<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1995 Commission File Number: 0-9341
SECURITY NATIONAL FINANCIAL CORPORATION
Exact Name of Registrant.
UTAH 87-0345941
(State or other jurisdiction IRS Identification
of incorporation or organization) Number
5300 South 360 West, Salt Lake City, Utah 84123
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including Area Code (801) 264-1060
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Sections 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for 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 XX NO
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, net of treasury stock, as of
the close of the period covered by this report.
Class A Common Stock, $2.00 par value 3,026,391
- - - - - - - - - - ------------------------------------- ----------------
Title of Class Number of Shares
Outstanding as
of March 31, 1995
Class C Common Stock, $.40 par value 2,250,764
- - - - - - - - - - ------------------------------------ ----------------
Title of Class Number of Shares
Outstanding as
of March 31, 1995
<PAGE>
SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES
FORM 10Q
QUARTER ENDED MARCH 31, 1995
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
Page No.
<S> <C>
Consolidated Statements of Earnings - Three
months ended March 31, 1995 and 1994. . . . . . . . . . . . .3
Consolidated Balance Sheets - March 31,
1995 and December 31, 1994. . . . . . . . . . . . . . . . . .4-5
Consolidated Statements of Cash Flows -
Three months ended March 31, 1995 and
March 31, 1994. . . . . . . . . . . . . . . . . . . . . . . .6-7
Item 2 Management's Discussion and Analysis
of Summary of Earnings and
Financial Condition . . . . . . . . . . . . . . . . . . . . .8-14
PART II - OTHER INFORMATION
Other Information . . . . . . . . . . . . . . . . . . . . . .14
Signature Page. . . . . . . . . . . . . . . . . . . . . . . .15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended March 31,
1995 1994
(Unaudited) (Unaudited)
---------- ----------
REVENUES:
<S> <C> <C>
Insurance premiums
and other considerations $1,493,350 $1,336,080
Net investment income 1,679,579 948,140
Realized gains on investments
and other assets 1,514 63,126
Mortuary and cemetery sales 1,549,320 1,393,929
Mortgage fee income 316,429 658,805
Other 106,677 21,008
---------- ------------
Total Revenues $5,146,869 $4,421,088
BENEFITS AND EXPENSES:
Death benefits $513,171 $499,709
Surrenders and other
policy benefits 721,212 234,142
Increase in future
policy benefits 322,432 338,551
Amortization of deferred
policy acquisition costs 229,883 145,850
General and administrative
expenses:
Commissions 482,213 320,527
Salaries 741,660 801,986
Other 1,100,074 1,364,193
Interest expense 219,767 162,667
Cost of mortuary and cemetery
lots and services 461,145 386,727
---------- ----------
Total benefits and expenses $4,791,557 $4,254,352
---------- ----------
Earnings before income taxes $ 355,312 $ 166,736
Income tax (expense) benefit (91,965) (48,353)
---------- ----------
Net earnings $ 263,347 $ 118,383
========== ==========
Net earnings per share $0.08 $0.04
===== =====
Weighted average outstanding
common shares 3,322,310 3,270,899
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1995 December 31,
(Unaudited) 1994
-------------- -------------
<S> <C> <C>
Assets:
Investments:
Fixed maturity securities
held to maturity, at
amortized cost $38,942,780 $39,397,628
Equity securities available
for sale, at market 4,280,436 4,149,713
Mortgage loans on real estate 16,884,571 14,681,293
Real estate, net of
accumulated depreciation 7,766,019 7,586,650
Policy loans 2,579,160 2,670,989
Other loans 622,055 677,334
Short-term investments 2,695,315 4,013,296
---------- -----------
Total insurance
related investments 73,770,336 73,176,903
Restricted assets of
cemeteries and mortuaries 2,581,725 2,482,068
Cash 1,678,623 2,060,876
Receivables:
Trade contracts 5,435,404 4,938,098
Receivable from agents 408,295 463,040
Other 230,078 336,801
----------- -----------
Total receivables 6,073,777 5,737,939
Allowance for doubtful
accounts (1,941,853) (1,923,808)
----------- -----------
Net receivables 4,131,924 3,814,131
Land and improvements
held for sale 8,138,498 6,920,208
Accrued investment income 1,004,218 996,845
Deferred policy acquisition
costs 4,830,618 4,860,865
Property, plant and equipment, net 4,820,543 4,899,873
Cost of insurance acquired 3,431,697 3,488,383
Excess of cost over net assets
of acquired subsidiaries 706,300 718,391
Other 303,728 339,714
------------ ------------
Total Assets $105,398,210 $103,758,257
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
March 31, 1995 December 31,
(Unaudited) 1994
-------------- ------------
<S> <C> <C>
Liabilities:
Future life, annuity, and
other benefits $62,444,259 $61,895,251
Bank loans payable 7,278,363 7,440,576
Notes and contracts payable 3,729,140 2,768,546
Estimated future costs of
pre-need sales 6,299,843 6,284,421
Payable to endowment care
fund 325,578 319,336
Accounts payable and
accrued expenses 1,674,503 1,760,399
Other liabilities 1,310,605 1,438,889
Income taxes 1,963,675 1,872,294
----------- -----------
Total Liabilities 85,025,966 83,779,712
Stockholders' Equity:
Common stock:
Class A: $2 par value, authorized
10,000,000 shares, issued 3,558,406
shares in 1995 and 3,558,406 shares
in 1994 7,116,814 7,116,814
Class C: $0.40 par value, authorized
7,500,000 shares, issued 2,275,045
shares in 1995 and 2,275,045 shares
in 1994 910,018 910,018
Additional paid-in capital 7,214,061 7,214,061
Unrealized appreciation of
investments 352,142 221,790
Retained earnings 6,418,041 6,154,694
----------- -----------
22,011,076 21,617,377
Treasury stock at cost (532,015
Class A shares and 24,281
Class C shares in 1995;
532,015 Class A shares and
24,281 Class C shares in 1994,
held by affiliated companies) (1,638,832) (1,638,832)
------------ ------------
Net Stockholders' Equity 20,372,244 19,978,545
------------ ------------
Total Liabilities and
Stockholders' Equity $105,398,210 $103,758,257
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
SECURITY NATIONAL FINANCIAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
1995 1994
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $263,347 $118,383
Adjustments to reconcile
net earnings to net cash
provided by operating
activities:
Net realized gain on sale
of investments (1,514) (63,126)
Depreciation 164,360 146,306
Provision for losses on
accounts and loans
receivable 8,951 34,366
Amortization of goodwill,
premiums, and discounts (38,259) 1,929
Amortization of cost of
insurance acquired 56,686 --
Deferred taxes 92,381 48,353
Policy acquisition costs
deferred (199,636) (170,381)
Policy acquisition costs
amortized 229,883 145,850
Change in assets and liabilities:
Land and improvements held
for sale (1,218,290) (22,389)
Future life and other
benefits 549,008 526,179
Other operating assets
and liabilities (492,018) 346,379
---------- ----------
Net cash (used in) provided by
operating activities (585,101) 1,111,849
Cash flows from investing activities:
Securities held to maturity:
Purchases - fixed maturity
securities 504,416 (2,148,362)
Calls and maturities - fixed
maturity securities -- 921,226
Securities available for sale:
Sales - equity securities -- 17,510
Net purchases and sales of
short-term investments
and restricted assets of
cemeteries and mortuaries 1,218,324 (1,466,122)
Mortgage and other loans
made (5,303,376) (7,973,893)
Payments received for mortgage
and other loans 3,163,993 8,506,785
Change in policy loans 91,829 --
Purchases of property,
plant, and equipment (16,601) (111,076)
Purchases of real estate (254,118) (1,131,565)
----------- -----------
Net cash used in investing
activities (595,533) (3,385,497)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Three Months Ended March 31,
1995 1994
(Unaudited) (Unaudited)
---------- ----------
<S> <C> <C>
Cash flows from financing activities:
Repayment of notes and
contracts payable (280,566) (339,948)
Proceeds from borrowings
on notes and contracts
payable 1,078,947 953,820
----------- -----------
Net cash provided by
financing activities 798,381 613,872
----------- -----------
Net decrease in cash (382,253) (1,659,776)
Cash at beginning of year 2,060,876 6,831,051
---------- -----------
Cash at end of year $1,678,623 $ 5,171,275
========== ===========
</TABLE>
<PAGE>
SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1995 and 1994
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete 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
three months ended March 31, 1995, are not necessarily
indicative of the results that may be expected for the year
ending December 31, 1995. For further information, refer to
the consolidated financial statements and footnotes thereto
for the year ended December 31, 1994, included in the
Company's Annual Report on Form 10-K (file number 0-9341).
2. Notes and Contracts Payable
On February 3, 1995, the Company purchased approximately 100
acres of real property located in San Diego, California, of
which approximately 35 acres will be used for the development
of a cemetery. In purchasing the property the Company
incurred a debt of $1,062,000. This debt carries an interest
rate of 9% per annum and will be paid in twelve monthly
installments of $5,000. Thereafter, equal monthly payments of
$10,000 will be made, however interest shall not accrue on any
part of the principal balance until February 3, 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
Results of Operations
Overview
The Company's operations over the last three years generally
reflect three trends or events which the Company expects to
continue: (i) increased attention to "niche" insurance
products, such as the Company's funeral plan policies, (ii)
decreased general and administrative costs as a percentage of
revenue through efforts to reduce operating costs and through
eliminating unnecessary duplication of costs at acquired
companies; and (iii) emphasis on high margin cemetery and
mortuary business.
The Company maintains a diversified investment portfolio
consisting of common stock, preferred stock, municipal bonds,
investment grade and non-investment grade bonds, mortgage
loans, short term and other securities and investments. The
Company's investment goals are to maintain safety and
liquidity, enhance principal values and achieve increased
rates of return consistent with regulatory restraints. The
Company's interest sensitive type products, primarily
annuities and interest sensitive whole life, compete with
other financial products such as bank certificates of deposit,
brokerage sponsored money market funds as well as competing
life insurance company products.
<PAGE>
<TABLE>
<CAPTION>
First Quarter 1995 Compared to First Quarter 1994
The following schedule summarizes the effect the acquisition
of Capital Investors Life Insurance Company had on the consolidated
statements of 1995.
Three Months Ended March 31,
Consolidated
Without the
Effects of
Capital Capital
Investors Investors
Consolidated Life Life Consolidated
1995 1995 1995 1994
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Insurance premiums
and other
considerations $1,493,350 $ 232,511 $1,260,839 $1,336,080
Net investment income 1,679,579 477,001 1,202,578 948,140
Realized gains on
investments
and other assets 1,514 -- 1,514 63,126
Mortuary and
cemetery sales 1,549,320 -- 1,549,320 1,393,929
Mortgage fee income 316,429 -- 316,429 658,805
Other 166,677 91,534 15,143 21,008
---------- -------- --------- ---------
Total Revenues $5,146,869 $ 801,046 $4,345,823 $4,421,088
BENEFITS AND EXPENSES:
Death benefits $513,171 $ 75,015 438,156 $499,709
Surrenders and other
policy benefits 721,212 536,919 184,293 234,142
Increase in future
policy benefits 322,432 (186,370) 508,802 338,551
Amortization of
deferred policy
acquisition costs 229,883 56,686 173,197 145,850
General and admini-
strative expenses:
Commissions 482,213 32,247 449,966 320,527
Salaries 741,660 -- 741,660 801,986
Other 1,100,074 216,365 883,709 1,364,193
Interest expense 219,767 -- 219,767 162,667
Cost of mortuary
and cemetery
lots and services 461,145 -- 461,145 386,727
---------- --------- ---------- ----------
Total benefits
and expenses $4,791,557 $730,862 $4,060,695 $4,254,352
---------- -------- ---------- ----------
Earnings before
income taxes $ 355,312 $ 70,184 $ 285,128 $ 166,736
========== ======== ========== ==========
</TABLE>
The following managements discussion and analysis for the three months
ended March 31, 1995 and March 31, 1994, excludes the acquisition of
Capital Investors Life Insurance Company.
<PAGE>
Total revenues decreased by $75,265 (1.7%), from $4,421,088 for the three
months ended March 31 1994, to $4,345,823 for the three months ended March
31, 1995. Contributing to this decrease in total revenues was a $75,241
decrease in insurance premiums and other considerations, a $61,612 decrease
in net realized gains on investment and other assets and a $342,376
decrease in mortgage fee income.
Net investment income increased by $254,438, from $948,140 for
the three months ended March 31, 1994, to $1,202,578 for the
three months ended March 31, 1995. This increase was
attributable to the Company's emphasis on investing its cash
and short-term investments in higher-yielding long term
investments.
Realized gains on investments decreased by $61,612 from
$63,126 for the three months ended March 31, 1994 to $1,514
for the three months ended March 31, 1995. This decrease was
the result of increased bond redemptions due to lower interest
rates and improved performance of the stock market in the
first quarter ended March 31, 1994.
Mortuary and cemetery sales increased by $155,391, from
$1,393,929 for the three months ended March 31, 1994 to
$1,549,320 for the three months ended March 31, 1995. This
increase was primarily related to the mortuary portion of the
business.
Mortgage fee income decreased $342,376, from $658,805 for the
three months ended March 31, 1994, to $316,429 for the three
months ended March 31, 1995. This decrease was the result of
higher interest rates for the three months ended March 31,
1995, thereby reducing the opportunity for refinancing and
loan originations.
Total benefits and expenses were $4,254,352 for the three
months ended March 31, 1994, which is 96% of total revenue of
the Company, as compared to $4,060,695, or 93% of total
revenues for the three months ended March 31, 1995. Policy
benefits increased by $58,869, from $1,072,402 for the three
months ended March 31, 1994, to $1,131,251 for the three
months ended March 31, 1995. This increase is primarily due
to the maturing of the policies in force.
Amortization of deferred policy acquisition costs has
increased by $27,347, from $145,850 for the three months ended
March 31, 1994, to $173,197 for the three months ended March
31, 1995. This increase was also due to the maturing of the
policies in force.
The decrease in general and administrative expenses resulted
from a reduction in operations at Security National Mortgage
due to its decreased loan activity.
Interest expense increased by $57,100, from $162,667 for the
three months ended March 31, 1994, to $219,767 for the three
months ended March 31, 1995. This increase was primarily due
to the interest on the debt acquired in the amount of
$2,800,000 for the acquisition of Capital Investors Life
Insurance Company, which was completed on December 21, 1994.
<PAGE>
Cost of mortuary and cemetery lots and services increased by
$74,418, from $386,727 for the three months ended March 31,
1994, to $461,145 for the three months ended March 31, 1995.
The increase of goods and services sold is consistent with the
increase in sales at the cemeteries and mortuaries.
First Quarter 1994 Compared to First Quarter 1993
The Company's total revenues increased by $161,000 (4.0%),
from $4,260,000 for the three months ended March 31, 1993 to
$4,421,000 for the three months ended March 31, 1994.
Contributing to this increase in total revenues was a $49,000
increase in premiums from $1,158,000 in the first quarter of
1993 to $1,207,000 in the first quarter of 1994. This
increase was attributable to an increase in renewal premiums.
Investment income decreased by $17,000, from $965,000 in the
first quarter of 1993 to $948,000 in the first quarter of
1994. This decrease was due to a higher percentage of
invested assets in short term investments in the current three
month period, yielding a lower rate of interest. In the
comparative three month period, 17% of the invested assets
were in short term investments whereas in the current three
month period 28% of the invested assets were in short term
investments.
Mortuary and cemetery income decreased by $204,000, from
$1,599,000 in the first quarter of 1993 to $1,394,000 in the
first quarter of 1994. This decrease was primarily related to
a $100,000 reduction in preneed sales at Holladay Memorial
Cottonwood Foundation. The revenue of Bonneville Limousine,
which is part of the operations of Deseret Mortuary, decreased
by $120,000. This higher level of revenues in the first
quarter of 1993 was due to the increase limousine services
resulting from the NBA Allstar Game, which was held in Salt
Lake City during the first quarter of 1993.
Realized gains on investments decreased by $230,000, from
$293,000 in the first quarter of 1993 to $63,000 in the first
quarter of 1994. The 1993 amount included the results of a
favorable settlement of a lawsuit brought in 1988 by the
Metropolitan Water District against the Company to condemn 6.6
acres of land at Mountain View Cemetery. On February 19,
1993, an agreement was reached wherein the land was sold to
Metropolitan Water District for $300,000. The net gain on the
sale of the land, after deducting the original cost of the
land and the costs of litigation, was approximately $184,000.
Other revenues increased by $581,000, from $98,000 in the
first quarter of 1993 to $680,000 in the first quarter of
1994. This increase was primarily due to $643,000 in
additional revenues that were generated by Security National
Mortgage Company, which was formed on July 1, 1993, as a
wholly-owned subsidiary of the Company for the purpose of
originating and refinancing mortgage loans.
Total benefits and expenses were $4,254,000 for the three
month period ended March 31, 1994, which constituted 96.2% of
total revenue of the Company, as compared to $3,802,000, or
89.2% of total revenue for the three month period ended March
31, 1993. Death and other policy benefits decreased by
$166,000, from $1,238,000 for the first quarter of 1993 to
$1,072,000 for the first quarter of 1994. This decrease was
primarily due to a reduction in the rate of interest being
credited to annuity and other interest sensitive reserves
during the current three month period.
<PAGE>
General and administrative expenses increased $747,000 from
$1,740,000 in the first quarter of 1993 to $2,487,000 in the
first quarter of 1994. This increase is due to the additional
costs associated with the operations of Camelback Sunset
Funeral Home, which was acquired on January 10, 1994, and
Security National Mortgage Company, which was formed on July
1, 1993.
Interest expense increased by $15,000, from $147,000 in the
first quarter of 1993 to $163,000 in the first quarter of
1994. This additional increase in expense was the result of
the $1,500,000 in additional debt financing by the Company as
of February 12, 1993 to acquire Pinehill Business Park and
$940,000 in additional debt in connection with the acquisition
of Camelback Funeral Home. Cost of mortuary and cemetery lots
and services decreased by $140,000 from $527,000 in the first
quarter of 1993 to $387,000 in the first quarter of 1994.
This decrease was due to a reduction in pre-need sales during
the current three month period.
Liquidity and Capital Resources
The Company's life insurance subsidiary and cemetery and
mortuary subsidiaries realize cash flow from premiums,
contract payments and sales on personal services rendered for
cemetery and mortuary business from interest and dividends on
invested assets, and from the proceeds from the maturity of
held to maturity investment, or sale of other investments.
The Company considers these sources of cash flow to be
adequate to fund future policyholder and cemetery and mortuary
liabilities which generally are long-term and adequate to pay
current policyholder claims, annuity payments, expenses on the
issuance of new policies and the maintenance of existing
policies.
The Company attempts to match the duration of invested assets
with its policyholder and cemetery and mortuary liabilities.
The Company may sell investments other than those held to
maturity in the portfolio to help in this timing, however to
date that has not been necessary. The Company purchases
short-term investments on a temporary basis to meet the
expectations of short-term requirements of the Company's
products. The Company's investment philosophy is intended to
provide a rate of return which will persist during the
expected duration of policyholder and cemetery and mortuary
liabilities regardless of future interest rate movements.
The Company's investment policy is to invest predominately in
fixed maturity securities in accordance with the requirements
and laws governing the life insurance subsidiary. Bonds owned
by the insurance subsidiary amounted to $38,942,780, at
amortized cost as of March 31, 1995. Generally all bonds
owned by life insurance companies are rated by the National
Association of Insurance Commissioners (NAIC). Under this
rating system, there are six categories used for rating bonds.
At March 31, 1995, 2.4% ($1,801,000) and at March 31, 1994,
1.5% ($739,000) of the Company's total invested assets were
invested in bonds in rating categories three through six which
are considered non-investment grade.
The Company's interest sensitive type products, primarily
annuities and interest sensitive whole life, compete with
other financial products such as bank certificates of deposit,
brokerage sponsored money market funds as well as competing
life insurance company products. Based on preliminary
<PAGE>
information, the Company plans to hold its fixed income
securities, including high-yield securities, in its portfolio
to maturity. Business conditions, however, may develop in the
future which may indicate a need for a higher level of
liquidity in the investment portfolio. In that event the
Company believes it could sell cash equivalents in investment
grade securities before liquidating high-yield securities.
Lapse rates measure the amount of insurance terminated during
a particular period. The Company's lapse rate for life
insurance in 1994 was 8%, as compared to a rate of 9% in 1993.
The Company's primary needs for liquidity are for debt
service, maintenance of statutory capital and surplus for its
life insurance subsidiary and administrative expenses and cost
of cemetery and mortuary services to be rendered.
On February 12, 1993, Security National Life Insurance Company
entered into a purchase and sale agreement for the Pinehill
Business Park located in Murray, Utah. The purchase price was
$2,150,000 with debt financing of $1,500,000 through a local
bank. As of March 31, 1995, about 95% of the available space
was occupied.
On July 31, 1993, the Company contributed assets of
approximately $268,000 to its new wholly-owned subsidiary,
Security National Mortgage Company. Security National
Mortgage Company operates in two principal markets:
refinancing of mortgage loans and origination of mortgage
loans. These loans are sold on the secondary market to
investors with servicing obligations released. Security
National Life Insurance Company intends to act as a warehouse
lender for the mortgage loans. By becoming a warehouse
lender, Security National Life Insurance Company can obtain a
long term interest rate on its assets without committing the
funds for a long period of time.
On January 10, 1994, the Company acquired Sunset Funeral Home,
Inc. ("Sunset"), which owns and operates a mortuary in
Phoenix, Arizona, known as Camelback Sunset Funeral Home. As
consideration for the purchase, the Company paid $140,000 in
cash, issued 25,000 shares of Class A Common Stock, assumed an
existing debt of $588,000, and entered into an agreement to
pay the seller the sum of $3,500 in monthly installments
during his lifetime up to a maximum of $560,000. In the event
of the death of the seller prior to the payment of $560,000,
the remaining unpaid balance of such amount would be paid to
his daughter.
On December 21, 1994, the Company purchased all of the
outstanding shares of common stock of Capital Investors Life
Insurance Company ("Capital Investors Life") from Suncoast
Financial Corporation ("Suncoast Financial"). As
consideration for the purchase of the shares, the Company paid
$5,231,000 in cash, issued 40,000 shares of its Class A Common
Stock, and entered into a profit sharing agreement providing
for 33-1/3% of the profits from new post-closing sales of
existing Capital Investors Life plans of insurance to be paid
as earned. An aggregate of $2,700,000 of the cash
consideration was borrowed by the Company from Key Bank,
Crossroads Office, Salt Lake City, Utah, and is payable by the
Company in accordance with the terms of a Promissory Note
dated December 16, 1994, bearing interest at one-half percent
per annum above the bank's prime rate, and payable in monthly
payments in the amount of $36,420, with the unpaid principal
balance, together with accrued interest and other charges, due
and payable on December 16, 1999. The remainder of the
purchase price came from the Company's internal funds.
<PAGE>
On February 3, 1995, the Company purchased approximately 100
acres of real property (the "Property") located in San Diego,
California, approximately 35 acres of which will be used for
the development of a cemetery. The purchase price of the
property was $1,162,000, $100,000 of which was paid in cash
and the balance of $1,062,000, together with interest thereon
at the rate of nine percent (9%) per annum, will be paid in 12
monthly payments of $5,000, thereafter in equal monthly
payments of $10,000; however, interest shall not accrue on any
part of the principal balance until February 3, 1996, and a
principal payment of $100,000 is to be made 15 days after the
date the California Cemetery Board approves the Company's
application for Certificate of Authority, or February 3, 1996,
whichever occurs first.
The Company has invested and deferred approximately $1,013,000
in option fees and costs of various regulatory studies,
including environmental, water, and archaeological studies.
The Company is seeking approval from the federal government
and the California Cemetery Board to operate a cemetery. The
development of the cemetery will be financed internally as
well as through a private offering. Initial development of 35
acres to operate as a cemetery would cost approximately
$500,000.
On March 8, 1995, the Company was issued 97,800 shares of
common stock of Greer-Wilson Funeral Home, Inc. ("Greer-
Wilson"), representing 97.8% of the total issued and
outstanding shares of common stock of Greer-Wilson after the
issuance of such shares. In consideration for the purchase of
such shares, the Company agreed to contribute $430,000 to
Greer-Wilson for the payment of its accounts payable, or to
assume payment of the accounts payable, and to pay or
refinance Greer-Wilson's existing mortgage loan indebtedness;
and to pay the former President and his wife $6,000 per month
over a ten year period for providing consulting services. The
Company also loaned the former President and his wife the sum
of $200,000 to be paid on March 8, 2005, together with
interest thereon at the rate of seven percent (7%) per annum.
This obligation is collateralized by a pledge of 2,200 shares
of the Company's common stock that is currently owned by Mr.
Greer.
At March 31, 1995, $8,724,052 of the Company's consolidated
stockholders' equity represents the statutory stockholders'
equity of the Company's insurance subsidiary Security National
Life. Security National is restricted to the amount of dividends
it may pay depending upon its earnings and surplus. Generally,
Security National's excess surplus as calculated under the Utah
Insurance Code, is not restricted except for prior notification
to the Department of Insurance if the dividend exceeded the preceding
year's earnings.
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Part II Other Information:
<S> <C>
Item 1. NONE
Item 2. NONE
Item 3. NONE
Item 4. NONE
Item 5. NONE
Item 6. The Company filed reports on Form 8-K with the
Securities and Exchange Commission on February 24,
1995 and March 31, 1995, respectively. The reports
supplied information under Section 2 therefore,
capitioned "Acquisition or Disposition of Assets,"
which were related to the acquisition of Capital
Investors Life Insurance Company.
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<PAGE>
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
REGISTRANT
SECURITY NATIONAL FINANCIAL CORPORATION
Registrant
<S> <C>
DATED: May 13, 1995 By: Scott M. Quist
First Vice President, General
Counsel, Treasurer and Principal
Accounting Officer
DATED: May 13, 1995 By: George R. Quist
President
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