<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 March 31, 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 6,264,040 shares of common stock, par value $.025 per share,
outstanding as of the close of business on May 10, 1995.
<PAGE> 2
PART I
MOBILE AMERICA CORPORATION
INDEX
<TABLE>
<CAPTION>
Financial Statements: Page
<S> <C>
Part I
------
Consolidated Balance Sheet 1
Consolidated Statement of Operations 2
Consolidated Statements of Cash Flows 3
Consolidated Statement of Changes in
Stockholders' Equity 4
Notes to Financial Statements 5-8
Management's Discussion and Analysis
of the Consolidated Statements of Income 9
Exhibit 11 - Computations of Earnings Per Share 10
Part II
-------
Other Information, and Signatures 11
</TABLE>
<PAGE> 3
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
ASSETS 1995 1994
------ ---- ----
<S> <C> <C>
Investments:
Fixed maturities held to maturity $ 71,712,310 $ 70,287,568
at amortized cost (fair value
$71,653,425 and $69,817,915)
Equity Securities, at market 2,108,366 1,929,557
(cost $2,171,597 and $2,087,656)
Notes receivable less unearned 4,109 5,012
discount of $312 and $379
Short-term investments 15,853,463 14,369,810
------------ ------------
Total investments 89,678,248 86,591,947
------------ ------------
Cash 5,317,030 5,479,899
Receivables:
Insurance premiums 1,223,631 712,658
Accrued investment income and other 1,513,754 1,460,572
Reinsurance 24,470,265 24,832,401
------------ ------------
Total receivables 27,207,650 27,005,631
------------ ------------
Income taxes:
Currently receivable -- 178,413
Deferred 816,398 607,398
------------ ------------
Total income taxes 816,398 785,811
------------ ------------
Prepaid reinsurance premiums 21,631,039 22,412,328
Inventory of mobile homes 39,545 39,545
Deferred policy acquisition costs (3,993,696) (3,774,978)
Property and Equipment:
Land, at cost 356,970 356,970
Modular office equipment, at cost less
accumulated depreciation of $315,157
and $320,470 12,221 12,883
Equipment and leasehold improvements
at cost less accumulated
depreciation and amortization of
$1,766,247 and $1,725,426 821,015 727,104
------------ ------------
Total property and equipment: 1,190,206 1,096,957
------------ ------------
Prepaid expenses and other assets 352 100,693
Equity in Pools and Associations 4,077,462 4,077,462
------------ ------------
$145,964,234 $143,815,295
============ ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
- - - - ------------------------------------ ---- ----
<S> <C> <C>
Insurance loss reserves, including
future policy benefits $ 41,777,875 $ 43,950,469
Unearned premiums 33,745,825 34,639,680
Reinsurance funds held and
balances payable 27,993,969 29,061,872
Accrued expenses and other liabilities 15,014,311 9,351,078
Income taxes payable 256,950 --
Unearned service fees 1,283,841 1,197,905
------------ ------------
Total liabilities $120,072,771 $118,201,004
------------ ------------
Stockholders' equity:
Common stock, $.025 par value per share
Authorized - 18,000,000 shares
Issued
6,720,396 shares 168,010 168,010
Preferred stock, $.10 par value per share
Authorized - 500,000 shares
Issued and outstanding - none -- --
Capital in excess of par value 2,686,060 2,686,060
Net unrealized losses on equity securities (63,231) (158,099)
Treasury Stock at Cost, 456,356 and
456,356 shares (388,441) (388,441)
Retained Earnings 23,489,065 23,306,761
------------ ------------
Total stockholders' equity 25,891,463 25,614,291
------------ ------------
$145,964,234 $143,815,295
============ ============
</TABLE>
See notes to consolidated financial statements
-1-
<PAGE> 4
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
UNAUDITED STATEMENT OF OPERATIONS
QUARTERS ENDED MARCH 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Revenues:
Insurance premiums earned (net of premiums
ceded of $13,970,523 and $11,386,035) $ 7,209,877 $ 9,045,937
Investment income 1,224,635 1,119,115
Equipment rentals 21,359 24,768
Service fees earned 876,527 99,849
Other -- 1,707
Sales of modular office equipment 4,600 10,806
Net realized gains on investments 35,254 509,824
------------- -------------
Total revenues 9,372,252 10,812,006
------------- -------------
Expenses:
Losses and loss adjustment expenses (net of
reinsurance recoveries of $9,672,257 and
$7,320,157) 5,852,417 6,163,734
Policy acquisition costs (521,036) 41,442
Salaries and wages 1,359,120 1,238,590
General and administrative 1,161,521 1,092,048
Cost of sales of modular office equipment 44 284
------------- -------------
Total expenses 7,852,066 8,536,098
------------- -------------
Income before provision for income taxes 1,520,186 2,275,908
Provision for income taxes:
Current 600,659 700,050
Deferred (209,000) (31,000)
------------- -------------
Total provision for income taxes 391,659 669,050
------------- -------------
Net income $ 1,128,527 $ 1,606,858
============= =============
Earnings per share:
Net income $ .18 $ .26
============= =============
Weighted average number of common stock and
common stock equivalents 6,264,040 6,269,040
============= =============
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE> 5
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
UNAUDITED STATEMENTS OF CASH FLOWS
QUARTERS ENDED MARCH 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 1,128,527 $ 1,606,858
Adjustments to reconcile net income to
net cash provided by operating activities:
Provisions for depreciation 54,783 75,227
(Gain) loss on sale of investments (35,254) (509,824)
(Increase) decrease in insurance premiums receivable (510,973) 176,047
(Increase) in accrued investment income and other (53,182) (282,029)
(Increase) decrease in deferred policy acquisition costs 218,718 (464,158)
(Increase) decrease in prepaid expenses and other assets 100,341 1,006
Increase (decrease) in insurance loss reserves (2,172,594) (5,606,037)
Increase (decrease) in unearned premiums (893,855) (5,071,026)
Increase (decrease) in reinsurance funds held and
balances payable (1,067,903) (4,454,222)
Increase (decrease) in accrued expenses
and other liabilities 5,663,233 4,677,639
Increase (decrease) in current income taxes 435,363 1,686,157
Increase (decrease) in deferred income taxes (209,000) (31,000)
(Increase) decrease in reinsurance premiums receivable 362,136 3,725,285
(Increase) decrease in prepaid reinsurance premiums 781,289 3,342,329
Increase in unearned service fees 85,936 --
------------ ------------
Net cash provided by operating activities 3,887,565 (1,127,748)
------------ ------------
Cash Flows from Investing Activities:
Net change in short term investments (1,483,653) 2,689,381
Purchase of equity securities (660,845) (365,476)
Sale of equity securities 605,675 848,358
Purchase of modular offices, equipment
and leasehold improvements 148,032 10,075
Purchase of fixed maturities (5,738,229) (8,479,096)
Sales of fixed maturities 4,023,906 6,786,291
Notes receivable 903 551
------------ ------------
Net cash used in investing activities (3,104,211) 1,490,084
------------ ------------
Cash Flows from Financing Activities:
Dividends paid to shareholders (946,223) (1,304,142)
------------ ------------
Net cash used in financing activities (946,223) (1,304,142)
------------ ------------
Net increase (decrease) in cash (162,869) (941,806)
Cash, beginning year 5,479,899 4,662,848
------------ ------------
Cash, end of period $ 5,317,030 $ 3,721,042
============ ============
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE> 6
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
QUARTERS ENDED MARCH 31, 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 (losses) gains (63,231) 118,404
Deferred taxes on unrealized gains -- (40,000)
------------ ------------
Balance at end of period (63,231) 78,404
------------ ------------
Treasury Stock (388,441) (336,566)
------------ ------------
Retained earnings:
Balance at beginning of period 23,306,761 20,562,457
Net income 1,128,527 1,606,858
Cash Dividends $.18 and $.21 per share (946,223) (1,304,142)
------------ ------------
Balance at end of period 23,489,065 20,865,173
------------ ------------
Total stockholders' equity at end of period $ 25,891,463 $ 23,461,081
============ ============
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE> 7
MOBILE AMERICA CORPORATION
NOTES TO FINANCIAL STATEMENTS
QUARTERS ENDED MARCH 31, 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 March 31, 1995, and the results of its operations and
statement of cash flow for the three months ended March 31, 1995.
Note 2
The results of operations for the three months ended March 31, 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 March 31,
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
year-end. 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 Internal Revenue Service is currently examining the Company's 1992
federal income tax return. To date, no final examination adjustments have been
proposed by the IRS. A preliminary adjustment is being evaluated for which
management and independent tax counsel believe the Company has a justified
position with respect to its original filing. Accordingly, no accrual has been
recorded for this preliminary adjustment.
-8-
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Total consolidated revenues decreased by 13% to $9,372,252 in the
first quarter of 1995 from $10,812,006 for the first quarter of 1994.
Insurance premiums earned decreased by 20% from the first quarter of
1994 due to a higher cession of direct earned premium to reinsurers. Direct
premium earned grew in the first quarter of 1995 to $21,180,400 from
$20,431,972 in the first quarter of 1994. This 3.7% increase resulted from
rate increases on private passenger automobile lines offsetting reduced earned
premium on personal property lines. Investment income rose by 9% in the first
quarter of 1995 compared with the first quarter of 1994, while net realized
gains on the sale of investments decreased to $35,254 from $509,824 in the
first quarter of 1994. The growth in investment income is due to both a higher
level of invested funds in 1995 as well as higher yields available for the
investment portfolio. Service fees earned grew to $876,527 in the first
quarter of 1995 from $99,849 in the first quarter of 1994 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.
Consolidated expenses decreased by 8% to $7,852,066 from $8,536,098 in
the first quarter of 1994. This drop is due to a higher percentage cession of
private passenger automobile insurance resulting in both lower net losses and
loss adjustment expenses as well as higher commissions received from reinsurers
in return for the cession of premium to them. Reinsurance commissions earned
exceeded commissions paid to writing agents in the first quarter of 1995,
resulting in a negative policy acquisition costs result of $521,035 for the
quarter.
Cash dividends and any capital expenditure requirements continue to be
provided by funds generated from operations. The company continues to exhibit
strong liquidity. The company's investment policy continues to emphasize high
quality securities matched closely with the company's short liability duration.
-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
March 31, 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
May 11, 1995 By/s/ Joseph M. Bost
- - - - ------------ --------------------------
Date Joseph M. Bost
Chief Financial Officer
By/s/ Thomas L. Stinson
--------------------------
Thomas L. Stinson
Vice President Financial Reporting
-11-
<PAGE> 1
EXHIBIT 11
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
UNAUDITED COMPUTATIONS OF EARNINGS PER SHARE
QUARTERS ENDED MARCH 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Net Income $ 1,128,527 $ 1,606,858
============ ============
Common shares outstanding 6,264,040 6,269,040
Effect of weighting treasury stock acquired - -
------------ ------------
Common and common equivalent shares used in
computing earnings per share 6,264,040 6,269,040
============ ============
Earnings per share $ .18 $ .26
============ ============
</TABLE>
-10-
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MOBILE AMERICA CORPORATION FOR THE THREE MONTHS ENDED
MARCH 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 71,712,310
<DEBT-MARKET-VALUE> 71,653,425
<EQUITIES> 2,108,366
<MORTGAGE> 0
<REAL-ESTATE> 356,970
<TOTAL-INVEST> 89,678,248
<CASH> 5,317,030
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> (3,993,696)
<TOTAL-ASSETS> 145,964,234
<POLICY-LOSSES> 41,777,875
<UNEARNED-PREMIUMS> 33,745,825
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
<COMMON> 168,010
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 145,964,234
7,209,877
<INVESTMENT-INCOME> 1,224,635
<INVESTMENT-GAINS> 35,254
<OTHER-INCOME> 0
<BENEFITS> 5,852,417
<UNDERWRITING-AMORTIZATION> 1,999,649
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 1,520,186
<INCOME-TAX> 391,659
<INCOME-CONTINUING> 1,128,527
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,128,527
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
<RESERVE-OPEN> 19,103,286
<PROVISION-CURRENT> 5,123,618
<PROVISION-PRIOR> (707,267)
<PAYMENTS-CURRENT> 828,410
<PAYMENTS-PRIOR> 6,380,372
<RESERVE-CLOSE> 17,139,265
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
