding 1994 period, reflecting various factors
including the increased volume of individual life and
annuity business and credit insurance in force during the
1995 period.
An aggregate increase of $9.9 million or 7.4% in
commissions, general expenses, and insurance taxes and
licenses reflected increased volume in the individual life
insurance and annuity product line as well as the increased
premium income on credit life and disability insurance
products.
At June 30, 1995, consolidated invested assets included
approximately $251 million (at market) of less than
investment grade corporate securities, based on ratings
assigned by recognized rating agencies and insurance
regulatory authorities. These investments represent about
3% of consolidated total assets at that date. See Note 2 of
Notes to Financial Statements for further information.
These securities generally provide higher yields and involve
greater risk of loss from borrower default than investment
grade securities because their issuers typically have higher
levels of indebtedness and are more vulnerable to adverse
economic conditions than other issuers. The Company's
results of operations historically have not reflected a
material adverse impact from investments in such securities.
In March, 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 121,
entitled "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." The Statement
requires that long-lived assets such as property and
equipment, and certain intangible assets, be reviewed for
impairment when events or changes in circumstances indicate
that the carrying amount may not be recoverable. When
recoverability standards specified in the Statement are not
met, a writedown of the covered assets may be required. The
<PAGE>22
Statement does not apply to various classes of assets
including the Company's investment securities and deferred
policy acquisition costs, which will continue to be
evaluated based on previously established accounting
standards. Statement No. 121 must be adopted by calendar
year enterprises no later than 1996. Due to the recent
issuance of this Statement, the Company has not yet
completed its analysis of the prospective impact, if any, of
these accounting standards on its reported financial
position and results of operations.
Three Months Ended June 30, 1995 compared to
Three Months Ended June 30, 1994
For the three months ended June 30, 1995, net income
amounted to $26.2 million versus $24.2 million for the
comparable period of 1994, an increase of $2.0 million or
8.3%.
Capital gains and losses had no material impact on reported
results of operations for the second quarter of 1995 or
1994. Although certain real estate properties acquired
through foreclosure were sold during the 1995 period, these
disposals had no material impact on current reported results
since reserves had been previously established to recognize
the reductions in value.
Excluding capital gains and losses, consolidated after-tax
income amounted to $26.1 million for the second quarter of
1995 versus $24.1 million for the corresponding 1994 period,
an increase of $2.0 million or 8.4%. On a similar basis,
after-tax income of the life insurance subsidiaries
increased $2.8 million or 8.3%. Also on a similar basis,
after-tax corporate charges (including the operating results
of USLIFE's servicing units) amounted to $10.7 million in
the second quarter of 1995 versus $9.9 million for the
comparable 1994 period, resulting in a negative comparative
impact of approximately $800 thousand on after-tax
consolidated results that partially offset the improvement
in life insurance subsidiary results.
The improvement in life insurance subsidiary results came
primarily from increases in pre-tax profits from the
individual life and annuity product line and credit life
insurance, partially offset by less favorable results from
the employer/association group insurance lines.
The negative variance in corporate charges reflected
increased interest expense at the corporate level. The
Company's consolidated interest expense, which increased to
$10.0 million in the second quarter of 1995 from $8.6
<PAGE>23
million in the corresponding 1994 period, relates to
borrowings at the parent company level for general corporate
purposes including treasury stock repurchases. As
previously discussed, higher interest rates applicable to
the Company's short term borrowings were the primary cause
of the increase in interest expense for the second quarter.
A discussion of the Company's various product lines,
excluding the impact of capital gains and losses which are
previously discussed, follows.
Individual life and annuity pre-tax profits, including
income attributable to capital and surplus, amounted to
$53.6 million for the second quarter of 1995 versus $48.0
million for the corresponding 1994 period. The increase of
$5.5 million or 11.5% reflected contributions from major
sources of profit including mortality experience, investment
income, and voluntary policy termination experience
("persistency").
A pre-tax profit of $780 thousand was reported for credit
life insurance coverages for the second quarter of 1995,
compared to a pre-tax loss of $678 thousand for the
corresponding 1994 period. The favorable variance of $1.5
million came primarily from improved mortality experience
during the second quarter of 1995.
Pre-tax profits from the Company's group life insurance
lines of business amounted to $1.8 million for the second
quarter of 1995, versus $1.6 million for the corresponding
1994 period, as more favorable mortality experience on
specialty coverages included in these lines more than offset
reduced pre-tax profits from employer/association group life
insurance and mortgage life insurance.
The Company's group health insurance lines of business
reported a pre-tax loss of approximately $1.4 million for
the second quarter of 1995 versus a pre-tax profit of $2.0
million for the corresponding 1994 period. The negative
variance of $3.4 million was primarily attributed to the
employer/association group health insurance line, which
reported a pre-tax loss of $1.3 million for the 1995 period
versus a pre-tax profit of $1.5 million a year ago.
Premium revenues on employer/association group health
insurance products declined from $107 million in the second
quarter of 1994 to $89 million in the 1995 period, with the
decline primarily attributed to small group major medical
cases. As previously discussed, although the Company has
initiated strategies directed toward expense reduction,
emphasis of non-major medical products, and programs to
improve its competitive position in the employer/association
group insurance market, the revenue decline outpaced
<PAGE>24
reductions in overhead and other expenses resulting in a
reported pre-tax loss for the 1995 period.
Total revenues of the life insurance subsidiaries in the
1995 period amounted to $437.8 million, an increase of $13.9
million or 3.3% over the same period of 1994, primarily on
increases of $5.8 million (or 1.9%) and $7.1 million (or
6.3%) in premiums and considerations and net investment
income, respectively.
The increase in premiums and considerations came primarily
from the individual life insurance and annuity product line
and the credit life and disability lines, with declining
employer/association group health premiums a partial offset
as previously discussed.
Premiums and other considerations from individual life
insurance and annuity products amounted to $126 million in
the 1995 period, compared to $112 million in the 1994
period, with the increase from both interest sensitive and
traditional products and reflecting a larger base of in-
force business as well as increased sales during the second
quarter of 1995.
Net premium income on credit life and disability products
increased $4.1 million to $40.6 million in the second
quarter of 1995, reflecting increased written premium for
both credit life and credit disability products.
Net investment income of the life insurance subsidiaries
increased $7.1 million, as noted above, reflecting a larger
investment base in the 1995 period and a modest increase in
overall yield as previously discussed.
Total benefits and expenses of the life insurance
subsidiaries increased $10.2 million or 2.8% over the same
period of 1994.
Benefits to policyholders and beneficiaries amounted to
$175.9 million in the 1995 period, a decrease of $10.0
million versus the $185.9 million reported for the second
quarter of 1994. A $14.2 million decrease in
employer/association group health benefits, reflecting the
decline in volume on that line, was the primary cause of the
overall decrease in benefits. An increase of $5.8 million
in death benefits on individual life insurance products,
reflecting increased volume of business in force, partially
offset the impact of the decline in employer/association
group health benefits.
Interest credited to policyholder account balances increased
$4.6 million (or 9.7%) over the second quarter of 1994.
This increase reflected the greater volume of universal
life-type and individual annuity contracts in the 1995
<PAGE>25
period as well as increases in rates of interest offered,
initiated during the second half of 1994, on substantially
all of the Company's deferred annuities as previously
discussed.
An increase in future policy benefits of $40.0 million was
recorded for the 1995 period, versus $28.9 million for the
corresponding 1994 period, with the $11.1 million increase
primarily associated with the increase in premiums on
traditional individual life insurance coverages and credit
insurance products.
An aggregate increase of $4.6 million or 6.8% in
commissions, general expenses, and insurance taxes and
licenses reflected increased volume in the individual life
insurance and annuity product line as well as the increased
premium income on credit life and disability insurance
products.
<PAGE>26
OTHER FINANCIAL INFORMATION
The management of USLIFE believes that all adjustments
(consisting only of normal recurring accruals and adjustments)
necessary to present fairly the consolidated financial position
of USLIFE Corporation and subsidiaries as of June 30, 1995 and
December 31, 1994, the consolidated results of operations for the
six and three month periods ended June 30, 1995 and 1994, and
consolidated cash flows for the six month periods ended June 30,
1995 and 1994, have been included in the accompanying financial
statements.
Certain prior year amounts have been reclassified to conform to
current year presentation.
<PAGE>27
Part II - Other Information
Item 1. Legal Proceedings
_________________
As noted in the Company's Report on Form 10-K for the year ended
December 31, 1994, in June 1993, a purported class action (Hoban
v. USLIFE Credit Life Insurance Company, All American Life
Insurance Company and Security of America Life Insurance Company)
was filed in the United States District Court for the Northern
District of Illinois. An Amended Complaint was filed in October
1993. The Amended Complaint alleges that the defendant
companies, all of which are subsidiaries of USLIFE Corporation,
sold single premium credit life and credit disability insurance
policies to second mortgage borrowers in several states. The
Amended Complaint further alleges that some second mortgage loans
were paid off early so that the insureds were legally entitled to
refunds for unearned premiums. The suit seeks damages on behalf
of those insureds who did not claim and therefore did not receive
partial refunds of their premiums from the named defendants. The
Amended Complaint also contains claims under the Federal RICO
statute and the Illinois Consumer Fraud Act. Defendants filed a
Motion to Dismiss the Amended Complaint for lack of federal
jurisdiction, for failure to allege facts amounting to fraud, and
for failure to allege facts amounting to a RICO violation.
Plaintiffs have filed a Motion to Certify the Class, which
defendants opposed. In an order issued on October 25, 1994, the
District Court dismissed the case with leave to reinstate after
the United States Court of Appeals for the Seventh Circuit issued
its decision in a similar case (Richards v. Combined Insurance
Company) raising some of the same issues raised by defendants'
Motion to Dismiss. The dismissal in Richards was recently upheld
by the Seventh Circuit on appeal. Plaintiffs filed a Motion to
Reinstate which was granted by the Court on June 19, 1995. On
June 30, 1995, defendants filed a supplemental brief regarding
defendants' pending Motion to Dismiss.
Item 4. Submission of Matters to a Vote of Security Holders
___________________________________________________
The Annual Meeting of Shareholders of USLIFE Corporation was held
on May l6, l995 at Schimmel Center, Pace University, New York,
New York. Gordon E. Crosby, Jr., Chairman of the Board,
presided.
The shares represented at the meeting, either in person or by
proxy, amounted to 19,903,432 or approximately 86.9% of the total
<PAGE>28
shares of common and preferred stock outstanding as of the record
date of March 31, l995.
The following actions were taken by the shareholders at the
meeting:
(a) Election of Directors:
The nominees listed below were elected as directors of the
Corporation.
Votes Abstentions
Votes Against and Broker
Name For or Withheld Non-Votes
____ _____ ___________ ___________
Kenneth Black, Jr. 19,803,654 99,778 *
William J. Catacosinos 19,797,051 106,381 *
Gordon E. Crosby, Jr. 19,785,512 117,920 *
Austin L. D'Alton 19,801,278 102,154 *
Charles A. Davis 19,785,923 117,509 *
John R. Galvin 19,752,889 150,543 *
Robert E. Grant 19,802,272 101,160 *
Robert H. Osborne 19,746,699 156,733 *
William A. Simpson 19,795,859 107,573 *
* Pursuant to New York Law, abstentions and broker non-
votes are not counted toward the election of directors.
In addition to the directors listed above, the term of office of
the following directors continued after the Shareholders meeting:
John W. Riehm, Christopher S. Ruisi, William G. Sharwell, Beryl
W. Sprinkel, Greer F. Henderson, Thomas H. Lenagh, Franklin R.
Saul, and Robert L. Shafer.
(b) Ratification of KPMG Peat Marwick LLP as the Company's
Independent Auditor for the Year 1995:
Votes Abstentions
Votes Against and Broker
For or Withheld Non-Votes
_____ ___________ ___________
19,800,215 42,710 60,507
<PAGE>29
Item 6. Exhibits and Reports on Form 8-K
________________________________
(a) Exhibits
10 (i) - Eighth Amendment dated as of May 1, 1995 to an
employment contract dated as of April 1, 1989, as amended,
between USLIFE Corporation and Gordon E. Crosby, Jr.
(ii) - Seventh Amendment dated as of May 1, 1995 to an
employment contract dated as of April 1, 1989, as amended,
between USLIFE Corporation and Greer F. Henderson.
(iii) - Seventh Amendment dated as of May 1, 1995 to an
employment contract dated as of April 1, 1989, as amended,
between USLIFE Corporation and Christopher S. Ruisi.
(iv) - Fifth Amendment dated as of January 1, 1995 to an
employment contract dated as of April 16, 1990, as amended,
between USLIFE Corporation and William A. Simpson.
(v) - Sixth Amendment dated as of May 1, 1995 to an
employment contract dated as of April 16, 1990, as amended,
between USLIFE Corporation and William A. Simpson.
(vi) - Third Amendment to Lease dated May 10, 1989, to Lease
dated as of December 30, 1986 between The United States Life
Insurance Company In the City of New York and RREEF USA
Fund-III for the lease of a portion of 125 Maiden Lane, New
York, New York.
(vii) - Fourth Amendment to Lease dated as of April 14, 1995
to Lease dated as of December 30, 1986 between The United
States Life Insurance Company In the City of New York and
RREEF USA Fund-III for the lease of a portion of 125 Maiden
Lane, New York, New York.
27 Financial Data Schedule
(b) No reports on Form 8-K were filed on behalf of the Registrant
during the quarter ended June 30, 1995.
<PAGE>30
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.
USLIFE Corporation
_____________________________
(Registrant)
August 9, 1995 By /s/ Greer F. Henderson
____________________ _____________________________
Date Greer F. Henderson
Vice Chairman and
Chief Financial Officer
<PAGE>1
USLIFE Corporation
Form 10-Q for the Quarterly Period Ended June 30, 1995
Exhibit Index
Exhibit Number
Per Item 601 of
Regulation S-K
_______________
10 (i) - Eighth Amendment dated as of May 1, 1995 to an
employment contract dated as of April 1, 1989, as amended,
between USLIFE Corporation and Gordon E. Crosby, Jr.
(ii) - Seventh Amendment dated as of May 1, 1995 to an
employment contract dated as of April 1, 1989, as amended,
between USLIFE Corporation and Greer F. Henderson.
(iii) - Seventh Amendment dated as of May 1, 1995 to an
employment contract dated as of April 1, 1989, as amended,
between USLIFE Corporation and Christopher S. Ruisi.
(iv) - Fifth Amendment dated as of January 1, 1995 to an
employment contract dated as of April 16, 1990, as amended,
between USLIFE Corporation and William A. Simpson.
(v) - Sixth Amendment dated as of May 1, 1995 to an
employment contract dated as of April 16, 1990, as amended,
between USLIFE Corporation and William A. Simpson.
(vi) - Third Amendment to Lease dated May 10, 1989, to Lease
dated as of December 30, 1986 between The United States Life
Insurance Company In the City of New York and RREEF USA
Fund-III for the lease of a portion of 125 Maiden Lane, New
York, New York.
(vii) - Fourth Amendment to Lease dated as of April 14, 1995
to Lease dated as of December 30, 1986 between The United
States Life Insurance Company In the City of New York and
RREEF USA Fund-III for the lease of a portion of 125 Maiden
Lane, New York, New York.
27 Financial Data Schedule
<PAGE>1
EIGHTH AMENDMENT TO EMPLOYMENT AGREEMENT
________________________________________
This is an Eighth Amendment ("Eighth Amendment") dated as of May 1, 1995
to an Employment Agreement ("Agreement") dated April 1, 1989 between USLIFE
Corporation, a New York Corporation ("Employer") and Gordon E. Crosby
("Employee").
THE TERMS of this Eighth Amendment are:
1. Paragraph (2) of the Agreement, as amended by the First, Second, Third,
Fourth, Fifth, Sixth and Seventh Amendments, is now further amended to read, in
its entirety, as follows:
"(2) Employer will pay Employee for his services under paragraph (1) of
the Agreement at the rate of $1,070,000 per annum during the term of the
Agreement, in equal monthly installments, plus such periodic salary increases
and such additional compensation (if any) as may from time to time be voted by
Employer's Board of Directors and/or the Executive Compensation Committee or
its successor, in the sole and absolute discretion of said Board and/or
Committee. In addition, Employee is entitled to participate in the Annual
Incentive Plan adopted by Employer, under which Employee is entitled to receive
a bonus equal to a percentage of his "base salary", as further described in the
letter to Employee which is attached hereto and incorporated by reference
herein, if the applicable performance criteria are satisfied. For the purposes
of the preceding sentence, "base salary" shall mean Employee's base salary as
in effect on January 1 of a given year, but in no event shall base salary for
such purposes be deemed to exceed Employee's actual base salary as in effect on
January 1, 1994 increased at the rate provided by the Annual Incentive Plan.
<PAGE>2
Nothing in this Agreement shall be construed as precluding merit increases in
salary or as barring the Employee from such fringe benefits as the Employer may
grant."
2. Except as specifically amended by this Eighth Amendment, all other
provisions of the Agreement, as amended by the First, Second, Third, Fourth,
Fifth, Sixth and Seventh Amendments, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Eighth Amendment to the
Agreement on the date first set forth above.
USLIFE Corporation
By: /s/ Christopher S. Ruisi
________________________
Christopher S. Ruisi
Vice Chairman and Chief
Administrative Officer
/s/ Gordon E. Crosby, Jr.
_________________________
Gordon E. Crosby, Jr.
<PAGE>3
March 8, 1995
Mr. Gordon E. Crosby, Jr.
Chairman of the Board and
the Executive Committee
USLIFE Corporation
125 Maiden Lane
New York, NY 10038
Dear Gordon:
As you know, you have been selected by the Executive Compensation and
Nominating Committee of USLIFE Corporation ("Committee") to participate during
1995 in the Annual Incentive Plan. A copy of the Plan is attached for your
review.
The Plan is intended to provide additional compensation in the form of an
annual cash bonus to key officers of USLIFE and its subsidiaries tied to the
profitability of the Company's core individual lines of business, including
individual life and individual investment contracts. Participation in the Plan
is limited to a very small number of officers who have had, and who are
expected to continue to have, a significant impact on the Company's
performance.
The Committee has approved financial performance targets related to income from
USLIFE's core business, as defined in Section 2(c) of the Plan, for 1995.
These targets include a threshold level of $124,304,000 equal to 70% of the
average amount of income earned during 1992 through 1994. If 1995 income is
less than this threshold, no bonus payment will be made to any participant in
the Plan.
Assuming actual 1995 income equals $124,304,000, the threshold level, you will
be eligible to receive a bonus equal to 35% of your base salary, in accordance
with Section 5 of the Plan. As 1995 income exceeds the threshold level, your
potential bonus opportunity will also increase up to a maximum award of 75% of
base salary. For each $2,000,000 of income earned in excess of the threshold
income level, your potential bonus award will increase by 1% of salary.
<PAGE>4
Mr. Gordon E. Crosby, Jr.
March 8, 1995
Page Two
When the 1995 financial results for the Company's core business are known, they
will be reviewed and certified by the Committee. The Committee retains the
sole discretion to make awards under the Plan. As detailed in Section 6(b),
the Committee may decide to award a smaller amount than that indicated solely
by 1995 income, or to make no award at all, to recognize other aspects of
Company performance or your individual performance. The Committee's decisions
on individual awards will be communicated to you and any award payments will be
made no later than April 30, 1996.
Sincerely,
/s/ Christopher S. Ruisi
________________________
CSR:
cc: Mr. R. Hohn
<PAGE>1
SEVENTH AMENDMENT TO EMPLOYMENT AGREEMENT
_________________________________________
This is a Seventh Amendment ("Seventh Amendment") dated as of May 1, 1995 to
an Employment Agreement ("Agreement") dated April 1, 1989 between USLIFE
Corporation, a New York Corporation ("Employer") and Greer F. Henderson
("Employee").
THE TERMS of this Seventh Amendment are:
1. Paragraph (2) of the Agreement, as amended by the First, Second, Third,
Fourth, Fifth and Sixth Amendments, is now further amended to read, in its
entirety, as follows:
"(2) Employer will pay Employee for his services under paragraph (1) of
the Agreement at the rate of $610,000 per annum during the term of the
Agreement, in equal monthly installments, plus such periodic salary increases
and such additional compensation (if any) as may from time to time be voted by
Employer's Board of Directors and/or the Executive Compensation Committee or
its successor, in the sole and absolute discretion of said Board and/or
Committee. In addition, Employee is entitled to participate in the Annual
Incentive Plan adopted by Employer, under which Employee is entitled to receive
a bonus equal to a percentage of his "base salary", as further described in the
letter to Employee which is attached hereto and incorporated by reference
herein, if the applicable performance criteria are satisfied. For the purposes
of the preceding sentence, "base salary" shall mean Employee's base salary as
in effect on January 1 of a given year, but in no event shall base salary for
such purposes be deemed to exceed Employee's actual base salary as in effect on
January 1, 1994 increased at the rate provided by the Annual Incentive Plan.
<PAGE>2
Nothing in this Agreement shall be construed as precluding merit increases in
salary or as barring the Employee from such fringe benefits as the Employer may
grant."
2. Except as specifically amended by this Seventh Amendment, all other
provisions of the Agreement, as amended by the First, Second, Third, Fourth,
Fifth, Sixth and Seventh Amendments, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Seventh Amendment to the
Agreement on the date first set forth above.
USLIFE Corporation
By: /s/ Gordon E. Crosby, Jr.
_________________________
Gordon E. Crosby, Jr.
Chairman of the Board
/s/ Greer F. Henderson
______________________
Greer F. Henderson
<PAGE>3
March 8, 1995
Mr. Greer F. Henderson
Vice Chairman and Chief Financial Officer
USLIFE Corporation
3600 Route 66
Neptune, NJ 07754
Dear Greer:
As you know, you have been selected by the Executive Compensation and
Nominating Committee of USLIFE Corporation ("Committee") to participate during
1995 in the Annual Incentive Plan.
The Plan is intended to provide additional compensation in the form of an
annual cash bonus to key officers of USLIFE and its subsidiaries tied to the
profitability of the Company's core individual lines of business, including
individual life and individual investment contracts. Participation in the Plan
is limited to a very small number of officers who have had, and who are
expected to continue to have, a significant impact on the Company's
performance.
The Committee has approved financial performance targets related to income from
USLIFE's core business, as defined in Section 2(c) of the Plan, for 1995.
These targets include a threshold level of $124,304,000 equal to 70% of the
average amount of income earned during 1992 through 1994. If 1995 income is
less than this threshold, no bonus payment will be made to any participant in
the Plan.
Assuming actual 1995 income falls within the range of $124,304,000, the
threshold level, and $186,274,000, the income earned by the Company's core
business during 1994, you will be eligible to receive a bonus equal to 10% of
your annual base salary, in accordance with Section 5 of the Plan. As 1995
income exceeds 1994 income, your potential bonus opportunity will also increase
up to a maximum award of 40% of base salary. For each $500,000 of income
earned in excess of 1994 income of $186,274,000, your potential bonus award
will increase by 1% of salary.
<PAGE>4
Mr. Greer F. Henderson
March 8, 1995
Page Two
When the 1995 financial results for the Company's core business are known, they
will be reviewed and certified by the Committee. The Committee retains the
sole discretion to make awards under the Plan. As detailed in Section 6(b),
the Committee may decide to award a smaller amount than that indicated solely
by 1995 income, or to make no award at all, to recognize other aspects of
Company performance or your individual performance. The Committee's decisions
on individual awards will be communicated to you and any award payments will be
made no later than April 30, 1996.
I am sure that you will continue to give your best efforts toward making 1995 a
profitable year for USLIFE Corporation and its shareholders.
Sincerely,
/s/ Gordon E. Crosby, Jr.
__________________________
GEC:
cc: Mr. R. Hohn
<PAGE>1
SEVENTH AMENDMENT TO EMPLOYMENT AGREEMENT
_________________________________________
This is a Seventh Amendment ("Seventh Amendment") dated as of May 1, 1995 to
an Employment Agreement ("Agreement") dated April 1, 1989 between USLIFE
Corporation, a New York Corporation ("Employer") and Christopher S. Ruisi
("Employee").
THE TERMS of this Seventh Amendment are:
1. Paragraph (2) of the Agreement, as amended by the First, Second, Third,
Fourth, Fifth and Sixth Amendments, is now further amended to read, in its
entirety, as follows:
"(2) Employer will pay Employee for his services under paragraph (1) of
the Agreement at the rate of $450,000 per annum during the term of the
Agreement, in equal monthly installments, plus such periodic salary increases
and such additional compensation (if any) as may from time to time be voted by
Employer's Board of Directors and/or the Executive Compensation Committee or
its successor, in the sole and absolute discretion of said Board and/or
Committee. In addition, Employee is entitled to participate in the Annual
Incentive Plan adopted by Employer, under which Employee is entitled to receive
a bonus equal to a percentage of his "base salary", as further described in the
letter to Employee which is attached hereto and incorporated by reference
herein, if the applicable performance criteria are satisfied. For the purposes
of the preceding sentence, "base salary" shall mean Employee's base salary as
in effect on January 1 of a given year, but in no event shall base salary for
such purposes be deemed to exceed Employee's actual base salary as in effect on
January 1, 1994 increased at the rate provided by the Annual Incentive Plan.
<PAGE>2
Nothing in this Agreement shall be construed as precluding merit increases in
salary or as barring the Employee from such fringe benefits as the Employer may
grant."
2. Except as specifically amended by this Seventh Amendment, all other
provisions of the Agreement, as amended by the First, Second, Third, Fourth,
Fifth and Sixth Amendments, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Seventh Amendment to the
Agreement on the date first set forth above.
USLIFE Corporation
By: /s/ Gordon E. Crosby, Jr.
_________________________
Gordon E. Crosby, Jr.
Chairman of the Board
/s/ Christopher S. Ruisi
________________________
Christopher S. Ruisi
<PAGE>3
March 8, 1995
Mr. Christopher S. Ruisi
Vice Chairman and Chief Administrative Officer
USLIFE Corporation
3600 Route 66
Neptune, NJ 07754
Dear Chris:
As you know, you have been selected by the Executive Compensation and
Nominating Committee of USLIFE Corporation ("Committee") to participate during
1995 in the Annual Incentive Plan.
The Plan is intended to provide additional compensation in the form of an
annual cash bonus to key officers of USLIFE and its subsidiaries tied to the
profitability of the Company's core individual lines of business, including
individual life and individual investment contracts. Participation in the Plan
is limited to a very small number of officers who have had, and who are
expected to continue to have, a significant impact on the Company's
performance.
The Committee has approved financial performance targets related to income from
USLIFE's core business, as defined in Section 2(c) of the Plan, for 1995.
These targets include a threshold level of $124,304,000 equal to 70% of the
average amount of income earned during 1992 through 1994. If 1995 income is
less than this threshold, no bonus payment will be made to any participant in
the Plan.
Assuming actual 1995 income falls within the range of $124,304,000, the
threshold level, and $186,274,000, the income earned by the Company's core
business during 1994, you will be eligible to receive a bonus equal to 10% of
your annual base salary, in accordance with Section 5 of the Plan. As 1995
income exceeds 1994 income, your potential bonus opportunity will also increase
up to a maximum award of 40% of base salary. For each $500,000 of income
earned in excess of 1994 income of $186,274,000, your potential bonus award
will increase by 1% of salary.
<PAGE>4
Mr. Christopher S. Ruisi
March 8, 1995
Page Two
When the 1995 financial results for the Company's core business are known, they
will be reviewed and certified by the Committee. The Committee retains the
sole discretion to make awards under the Plan. As detailed in Section 6(b),
the Committee may decide to award a smaller amount than that indicated solely
by 1995 income, or to make no award at all, to recognize other aspects of
Company performance or your individual performance. The Committee's decisions
on individual awards will be communicated to you and any award payments will be
made no later than April 30, 1996.
I am sure that you will continue to give your best efforts toward making 1995 a
profitable year for USLIFE Corporation and its shareholders.
Sincerely,
/s/ Gordon E. Crosby, Jr.
_________________________
GEC:
cc: Mr. R. Hohn
<PAGE>1
FIFTH AMENDMENT TO EMPLOYMENT AGREEMENT
_______________________________________
This is a Fifth Amendment ("Fifth Amendment") dated as of January 1, 1995 to
an Employment Agreement ("Agreement") dated April 16, 1990 between USLIFE
Corporation, a New York Corporation ("Employer") and William A. Simpson
("Employee").
THE TERMS of this Fifth Amendment are:
1. Paragraph (2) of the Agreement, as amended by the First, Second, Third
and Fourth Amendments, is now further amended to read, in its entirety, as
follows:
"(2) Employer will pay Employee for his services under paragraph (1) of
the Agreement at the rate of $700,000 per annum during the term of the
Agreement, in equal monthly installments, plus an annual lump sum bonus payment
of $-0-, plus such periodic salary increases and such additional compensation
(if any) as may from time to time be voted by Employer's Board of Directors
and/or the Executive Compensation Committee or its successor, in the sole and
absolute discretion of said Board and/or Committee. In addition, Employee
shall be entitled to participate in the Annual Incentive Plan adopted by
Employer, under which Employee shall be entitled to receive a bonus of up to
40% of his "base salary", as further described in a June 8, 1994 letter to
Employee, which was attached to and incorporated by reference in the Fourth
Amendment to your Employment Agreement, if the applicable performance criteria
are satisfied. For the purposes of the preceding sentence, "base salary" shall
mean Employee's base salary as in effect on January 1 of a given year, but in
no event shall base salary for such purposes be deemed to exceed Employee's
actual base salary as in effect on January 1, 1994 increased at the rate of 15%
per year. Nothing in this Agreement shall be construed as precluding merit
increases in salary or as barring the Employee from such fringe benefits as the
Employer may grant."
<PAGE>2
2. Except as specifically amended by this Fifth Amendment, all other
provisions of the Agreement, as amended by the First, Second, Third and Fourth
Amendments, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Fifth Amendment to the
Agreement on the date first set forth above.
USLIFE Corporation
By: /s/ Gordon E. Crosby, Jr.
_________________________
Gordon E. Crosby, Jr.
Chairman of the Board
/s/ William A. Simpson
______________________
William A. Simpson
<PAGE>1
SIXTH AMENDMENT TO EMPLOYMENT AGREEMENT
_______________________________________
This is a Sixth Amendment ("Sixth Amendment") dated as of May 1, 1995 to an
Employment Agreement ("Agreement") dated April 16, 1990 between USLIFE
Corporation, a New York Corporation ("Employer") and William A. Simpson
("Employee").
THE TERMS of this Sixth Amendment are:
1. Paragraph (2) of the Agreement, as amended by the First, Second, Third,
Fourth and Fifth Amendments, is now further amended to read, in its entirety,
as follows:
"(2) Employer will pay Employee for his services under paragraph (1) of
the Agreement at the rate of $700,000 per annum during the term of the
Agreement, in equal monthly installments, plus such periodic salary increases
and such additional compensation (if any) as may from time to time be voted by
Employer's Board of Directors and/or the Executive Compensation Committee or
its successor, in the sole and absolute discretion of said Board and/or
Committee. In addition, Employee shall be entitled to participate in the
Annual Incentive Plan adopted by Employer, under which Employee shall be
entitled to receive a bonus equal to a percentage of his "base salary", as
further described in a the letter to Employee, which is attached hereto and
incorporated by reference herein, if the applicable performance criteria are
satisfied. For the purposes of the preceding sentence, "base salary" shall
mean Employee's base salary as in effect on January 1 of a given year, but in
no event shall base salary for such purposes be deemed to exceed Employee's
actual base salary as in effect on January 1, 1994 increased at the rate
provided by the Annual Incentive Plan. Nothing in this Agreement shall be
construed as precluding merit increases in salary or as barring the Employee
from such fringe benefits as the Employer may grant."
<PAGE>2
2. Except as specifically amended by this Sixth Amendment, all other
provisions of the Agreement, as amended by the First, Second, Third, Fourth and
Fifth Amendments, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Sixth Amendment to the
Agreement on the date first set forth above.
USLIFE Corporation
By: /s/ Gordon E. Crosby, Jr.
_________________________
Gordon E. Crosby, Jr.
Chairman of the Board
/s/ William A. Simpson
______________________
William A. Simpson
<PAGE>3
March 8, 1995
Mr. William A. Simpson
President and Chief Executive Officer
USLIFE Corporation
125 Maiden Lane
New York, NY 10038
Dear Bill:
As you know, you have been selected by the Executive Compensation and
Nominating Committee of USLIFE Corporation ("Committee") to participate during
1995 in the Annual Incentive Plan.
The Plan is intended to provide additional compensation in the form of an
annual cash bonus to key officers of USLIFE and its subsidiaries tied to the
profitability of the Company's core individual lines of business, including
individual life and individual investment contracts. Participation in the Plan
is limited to a very small number of officers who have had, and who are
expected to continue to have, a significant impact on the Company's
performance.
The Committee has approved financial performance targets related to income from
USLIFE's core business, as defined in Section 2(c) of the Plan, for 1995.
These targets include a threshold level of $124,304,000 equal to 70% of the
average amount of income earned during 1992 through 1994. If 1995 income is
less than this threshold, no bonus payment will be made to any participant in
the Plan.
Assuming actual 1995 income falls within the range of $124,304,000, the
threshold level, and $186,274,000, the income earned by the Company's core
business during 1994, you will be eligible to receive a bonus equal to 10% of
your annual base salary, in accordance with Section 5 of the Plan. As 1995
income exceeds 1994 income, your potential bonus opportunity will also increase
up to a maximum award of 40% of base salary. For each $500,000 of income
earned in excess of 1994 income of $186,274,000, your potential bonus award
will increase by 1% of salary.
<PAGE>4
Mr. William A. Simpson
March 8, 1995
Page Two
When the 1995 financial results for the Company's core business are known, they
will be reviewed and certified by the Committee. The Committee retains the
sole discretion to make awards under the Plan. As detailed in Section 6(b),
the Committee may decide to award a smaller amount than that indicated solely
by 1995 income, or to make no award at all, to recognize other aspects of
Company performance or your individual performance. The Committee's decisions
on individual awards will be communicated to you and any award payments will be
made no later than April 30, 1996.
I am sure that you will continue to give your best efforts toward making 1995 a
profitable year for USLIFE Corporation and its shareholders.
Sincerely,
/s/ Gordon E. Crosby, Jr.
_________________________
GEC:
cc: Mr. R. Hohn
<PAGE>1
THIRD AMENDMENT TO LEASE
________________________
THIRD AMENDMENT TO LEASE, dated the 10th day of May 1989, between RREEF
USA FUND-III, a California group trust with offices c/o The RREEF Funds, Park
Avenue Plaza, 55 East 52nd Street, New York, New York, Landlord, and THE UNITED
STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK, a New York corporation
having an address at 125 Maiden Lane, New York, New York, Tenant.
WHEREAS, by the terms of a certain lease agreement dated December 30, 1986
between Landlord and Tenant, as modified by a certain Amendment to Lease dated
August 31, 1988 and by a certain Second Amendment to Lease dated November 10,
1988 (collectively, the "Lease"), Landlord leases to Tenant the Premises in the
building known as and located at 125 Maiden Lane, New York, New York (the
"Building"); and
WHEREAS, Tenant wishes to hire and Landlord wishes to lease an additional
2455 square feet of space of the basement level of the Building (the "new
Basement Space"), which New Basement Space is approximately as shown on the
floor plan attached hereto as Exhibit A and made a part hereof, pursuant to the
terms set forth hereafter; and
WHEREAS, Landlord and Tenant wish to extend the expiration of the Lease
with respect to a 1192 square foot portion of the third floor of the Building
(the "Third Floor Area"), which Third Floor Area is approximately as shown on
the floor plan attached hereto as Exhibit B and made a part hereof, pursuant to
the terms set forth hereafter; and
WHEREAS, Landlord and Tenant desire to amend the Lease to incorporate the
terms and conditions set forth below.
NOW THEREFORE, in consideration of the mutual promises contained herein
and for the other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Capitalized terms used herein without definition shall have the
meanings provided in the Lease.
2. Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord the New Basement Space for a term commencing on May 1, 1989
(the "New Basement Space Commencement Date") and ending on the Long-
term Expiration Date set forth in the Lease. From and after May 1,
1989 until the Long-term Expiration Date, Tenant shall pay to
Landlord fixed base rent with respect to the New Basement Space at
the all-inclusive rate equal to $10.00 per square foot per annum,
which rate shall not be subject to any adjustments or increases.
<PAGE>2
3. (a) Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord the Third Floor Area for a term commencing on May 1,
1989 and continuing thereafter on a "month-to-month" basis until
the Termination Date set forth in sub-paragraph (b) below. From
and after May 1, 1989 until the Termination Date, Tenant shall
pay to Landlord fixed base rent with respect to the Third Floor
Area at the all-inclusive rate equal to $20.00 per square foot
per annum which rate shall not be subject to any adjustments or
increases.
(b) Either Landlord or Tenant may terminate the month-to-month
tenancy created hereby as of the last day of any calendar month
by notice one to the other of such termination at least thirty
(30) days in advance of the date such termination is to become
effective. The date upon which such termination becomes
effective shall be known herein as the "Termination Date".
4) In the event of any conflict between the terms and provisions of this
Third Amendment to Lease and those of the Lease, the terms and
provisions of this Third Amendment to Lease and those of the Lease,
the terms and provisions of this Third Amendment to Lease shall
control.
5) Except as expressly amended by this Third Amendment to Lease, the
Lease shall remain unmodified and in full force and effect.
6) This Third Amendment to Lease may be executed in one or more
counterparts, and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together
constitute but one and the same agreement.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Third Amendment
to Lease as of the date specified in the first paragraph hereof.
RREEF USA FUND-III, a group trust
By: RREEF Management Company,
a California corporation
By: /s/ Denise Stewart
_____________________________
Title: District Manager
_____________________________
THE UNITED STATES LIFE INSURANCE
COMPANY IN THE CITY OF NEW YORK
By: /s/ John G. Kelly
________________________________
Title: Vice President
______________________________
<PAGE>3
EXHIBIT A
_________
FLOOR PLAN DEPICTING NEW BASEMENT SPACE
<PAGE>4
EXHIBIT B
_________
FLOOR PLAN DEPICTING THIRD FLOOR AREA
<PAGE>1
FOURTH AMENDMENT OF LEASE
THIS FOURTH AMENDMENT OF LEASE (this "Fourth Amendment"), dated as
of April 14, 1995, between RREEF USA FUND-III, a California group trust
("Landlord"), having an office c/o The RREEF Funds, Park Avenue Plaza,
55 East 52nd Street, New York, New York 10055, and THE UNITED STATES LIFE
INSURANCE COMPANY IN THE CITY OF NEW YORK, a New York corporation
("Tenant"), having an office at 125 Maiden Lane, New York, New York.
W I T N E S S E T H:
_ _ _ _ _ _ _ _ _ _
WHEREAS, Landlord and Tenant are parties to that certain
Lease Agreement, dated as of December 30, 1986 (the "Original Lease"),
whereby Landlord leased to Tenant and Tenant hired from Landlord a
portion of the basement level, first floor, second floor, third floor,
fourth floor and fifth floor (referred to in the Original Lease
collectively as the "Short-Term Space"), and a portion of the basement
level (the "Basement Premises"), second floor (the "Second Floor
Premises"), fifth floor (the "Fifth Floor Premises"), sixth floor (the
"Sixth Floor Premises"), seventh floor (the "Seventh Floor Premises"),
eighth floor (the "Eighth Floor Premises") and ninth floor (the "Ninth
Floor Premises") (the Basement Premises, the Second Floor Premises, the
Fifth Floor Premises, the Sixth Floor Premises, the Seventh Floor
Premises, the Eighth Floor Premises and the Ninth Floor Premises are
referred to in the Original Lease collectively as the "Long-Term
Space"), in the building located at 125 Maiden Lane, New York, New York
(the "Building"), all as more particularly described in the Original
Lease; and
WHEREAS, pursuant to that certain Amendment, dated August 31, 1988
(the "First Amendment"), Landlord and Tenant modified the Original Lease to,
among other things, extend the term of the leasing of the Short-Term Space,
all as more particularly described in the First Amendment; and
WHEREAS, pursuant to that certain Second Amendment to Lease, dated
November 10, 1988 (the "Second Amendment"), Landlord and Tenant further
modified the Original Lease to, among other things, provide for the leasing
of additional space on the fifth floor of the Building (the "Additional
Fifth Floor Premises"), all as more particularly described in the Second
Amendment; and
WHEREAS, pursuant to that certain Third Amendment to Lease, dated
May 10, 1989 (the "Third Amendment"), Landlord and Tenant further modified
the Original Lease to, among other things, provide for the leasing of
certain space on the basement level (the "Additional Basement Premises") and
the third floor (the "Third Floor Premises") on a month-to-month basis, all
as more particularly described in the Third Amendment; and
<PAGE>2
WHEREAS, the Original Lease, as modified by the First Amendment,
the Second Amendment and the Third Amendment, is hereinafter referred to as
the "Lease"; and
WHEREAS, the term of the leasing of the Short-Term Space and the
term of the leasing of the Third Floor Premises have expired in accordance
with the terms of the Lease; and
WHEREAS, (i) Tenant desires to surrender to Landlord, and Landlord
desires to accept the surrender from Tenant of, the Initial Surrender
Premises (as hereinafter defined); (ii) Landlord and Tenant desire to reduce
the term of the Lease, and (iii) Landlord and Tenant desire to make further
modifications to the Lease, in each case, all as more particularly set forth
in this Fourth Amendment.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto do hereby
agree to modify the Lease as follows:
1. Definitions. All capitalized terms used and not otherwise
defined herein shall have the respective meanings assigned to them in the
Lease. The term "Effective Date" shall mean July 1, 1995.
2. Surrender of Premises. (a) On June 30, 1995 (the "Initial
Surrender Date"), Tenant shall vacate the Initial Surrender Premises and
surrender the same to Landlord in the condition required pursuant to the
Lease, as modified by this Fourth Amendment, as if such date were the
Expiration Date. Tenant hereby represents on behalf of itself, its
successors and assigns that it has not assigned, pledged or encumbered the
Lease, as modified by this Fourth Amendment, or sublet the Initial Surrender
Premises or done or suffered any other action as a result of which the Lease
or the Initial Surrender Premises might be subject to any lien or
encumbrance, and Tenant covenants that such representation shall also be
true, correct and accurate on the Initial Surrender Date. As used herein
the term "Initial Surrender Premises" shall mean the Basement Premises, the
Fifth Floor Premises, the Additional Fifth Floor Premises and the portion of
the Sixth Floor Premises (the "Sixth Floor Surrender Premises") more
particularly shown on Exhibit B annexed hereto.
(b) If Tenant fails to vacate and deliver possession of the
Initial Surrender Premises to Landlord on the Initial Surrender Date, then
(i) such failure shall be a default by Tenant under the Lease, as modified
by this Fourth Amendment, and (ii) Tenant shall be deemed to be a holdover
in the Initial Surrender Premises and, in addition to all of Landlord's
rights and remedies set forth in the Lease, Landlord shall have the right to
exercise any of its rights and remedies at law and in equity.
(c) On the Initial Surrender Date, the term of the Lease with
respect to the Initial Surrender Premises shall end and expire and Tenant's
estate in and possession of the Initial Surrender Premises shall terminate and
be wholly extinguished with the same force and effect as if such date was
initially set forth as the Expiration Date applicable thereto.
<PAGE>3
(d) Effective from and after the Effective Date, (i) Tenant
shall continue to lease the Premises (other than the Initial Surrender
Premises) upon all of the terms and conditions of the Lease, as modified by
this Fourth Amendment (including all of the rights and privileges provided
for Tenant under the Lease), (ii) the Premises shall no longer include the
Initial Surrender Premises, (iii) Tenant shall be deemed to have given,
granted, assigned and surrendered unto Landlord, its successors and assigns,
all right to possession of the Initial Surrender Premises, and (iv) without
limiting Tenant's rights under Section 42.01 of the Lease, Landlord shall be
entitled to lease the Initial Surrender Premises to any person or entity, or
take any other action with respect thereto, free from any claim of Tenant or
any person or entity claiming through Tenant.
(e) Tenant shall be responsible for the payment of all taxes
and other payments (including, without limitation, all transfer taxes)
required to be paid in connection with or relating to Tenant's surrender of
the Initial Surrender Premises, regardless of whether such taxes or other
payments are the obligation of Landlord or Tenant. Tenant shall indemnify
and hold harmless Landlord and its partners, directors, officers,
principals, agents, shareholders, trustees, trust beneficiaries, investment
managers and employees from and against any and all liability, damages,
claims, costs or expenses relating to the payment of any taxes or other
payments required to be paid in connection with or relating to Tenant's
surrender of the Initial Surrender Premises, together with all costs,
expenses and liabilities incurred in or in connection with each such claim
or action or proceeding brought thereon, including, without limitation, all
reasonable attorneys' fees and expenses.
3. Lease of Premises. (a) As of the Effective Date, after
giving effect to the surrender of the Initial Surrender Premises, the
Premises shall consist of the Additional Basement Premises, the Second Floor
Premises, the Sixth Floor Premises (excluding the Sixth Floor Surrender
Premises), the Seventh Floor Premises, the Eighth Floor Premises and the
Ninth Floor Premises, all as more particularly shown on the floor plans
annexed hereto as Exhibit A. As of the Effective Date, the term "Long-Term
Space" as used in the Lease shall be deemed to mean the Premises. Each
floor of the Premises shall be deemed to contain the number of rentable
square feet set forth opposite each Floor on Exhibit D annexed hereto, for
all purposes of the Lease, as modified by this Fourth Amendment.
(b) Tenant has previously accepted the Premises "as is", and
Landlord either was not required to, or as of the date hereof has satisfied
all obligations set forth in the Lease to, make any contribution, perform
any work, install any equipment or fixtures or render any services to make
the Building or the Premises ready or suitable for Tenant's use and
occupancy. Landlord shall not be required to make any contribution, except
for the Tenant Allowance (as hereinafter defined), or be required to perform
any work, install any equipment or fixtures or render any services to make
the Premises ready or suitable for Tenant's use and occupancy.
<PAGE>4
4. Lease Term. (a) Effective as of the Effective Date, the
term of the Lease shall be reduced until the earlier of (i) December 31,
1995 and (ii) the later of (x) July 1, 1995 and (y) the effective date of
the legislation effectuating the Mayor's Plan for Revitalization of Lower
Manhattan dated December 15, 1994 (such later date being hereinafter
referred to as the "Plan Date") (or such earlier date on which the term may
end pursuant to any of the terms, conditions or covenants of the Lease, as
modified by this Fourth Amendment, or pursuant to law). Effective as of the
Effective Date, (1) the term "Long Term Expiration Date" shall be deemed to
mean the "Expiration Date," (2) the term "Expiration Date" shall be deemed
to mean the earlier of (A) December 31, 1995 and (B) the Plan Date, (3) all
references to the word "term" in the Lease shall be deemed to refer to the
term of the Lease as hereby extended, and (4) the parenthetical clause at
the end of the section entitled "Term of Lease" on the Reference Page of the
Original Lease shall be deleted in its entirety.
(b) Tenant shall be responsible for the payment of all taxes
and other payments (including, without limitation, all transfer taxes)
required to be paid in connection with or relating to the reduction of the
term of the Lease, regardless of whether such taxes or other payments are
the obligation of Landlord or Tenant. Tenant shall indemnify and hold
harmless Landlord and its partners, directors, officers, principals, agents,
shareholders, trustees, trust beneficiaries, investment managers and
employees from and against any and all liability, damages, claims, costs or
expenses relating to the payment of any taxes or other payments required to
be paid in connection with or relating to the reduction of the term of the
Lease, together with all costs, expenses and liabilities incurred in or in
connection with each such claim or action or proceeding brought thereon,
including, without limitation, all reasonable attorneys' fees and expenses.
5. Fixed Base Rent. (a) Effective as of the Effective Date,
(i) Exhibit D of the Lease shall be deleted in its entirety and Exhibit D
annexed hereto shall be substituted in its place, (ii) the first sentence of
the section entitled "Portion of Annual Fixed Base Rent Allocable to
Electricity" on the Reference Page of the Original Lease shall be deleted in
its entirety, (iii) the last sentence of Section 1.03(c) shall be deleted in
its entirety, and (iv) the first sentence of Section 1.03(a) of the
Original Lease shall be deleted in its entirety and the following
substituted in its place: "From and after July 1, 1995, Tenant shall pay to
Landlord fixed annual base rent, subject to adjustment as herein expressly
provided, at the annual fixed base rental rates set forth on Exhibit D
hereto (the "Fixed Base Rent"), which shall be payable in equal monthly
installments in advance on the first day of each and every calendar month
during the term of this Lease."
(b) Notwithstanding anything to the contrary contained in
the Lease or this Fourth Amendment, provided Tenant shall not be in Material
Default (as hereinafter defined) under any of the terms and provisions of
the Lease, as modified by this Fourth Amendment, the Fixed Base Rent
(excluding the portion of Fixed Base Rent allocable to electricity) payable
under the Lease, as modified by this Fourth Amendment, shall be abated from
the Effective Date through the Expiration Date; provided, however, that upon
the occurrence of (but only during the continuance of) a Material Default by
Tenant under any of the terms and provisions of the Lease, as modified by
this Fourth Amendment, such abatement shall end. The term "Material
Default" shall mean any monetary default or
<PAGE>5
any non-monetary default the cost of curing of which is in excess of
$50,000, in each case which default continues beyond the expiration of any
applicable notice and/or cure periods.
6. Taxes. During the period commencing on the Effective Date
and ending on the earlier of (a) December 31, 1995 and (b) the Plan Date,
the provisions of Article 4 of the Lease shall not be applicable to the
leasing of the Premises (provided that the rights and obligations of
Landlord and Tenant with respect to Taxes for the period prior to the
Effective Date shall not be affected).
7. Operating Expense Escalation. During the period commencing
on the Effective Date and ending on the earlier of (a) December 31, 1995 and
(b) the Plan Date, the provisions of Article 5 of the Lease shall not be
applicable to the leasing of the Premises (provided that the rights and
obligations of Landlord and Tenant with respect to the payments made on
account of the Wage Rate escalation for the period prior to the Effective
Date shall not be affected).
8. Tenant Allowance. (a) Provided Tenant shall not be in
Material Default under the terms of the Lease, as modified by this Fourth
Amendment, at any time a disbursement is required to be made by Landlord,
Landlord shall provide Tenant an allowance in the amount of $2,079,000
(which amount is hereinafter referred to as the "Tenant Allowance"), upon
the terms and conditions hereinafter set forth. The Tenant Allowance is to
be used by Tenant to pay the costs incurred by Tenant in connection with
Tenant's continued occupancy of the Premises. Within 30 days after the date
hereof, Tenant shall deliver to Landlord an estimate of such costs to be
incurred by Tenant (the "Estimate"). Within 30 days after Landlord's
receipt of (i) the Estimate and (ii) a request from Tenant, signed by an
authorized officer of Tenant, requesting the initial disbursement of the
Tenant Allowance (a "Disbursement Request"), Landlord shall pay to Tenant
the initial disbursement of the Tenant Allowance in an amount equal to
$1,500,000. Subject to the provisions of Section 8(b), the balance of the
Tenant Allowance shall be disbursed to Tenant after Landlord's receipt of
(i) a Disbursement Request, (ii) invoices or other evidence reasonably
satisfactory to Landlord of Tenant's costs theretofore paid or then due and
payable for which Tenant is seeking reimbursement, and (iii) evidence
reasonably satisfactory to Landlord establishing that all sums due and owing
to contractors, subcontractors and materialmen have been paid, including
lien waivers.
(b) If (i) Tenant shall not have received disbursement of
the entire Tenant Allowance pursuant to Section 8(a) following the
completion of the work performed by Tenant to prepare the Premises for
Tenant's continued occupancy thereof, (ii) Landlord shall have received the
Estimate and evidence reasonably satisfactory to Landlord establishing that
all sums due and owing to contractors, subcontractors and materialmen have
been paid, including lien waivers, and (iii) Tenant shall not be in Material
Default under the terms of the Lease, as modified by this Fourth Amendment,
then Tenant shall be entitled to receive a credit against the next
installments of Fixed Base Rent becoming due and payable hereunder in an
amount equal to the undisbursed portion of the Tenant Allowance.
<PAGE>6
(c) The right to receive the Tenant Allowance as set forth
herein shall be for the exclusive benefit of Tenant, it being the express
intent of the parties hereto that in no event shall such right be conferred
upon or for the benefit of any third party, including, without limitation,
any contractor, subcontractor, materialman, laborer, architect, engineer,
attorney or any other person, firm or entity.
9. Expansion Option. During the period commencing on the
Effective Date and ending on the earlier of (a) December 31, 1995 and
(b) the Plan Date, Landlord shall have no obligation to Tenant with respect
to the delivery of any Option Notice or the leasing of any Option Space, and
Tenant shall have no rights to lease any Option Space, pursuant to
Article 39 of the Lease. Tenant hereby acknowledges that Landlord has
commenced negotiations for the leasing of the vacant portion of the tenth
floor of the Building with CDM Federal Programs Corporation, and Tenant
hereby waives any and all rights Tenant may have to lease such portion of
the tenth floor pursuant to Article 39 of the Lease for the term of any
lease between Landlord and CDM Federal Programs Corporation (and/or its
designees, assignees or successors) and the term of any renewals or
extensions of such lease.
10. Assignment and Subletting. (a) Section 9.02(a) of the Lease
is hereby amended by adding in the fourth line after the word "shall" the
words "with respect to an assignment or sublet of all or a portion of the
Premises consisting of a full floor or more or an amount of space equal to
at least 18,540 rentable square feet with respect to the 6th floor)".
(b) Section 9.02(b) is hereby amended by adding the
following provision to the end thereof:
"If Landlord shall accept Tenant's offer of assignment or sublease,
then from and after the effective date of the assignment or the
commencement date of the sublease, as applicable, Tenant shall be
released from all remaining liability as tenant under this lease
accruing from and after the effective date of the assignment or the
commencement date of the sublease, as applicable, with respect to this
lease, in the case of an assignment, or the Excluded Area, in the case
of a sublease."
(c) Article 9 is hereby amended by inserting the following
provision:
"9.12. If (a) the Premises or any portion thereof shall be sublet or
if this lease or Tenant's interest herein shall be assigned or
transferred in accordance with the terms hereof (except as provided in
Section 9.08 hereof), and (b) at any time Tenant receives periodic rent
(fixed or additional rent) and/or other consideration in connection
with such assignment, subletting or other transfer in an amount
exceeding the Fixed Base Rent and Additional Rent that Tenant is
obligated to pay to Landlord during the period covered by such
assignment, subletting or other transfer, then Tenant shall pay to
Landlord (x) in the case of a subletting, 25% of the gross increase in
such rent as such rent is received by Tenant and 25% of any other
consideration received by Tenant in connection with such sublease or
(y) in the case of an
<PAGE>7
assignment or other transfer, 25% of the consideration paid to Tenant
in connection with such assignment or other transfer."
11. Modifications to Lease. (a) Effective as of the Effective
Date, (i) Exhibit E of the Original Lease shall be deleted in its entirety
and Exhibit E annexed hereto shall be substituted in its place, (ii) Article
44 of the Original Lease shall be deleted in its entirety, (iii) Sections 2,
3, 4, 5, 6 and 7 of the First Amendment shall be deleted in their entirety,
(iv) Sections 2, 3, 4 and 5 of the Second Amendment shall be deleted in
their entirety and (v) the second sentence of Section 2 of the Third
Amendment shall be deleted in its entirety.
(b) Effective as of the date hereof, all Notices to Landlord
shall be delivered as follows notwithstanding anything to the contrary
contained in Sections 32.01 and 32.03 of the Original Lease:
RREEF USA Fund-III
125 Maiden Lane
New York, New York 10038
Attention: Ms. Alane S. Berkowitz
with a copy to:
The RREEF Funds
401 Hackensack Avenue, 7th Floor
Hackensack, New Jersey 07601
Attention: Ms. Denise Stewart
12. Brokers. Tenant covenants, represents and warrants that
Tenant has had no dealings or negotiations with any broker or agent other
than Equis of New York (the "Broker") in connection with the consummation of
this Fourth Amendment, and Tenant covenants and agrees to pay, hold harmless
and indemnify Landlord from and against any and all cost, expense (including
reasonable attorneys' fees and court costs), loss and liability for any
compensation, commissions or charges claimed by any broker or agent, other
than the Broker, with respect to this Fourth Amendment or the negotiation
thereof to the extent such claim or claims by any such broker or agent are
based in whole or in part on dealing with Tenant or its representatives and
not with Landlord or its representatives. Landlord shall be responsible for
such compensation, commissions or charges to which Broker may be entitled
pursuant to a separate agreement between Broker and Landlord. Landlord
covenants and agrees to pay, hold harmless and indemnify Tenant from and
against any and all cost, expense (including reasonable attorneys' fees and
court costs), loss and liability for any compensation, commissions or
charges in connection with this Fourth Amendment or the negotiation thereof,
claimed under any circumstances by the Broker, or claimed by any other
broker or agent to the extent such claim or claims by such other brokers or
agents are based in whole or part on dealing with Landlord or its
representatives and not with Tenant or its representatives.
<PAGE>8
13. No Modification. Except as specifically provided herein,
nothing contained in this Fourth Amendment shall be deemed to modify in any
respect the terms, provisions or conditions of the Lease, and such terms,
provisions and conditions are hereby ratified and shall remain in full force
and effect as modified hereby.
14. Construction. In the event that there is any inconsistency
between the terms of this Fourth Amendment and the terms of the Lease, the
terms of this Fourth Amendment shall prevail.
15. Entire Agreement. This Fourth Amendment contains the sole
and entire understanding and agreement of the parties with respect to its
entire subject matter and all prior negotiations, discussions,
representations, agreements, and understandings heretofore had among the
parties with respect thereto are merged herein.
16. Counterparts. This Fourth Amendment may be executed in
duplicate counterparts, each of which shall be deemed an original and all of
which, when taken together, shall constitute one and the same instrument.
17. Successors and Assigns. This Fourth Amendment shall be
binding upon and inure to the benefit of Landlord and Tenant and their
respective successors and permitted assigns.
<PAGE>9
IN WITNESS WHEREOF, Landlord and Tenant have executed this Fourth
Amendment as of the day and year first above written.
LANDLORD:
RREEF USA FUND-III, a California group trust
By: RREEF MANAGEMENT COMPANY,
a California Corporation
By: /s/ Denise Stewart
_______________________________
Name: Denise Stewart
Title: Vice President,
Director of Properties
By:/s/ Alane S. Berkowitz
_______________________________
Name: Alane S. Berkowitz
Title: District Manager
TENANT:
ATTEST: THE UNITED STATES LIFE INSURANCE
COMPANY IN THE CITY OF NEW YORK
/s/ James F. DeVarso By:/s/Richard G. Hohn
_____________________________ _______________________________________
Name: James F. DeVarso Name: Richard G. Hohn
Title: Assistant Secretary Title: Senior Vice President
<PAGE>10
EXHIBIT A
FLOOR PLANS DEPICTING BASEMENT, 2ND FLOOR, 6TH FLOOR, 7TH FLOOR,
8TH FLOOR AND 9TH FLOOR
PREMISES
________
<PAGE>11
EXHIBIT B
SIXTH FLOOR SURRENDER PREMISES WITH FLOOR PLAN
______________________________________________
<PAGE>12
EXHIBIT C
[INTENTIONALLY OMITTED]
<PAGE>13
<TABLE>
EXHIBIT D
<CAPTION>
Portion of Annual
Fixed Base Rent
Fixed Base Rent Allocable to Electricity
Floor Rentable Area Tenant's Proportionate (with electricity As of the Effective Monthly Installment
(Square Feet) Share included) Date of Fixed Based Rent
_____ _____________ ______________________ _________________ ________________________ ___________________
<S> <C> <C> <C> <C> <C>
Basement 2,455 s.f. -- From the Effective $1,227.50 From the Effective
Date until the Date until the
Expiration Date: Expiration Date:
$13,502.50 $1,125.21
Six 18,540 s.f. 6.294% From the Effective $37,080 From the Effective
Date until the Date until the
Expiration Date: Expiration Date:
$384,705 $32,058.75
Seven 21,540 s.f. 7.313% From the Effective $43,080 From the Effective
Date until the Date until the
Expiration Date: Expiration Date:
$446,955 $37,246.25
Eight 21,540 s.f. 7.313% From the Effective $43,080 From the Effective
Date until the Date until the
Expiration Date: Expiration Date:
$446,955 $37,246.25
Nine 21,540 s.f. 7.313% From the Effective $43,080 From the Effective
Date until the Date until the
Expiration Date: Expiration Date:
$446,955 $37,246.25
_____ _____________ ______________________ _________________ ________________________ ___________________
Totals: 85,615 s.f. 28.233% From the Effective $167,547.50 From the Effective
Date until the Date until the
Expiration Date: Expiration Date:
$1,739,072.50 $144,922.71
</TABLE>
D-1
<PAGE>14
EXHIBIT E
_________
CLEANING SCHEDULE
_________________
E-1
<PAGE>15
A. LOBBY
1. Stone, ceramic tile, marble, travertine, terrazzo,
quarry tile and other untreated flooring shall be
wet-mopped and mopped-dry, using proper methods of
floor care and proper quantities of approved
cleaning materials nightly. All floors shall be
machine scrubbed. Treated floors shall be sealed,
waxed, buffed nightly, stripped and rewaxed as
necessary.
2. Stone walls shall be wiped clean of dust and haze
daily. Finger marks and surface blemishes shall
be removed each day using proper methods and
materials.
3. Treated and untreated metal stair doors, elevator
doors, saddles and frames, elevator indicator and
control panels, alarm panels, ventilator and
radiator enclosures, mailbox, cigarette
receptacles, directory board and sign frames,
glass wall mullions shall be wiped clean of dust,
fingermarks, surface blemishes, scruff marks, haze
and other soil nightly and as often as required
each business day. Untreated metal items above
shall be polished using approved methods and
materials.
4. Clean all cigarette urns and replace sand or water
as necessary, material to be furnished by
Contractor.
5. Foul weather traffic runner mats shall be removed
nightly to permit complete floor cleaning and be
cleaned and relaid or stored ready for use. Mats
supplied by Owner.
6. Clean entrance and all lobby glass as required by
Owner or at least once per day.
E-2
<PAGE>16
7. Clean lights, globes, diffusers and fixtures as
often as necessary and keep light fixtures
properly lamped. Bulbs supplied by Owner.
8. Dust monthly all air conditioning louvers, grills,
etc., not reached in nightly cleaning.
9. Exterior granite walls are to be dusted monthly
and washed quarterly.
10. Clean elevator pits weekly.
B. SIDEWALKS
_________
1. Exterior sidewalks, vestibules and loading areas
shall be swept daily; hosed clean every morning as
weather dictates, litter picked up as often as
required during the day and evening, weekends and
holidays.
2. Snow shall be completely removed from sidewalks,
curb and crosswalks promptly during and after
storms. Snow removal equipment, shovels and
sufficient supply of ice-melting chemicals should
be kept by contractor at premises during winter
season. (At contractor's cost).
3. Remove gum and foreign matter from sidewalks on
sight.
4. Scrub clean and/or steam clean sidewalks as often
as necessary.
C. ELEVATORS
_________
1. Dust and rub down elevator doors, walls, ceilings,
metal work and saddles in elevator cabs. Vacuum
elevator door tracks and saddles.
2. Dust bulbs, fixtures and diffusers as required.
3. Maintain metal work throughout, including elevator
cabs by cleaning and polishing as necessary.
4. Wash painted ceiling above suspended ceiling
annually.
E-3
<PAGE>17
5. Maintain floors in elevator cabs as needed. If
carpeted, remove soluble spots which safely
respond to standard spotting procedure without
risk of injury to color or fabric. Cabs to be
vacuumed nightly and shampooed as required.
6. Remove all chewing gum, etc., from floors, walls
and rails.
7. Clean saddles and frames on floors above lobby
once per week.
D. BUILDING SERVICE AREAS
______________________
1. Keep locker rooms and slop sink rooms in a neat,
orderly condition at all times.
2. Hose all ramps, loading docks, etc., daily scrub
or steam clean if necessary.
3. Clean mechanical equipment areas, electric and
telephone closets as often as necessary. No
admittance into restricted areas permitted without
attendance of Building Engineer.
4. Keep waste paper, cardboard and rubbish stored in
approved areas. Clean the floor, walls and doors
as necessary.
E. EXTERIOR CLEANING
_________________
1. Maintain entire building exterior including metal
work, entrance doors and building trim. Clean
standpipes, sprinkles, siamese connections and
hose bibs.
F. ROOF AREA
_________
1. Police roof and clean as often as necessary.
G. BASEMENT AND PUBLIC CORRIDORS
_____________________________
1. Linoleum, rubber, asphalt, vinyl, asbestos, pure
vinyl, sheet and tile and other similar resilient
types of flooring requiring waxed or treated
finish shall be swept using approved treated cloth
dust mops and damped mopped nightly. Rewaxing or
interim buffing shall be done as required.
E-4
<PAGE>18
2. Wash vertical surfaces of public corridors as
often as necessary and as requested by Owner.
H. BUILDING OFFICE, BASEMENT LOCKER ROOMS AND
__________________________________________
LAVATORIES NIGHTLY
__________________
1. Scour, wash and disinfect all toilet seats (both
sides), basins, bowls and urinals throughout.
2. Sweep and wash all lavatory floors using proper
disinfectants.
3. Wash and polish all mirrors, powder shelves,
bright work and enameled surfaces in all
lavatories.
4. Service sanitary napkin dispensers (napkins
supplied by contractor).
5. Empty and clean sanitary napkin disposal
receptacles.
6. Empty paper towel receptacles and remove paper to
designated areas.
7. Fill toilet tissue holders, soap dispensers and
towels each night and when necessary during the
day. (Supplied by contractor).
PERIODIC
________
8. Clean and wash all partitions once every two
weeks.
9. Hand dust, clean and wash all walls once each
month.
10. High dusting shall be done once each month which
will include lights, walls and grills.
11. Clean and wash all receptacles and dispensers as
necessary, but not less than once each month.
12. Clean and wash ceilings as required.
E-5
<PAGE>19
I. PUBLIC STAIRWAYS
________________
1. Check all stairways daily throughout building,
sweep and mop monthly.
J. WINDOW CLEANING
_______________
1. Wash and clean exterior and interior of all
windows and frames every three months.
2. Building entrance doors and inside lobby glass
shall be cleaned daily and kept in clean condition
at all times during the day.
3. Clean all store windows one time per week except
Carolyn Smith four times extra.
Contractor shall provide necessary protection to
the exterior of the building during window washing
operation.
4. Contractor shall provide all labor, materials,
tools, equipment and perform all operations
necessary to carry out the window washing
operation.
5. All anchor bolts and related fixtures shall be
tested and maintained in accordance with the rules
and regulations of all governmental agencies
having jurisdiction (at Owner's expense).
Contractor to report any hazardous conditions to
Owner.
K. FREIGHT ELEVATORS
_________________
1. Contractor shall perform such additional work as
is necessary to keep freight elevator in clean
condition including, but not limited to, cleaning
saddles, doors and frames and vacuuming door
tracks and saddles.
L. PEST CONTROL
____________
1. The Contractor shall render pest control services
throughout the entire premises once each month.
Services to be performed by thoroughly trained
licensed operators. Evidence of such service
calls shall be presented to Owner.
2. Special emergency calls shall be made on request
at no additional charge. Service shall be
rendered at such hours as will not interfere with
normal building operation.
E-6
<PAGE>20
M. DAY PERSONNEL DAY PORTERS
_________________________
Contractor agrees to furnish two (2) days porters to
perform the following duties and any additional duties
as may be directed by Owner.
1. Police entire lobby area, sidewalks and cellar
corridors.
2. Police and maintain elevator cabs, including
floors as required. Carpeted floors as required.
Carpeted floors to be vacuumed and spots to be
removed as required, but not less than once in the
afternoon.
3. Clean cellar, corridors, utility areas, police
locker rooms so that they are kept in a clean
condition at all times.
4. Sweep and hose building sidewalk areas daily
before 8:00 a.m., Monday through Friday of each
week, all equipment to be provided by contractor.
5. Pick up and put out foul weather mats as
necessary, making sure that they are kept clean at
all times during storage.
6. Clean roof as necessary.
7. Clean all lobby glass, directory glass, etc.
inside and outside including frames.
8. Clean and polish standpipes and sprinklers,
siamese connections, as necessary.
9. Clean loading dock area and service/freight
corridor.
10. Remove snow when necessary from building entrance
ways and sidewalks.
11. Equipment rooms, fan rooms and utility rooms shall
be swept regularly and kept in clean condition.
12. Perform other such duties as may be directed by
the Owner.
E-7
<PAGE>21
13. Clean basement corridors and utility areas
including floors, walls, ceilings, fixtures and
other public areas. All such areas shall be kept
in clean condition to the satisfaction of the
owner.
14. Police men's and women's rooms, fill dispensers as
required.
N. LOBBY SECURITY
______________
1. Contractor shall be responsible for maintaining
lobby security 24 hours a day, 7 days per week,
and all legal and union holidays. All personnel
on duty to be in uniform.
2. Supply one additional security guard, Monday thru
Friday, 8:00 AM to 5:00 PM.
O. ADDITIONAL TENANT SERVICES
__________________________
1. Contractor may perform special additional services
for the tenants in the building.
P. GENERAL OFFICE AREAS NIGHTLY
____________________________
1. All stone, ceramic tile, marble, terrazzo and
other unwaxed flooring to be swept nightly. Wash
flooring weekly, scrub when necessary.
2. All unwaxed flooring used as corridors adjacent to
the core shall be cleaned and wet mopped nightly.
3. All linoleum, vinyl, rubber, asphalt tile and
other similar types of flooring (that may be
waxed) to be swept nightly.
4. Mop up and wash floor for spills, smears and foot
tracks throughout, including tenants space, as
needed wash floor in general as required.
5. All carpeting and rugs to be carpet swept nightly
and vacuum cleaned weekly.
6. Hand dust with treated cloth and wipe clean all
furniture and fixtures.
7. Empty and clean all waste receptacles nightly and
remove the wastepaper from the premises to
designated areas.
E-8
<PAGE>22
8. Empty and clean all ash trays and screen all sand
urns nightly.
9. Dust interior of all waste disposal cans and
baskets nightly; damp dust as necessary.
10. Wash clean all water fountains and coolers
nightly.
11. Dust all door and other ventilating louvers within
reach; damp wipe as necessary.
12. Damp dust all telephones monthly.
13. Keep locker and slop sink rooms in a neat and
orderly condition at all times.
14. Wipe clean and polish all brass, if necessary; and
other bright work nightly.
15. Sweep all private staircases nightly.
16. Metal doors of all elevator cars to be properly
maintained.
17. Remove all gum and foreign matter on sight.
18. Clean all glass furniture tops.
19. Collect and remove wastepaper, cardboard boxes
(which Contractor will flatten) and waste material
to a designated area on the Premises. Waste
and/or rubbish bags (heavy duty plastic) shall be
furnished by contractor ahd sall be adequate to
hold contents without breaking. Owner shall have
the right to approve trash removal containers and
janitorial carts.
20. Dust and wash closet and coat room shelving, coat
racks and flooring.
PERIODIC CLEANING
_________________
To be performed as needed unless otherwise specified;
but not less than once each week or as hereinafter
provided.
1. Polish all aluminum, chrome, stainless steel,
brass and other metal work, including trim and
hardware, as necessary, using non-acid polish.
E-9
<PAGE>23
2. Wash and remove all fingermarks, ink stains,
smudges, scruff marks and other marks from metal
partitions, sills, all vertical surfaces (doors,
walls, window sills), including elevator doors and
other surfaces as necessary. Clean and sweep
vacant areas.
3. Dust and clean electric fixtures, all baseboards
and other fixtures or fittings as necessary, but
not less than once a week.
Q. HIGH DUSTING
____________
1. Do all high dusting every two (2) months, unless
specified including, but not limited to the
following:
a. Vacuum and dust all pictures, frames, charts,
graphs and similar wall hangings not reached
in nightly cleaning. Damp dust as required.
b. Vacuum and dust all vertical surfaces such as
walls, partitions, doors, bucks and
ventilating louvres, high moldings and other
surfaces not reached in nightly cleaning.
c. Dust exterior of lighting fixtures.
d. Wash all furniture glass as needed.
e. Vacuum and dust ceiling tiles around
ventilators and clean air conditioning
diffusers as required.
R. ELEVATOR LOBBY AND PUBLIC CORRIDORS (MULTI-TENANT
__________________________________________________
FLOORS)
_______
1. Sweep and wash floor nightly and machine scrub as
necessary. Wax, buff, apply sealer and finishes
as required. Spot clean and shampoo carpets where
substituted in corridors.
2. Wipe down all metal surfaces in the lobby and
polish as required.
3. High dust if necessary all electrical and air
conditioning ceiling fixtures at least once per
month.
E-10
<PAGE>24
4. Dust walls nightly and wash as required.
5. Clean and dust mail depository in lobby.
6. Clean cigarette urns, screen sand and supply sand
as necessary.
S. LAVATORIES PUBLIC
_________________
1. Scour, wash and disinfect all toilet seats (both
sides), basins, urinals and tile walls.
2. Sweep and wash all lavatory floors using proper
disinfectants.
3. Wash and polish all mirrors, powder shelves,
bright work and enameled surfaces in all
lavatories.
4. Contractor shall use only non-abrasive material to
avoid damage and deterioration to chrome fixtures.
5. Hand dust and clean, washing when necessary, all
partitions, dispensers and receptacles in all
lavatories and restrooms.
6. Service sanitary napkin dispensers. (Napkins to
be Supplied by Contractor).
7. Empty paper towel and sanitary napkin disposal
receptacles and remove paper to designated areas.
8. Fill toilet tissue, paper towel and soap
dispensers nightly. (Contractor to supply all
materials).
Full floor tenants shall supply their own paper
hand towels, toilet tissue, soap and sanitary
napkins.
9. Clean and wash all receptacles and dispensers.
10. Remove fingermarks from painted surfaces.
PERIODIC
________
11. Clean and wash all partitions once every two
weeks.
E-11
<PAGE>25
12. Scrub floors as necessary, but not less than once
each week.
13. Hand dust clean and wash all tile walls and
ceilings, including washable acoustical tile, once
each month.
14. High dusting shall be done once each month which
will include lights, walls and grills.
15. Wash all light fixtures as necessary.
E-12
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, SUMMARY STATEMENTS OF CONSOLIDATED NET
INCOME, AND NOTES TO FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE
30, 1995 OF USLIFE CORPORATION AND SUBSIDIARIES FILED ON FORM 10-Q AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
AND NOTES TO FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<DEBT-HELD-FOR-SALE> 5,672,606
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 5,291
<MORTGAGE> 302,489
<REAL-ESTATE> 31,153
<TOTAL-INVEST> 6,387,521
<CASH> 52,082
<RECOVER-REINSURE> 5,252 <F1>
<DEFERRED-ACQUISITION> 708,711
<TOTAL-ASSETS> 7,596,208
<POLICY-LOSSES> 5,308,395
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 179,139
<POLICY-HOLDER-FUNDS> 39,834
<NOTES-PAYABLE> 577,125
<COMMON> 38,313
0
541
<OTHER-SE> 1,117,828
<TOTAL-LIABILITY-AND-EQUITY> 7,596,208
489,221
<INVESTMENT-INCOME> 242,148
<INVESTMENT-GAINS> 467
<OTHER-INCOME> 130,184
<BENEFITS> 515,799
<UNDERWRITING-AMORTIZATION> 81,726
<UNDERWRITING-OTHER> 186,017
<INCOME-PRETAX> 76,784
<INCOME-TAX> 26,327
<INCOME-CONTINUING> 50,457
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,457
<EPS-PRIMARY> 2.18
<EPS-DILUTED> 2.18
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1> See "Note 5. Reinsurance" of Notes to Financial
Statements.
</FN>
</TABLE>
