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FORM 10-Q/A
AMENDMENT NO. 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 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 1-8007
FREMONT GENERAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN THIS CHARTER)
<TABLE>
<S> <C>
NEVADA 95-2815260
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
2020 SANTA MONICA BLVD.
SANTA MONICA, CALIFORNIA 90404
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(310) 315-5500
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all
reports required by Section 13 or 15 (d) of 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:
<TABLE>
<CAPTION>
SHARES OUTSTANDING
CLASS APRIL 30, 1995
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<S> <C>
Common Stock, $1.00 par value 15,387,641
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FREMONT GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
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(Unaudited)
ASSETS (Thousands of dollars)
<S> <C> <C>
Securities held to maturity:
Fixed maturity investments at amortized cost
(fair value: 1995 - $218,838; 1994 - $199,103) $ 223,638 $ 206,416
Securities available for sale:
Fixed maturity investments, at fair value
(amortized cost: 1995 - $817,253; 1994 - $311,701) 765,756 235,442
Non-redeemable preferred stock at fair value
(amortized cost: 1995 - $301,286; 1994 - $213,935) 281,451 189,632
----------- ----------
Total securities available for sale 1,047,207 425,074
Loans receivable 1,441,110 1,440,774
Short-term investments 280,461 255,751
Other investments 1,638 1,677
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TOTAL INVESTMENTS AND LOANS 2,994,054 2,329,692
Cash 13,787 31,058
Accrued investment income 16,786 13,622
Premiums receivable and agents' balances 101,992 48,556
Reinsurance recoverable on paid losses 12,873 7,204
Reinsurance recoverable on unpaid losses 271,265 136,151
Deferred policy acquisition costs 72,275 59,286
Costs in excess of net assets acquired 76,397 28,776
Deferred income taxes 135,902 88,426
Other assets 63,330 54,806
Assets held for discontinued operations 272,242 336,813
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TOTAL ASSETS $4,030,903 $3,134,390
========== ==========
LIABILITIES
Claims and policy liabilities:
Losses and loss adjustment expenses $1,454,187 $746,661
Life insurance benefits and liabilities 203,568 172,425
Unearned premiums 117,643 47,551
Dividends to policyholders 56,208 46,067
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TOTAL CLAIMS AND POLICY LIABILITIES 1,831,606 1,012,704
Reinsurance premiums payable and funds withheld 5,677 6,961
Other liabilities 82,009 68,721
Thrift deposits 756,583 746,977
Short-term debt 188,163 176,325
Long-term debt 542,462 468,390
Liabilities of discontinued operations 238,728 303,299
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TOTAL LIABILITIES 3,645,228 2,783,377
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common Stock, par value $1 per share--Authorized:
30,000,000 shares; issued and outstanding:
1995 and 1994 - 15,388,000) 15,388 15,388
Additional paid-in capital 80,264 80,264
Retained earnings 342,996 331,713
Unearned Employee Stock Ownership Plan shares (6,607) (10,987)
Net unrealized loss on investments, net of deferred taxes (46,366) (65,365)
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TOTAL STOCKHOLDERS' EQUITY 385,675 351,013
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,030,903 $3,134,390
========== ==========
</TABLE>
See notes to consolidated financial statements on Form 10-Q.
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FREMONT GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
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(Thousands of dollars,
REVENUES except per share data)
<S> <C> <C>
Premiums earned:
Property and casualty $123,423 $106,326
Life insurance 7,724 3,501
Net investment income 22,374 21,086
Loan interest 39,213 21,870
Realized investment gains (losses) 6 (4)
Other revenue 6,417 3,279
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Total Revenues 199,157 156,058
EXPENSES
Losses and loss adjustment expenses 93,517 68,394
Life insurance benefits 8,211 2,843
Policy acquisition costs 23,710 21,106
Provision for loan losses 4,357 1,318
Other operating costs and expenses 25,933 17,655
Dividends to policyholders -- 13,338
Interest expense 22,614 11,223
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Total Expenses 178,342 135,877
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Income before taxes 20,815 20,181
Income tax expense 6,609 6,694
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NET INCOME $ 14,206 $ 13,487
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PER SHARE DATA
Net income:
Primary $ 0.91 $ 0.86
Fully diluted 0.76 0.72
Cash dividends 0.19 0.18
Weighted average shares:
Primary 15,650 15,689
Fully diluted 20,018 20,058
</TABLE>
See notes to consolidated financial statements on Form 10-Q.
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FREMONT GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
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(Thousands of dollars)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 14,206 $ 13,487
Adjustments to reconcile net income to net cash
provided by operating activities:
Change in premiums receivable and agents' balances
and reinsurance recoverable on paid losses 3,895 1,809
Change in accrued investment income 391 1,818
Change in claims and policy liabilities 12,798 19,911
Amortization of policy acquisition costs 23,710 21,106
Policy acquisition costs deferred (27,490) (22,339)
Provision for deferred income taxes (802) (1,657)
Provision for loan losses 4,357 1,318
Provision for depreciation and amortization 4,430 3,902
Net amortization on fixed maturity investments (1,042) 268
Realized investment (gains) losses (6) 4
Change in other assets and liabilities 4,631 1,560
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NET CASH PROVIDED BY OPERATING ACTIVITIES 39,078 41,187
INVESTING ACTIVITIES
Securities held to maturity:
Purchases of securities (18,937) --
Sales of securities -- --
Securities matured or called 2,489 --
Securities available for sale:
Purchases of securities (766,883) (263,308)
Sales of securities 178,543 194,359
Securities matured or called 11,360 22,599
Decrease (increase) in short-term and other
investments 697,645 (660)
Loan originations and bulk purchases funded (111,442) (77,346)
Receipts from repayments of loans 106,749 40,863
Purchase of subsidiaries, less cash acquired (249,305) --
Purchase of property and equipment (1,661) (1,330)
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NET CASH USED IN INVESTING ACTIVITIES (151,442) (84,823)
FINANCING ACTIVITIES
Proceeds from short-term debt 22,436 26,432
Repayments of short-term debt (10,598) (8,790)
Proceeds from long-term debt 75,000 --
Repayments of long-term debt (2,808) --
Net increase in thrift deposits 9,606 28,620
Dividends paid (2,923) (2,771)
Decrease in unearned Employee Stock
Ownership Plan shares 4,380 4,147
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NET CASH PROVIDED BY FINANCING ACTIVITIES 95,093 47,638
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INCREASE (DECREASE) IN CASH (17,271) 4,002
Cash at beginning of year 31,058 28,433
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CASH AT MARCH 31, $ 13,787 $ 32,435
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</TABLE>
See notes to consolidated financial statements on Form 10-Q.
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FREMONT GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ON FORM 10-Q
(UNAUDITED)
NOTE A --- BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
These statements have been prepared in accordance with generally
accepted accounting principles and, accordingly, adjustments (consisting of
normal accruals) have been made as management considers necessary for fair
presentations. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994. Certain 1994 amounts have been
reclassified to conform to the 1995 presentation.
NOTE B --- ACQUISITION
On February 22, 1995, the Company completed the acquisition of
Casualty Insurance Company, an Illinois insurance company ("Casualty") pursuant
to a Stock Purchase Agreement dated as of December 16, 1994 among the Company,
Fremont Compensation Insurance Company, a California corporation and
wholly-owned subsidiary of the Company ("Fremont Compensation"), The Buckeye
Union Insurance Company, an Ohio insurance company ("Buckeye"), and The
Continental Corporation, a New York corporation, whereby Fremont Compensation
purchased all of the issued and outstanding capital stock of Casualty. The
purchase price paid by the Company was $250 million, comprised of $225 million
in cash and $25 million in a note payable to Buckeye. The cash used to fund
the acquisition includes $55 million in borrowings under the Company's existing
line of credit and the remainder from internally generated funds. The
acquisition was treated as a purchase for accounting purposes.
Casualty's operating results are included in the Company's
consolidated statement of income from the date of acquisition. If the
acquisition had occurred on January 1, 1995 the pro forma effect on
consolidated revenues would have been an increase in premiums earned of $57
million and an increase in net investment income of an estimated $5 million.
The pro forma effect on net income would have been an increase of $2 million or
$0.14 per share.
Prior to 1995 and its acquisition by the Company, Casualty
participated in an intercompany pooling arrangement with several insurance
subsidiaries of its former parent whereby Casualty ceded its insurance risks to
these affiliates and reassumed a portion of the former parent's pooled book of
business. Because of this intercompany pooling arrangement, separate financial
statements on an unpooled basis were not prepared. Accordingly, pro forma
results of Casualty's 1994 first quarter operations would not be meaningful.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
FREMONT GENERAL CORPORATION
Date: February 6, 1996 JOHN A. DONALDSON
----------------------------------------
John A. Donaldson, Controller
and Chief Accounting Officer
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