<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1995_______________Commission File No. 0-6764
MOBILE AMERICA CORPORATION
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-1218935
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Fortune Parkway, Jacksonville, Florida 32256
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (904) 363-6339
------------------------------
N/A
- - --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X . No .
------ ------
(APPLICABLE ONLY TO CORPORATE ISSUERS)
There were 6,260,040 shares of common stock, par value $.025 per share,
outstanding as of the close of business on November 9, 1995.
<PAGE> 2
PART I
MOBILE AMERICA CORPORATION
INDEX
<TABLE>
<S> <C>
Financial Statements: Page
Part I
------
Consolidated Balance Sheets 1
Consolidated Statements of Operations 2
Consolidated Statements of Cash Flows 3
Consolidated Statements of Changes in
Stockholders' Equity 4
Notes to Financial Statements 5-8
Management's Discussion and Analysis
of Results of Operations and Financial Condition 9
Part II
-------
Other Information, and Signatures 10
Exhibit 11 - Computations of Earnings Per Share 11
</TABLE>
<PAGE> 3
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
September 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
ASSETS 1995 1994 LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
- - ------ ---- ---- ------------------------------------ ---- ----
<S> <C> <C> <C> <C> <C>
Investments:
Fixed maturities held to maturity $ 72,226,037 $ 70,287,568 Insurance loss reserves, including
at amortized cost (fair value future policy benefits $ 41,638,656 $ 43,950,469
$72,296,195 and $69,817,915) Unearned premiums 36,850,201 34,639,680
Equity Securities, at market 2,296,907 1,929,557 Reinsurance funds held and
(cost $2,470,997 and $2,087,656) balances payable 27,509,970 29,061,872
Notes receivable less unearned 3,139 5,012 Accrued expenses and other liabilities 12,179,913 9,351,078
discount of $173 and $379 Income taxes payable 2,427,026 -
Short-term investments 14,956,070 14,369,810 Unearned service fees 1,954,465 1,197,905
------------ ------------ ------------ ------------
Total investments 89,482,153 86,591,947 Total liabilities $122,560,231 $118,201,004
------------ ------------ ------------ ------------
Cash 5,970,167 5,479,899
Receivables: Stockholders' equity:
Insurance premiums 4,389,622 712,658 Common stock, $.025 par value per share
Accrued investment income and other 1,784,250 1,460,572 Authorized - 18,000,000 shares
Reinsurance 25,355,767 24,832,401 Issued
------------ ------------
Total receivables 31,529,639 27,005,631 6,720,396 shares 168,010 168,010
------------ ------------
Income taxes:
Currently receivable - 178,413
Deferred 755,892 607,398 Preferred stock, $.10 par value per share
------------ ------------
Total income taxes 755,892 785,811 Authorized - 500,000 shares
------------ ------------ Issued and outstanding - none - -
Prepaid reinsurance premiums 22,593,506 22,412,328
Inventory of mobile homes 39,545 39,545
Capital in excess of par value 2,686,060 2,686,060
Deferred policy acquisition costs (3,929,267) (3,774,978)
Property and Equipment:
Land, at cost 356,970 356,970
Modular office equipment, at cost less
accumulated depreciation of $308,090
and $320,470 11,602 12,883
Net unrealized losses on equity
securities (174,090) (158,099)
Equipment and leasehold improvements
at cost less accumulated
depreciation and amortization of Treasury Stock at Cost, 460,356 and
$1,821,280 and $1,725,426 783,963 727,104 456,356 shares (420,944) (388,441)
------------ ------------
Total property and equipment: 1,107,679 1,096,957
------------ ------------
Retained Earnings 26,807,509 23,306,761
------------ ------------
Prepaid expenses and other assets - 100,693
Equity in Pools and Associations 4,077,462 4,077,462 Total stockholders' equity 29,066,545 25,614,291
------------ ------------ ------------ ------------
$151,626,776 $143,815,295 $151,626,776 $143,815,295
============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements
<PAGE> 4
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
UNAUDITED STATEMENTS OF OPERATIONS
QUARTERS ENDED SEPTEMBER 30, 1995 AND 1994, NINE MONTHS ENDED SEPTEMBER 30,
1995 AND 1994
<TABLE>
<CAPTION>
Nine Months Ended
Quarters Ended September 30, September 30 ,
----------------------------- ----------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Insurance premiums earned
(net of premiums ceded of
$13,188,504, $12,787,538
$42,065,677 and $35,969,468) $ 10,274,025 $ 7,562,217 $24,470,300 $26,559,807
Service fees earned 3,095,254 851,595 7,227,316 2,510,678
Investment income 1,381,763 773,674 3,946,719 2,939,563
Equipment rentals 20,965 19,462 60,503 61,393
Other 40,886 140,021 67,703 150,078
Sales of modular office equipment 2,650 8,334 11,250 38,143
Net realized gains (losses)
on investments 93,803 (41,259) 198,356 781,837
----------- ----------- ----------- -----------
Total revenues 14,909,346 9,314,044 $35,982,147 $33,041,499
----------- ----------- ----------- -----------
Expenses:
Losses and loss adjustment
expenses (net of reinsurance
recoveries of $11,286,936,
$8,711,722, $31,196,110
and $25,639,981) 9,414,111 6,220,555 21,640,903 18,923,650
Policy acquisition costs 1,918,379 1,935,980 1,160,510 3,707,377
Salaries and wages 1,426,680 1,117,576 4,014,536 3,390,948
General and administrative 674,232 542,697 3,326,145 2,716,353
Cost of sales of modular office
equipment - 6,000 44 7,596
----------- ----------- --------- ---------
Total expenses 13,433,402 9,822,808 30,142,138 28,745,924
----------- ----------- ----------- ----------
Income (loss) before provision for
income taxes 1,475,944 (508,764) 5,840,009 4,295,575
Provision for income taxes:
Current 61,429 (913,482) 1,541,532 829,518
Deferred (114,494) 300,000 (148,494) 137,000
----------- ----------- ----------- -----------
Total provision for
income taxes (53,065) (613,482) 1,393,038 966,518
----------- ----------- ----------- -----------
Net income $ 1,529,009 $ 104,718 $ 4,446,971 $ 3,329,057
=========== =========== =========== ===========
Earnings per share:
Net income $ .24 $ .02 $ .71 $ .53
=========== =========== =========== ===========
Weighted average number of
common stock and common stock
equivalents 6,260,040 6,264,040 6,260,040 6,264,040
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE> 5
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
UNAUDITED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 4,446,971 $ 3,329,057
Adjustments to reconcile net income to
net cash provided by operating activities:
Provisions for depreciation 516,922 219,195
(Gain) loss on sale of investments (198,356) (781,837)
(Increase) decrease in insurance premiums receivable (3,676,964) 36,036
(Increase) decrease in accrued investment income
and other receivables (323,678) 118,723
(Increase) decrease in deferred policy acquisition costs 154,289 1,075,422
(Increase) decrease in prepaid expenses and other assets 100,693 416
Increase (decrease) in insurance loss reserves (2,311,813) (2,172,011)
Increase (decrease) in unearned premiums 2,210,521 (863,863)
Increase (decrease) in reinsurance funds held and
balances payable (1,551,902) 787,369
Increase (decrease) in accrued expenses
and other liabilities 2,828,835 123,935
Increase (decrease) in current income taxes payable 2,605,439 847,857
Increase (decrease) in deferred income taxes payable (148,494) 137,000
(Increase) decrease in prepaid reinsurance premiums (181,178) (2,464,038)
(Increase) decrease in reinsurance receivable (523,366) 695,858
Increase in unearned service fees 756,560 708,413
---------- ----------
Net cash provided by operating activities 4,704,479 1,797,532
---------- ----------
Cash Flows from Investing Activities:
Net change in short term investments (586,260) (1,626,512)
Purchase of equity securities (2,073,775) (1,704,982)
Sale of equity securities 1,852,021 2,898,997
Purchase of modular offices, equipment
and leasehold improvements 158,326 (181,427)
Purchase of fixed maturities (18,114,533) (21,621,046)
Sales and maturities of fixed maturities 15,526,863 20,669,394
Notes receivable 1,873 4,286
----------- -----------
Net cash used in investing activities (3,235,485) (1,561,290)
----------- -----------
Cash Flows from Financing Activities:
Purchase of treasury stock (32,503) (51,875)
Dividends paid to shareholders (946,223) (1,304,142)
----------- -----------
Net cash used in financing activities (978,726) (1,356,017)
----------- -----------
Net increase (decrease) in cash 490,268 (1,119,775)
Cash, beginning year 5,479,899 4,662,848
----------- -----------
Cash, end of period $ 5,970,167 $ 3,543,073
=========== ===========
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE> 6
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Common Stock:
No change during period $ 168,010 $ 168,010
----------- -----------
Preferred Stock:
No change during period - -
----------- -----------
Capital in excess of par value:
No change during period 2,686,060 2,686,060
----------- -----------
Net unrealized investment gains (losses) (174,090) (168,254)
----------- -----------
Treasury Stock (420,944) (388,441)
----------- -----------
Retained earnings:
Balance at beginning of period 23,306,761 20,562,457
Net income 4,446,971 3,329,057
Cash Dividends $.21 and $.435 per share (946,223) (1,304,142)
----------- -----------
Balance at end of period 26,807,509 22,587,372
----------- -----------
Total stockholders' equity at end of period $29,066,545 $24,884,747
=========== ===========
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE> 7
MOBILE AMERICA CORPORATION
NOTES TO FINANCIAL STATEMENTS
QUARTERS ENDED SEPTEMBER 30, 1995 AND 1994
Note 1
In the opinion of the Registrant, the accompanying unaudited,
consolidated, condensed financial statements contain all adjustments
(consisting of only normal occurring accruals) necessary to present fairly its
financial position as of September 30, 1995, and the results of its operations
and statement of cash flow for the nine months ended September 30, 1995.
Note 2
The results of operations for the nine months ended September 30, 1995
are not necessarily indicative of the results to be expected for the full year.
Note 3 - Summary of Significant Accounting Policies
(a) Basis of Financial Statement Presentation
The consolidated financial statements have been prepared on the basis
of generally accepted accounting principles which vary from statutory reporting
practices prescribed or permitted for insurance companies by regulatory
authorities.
(b) Principles of Consolidation
The accompanying consolidated financial statements include Mobile
America Corporation (the Company) and its subsidiaries, all of which are
wholly-owned. All significant intercompany transactions have been eliminated
in consolidation.
(c) Basis of Inventory Valuation
Inventories are valued at the lower of cost or market, with cost being
determined primarily under the specific identification method.
-5-
<PAGE> 8
(d) Investments
The portfolio of marketable equity securities available for sale is
carried at fair value. Fixed maturity investments are all classified as held
to maturity and are recorded at amortized cost. The cost of securities sold is
based upon the specific identification method and any gains or losses are
reflected in earnings.
(e) Deferred Policy Acquisition Costs
The costs associated with acquiring new insurance contracts have been
deferred. Such costs are being amortized over the premium paying period or in
proportion to premiums earned on those contracts.
(f) Depreciation and Amortization
Depreciation and amortization of properties, equipment and leasehold
improvements are calculated principally under the straight-line method based on
the estimated useful life of the asset for financial reporting purposes.
Maintenance and repairs are charged to expenses as incurred; additions
and major betterments are capitalized and depreciated. At the time of
retirement or other disposition of property, equipment or leasehold
improvements, the accounts are relieved of the cost and the related accumulated
depreciation and any gains or losses are reflected in income.
(g) Insurance Contracts
The insurance contracts accounted for in these financial statements
include both short-duration contracts and long-duration contracts.
Short-duration contracts provide insurance protection for a fixed period of
short duration and enable the insurer to cancel the contract or to adjust the
provisions at the end of any contract period. Most property-liability
insurance contracts and certain term life insurance contracts,
-6-
<PAGE> 9
such as credit life insurance, are short-duration contracts. Long-duration
contracts generally are not subject to unilateral changes in their provisions
and require the performance of various functions and services, including
insurance protection, for an extended period. Long-duration contracts include
whole-life contracts and guaranteed renewable term life contracts. Accident
and health insurance contracts may be short-duration or long-duration depending
on whether the contracts are expected to remain in force for an extended
period. The Company has not issued any participating policies.
(h) Insurance Loss Reserves
The liability for future policy benefits of long-duration contracts
has been provided for on a net level premium method based on estimated
investment yields, withdrawals, mortality, terminations, morbidity, and other
assumptions which were appropriate at the time the contracts were issued. Such
estimates were based on past experience as adjusted to provide for possible
adverse deviation from the estimates. Interest assumptions are based on
historical assumptions and experience, and range from 3% to 4.5% at September
30, 1995.
The liabilities for unpaid claims of short-duration contracts and
related adjustment expenses are determined using case basis evaluations and
statistical analysis and represent estimates of the ultimate net cost of all
reported and unreported claims relating to insured events which are unpaid at
the statement date. The liabilities include estimates of future trends in
claims severity and frequency and other factors which could vary as the claims
are ultimately settled. Although such estimates may vary, management believes
that the liabilities for unpaid claims and related adjustment expenses are
adequate. The estimates are continually reviewed, and as adjustments to these
liabilities become necessary, they are reflected in current operations.
-7-
<PAGE> 10
(I) Recognition of Premium Revenues and Costs
Premiums for long-duration contracts are recognized as revenues when
due from the policyholders. A liability for the expected costs relating to
such long-duration contracts is accrued over the current and expected renewal
periods.
Premiums for short-duration contracts are recognized as revenues over
the period of the contract in proportion to the amount and duration of
insurance protection provided.
(j) Commitments and Contingencies
The IRS recently concluded its examination of the company's 1993 tax
return. The result of this examination was an adjustment in the timing of
revenue recognition for that year. Accordingly, while revenue was under
reported in 1992, this effect has reversed in subsequent periods. The net
impact on the Company's financial statement was deemed to be immaterial.
Note 4
Service fees earned of $3,095,254 in the third quarter of 1995 and
$7,227,316 in the first nine months of 1995 as well as $851,595 in the third
quarter of 1994 and $2,510,678 in the first nine months of 1994 reflect a
reclassification of fees earned by the company's managing general agency for
the servicing of insurance policies. In prior periods those amounts were
reported as a reduction to policy acquisition costs.
The amounts reclassified from policy acquisition costs to service fees
earned are as follows:
<TABLE>
<CAPTION>
Quarter Ended September 30, Nine Months Ended September 30,
1994 1995 1994 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C>
$ 521,237 $ 1,471,772 $ 1,817,337 $ 3,645,570
</TABLE>
-8-
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Operations
Total consolidated revenues increased by 8.9% from $33,041,499 for
the first nine months of 1994 to $35,982,147 for the first nine months of 1995.
Correspondingly, total consolidated expenses decreased 4.9% from $28,745,924
for the first nine months of 1994 to $30,142,138 for the first nine months of
1995.
While insurance premiums earned declined 7.9% from $26,559,807 in the
first nine months of 1994 to $24,470,300 for the first nine months of 1995,
principally due to the classification of certain premiums as fees, service fees
earned increased over 187.9% from $2,510,678 during the first nine months of
1994 to $7,227,316 during the first nine months of 1995. The service fee growth
is due to a strong volume of policies administered for the State of Florida's
joint underwriting associations as well as growth of the company's premium
finance business unit. Investment income increased from $2,939,563 for the
first nine months of 1994 to $3,946,719 during the first nine months of 1995,
an increase of 34.3%. The increase in investment income was offset by a
decline in net realized capital gains from $781,837 in the first nine months of
1994 to $198,356 during the first nine months of 1995.
Loss and loss adjustment expenses as a percentage of earned premium
increased from 71.2% for the first nine months of 1994 to 88.4% for the first
nine months of 1995. This is the result of the company's continuing efforts to
strengthen reserves in the private passenger personal injury protection line of
business. Salaries and wages and general and administrative expenses increased
from $6,107,301 during the first nine months of 1994 to $7,340,681 during the
first nine months of 1995.
Financial Condition
Cash dividend and any capital expenditure requirements continue to be
provided by funds generated from operations. Liquidity remains substantial as
emphasis continues to be placed on investment portfolio strength and
flexibility so as to take advantage of investment yield opportunities as well
as the timely payment of claims.
The Company consummated a $12 million loan from SouthTrust Bank in
October 1995. The proceeds are to be used primarily to provide additional
capital for growth.
-9-
<PAGE> 12
Part II
OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits:
11. Unaudited computations of earnings per share.
27. Financial Data Schedule (for SEC use only).
(b) Reports on Form 8K
No reports on Form 8K were filed for the quarter ended
September 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
MOBILE AMERICA CORPORATION
--------------------------
Registrant
November 11, 1995 By/s/ Joseph M. Bost
- - ----------------- --------------------------
Date Joseph M. Bost
Chief Financial Officer
By/s/ Thomas L. Stinson
-----------------------
Thomas L. Stinson
Vice President
-10-
<PAGE> 13
INDEX TO EXHIBITS
(a) Exhibits:
11. Unaudited computations of earnings per share.
27. Financial Data Schedule (for SEC use only).
(b) Reports on Form 8K
No reports on Form 8K were filed for the quarter ended
September 30, 1995.
<PAGE> 1
EXHIBIT 11
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
UNAUDITED COMPUTATIONS OF EARNINGS PER SHARE
QUARTERS ENDED SEPTEMBER 30, 1995 AND 1994, NINE MONTHS ENDED SEPTEMBER 30,
1995 AND 1994
<TABLE>
<CAPTION>
Quarters Ended Nine Months Ended
September 30, September 30,
----------------------------- --------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Income $ 1,529,009 $ 104,718 $ 4,446,971 $ 3,329,057
============ ============ ============ ============
Common shares outstanding 6,260,040 6,264,040 6,260,040 6,264,040
Effect of weighting treasury
stock acquired - - - -
Common and common equivalent
shares used in computing earnings
per share
------------ ------------ ------------ ------------
6,260,040 6,264,040 6,260,040 6,264,040
============ ============ ============ ============
Earnings per share $ .24 $ .02 $ .71 $ .53
============ ============ ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MOBILE AMERICA CORPORATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 72,226,037
<DEBT-MARKET-VALUE> 72,296,195
<EQUITIES> 2,296,907
<MORTGAGE> 0
<REAL-ESTATE> 356,970
<TOTAL-INVEST> 89,482,153
<CASH> 5,970,167
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> (3,929,267)
<TOTAL-ASSETS> 151,626,776
<POLICY-LOSSES> 41,638,656
<UNEARNED-PREMIUMS> 36,850,201
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
<COMMON> 168,010
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 151,626,776
24,470,300
<INVESTMENT-INCOME> 3,946,719
<INVESTMENT-GAINS> 198,356
<OTHER-INCOME> 67,703
<BENEFITS> 21,640,903
<UNDERWRITING-AMORTIZATION> 1,160,510
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 5,840,009
<INCOME-TAX> 1,393,038
<INCOME-CONTINUING> 4,446,971
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,446,971
<EPS-PRIMARY> .71
<EPS-DILUTED> .71
<RESERVE-OPEN> 19,103,286
<PROVISION-CURRENT> 12,754,805
<PROVISION-PRIOR> (2,201,629)
<PAYMENTS-CURRENT> 8,200,449
<PAYMENTS-PRIOR> 13,373,573
<RESERVE-CLOSE> 16,282,889
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
