<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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: 0-15196
US FACILITIES CORPORATION
-------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 33-0097221
- ----------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
650 Town Center Drive, Suite 1600, Costa Mesa, CA 92626
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(714) 549-1600
--------------
(Registrant's telephone number, including area code)
Not applicable
--------------
(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
---- ----
Number of shares outstanding of each class of the Registrant's Common Stock as
of November 3, 1995:
Common Stock, par value $.01 per share: 5,723,098
Common Stock Purchase Rights: 5,723,098
<PAGE>
INDEX
<TABLE>
<S> <C>
Part I FINANCIAL INFORMATION
Item 1. FINANCIAL INFORMATION
Consolidated Financial Statements:
Condensed Balance Sheets as of September 30, 1995 and
December 31, 1994.................................... 3
Income Statements for the Quarters and Nine Months
Ended September 30, 1995 and 1994.................... 4
Statements of Stockholders' Equity for the Nine
Months Ended September 30, 1995 and 1994............. 5
Condensed Statements of Cash Flows for the Nine
Months Ended September 30, 1995 and 1994............. 6
Notes to Consolidated Financial Statements........... 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.................. 8
Part II OTHER INFORMATION
Item 6. EXHIBITS and REPORTS ON FORM 8-K..................... 14
SIGNATURES.......................................................... 16
</TABLE>
2
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Financial Statements:
US FACILITIES CORPORATION
Condensed Consolidated Balance Sheets
(000 omitted)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------ -----------------
<S> <C> <C>
ASSETS:
Investments, at market (amortized cost
$148,284 at September 30, 1995,
$137,072 at December 31, 1994) $154,651 $133,075
Cash and invested cash 5,107 4,502
Restricted cash and short term
investments 22,672 21,340
Accrued investment income 2,118 1,844
Receivables:
Reinsurance losses and reserves 15,774 14,301
Premiums 14,647 9,434
Prepaid reinsurance premiums 5,578 3,950
Deferred income taxes 976 3,277
Other assets 7,944 8,014
-------- --------
Total assets $229,467 $199,737
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Insurance liabilities:
Amounts due insurance companies $ 23,254 $ 20,418
Losses and loss adjustment expenses 76,011 69,647
Unearned premiums 19,466 14,613
Note payable 25,000 25,000
Accounts payable and accrued expenses 4,500 6,980
-------- --------
Total liabilities 148,231 136,658
Stockholders' Equity 81,236 63,079
-------- --------
Total liabilities and
stockholders' equity $229,467 $199,737
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
US FACILITIES CORPORATION
Consolidated Income Statements
(000 omitted, except for per share data)
----------------------------------------
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
----------------- ------------------
1995 1994 1995 1994
------- ------- -------- -------
<S> <C> <C> <C> <C>
Revenues:
Premiums earned $27,507 $22,419 $ 84,843 $69,637
Commissions and fees 6,133 5,573 19,381 17,978
Net investment income 2,329 1,500 6,904 4,300
Realized investment gains 361 13 593 244
------- ------- -------- -------
Total revenues 36,330 29,505 111,721 92,159
------- ------- -------- -------
Operating Expenses:
Losses and loss adjustment
expenses incurred 18,663 15,012 56,762 49,185
Policy acquisition expenses 8,562 7,561 26,807 23,735
General and administrative
expenses 3,964 4,100 11,925 13,125
Other -- -- 1,242 --
Interest 535 -- 1,624 3
------- ------- -------- -------
31,724 26,673 98,360 86,048
Unusual charges:
Expenses related to
unsolicited takeover
proposal -- -- -- 1,504
Restructuring expenses -- -- -- 654
------- ------- -------- -------
Total operating expenses 31,724 26,673 98,360 88,206
------- ------- -------- -------
Income before income taxes 4,606 2,832 13,361 3,953
Income tax expense 1,129 725 3,113 485
------- ------- -------- -------
Net Income $ 3,477 $ 2,107 $ 10,248 $ 3,468
======= ======= ======== =======
Net income per common and
common equivalent share $.60 $.35 $1.81 $.58
======= ======= ======== =======
Weighted average number of
common and common
equivalent shares outstanding
during period 5,824 6,093 5,670 5,995
======= ======= ======== =======
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
US FACILITIES CORPORATION
Consolidated Statements of Stockholders' Equity
(000 omitted)
<TABLE>
<CAPTION>
Net
unrealized
gain (loss)
Common Paid in on Retained Treasury
stock capital securities earnings stock Total
------ ------- ---------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1993 $59 $43,156 $ 443 $20,306 $ (631) $63,333
Cumulative effect
of adoption of
SFAS 115 at
January 31, 1994 -- -- 3,838 -- -- 3,838
Net income -- -- -- 1,361 -- 1,361
Exercise of stock
options -- 368 -- -- 300 668
Unrealized
investment loss,
net -- -- (4,737) -- -- (4,737)
--- ------- -------- ------- ------- -------
Balance at
September 30, 1994 $59 $43,524 $ (456) $21,667 $ (331) $64,463
=== ======= ======== ======= ====== =======
- ----------------------------------------------------------------------------------------------------
Balance at
December 31, 1994 $59 $44,261 $(2,637) $26,544 $(5,148) $63,079
Net income -- -- -- 10,248 -- 10,248
Exercise of
stock options 2 225 -- -- 1,680 1,907
Dividends paid -- -- -- (837) -- (837)
Unrealized investment gain,
net -- -- 6,839 -- -- 6,839
--- ------- ------- ------- ------- -------
Balance at
September 30, 1995 $61 $44,486 $ 4,202 $35,955 $(3,468) $81,236
=== ======= ======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
US FACILITIES CORPORATION
Condensed Consolidated Statements of Cash Flows
(000 omitted)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
---------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
Cash provided by operating activities $ 9,965 $ 9,371
-------- --------
Cash flows from investing activities:
Purchases of fixed maturity investments (92,260) (13,076)
Purchases of equity securities (2,401) (6,351)
Proceeds from sales of investment
securities 73,216 15,418
Net sales (purchases) of short-term
investments 11,241 (7,976)
Purchases of property and equipment (226) (174)
-------- --------
Cash used in investing activities (10,430) (12,159)
-------- --------
Cash flows from financing activities:
Dividends paid (837) --
Exercise of stock options 1,907 1,082
-------- --------
Cash provided by financing activities 1,070 1,082
-------- --------
Net increase (decrease) in cash and
invested cash 605 (1,706)
Cash and invested cash at beginning of period 4,502 2,851
-------- --------
Cash and invested cash at end of period $ 5,107 $ 1,145
======== ========
Supplemental Disclosure of Cash Flow
Information:
Interest paid $ 1,583 $ ---
-------- --------
Income taxes paid $ 3,815 $ 525
-------- --------
See accompanying notes to consolidated financial statements.
</TABLE>
6
<PAGE>
US FACILITIES CORPORATION
Notes to Consolidated Financial Statements
1. GENERAL. The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
and with the instructions to Form 10-Q. 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 only of normal recurring accruals)
considered necessary for a fair presentation have been included. 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.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Registrant's 1994 Annual Report to
Stockholders.
2. OTHER. Other expenses include $547,000 incurred, resulting from the
closure of the Registrant's US MedCare Review, Inc. operations effective
May 31, 1995 and expenses of $695,000 pertaining to the resignation of the
Registrant's former Chief Executive Officer in March, 1995.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
- ---------------------
The Registrant's consolidated revenues for the third quarter ended
September 30, 1995 increased 23% to $36,330,000 from $29,505,000 in the 1994
quarter, and increased 21% to $ 111,721,000 for the first nine months of 1995
from $92,159,000 for the 1994 period. Consolidated net income for the third
quarter of 1995 increased 65% to $ 3,477,000 from $2,107,000 for the third
quarter of 1994, and increased 195% to $10,248,000 for the first nine months of
1995 from $3,468,000 in the 1994 nine month period.
The 1995 results reflect continuing improvements in profitability in each
of the Registrant's business segments resulting from growth in revenues due to
increased marketing efforts, lower claims cost and the effect of the
Registrant's cost control programs which began during 1994. The Registrant
incurred expenses of $547,000 resulting from the closure of its US MedCare
Review, Inc. operations effective May 31,1995, and expenses of $695,000
pertaining to the resignation of the Registrant's former Chief Executive Officer
in March, 1995.
Net income for the 1994 nine month period was negatively impacted by
several events. The Registrant became the target of an unsolicited takeover
proposal and involved in a proxy contest with Fidelity National Financial, Inc.
The expenses of responding to those issues reduced the Registrant's pretax
income by $1,504,000 for the nine months ended September 30, 1994. The
Registrant also posted a non-recurring restructuring charge during the second
quarter of 1994 which reduced pretax income by $654,000. In addition to the
unusual expenses noted above, claims incurred as a result of the Northridge,
California earthquake in January 1994 reduced pre-tax income by $2,100,000 for
the nine month period ended September 30, 1994.
Consolidated net investment income increased 55% to $2,329,000 in the 1995
quarter compared to $1,500,000 in the 1994 quarter, and increased 60% to
$6,904,000 for the 1995 nine month period from $4,300,000 in the 1994 nine month
period, reflecting continuing growth in USF RE's asset base and generally higher
rates of income earned on securities acquired between September, 1994 and June,
1995. Additionally, during 1995 the Registrant invested new funds in taxable
bonds rather than tax-exempt bonds. However, tax-exempt bonds continue to
account for the major portion of the Registrant's investment portfolio.
Consolidated general and administrative expenses declined 3% to $3,964,000
in the 1995 quarter from $4,100,000 in the 1994 quarter, and
8
<PAGE>
decreased 9% to $11,925,000 for the 1995 nine month period from $13,125,000 in
the 1994 nine month period, primarily due to cost savings realized from a
restructuring involving closings of branch offices, reductions in personnel, and
the continuation of expense control measures implemented during the second half
of 1994.
Income tax as a percentage of pre-tax income fluctuates depending on the
proportion of tax-exempt investment income to total pre-tax income.
Business Segments
- -----------------
The Registrant conducts business in two segments:
(a) Medical stop-loss and employee benefit products, which includes all
commission and fee-based revenues of the Registrant and reinsurance of
50% of the medical stop-loss business generated by the Registrant's
wholly owned subsidiary, USBenefits Insurance Services, Inc.
("USBenefits"). USBenefits acts as the underwriting manager and
marketing organization for medical stop-loss coverages issued for The
Continental Insurance Company, an unaffiliated party which during the
second quarter of 1995 became a member of the CNA Insurance Companies
Group. USBenefits also markets other employee benefits related
products.
(b) Property/casualty insurance and reinsurance underwriting conducted by
the Registrant's wholly-owned subsidiaries, USF RE INSURANCE COMPANY
("USF RE") and USF Insurance Company ("USFIC"). Business lines
included in this segment are property/casualty reinsurance assumed
nationwide from unaffiliated insurance companies, primarily through
reinsurance intermediaries, and surplus lines insurance underwritten
by USFIC. During the second quarter of 1995 USF RE ceased writing new
business in its plate glass insurance line of business, which line
accounted for 5% of earned premiums in 1994.
The tables set forth below present pre-tax operating information for each
of the Registrant's business segments and for its holding company operations
(including realized gains) for the quarters and nine month periods ended
September 30, 1995 and 1994. Segment amounts differ from those reported for the
third quarter of 1994 due to reclassification of general and administrative
expenses between segments to conform to the 1995 presentation.
9
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30 September 30
---------------------------- ---------------------------
1995 1994 % Change 1995 1994 % Change
------ ------ -------- ------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Stop-Loss and Employee
- ----------------------
Benefit Products
- ----------------
(000 omitted)
Revenues:
Premiums earned $19,524 $17,346 13% $60,462 $54,617 11%
Commissions & fees 6,133 5,573 10% 19,381 17,978 8%
Investment income 824 571 4% 2,444 1,637 49%
------- ------- ------- -------
Total Revenues 26,481 23,490 13% 82,287 74,232 11%
------- ------- ---- ------- ------- ----
Expenses:
Losses & loss
adjustment expenses 13,105 11,699 12% 39,783 36,838 8%
Policy acquisition expenses 6,388 5,699 12% 20,082 18,026 11%
General and administrative
expenses 2,779 3,189 (13)% 8,642 10,313 (16)%
------- ------- ------- -------
Total Expenses 22,272 20,587 10% 68,507 65,177 5%
------- ------- ---- ------- ------- ----
Income before income taxes $ 4,209 $ 2,903 45% $13,780 $ 9,055 52%
======= ======= ==== ======= ======= ====
</TABLE>
Medical stop-loss production increased 12% in the 1995 quarter and 10% in
the 1995 nine month periods over the 1994 comparable periods, generating the
indicated gains in premiums earned and commissions and fees revenues. The
changes in medical stop-loss production were primarily due to strong retention
of in-force accounts and continuing growth in new business. The increase in
profitability of medical stop-loss is due, in part, to the declining rate of
increase in the cost of healthcare over the prior year, reduction in general and
administrative expenses and improved underwriting selection. The increases in
acquisition expenses are primarily related to the additional revenues produced.
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30 September 30
--------------------------- --------------------------------
1995 1994 % Change 1995 1994 % Change
------ ------ -------- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Property/Casualty
- -----------------
Underwriting
- ------------
(000 omitted)
Revenues:
Premiums earned $7,983 $5,073 57% $24,381 $15,020 62%
Investment income 1,493 929 60% 4,430 2,663 66%
------ ------ ------- --------
Total revenues 9,476 6,002 58% 28,811 17,683 63%
------ ------ --- ------- -------- ---
Expenses:
Losses & loss
adjustment expenses 5,558 3,313 68% 16,979 12,347 37%
Policy Acquisition expenses 2,174 1,862 17% 6,725 5,709 18%
General and Administrative
expenses 852 649 31% 2,457 2,126 15%
------ ------ ------- --------
Total Expenses 8,584 5,824 47% 26,161 20,182 23%
------ ------ --- ------- -------- ---
Income (loss) before income taxes $ 892 $ 178 401% $ 2,650 $( 2,499) --
====== ====== === ======= ======== ===
</TABLE>
10
<PAGE>
The increases in property/casualty premiums earned during the 1995 periods
as compared to the 1994 periods result from the continued growth of USF RE's
property/casualty reinsurance operations due to marketing efforts, increased
production from its client base, and an increase in its policyholders' surplus.
Also contributing to this increase was growth in surplus lines premium writings
as USFIC expanded its operations into additional states. The increases in
losses and loss adjustment expenses in 1995 resulted directly from the increase
in earned premiums, while the nine months ended September 30, 1994 includes $2.1
million of claims incurred as a result of the Northridge, California earthquake
in January 1994. Increases in policy acquisition expenses, which include
commissions and a portion of general and administrative expenses, result from
the increases in earned premiums, and vary depending on the mix of business
written and the total amount of general and administrative expenses.
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30 September 30
----------------------------- -----------------------------------
1995 1994 % Change 1995 1994 % Change
------- ------- -------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Holding Company Operations
- --------------------------
(000 omitted)
Revenues:
Investment income $ 12 $ - - $ 30 $ - -
Realized gains 361 13 - 593 244 -
----- ----- ------- --------
Total revenues 373 13 - 623 244 -
----- ----- ------- ------- -------- -------
Expenses:
General and administrative
expenses 333 262 27% 826 686 20%
Expenses related to
unsolicited takeover proposal - -- - - 1,504 -
Restructuring expenses - -- - - 654 -
Other expenses - -- - 1,242 - -
Interest expense 535 -- - 1,624 3 -
----- ----- ------- --------
Total expenses 868 262 231% 3,692 $ 2,847 30%
----- ----- ------- ------- -------- -------
Loss before income taxes $(495) $(249) (99)% $(3,069) ( 2,603) 18%
===== ===== ======= ======= ======== =======
</TABLE>
Increases in realized gains for the 1995 quarter and nine month period as
compared to the 1994 periods result from changes in the mix of portfolio assets
in response to market interest rate changes.
The increase in interest expense resulted from a $25,000,000 bank loan
obtained by the Registrant in December 1995. Of this amount, $20,000,000 was
contributed to the surplus of USF RE and USFIC to support additional growth in
both medical stop-loss and property/casualty premiums in 1995 and beyond.
11
<PAGE>
Accounting Policies
- -------------------
Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments," will be adopted by the Registrant for the year
ending December 31,1995. Adoption is not expected to have a material effect on
the financial statements of the Registrant.
Inflation
- ---------
The healthcare marketplace has been subject to the effects of increasing costs
for provider services. Such growth in the costs of healthcare tends to generate
not only increases in premiums for medical stop-loss coverage, resulting in
greater revenues, but also higher claim payments.
Inflation can negatively impact insurance and reinsurance operations by
causing higher claim settlements than may have originally been estimated, while
not necessarily allowing an immediate increase in premiums to a level necessary
to maintain profit margins. The Registrant makes no explicit provisions for
inflation, but trends are considered when setting underwriting terms and claim
reserves. Such reserves are subjected to a continuing review process to assess
their adequacy and are adjusted as deemed appropriate. Overall economic trends
also affect interest rates, which in turn affect investment income and the
market value of the Registrant's investment portfolio.
Liquidity and Financial Resources
- ---------------------------------
The Registrant utilizes cash from operations and maturing investments to meet
its insurance obligations to policyholders and claimants. Primary sources of
cash from operations include premium collections, investment income and
commissions and fees. The principal uses of cash from operations are for
premium payments to insurance companies, payments of claims under insurance and
reinsurance contracts, and operating expenses such as salaries, commissions,
taxes and general overhead.
The Registrant anticipates that it will continue to generate sufficient cash
flow from operations to cover its short-term (1 to 18 months) and long-term (18
months to 3 years) liquidity needs. While the Registrant currently has no
immediate plans for significant capital outlays, it is contemplating acquisition
opportunities that complement its business operations.
The Registrant invests primarily in the highest grades of bonds, equities,
certificates of deposit and other short-term instruments. At September 30,
1995, 97% of its investment portfolio was rated AA or better. All such
securities are carried at quoted market values as of the balance sheet date.
12
<PAGE>
Other than as discussed above, the Registrant is not aware of any known
trends, events or uncertainties that have had or are reasonably likely to have a
material effect on the Registrant's liquidity, capital resources or operations.
Legislative and Regulatory Developments.
- ---------------------------------------
Federal healthcare legislation, which was extensively considered but not
adopted by Congress during 1994, has been taken up by the 1995 Congress. As with
prior efforts, such legislation concerns government regulation and control of
the financing and delivery of healthcare. Among the items being considered are
proposals concerning the scope of the present preemptive provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"). Some of these
proposals would reinforce the ERISA preemption of state regulation of self-
insured plans, while others would permit states the authority to regulate
specific aspects of self-insured plans.
For the past several years, various states have been initiating their own
healthcare reforms. Many of these actions have focused primarily on the small
group health insurance market, generally plans with 50 employees or less. Other
state efforts include attempts to regulate self-insured plans directly or
indirectly by regulating companies providing stop-loss coverage. The Registrant
believes these state initiatives have not had, and are not expected to have, a
significant effect on the Registrant's medical stop-loss business.
In addition, the National Association of Insurance Commissioners ("NAIC")
proposed in September 1995, a model act that would regulate medical stop-loss
policies. The principal feature of the model act is a recommendation
that stop-loss policies contain a minimum specific attachment point of $20,000.
In order to be effective, the NAIC model act would have to be adopted by
legislative action in each state. The Registrant believes that not all states
will adopt the model act, and that of those states that do, some will adopt
specific attachment point requirements lower than the $20,000 level recommended
by the model act. Furthermore, the Registrant believes that if adopted by a
state, the model act will be challenged on the basis that it is preempted by
ERISA. Accordingly, at this time the Registrant believes that the proposed model
act will not have a significant effect on its medical-stop loss business.
The Registrant can not predict at this time the extent to which the federal or
state legislative or regulatory initiatives discussed above will be adopted, or
the extent of the impact they would have on the Company's business. Management
believes, however, that changes to the healthcare system which ultimately may be
adopted will continue to recognize employers' self-insurance of healthcare
benefits as a viable and cost effective method of financing healthcare.
Accordingly, management believes that its stop-loss products will
13
<PAGE>
continue to be an appropriate component to assure the solvency of self-insured
plans, and will remain a source of revenues to the Registrant.
PART II OTHER INFORMATION
Item 6. EXHIBITS and REPORTS ON FORM 8-K.
(a) The following is a list of exhibits required to be filed as part of
this Form 10-Q by Item 601 of Regulation S-K:
3.1, 4.1 Restated Certificate of Incorporation, as amended, as presently
in effect. Filed as Exhibits 3.1 and 3.1.1 to the Registrant's
Form S-1 Registration Statement declared effective by the
Securities and Exchange Commission on October 31, 1986 (the
"Registration Statement"), and incorporated herein by this
reference; and as Exhibit 3 to the Registrant's Current Report
on Form 8-K dated May 24, 1990, and incorporated herein by this
reference.
3.2, 4.2 Bylaws of US Facilities Corporation, as amended, as presently
in effect. Filed as Exhibit 4.2 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1994, and
incorporated herein by this reference.
4.3 Stock Certificate of US Facilities Corporation. Filed as
Exhibit 4.1 to the Registrant's Registration Statement, and
incorporated herein by this reference.
4.4 Rights Agreement. Filed as Exhibit 2 to the Registrant's
Current Report on Form 8-K dated May 24, 1990, and incorporated
herein by this reference.
4.5 First Amendment to Rights Agreement. Filed as Exhibit 1 to the
Registrant's Current Report on Form 8-K dated January 16, 1992,
and incorporated herein by this reference.
4.6 Second Amendment to Rights Agreement. Filed as Exhibit 10.1 to
the Registrant's Current Report on Form 8-K dated April 29,
1994, and incorporated herein by this reference.
14
<PAGE>
4.7 Third Amendment to Rights Agreement. Filed on October 3, 1995,
as Exhibit 4 to the Registrant's Current Report on Form 8-K
dated September 28, 1995, and incorporated herein by this
reference.
11 US Facilities Corporation and Subsidiaries Computation of
Earnings Per Share.
15 Independent Auditors' letter regarding unaudited interim
financial information.
27 Financial Data Schedules
(b) No reports on Form 8-K were filed by the Registrant during the quarter
ended September 30, 1995.
15
<PAGE>
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.
US FACILITIES CORPORATION
Date: November 9, 1995 By: /S/DAVID L. CARGILE
--------------------
DAVID L. CARGILE
Chairman of the Board, President and Chief
Executive Officer
Date: November 9, 1995 By: /S/MARK BURKE
--------------
MARK BURKE
Senior Vice President, Chief Financial
Officer and Treasurer (Principal Financial
and Accounting Officer)
16
<PAGE>
EXHIBIT INDEX
4.1 Restated Certificate of Incorporation, as amended, as presently in effect.
Filed as Exhibits 3.1 and 3.1.1 to the Registrant's Form S-1 Registration
Statement declared effective by the Securities and Exchange Commission on
October 31, 1986 (the "Registration Statement"), and incorporated herein by
this reference; and as Exhibit 3 to the Registrant's Current Report on Form
8-K dated May 24, 1990, and incorporated herein by this reference.
4.2 Bylaws of US Facilities Corporation, as amended, as presently in effect.
Filed as Exhibit 4.2 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1994, and incorporated herein by this reference.
4.3 Stock Certificate of US Facilities Corporation. Filed as Exhibit 4.1 to
the Registrant's Registration Statement, and incorporated herein by this
reference.
4.4 Rights Agreement. Filed as Exhibit 2 to the Registrant's Current Report on
Form 8-K dated May 24, 1990, and incorporated herein by this reference.
4.5 First Amendment to Rights Agreement. Filed as Exhibit 1 to the
Registrant's Current Report on Form 8-K dated January 16, 1992, and
incorporated herein by this reference.
4.6 Second Amendment to Rights Agreement. Files as Exhibit 10.1 to the
Registrant's Current Report on Form 8-K dated April 29, 1994, and
incorporated herein by this reference.
4.7 Third Amendment to Rights Agreement. Filed on October 3, 1995, as Exhibit 4
to the Registrant's Current Report on Form 8-K dated September 28, 1995,
and incorporated herein by this reference.
11 US Facilities Corporation and Subsidiaries Computation of Earnings Per
Share.
15 Independent Auditors' letter regarding unaudited interim financial
information.
27 Financial Data Schedules.
17
<PAGE>
EXHIBIT 11
US FACILITIES CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
The computation of per share income is based upon the weighted average
number of common and common equivalent shares outstanding during each quarter
ended September 30, as follows:
(000 omitted, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30 September 30
---------------- -----------------
1995 1994 1995 1994
------ ------- -------- ------
<S> <C> <C> <C> <C>
Net Income $3,477 $2,107 $10,248 $3,468
====== ====== ======= ======
Weighted average shares outstanding
during the period 5,628 5,849 5,547 5,789
Common stock equivalent shares 196 244 123 206
------ ------ ------- ------
Common and common stock equivalent
shares outstanding for purposes of
calculating income per share 5,824 6,093 5,670 5,995
Incremental shares to reflect full 46 (33) 102 4
dilution ------ ------ ------- ------
Total shares for purpose of calculating
fully diluted income per share 5,870 6,060 5,772 5,999
====== ====== ======= ======
Net income per common and common
equivalent share $0.60 $0.35 $1.81 $0.58
====== ====== ======= ======
</TABLE>
<PAGE>
EXHIBIT 15
Independent Auditors' Review Report
-----------------------------------
The Board of Directors and Shareholders
US Facilities Corporation:
We have reviewed the condensed consolidated balance sheet of US Facilities
Corporation and subsidiaries as of September 30, 1995, and the related
consolidated income statements for the three-month and nine-month periods ended
September 30, 1995 and 1994, and the related consolidated statements of
stockholders' equity and condensed consolidated statements of cash flows for the
nine-month periods ended September 30, 1995 and 1994. These consolidated
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of US Facilities Corporation and
subsidiaries as of December 31, 1994, and the related consolidated income
statements, statements of stockholders' equity and cash flows for the year then
ended (not presented herein); and in our report dated February 17, 1995, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1994, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
/s/ KPMG PEAT MARWICK LLP
Los Angeles, California
October 20, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> JUL-01-1995 JAN-01-1995
<PERIOD-END> SEP-30-1995 SEP-30-1995
<DEBT-HELD-FOR-SALE> 0 0
<DEBT-CARRYING-VALUE> 0 0
<DEBT-MARKET-VALUE> 0 0
<EQUITIES> 0 0
<MORTGAGE> 0 0
<REAL-ESTATE> 0 0
<TOTAL-INVEST> 0 154,651
<CASH> 0 27,779
<RECOVER-REINSURE> 0 15,774
<DEFERRED-ACQUISITION> 0 0
<TOTAL-ASSETS> 0 229,647
<POLICY-LOSSES> 0 76,011
<UNEARNED-PREMIUMS> 0 19,466
<POLICY-OTHER> 0 0
<POLICY-HOLDER-FUNDS> 0 0
<NOTES-PAYABLE> 0 25,000
<COMMON> 0 0
0 0
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 0 229,467
27,507 84,843
<INVESTMENT-INCOME> 2,329 6,904
<INVESTMENT-GAINS> 361 593
<OTHER-INCOME> 6,133 19,381
<BENEFITS> 18,663 56,762
<UNDERWRITING-AMORTIZATION> 8,562 26,807
<UNDERWRITING-OTHER> 3,964 11,925
<INCOME-PRETAX> 4,606 13,361
<INCOME-TAX> 1,129 3,113
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,477 10,248
<EPS-PRIMARY> 0.60 1.81
<EPS-DILUTED> 0.60 1.81
<RESERVE-OPEN> 0 0
<PROVISION-CURRENT> 0 0
<PROVISION-PRIOR> 0 0
<PAYMENTS-CURRENT> 0 0
<PAYMENTS-PRIOR> 0 0
<RESERVE-CLOSE> 0 0
<CUMULATIVE-DEFICIENCY> 0 0
</TABLE>
