<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------- --------------
Commission file number: 1-6732
Danielson Holding Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware 95-6021257
(State of Incorporation) (I.R.S. Employer Identification No.)
767 Third Avenue, New York, New York 10017-2023
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (212) 888-0347
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 6, 1996
----- -----------------------------
Common Stock, $0.10 par value 15,360,255 shares
Cover page 1 of 12
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
DANIELSON HOLDING CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share information)
(Unaudited)
<TABLE>
<CAPTION>
For the Three For the Six
Months Ended June 30, Months Ended June 30,
------------------------ -----------------------
1996 1995 1996 1995
-------------- -------- ------------ ---------
<S> <C> <C> <C> <C>
Revenues:
Gross premiums earned $ 13,048 $21,223 $ 25,949 $43,614
Ceded premiums earned (3,890) (4,452) (7,823) (8,311)
-------- ------- -------- -------
Net premiums earned 9,158 16,771 18,126 35,303
Trust fee income 1,100 1,135 2,185 2,211
Net investment income 2,839 3,061 5,678 6,154
Net realized investment gains (losses) 69 (42) 69 (42)
Other income 249 522 582 837
-------- ------- -------- -------
Total revenues 13,415 21,447 26,640 44,463
-------- ------- -------- -------
Losses and expenses:
Gross losses and loss adjustment expenses 11,963 16,953 20,549 33,848
Ceded losses and loss adjustment expenses (5,173) (3,829) (7,088) (6,279)
-------- ------- -------- -------
Net losses and loss adjustment expenses 6,790 13,124 13,461 27,569
Policyholder dividends 43 - 87 137
Policy acquisition expenses 2,407 3,709 4,946 7,639
Expenses in connection with terminated
proposed acquisition 2,320 - 2,320 -
General and administrative expenses 3,509 3,780 6,910 7,633
-------- ------- -------- -------
Total losses and expenses 15,069 20,613 27,724 42,978
-------- ------- -------- -------
Income (loss) before provision for income taxes (1,654) 834 (1,084) 1,485
Income tax provision 6 55 19 93
-------- ------- -------- -------
Net income (loss) $ (1,660) $ 779 $ (1,103) $ 1,392
======== ======= ======== =======
Earnings (loss) per share of Common Stock
and common equivalent share $ (0.10) $ .05 $ (0.07) $ .09
======== ======= ======== =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
2
<PAGE>
DANIELSON HOLDING CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share information)
<TABLE>
<CAPTION>
June 30, 1996 December 31,
(Unaudited) 1995
------------- ------------
<S> <C> <C>
Assets:
Fixed maturities
Available-for-sale at fair value
(Cost: $155,196 and $167,773) $153,730 $172,595
Equity securities, at fair value (Cost: $256 and $256) 605 629
Short term investments, at cost which approximates fair value 4,675 8,570
-------- --------
Total investments 159,010 181,794
Cash 1,183 605
Accrued investment income 2,719 2,718
Premiums and fees receivable, net of allowances
of $211 and $157 6,608 8,826
Reinsurance recoverable on paid losses, net of allowances
of $388 and $388 3,238 1,828
Reinsurance recoverable on unpaid losses, net of
allowances of $425 and $425 18,151 21,112
Prepaid reinsurance premiums 2,639 2,226
Property and equipment, net of accumulated depreciation
of $7,106 and $6,849 3,774 4,159
Deferred acquisition costs 967 1,045
Excess of cost over net assets acquired 4,419 2,657
Other assets 1,182 954
-------- --------
Total assets $203,890 $227,924
======== ========
Liabilities and Stockholders' Equity:
Unpaid losses and loss adjustment expenses $118,330 $137,406
Unearned premiums 8,649 8,563
Policyholder dividends 4,591 4,664
Reinsurance premiums payable 2,087 1,707
Funds withheld on ceded reinsurance 1,492 1,534
Other liabilities 6,335 4,229
-------- --------
Total liabilties 141,484 158,103
Preferred stock ($0.10 par value; authorized
10,000,000 shares; none issued and outstanding) - -
Common stock ($0.10 par value; authorized
20,000,000 shares; issued 15,370,894 shares;
outstanding 15,360,255 shares) 1,537 1,537
Additional paid-in capital 46,131 46,131
Net unrealized gain (loss) on available-for-sale securities (1,117) 5,195
Retained earnings 15,921 17,024
Treasury stock (Cost of 10,639 shares) (66) (66)
-------- --------
Total stockholders' equity 62,406 69,821
-------- --------
Total liabilities and stockholders' equity $203,890 $227,924
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
DANIELSON HOLDING CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(In thousands, except share amounts)
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1996
--------------
<S> <C>
Common stock
Balance, beginning of year $ 1,537
-----------
Balance, end of period 1,537
-----------
Additional paid-in capital
Balance, beginning of year 46,131
-----------
Balance, end of period 46,131
-----------
Net unrealized gain (loss) on available-for-sale
securities
Balance, beginning of year 5,195
Net (decrease) (6,312)
-----------
Balance, end of period (1,117)
-----------
Retained earnings
Balance, beginning of year 17,024
Net loss (1,103)
-----------
Balance, end of period 15,921
-----------
Treasury stock
Balance, beginning of year (66)
-----------
Balance, end of period (66)
-----------
Total stockholders' equity $ 62,406
===========
Common stock, shares
Balance, beginning of year 15,370,894
-----------
Balance, end of period 15,370,894
===========
Treasury stock, shares
Balance, beginning of year 10,639
-----------
Balance, end of period 10,639
===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
DANIELSON HOLDING CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Six
Months Ended June 30,
------------------------
1996 1995
------------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (1,103) $ 1,392
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Net realized investment (gains) losses (69) 42
Depreciation and amortization 546 1,033
Change in accrued investment income (1) 148
Change in premiums and fees receivable 2,218 4,524
Change in reinsurance recoverables (1,410) 821
Change in reinsurance recoverable on unpaid losses 2,961 1,161
Change in prepaid reinsurance premiums (413) (154)
Change in deferred acquisition costs 78 508
Change in unpaid losses and loss adjustment expenses (19,076) (5,099)
Change in unearned premiums 86 (2,279)
Change in policyholder dividends payable (73) (1,335)
Change in reinsurance payables and funds withheld 338 409
Other, net 1,418 (1,761)
-------- --------
Net cash (used in) operating activities (14,500) (590)
-------- --------
Cash flows from investing activities:
Proceeds from sales:
Fixed income maturities available-for-sale 6,740 1,666
Investments, matured or called:
Fixed income maturities held-to-maturity - 5,157
Fixed income maturities available-for-sale 9,016 14,042
Investments, purchased:
Fixed income maturities held-to-maturity - (550)
Fixed income maturities available-for-sale (3,065) (21,138)
Acquisition of Valor Insurance Company (net of cash
and short term investments of $1,461) (1,450) -
Proceeds on sale of branch office assets 71 -
Purchases of other investments - (6)
Proceeds of sale of property and equipment 64 -
Purchases of property and equipment (193) (213)
-------- --------
Net cash provided by (used in) investing activities 11,183 (1,042)
-------- --------
Cash flows from financing activities:
Purchase of stock options - (286)
-------- --------
Net cash (used in) financing activities - (286)
-------- --------
Net decrease in cash and short term investments (3,317) (1,918)
Cash and short term investments at beginning of year 9,175 3,526
-------- --------
Cash and short term investments at end of period $ 5,858 $ 1,608
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
DANIELSON HOLDING CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1) BASIS OF PRESENTATION
The accompanying unaudited Consolidated Financial Statements of Danielson
Holding Corporation ("DHC" or "Registrant") and subsidiaries (collectively with
DHC, the "Company") have been prepared in accordance with generally accepted
accounting principles. However, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
consolidated financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the six months
ended June 30, 1996 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996. For further information,
reference is made to the Consolidated Financial Statements and footnotes thereto
included in DHC's Annual Report on Form 10-K for the year ended December 31,
1995 and its Quarterly Report on Form 10-Q for the three months ended March 31,
1996.
2) PER SHARE DATA
Per share data is based on the weighted average number of shares of common
stock of DHC, par value $0.10 per share ("Common Stock"), outstanding during a
particular year or other relevant period. Earnings per share computations, as
calculated under the treasury stock method, include the average number of shares
of additional outstanding Common Stock issuable for stock options, whether or
not currently exercisable. Such average shares outstanding for the three months
ended June 30, 1996 and 1995 were 16,015,394 and 16,038,096, respectively, and
for the six months ended June 30, 1996 and 1995, the average shares outstanding
were 16,001,024 and 16,045,877 respectively.
3) INCOME TAXES
DHC files a Federal consolidated income tax return with its subsidiaries
and with certain trusts that assumed various former liabilities of certain
present and former subsidiaries of DHC. The Company records its interim tax
provisions based upon estimated effective tax rates for the year.
The Company has made provisions for certain state and local franchise
taxes. The amount of these provisions is not material to the Consolidated
Financial Statements. Tax filings for these jurisdictions do not consolidate
the activity of the trusts referred to above. For further information,
reference is made to Note 8 of the Notes to Consolidated Financial Statements
included in DHC's Annual Report on Form 10-K for the year ended December 31,
1995.
4) EXPENSES IN CONNECTION WITH TERMINATED PROPOSED ACQUISITION
On February 26, 1996, DHC signed an Agreement and Plan of Merger (the
"Merger") with Midland Financial Group, Inc. ("Midland"). On April 24, 1996, DHC
and Midland filed a joint proxy statement with the SEC which provided for, among
other things, Midland to be merged into a subsidiary of DHC. As a result of the
deaths of key executives of DHC and Midland in the crash of TWA flight 800, DHC
and Midland signed a Termination Agreement for the Merger on July 24, 1996, and
it is DHC's intention to deregister the shares related to the proposed Merger.
The amounts expensed are amounts paid and accrued for that relate directly to
the proposed Merger and include (without
6
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limitation) regulatory filing fees, legal expenses, accounting expenses,
printing costs, fairness opinion expenses and investment banking fees.
5) ACQUISITION OF VALOR INSURANCE COMPANY
On June 24, 1996, NAICC completed the acquisition of 100% of the
outstanding common stock of Valor Insurance Company, Inc. ("Valor"). Valor is a
property and casualty insurance company domiciled in the state of Montana and
writes workers' compensation insurance in Montana. The acquisition of Valor has
been accounted for as a purchase. The purchase price of $2.9 million was
allocated to the identifiable net assets of Valor based upon the estimated
relative fair values thereof. In connection with the acquisition, NAICC acquired
net assets with a fair value of approximately $1.1 million resulting in $1.8
million of cost in excess of net assets acquired which is being amortized over
periods not exceeding more than 20 years.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
1. GENERAL
Danielson Holding Corporation ("DHC") is organized as a holding company
with substantially all of its operations conducted by subsidiaries (collectively
with DHC, the "Company"). DHC, on a parent-only basis, has limited continuing
expenditures for rent and administrative expenses and derives revenues primarily
from investment returns on portfolio securities. Therefore, the analysis of the
Company's financial condition is generally done on an operating subsidiary
basis.
2. RESULTS OF NAICC'S OPERATIONS
The operations of DHC's principal subsidiary, National American Insurance
Company of California ("NAICC"), are primarily in specialty property and
casualty insurance.
Property and Casualty Insurance Operations
Net earned premiums for the three and six months ended June 30, 1996 were
$9.2 million and $18.1 million, respectively. Net earned premiums for the three
and six months ended June 30, 1995 were $16.8 million and $35.3 million,
respectively. Net written premiums were $8.8 million and $17.8 million for the
three and six months ended June 30, 1996, respectively. Net written premiums
were $15.2 million and $32.9 million for the three and six months ended June 30,
1995, respectively. The decrease in net written premiums is attributable to a
decline in workers' compensation business in California, discussed below. The
decrease in earned premiums is directly related to the decline in written
premiums.
Net written premiums for workers' compensation were $7.9 million and $23.9
million for the six months of 1996 and 1995, respectively. This decrease is
attributable to significantly increased competition in the California workers'
compensation line of business since the beginning of 1995 resulting in pricing
at rates below a level necessary to achieve an underwriting profit. It is the
policy of NAICC to underwrite business that is expected to yield an underwriting
profit. As a result, NAICC's new and renewal policy count decreased
significantly in 1995 and continued to decrease during the first six months of
1996.
7
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Net written premiums for NAICC's non-standard private passenger automobile
insurance line of business were $7.7 million and $8.0 million for the six months
ended June 30, 1996 and 1995, respectively. In the first six months of 1996, the
private passenger automobile line represented 43% of total net written premiums,
up from 24% in the first six months of 1995. NAICC continues to cede 50% of its
private passenger automobile business to a major reinsurance company under a
quota reinsurance agreement.
Net investment income was $5.3 million and $5.8 million for the six months
ended June 30, 1996 and 1995, respectively. This decline is the result of a
decrease in NAICC's investment portfolio.
Net losses and loss adjustment expenses ("LAE") were $6.8 million and $13.5
million for the three and six months ended June 30, 1996, respectively. The
resulting net loss and LAE ratios were 74.3% and 78.2%, respectively, for the
six months ended June 30, 1996 and 1995. The decrease in the net loss and LAE
ratio in 1996 is due to the shift toward automobile business which has a lower
loss and LAE ratio than the workers' compensation business.
Policy acquisition costs were $4.9 million and $7.6 million for the six
months ended June 30, 1996 and 1995, respectively. The decrease is a direct
result of the decline in net earned premiums. As a percent of net earned
premiums, policy acquisition expenses were 27.3% and 21.6% for the six months
ended June 30, 1996 and 1995, respectively. The increase in the policy
acquisition expense ratio in 1996 is primarily the result of workers'
compensation premiums declining more than certain underwriting expenses of
policy acquisition costs.
General and administrative expenses were $3.1 million and $3.4 million for
the six months ended June 30, 1996 and 1995, respectively. These expenses are
fixed or semi-variable in nature and have declined slightly as a result of
certain cost reductions.
Policyholder dividends for the six months ended June 30, 1996 were $87,000,
as compared with $137,000 during the first six months of 1995. The decrease in
policyholder dividends is attributable to the decline in workers' compensation
earned premiums.
Net income for the three and six months ended June 30, 1996 was $1.2
million and $2.3 million, respectively, compared to net income of $1.6 million
and $3.1 million, respectively, for the same periods in 1995. The combined
ratios were 119.5% and 110.7% for the six months ended June 30, 1996 and 1995,
respectively. Net income has declined from 1995 due to the decline in premium
revenue and a decline in investment income.
Cash Flow from Insurance Operations
Cash used in operations was $12.6 million for the six months ended June 30,
1996 as compared to cash provided by operations of $1.1 million for the six
months ended June 30, 1995. The increase in cash used in operations is primarily
due to the payment of losses and LAE related to prior years while workers'
compensation premiums written have declined. Overall cash and invested assets,
at market value, at June 30, 1996 were $149 million, compared to $170 million at
December 31, 1995.
Liquidity and Capital Resources
The Company's insurance subsidiaries require both readily liquid assets and
adequate capital to meet ongoing obligations to policyholders and claimants, as
well as to pay ordinary operating expenses. The primary sources of funds to
meet these obligations are premium revenues, investment
8
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income, recoveries from reinsurance and, if required, the sale of invested
assets. NAICC's investment policy guidelines require that all liabilities be
matched by a comparable amount of investment grade invested assets. Premiums
written continue to be supported by adequate statutory capital and surplus. The
ratio of (annualized) net written premiums to statutory surplus was .8 to 1 for
the six months ended June 30, 1996. Management of NAICC believes that NAICC has
both adequate capital resources and sufficient reinsurance to meet any
unforeseen events such as natural catastrophes, reinsurer insolvencies or
possible reserve deficiencies.
3. RESULTS OF DANIELSON TRUST COMPANY'S OPERATIONS
The operations of DHC's Danielson Trust Company ("Danielson Trust")
subsidiary are comprised of trust and fiduciary services.
Trust and Fiduciary Services Operations
Total fee income was $1.1 million and $2.2 million, respectively, for the
three and six months ended June 30, 1996, reflecting a decrease of 3.2% and
1.2%, respectively, from the 1995 comparable periods. Fee income for the three
months ended June 30, 1996, as compared with the same period in 1995, reflects
flat revenue performance from the retirement services and private trust lines of
business with a 27.4% decrease in custody services fees.
Net investment income was $26,000 and $52,000 for the three and six months
ended June 30, 1996, respectively, as compared to $26,000 and $62,000 for the
three and six months ended June 30, 1995, respectively. Net investment income
for the first six months of 1996 decreased from the same period in 1995 because
average invested assets during such period in 1996 were less than average
invested assets during the same period in 1995.
General and administrative expenses were $2.6 million and $3.0 million for
the six months ended June 30, 1996 and 1995, respectively. The decrease in
expenses for the first six months of 1996 from the comparable period in 1995
reflects reduced staffing and data processing expenses, as well as other
operating efficiencies. As a result of the decrease in expenses, Danielson
Trust's net loss for the six months ended June 30, 1996 was $244,000, compared
to a net loss of $698,000 in the same period of 1995. The net loss from
operations for the three months ended June 30, 1996 was approximately $163,000
compared to a net loss from operations of $328,000 for the same period in 1995.
Cash Flow from Trust Operations
Cash used in trust operating activities for the six months ended June 30,
1996 and 1995 was $256,000 and $805,000, respectively. The decrease in cash used
in trust operating activities in the first six months of 1996 from the same
period in 1995 is primarily attributable to cost reductions and operating
efficiencies. Overall cash and invested assets, at fair value, at June 30, 1996
were $1.7 million, compared to $1.8 million at December 31, 1995.
Liquidity and Capital Resources:
Danielson Trust requires liquid assets to meet the working capital needs of
its continuing business. The primary source of these liquid assets are fees
charged to Danielson Trust's trust clients. Effective March 31, 1996, DHC
forgave the entire principal balance of a $300,000 unsecured note from Danielson
Trust and accrued interest as of January 1, 1996, and converted such amount into
additional paid-in capital of Danielson Trust. During the second quarter of
1996, DHC forgave $38,000 of receivables for expenses that were paid by DHC on
behalf of Danielson Trust and made an additional capital contribution of
$120,000. Such amounts were converted into additional paid-in-capital. As of
January 1, 1996, DHC agreed to make an additional unsecured loan to Danielson
Trust in the principal amount of $600,000, bearing interest at the rate of prime
plus 1%, and to consider making additional such loans in the aggregate amount of
$600,000 upon request of Danielson Trust. As of the date hereof, Danielson Trust
has not borrowed any amount under such loan agreement. To the extent that timing
differences exist between the collection of revenue and the actual payment of
expenses, or where revenues generated by Danielson Trust's business are
insufficient to cover its expenses or to maintain compliance with regulatory
capital requirements, the primary sources of funds to meet
9
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those obligations would be the sale of short term investments, additional
intercompany loans or parent company capital contributions or financing provided
by a third party.
In accordance with California banking regulations, Danielson Trust has
pledged assets having a fair value of $618,000 as of June 30, 1996 to the State
of California as a reserve in connection with certain types of fiduciary
appointments, the maximum amount of such reserves that may be required. State
banking laws also regulate the nature of trust companies' investments of
contributed capital and surplus, and generally restrict such investments to debt
type investments in which banks also are permitted to invest. In order to
satisfy such regulations, a majority of Danielson Trust's investments are in
U.S. Government obligations and, as of the six months ended June 30, 1996,
Danielson Trust was in compliance with the foregoing requirements.
On January 31, 1996, following approval of the California State Banking
Department, Danielson Trust sold substantially all of the fiduciary accounts
administered by its Santa Barbara branch to The Bank of Montecito (now known as
Montecito Bank and Trust). In connection with the sale, in January 1996,
Danielson Trust recognized a gain of $32,874.
4. RESULTS OF DHC'S OPERATIONS
Cash Flow from Parent-Only Operations
Operating cash flow of DHC on a parent-only basis is primarily dependent
upon the rate of return achieved on its investment portfolio and the payment of
general and administrative expenses incurred in the normal course of business.
For the six months ended June 30, 1996 and 1995, cash used in parent-only
operating activities was $1,242,000, and $904,000, respectively. The increase in
cash used in the first six months of 1996 from the same period in 1995 was
primarily attributable to the payment of expenses related to the terminated
proposed Merger with Midland. Such payments made during the second quarter of
1996 were $377,000. Management expects the remaining $1.9 million to be paid
during the last six months of 1996. For information regarding DHC's operating
subsidiaries' cash flow from operations, see "2. RESULTS OF NAICC'S OPERATIONS,
Cash Flow from Insurance Operations" and "3. RESULTS OF DANIELSON TRUST
COMPANY'S OPERATIONS, Cash Flow from Trust Operations."
Liquidity and Capital Resources
At June 30, 1996, cash and investments of the Company (excluding NAICC and
Danielson Trust) were approximately $9.7 million, compared to $11 million at
December 31, 1995. As described above, the primary use of funds was the payment
of general and administrative expenses in the normal course of business. The
decrease is also due to the capital contribution made to Danielson Trust and the
payment of expenses related to the terminated proposed Merger with Midland. For
information regarding DHC's operating subsidiaries' liquidity and capital
resources, see "2. RESULTS OF NAICC'S OPERATIONS, Liquidity and Capital
Resources" and "3. RESULTS OF DANIELSON TRUST COMPANY'S OPERATIONS, Liquidity
and Capital Resources."
10
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
NAICC and Danielson Trust are parties to various legal proceedings which
are considered routine and incidental to their respective businesses and are not
material to the financial condition and operation of those businesses. DHC is
not a party to any legal proceeding which is considered material to the
financial condition and operation of its business.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) No exhibits are required to be filed with this Report.
(b) During the quarter for which this Report is filed, DHC filed no
reports on Form 8-K.
11
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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.
Date: August 13, 1996
DANIELSON HOLDING CORPORATION
(Registrant)
By: /s/ DAVID BARSE
-----------------------------------------
David Barse
President & Chief Operating Officer
By: /s/ MICHAEL CARNEY
-----------------------------------------
Michael Carney
Chief Financial Officer
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY PERIOD ENDED JUNE 30, 1996 AND I8S QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<DEBT-HELD-FOR-SALE> 153,730
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 605
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 159,010
<CASH> 1,183
<RECOVER-REINSURE> 21,389<F1>
<DEFERRED-ACQUISITION> 967
<TOTAL-ASSETS> 203,890
<POLICY-LOSSES> 118,330
<UNEARNED-PREMIUMS> 8,649
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 4,591
<NOTES-PAYABLE> 0
0
0
<COMMON> 1,537
<OTHER-SE> 60,869<F2>
<TOTAL-LIABILITY-AND-EQUITY> 203,890
18,126
<INVESTMENT-INCOME> 5,678
<INVESTMENT-GAINS> 69
<OTHER-INCOME> 2,767<F3>
<BENEFITS> 13,461
<UNDERWRITING-AMORTIZATION> 3,097
<UNDERWRITING-OTHER> 11,079<F4>
<INCOME-PRETAX> (1,084)
<INCOME-TAX> 19
<INCOME-CONTINUING> (1,084)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,103)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
<RESERVE-OPEN> 116,294
<PROVISION-CURRENT> 13,461
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 3,651
<PAYMENTS-PRIOR> 26,776
<RESERVE-CLOSE> 100,177<F5>
<CUMULATIVE-DEFICIENCY> 3,123
<FN>
<F1> Included in this caption are reinsurance recoverables on unpaid losses of
18,151 and reinsurance recoverables on paid losses of 3,238.
<F2>Included in Stockholders' Equity-Other is treasury stock of 66.
<F3>Included in caption Other Income is trust fee income of 2,185.
<F4>Included in this caption are expenses in connection with terminated proposed
acquisition of 2,320.
<F5>Includes reserves of 851 of Valor Insurance Co. which was acquired on June
24, 1996.
</FN>
</TABLE>
