<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 June 30, 1997
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
The Centris Group, Inc.
-----------------------
(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)
US FACILITIES CORPORATION
-------------------------
(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 August 7, 1997:
Common Stock, par value $.01 per share: 5,987,898
Common Stock Purchase Rights: 5,987,898
<PAGE>
INDEX
Part I FINANCIAL INFORMATION
Item 1. FINANCIAL INFORMATION
Condensed Consolidated Financial Statements:
Balance Sheets as of June 30, 1997 and
December 31, 1996...........................................3
Income Statements for the Quarters and Six Months Ended
June 30, 1997 and 1996......................................4
Statements of Cash Flows for the Six Months Ended
June 30, 1997 and 1996......................................5
Notes to Condensed Consolidated Financial Statements..............6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS........................................................7
Part II OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS..............................................13
Item 6. EXHIBITS and REPORTS ON FORM 8-K.............................14
SIGNATURES...................................................................16
2
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. FINANCIAL INFORMATION
Condensed Consolidated Financial Statements:
<TABLE>
The Centris Group, Inc.
Condensed Consolidated Balance Sheets
(Dollars in Thousands)
<CAPTION>
ASSETS
June 30, 1997 December 31,1996
------------- ----------------
<S> <C> <C>
Investments, at market (amortized cost $190,209 at
June 30, 1997, $185,472 at December 31, 1996) $ 202,455 $ 194,352
Cash and invested cash 9,302 11,132
Restricted cash and short term investments 25,976 23,771
Accrued investment income 2,948 2,653
Receivables:
Reinsurance losses and reserves 26,868 23,975
Premiums 22,363 16,841
Prepaid reinsurance premiums 7,624 6,495
Deferred policy acquisition costs 4,440 3,644
Other assets 11,004 5,880
---------- -----------
Total assets $ 312,980 $ 288,743
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Insurance liabilities:
Amounts due insurance companies $ 29,206 $ 27,148
Losses and loss adjustment expenses 106,684 94,669
Unearned premiums 28,145 22,936
Note payable 33,750 35,000
Accounts payable and accrued expenses 3,879 6,626
----------- -----------
Total liabilities 201,664 186,379
Stockholders' Equity 111,316 102,364
----------- -----------
Total liabilities and stockholders' equity $ 312,980 $ 288,743
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
<TABLE>
The Centris Group, Inc.
Condensed Consolidated Income Statements
<CAPTION>
(Dollars in Thousands, except per share data)
Quarter Ended Six Months Ended
June 30 June 30
------- -------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Premiums earned $ 38,103 $ 29,707 $ 77,386 $ 58,859
Commissions and fees 8,140 6,305 16,182 12,894
Net investment income 2,712 2,526 5,403 4,968
Realized investment gains 78 (9) 255 726
--------- --------- --------- ---------
Total revenues 49,033 38,529 99,226 77,447
--------- --------- --------- ---------
Operating Expenses:
Losses and loss adjustment expenses
incurred 27,526 20,852 55,522 41,694
Policy acquisition expenses 11,083 8,818 22,992 17,692
General and administrative expenses 4,447 3,379 8,901 6,924
Interest 614 699 1,228 1,379
--------- --------- --------- ---------
Total operating expenses 43,670 33,748 88,643 67,689
--------- --------- --------- ---------
Income before income taxes 5,363 4,781 10,583 9,758
Income tax expense 1,615 1,196 3,175 2,365
--------- --------- --------- ---------
Net income $ 3,748 $ 3,585 $ 7,408 $ 7,393
========= ========= ========== =========
Net income per common and common equivalent
share $ 0.62 $ 0.60 $ 1.22 $ 1.24
========= ========= ========== =========
Weighted average number of common and common
equivalent shares outstanding during period
6,080 5,972 6,083 5,971
========= ========= ========== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
<TABLE>
The Centris Group, Inc.
Condensed Consolidated Statements of Cash Flows
<CAPTION>
(Dollars in Thousands)
Six Months Ended June 30,
1997 1996
---- ----
<S> <C> <C>
Cash provided by operating activities $ 4,659 $ 15,432
----------- -----------
Cash flows from investing activities:
Purchases of fixed maturity investments (16,983) (18,642)
Purchases of equity securities (627) (1,571)
Proceeds from sales of investment securities 14,310 13,923
Net purchases of short term
investments (937) (5,622)
Purchases of property and equipment (447) (972)
------------ ------------
Cash used in investing activities (4,684) (12,884)
------------ ------------
Cash flows from financing activities:
Payment on note payable (1,250) --
Dividends paid (716) (702)
Exercise of stock options 161 1,009
------------ ------------
Cash (used in) provided by financing activities (1,805) 307
------------ ------------
Net (decrease) increase in cash and invested cash (1,830) 2,855
Cash and invested cash at beginning of period 11,132 8,165
------------ ------------
Cash and invested cash at end of period $ 9,302 $ 11,020
============ ===========
Supplemental disclosure of cash flow information:
Interest paid $ 1,160 $ 662
============ ===========
Income taxes paid, net $ 2,580 $ 2,242
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
The Centris Group, Inc.
Notes to Condensed Consolidated Financial Statements
1. General
The accompanying unaudited condensed 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 six months
ended June 30,1997 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 for the year ended December 31,1996 included in
the 1996 Annual Report to Stockholders of The Centris Group, Inc., formerly
known as US Facilities Corporation, (the "Company").
2. Other
SFAS No. 128, "Earnings per Share" and SFAS No. 129, "Disclosure of
Information about Capital Structure" will be adopted by the Company for the year
ended December 31, 1997. Adoption of these pronouncements is not expected to
have a material effect on the financial statements or the related disclosures of
the Company.
3. Acquisition
Effective January 1,1997, the Company acquired the medical stop loss
business of Global Excess Re, Inc. ("Global") in a transaction accounted for as
a purchase. The purchase transaction was not material to the financial
statements of the Company. The results of operations of Global since the
acquisition date are included in the accompanying condensed consolidated
financial statements.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results Of Operations
- ---------------------
Consolidated revenues of The Centris Group, Inc., formerly known as US
Facilities Corporation, (the "Company") increased 27% to $49,033,000 for the
second quarter ended June 30, 1997 from $38,529,000 in the 1996 second quarter,
and increased 28% to $99,226,000 for the first six months of 1997 from
$77,447,000 for the 1996 six month period. Revenue improvements in the 1997
periods as compared to the 1996 periods were primarily attributable to growth in
the property/casualty segment, additional medical stop loss business resulting
from the acquisition of Global Excess Re in January 1997, and increased
production of provider excess coverage. Increases in net investment income in
the 1997 periods result from higher levels of invested assets.
Consolidated net income increased 4% to $3,748,000 for the second
quarter of 1997 from $3,585,000 in the second quarter of 1996, and was
$7,408,000 for the first six months of 1997 as compared to $7,393,000 in the
1996 six month period. Year to date 1997 results include a decline in realized
gains to $255,000 from $726,000 in the 1996 first half. Realized gains in the
1996 periods were the result of two transactions in the first quarter of 1996.
Net income for the 1997 periods as compared to the 1996 periods reflects the
changes in revenues noted above, an increase in medical lines claims cost
experience, and increases in income tax expenses as prior tax benefits were no
longer available. General and administrative expenses remained at 9% of revenues
in all periods presented as the Company continued its focus on productivity and
expense control.
Income taxes as a percentage of pre-tax income fluctuate depending on the
proportion of tax exempt investment income to total pre-tax income, the effect
of available tax benefits, and the proportion of total income subject to state
income taxes.
Insurance and reinsurance companies establish reserves for losses incurred but
not yet paid in order to match such losses with the related premiums earned. The
process of establishing loss reserves is subject to uncertainties that are a
normal, recurring aspect of the insurance business which requires the use of
informed judgments and estimates. Loss and loss adjustment expense reserve
development is reviewed on a regular basis, incorporating analysis of current
trends, market changes in the Company's business segments and historical
experience to analyze the Company's actuarial assumptions. As additional
experience and other data becomes available, the Company's actuarial estimates
may be revised. Such revisions may impact earnings. Policy acquisition expenses
vary on the basis of market conditions and mix of business.
7
<PAGE>
The statutory combined ratio is the traditional indicator of the
potential underwriting profitability of an insurance company's business.
Statutory combined ratios are presented in conformity with rating agency and
industry association presentations which include insurance company net
management fee revenues in calculating such ratios. The Company's statutory
combined ratios were 99.2 and 97.8 for the six month periods ended June 30, 1997
and 1996, respectively.
Business Segments
- -----------------
The Company conducts business in two segments:
Medical lines which includes medical stop-loss and provider excess coverages
underwritten by the Company's subsidiary, USBenefits Insurance Services, Inc.
("USBenefits") on behalf of The Continental Insurance Company ("Continental"),
one of the CNA Insurance Companies, as well as reinsurance of 50% of such
business by the Company's USF RE INSURANCE COMPANY ("USF RE") subsidiary.
USBenefits is the managing general underwriter and marketing organization for
medical lines coverages issued by Continental. Medical stop-loss coverage is a
form of insurance that protects employers that self-insure their employee
healthcare plans by limiting their exposure from the risk of loss to a
pre-established amount. Provider excess coverage limits the financial risks
healthcare providers face from medical plans that prepay the providers fixed
sums per plan participant (capitated fees) or provide specified rates for
services. USBenefits also markets other employee benefits related products on
behalf of several national life insurance companies. Medical lines products are
marketed through a network of unaffiliated third party administrators, insurance
agents, brokers and consultants ("Producers"). Producers have non-exclusive
arrangements with USBenefits that enable them to submit requests for coverage
quotations.
Property/Casualty reinsurance and insurance underwriting is conducted by USF RE
and its wholly-owned subsidiary, USF Insurance Company ("USFIC"). These
subsidiaries both carry an A (Excellent) rating from A.M. Best Company.
Insurance companies purchase reinsurance in order to control and manage the risk
they accept when they issue policies. USF RE assumes, primarily through
reinsurance intermediaries, facultative and treaty reinsurance from unaffiliated
insurance companies. Facultative is reinsurance of an individual risk; while
reinsurance treaties cover risks written or assumed by another insurer in a
particular class or classes of business. USF RE concentrates its casualty
writings in general liability, commercial auto liability and products liability.
It also provides a broad range of coverages for most types of property
exposures. USFIC writes surplus lines insurance on commercial property/casualty
risks which are marketed through independent excess and surplus lines brokers.
8
<PAGE>
The tables set forth below present pre-tax operating information by business
segment and holding company operations (including realized gains) for the
quarters and six month periods ended June 30, 1997 and 1996, respectively.
<TABLE>
Medical lines
- -------------
<CAPTION>
(Dollars in Thousands)
Quarter Ended Six Months Ended
June 30 June 30
------- -------
1997 1996 %Change 1997 1996 %Change
---- ---- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Premiums earned $ 25,538 $ 19,886 28% $ 50,570 $ 40,207 26%
Commissions and fees 8,140 6,305 29% 16,182 12,894 26%
Investment income 886 848 4% 1,751 1,597 10%
------- ------- --------- --------
Total revenues 34,564 27,039 28% 68,503 54,698 25%
--------- -------- --------- --------
Expenses:
Losses and loss adjustment 18,224 13,557 34% 36,110 27,395 32%
Policy acquisition 8,963 6,863 31% 17,569 13,719 28%
General and administrative 3,254 2,312 41% 6,593 4,784 38%
--------- ------- --------- --------
Total expenses 30,441 22,732 34% 60,272 45,898 31%
--------- --------- --------- --------
Income before income taxes $ 4,123 $ 4,307 (4)% $ 8,231 $ 8,800 (6)%
======== ======== ========= ========
</TABLE>
Increases in revenues for the 1997 periods are due to growth in the provider
excess line and additional medical stop loss business from the acquisition of
Global Excess Re in January 1997. As a result, medical lines segment production
increased in the 1997 periods over the 1996 periods, generating the changes
noted above in premiums earned and commissions and fees revenues.
Loss and loss adjustment expenses in the 1997 periods reflect increases in the
cost of healthcare which are not mitigated by increases in premium rates due to
ongoing competitive industry conditions, and an increase in the Company's
medical stop-loss claims cost experience. Policy acquisition expenses vary due
to the level of production activity, mix of business and market conditions.
Increases in general and administrative expenses in the 1997 periods primarily
result from expenses related to the operations of the January acquisition of
Global Excess Re.
9
<PAGE>
<TABLE>
Property/Casualty
- -----------------
<CAPTION>
(Dollars in Thousands)
Quarter Ended Six Months Ended
June 30 June 30
------- -------
1997 1996 % Change 1997 1996 % Change
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Premiums earned $ 12,565 $ 9,821 28% $ 26,816 $ 18,652 44%
Investment income 1,812 1,665 9% 3,626 3,339 9%
-------- ------- -------- --------
Total revenues 14,377 11,486 25% 30,442 21,991 38%
-------- ------- -------- --------
Expenses:
Losses and loss adjustment 9,302 7,295 28% 19,412 14,299 36%
Policy acquisition 2,120 1,955 8% 5,423 3,973 36%
General and administrative 913 872 5% 1,811 1,722 5%
------- ------- -------- --------
Total expenses 12,335 10,122 22% 26,646 19,994 33%
------- ------- -------- --------
Income before income taxes $ 2,042 $ 1,364 50% $ 3,796 $ 1,997 90%
======= ======= ======== ========
</TABLE>
The increases in premiums earned during the 1997 periods as compared to the 1996
periods primarily resulted from growth in the treaty reinsurance line. Treaties
initiated in 1996 and the first quarter of 1997 favorably impacted second
quarter 1997 results. The magnitude of the impact on a comparative basis will
decrease over the balance of the year as the business comes up for renewal.
Moderate growth of property/casualty facultative operations also contributed to
1997 results.
Changes in losses and loss adjustment expenses between periods reflect improved
loss experience in 1997. The increase in policy acquisition expenses in the 1997
periods as compared to 1996 results from the continued growth of the
property/casualty business lines and changes in the mix of business.
10
<PAGE>
<TABLE>
Holding Company
- ---------------
<CAPTION>
(Dollars in Thousands)
Quarter Ended Six Months Ended
June 30 June 30
------- -------
1997 1996 % Change 1997 1996 %Change
---- ---- -------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Investment income $ 14 $ 13 8% $ 26 $ 32 (19)%
Realized gains 78 (9) -- 255 726 (65)%
---- ----- ------ ----
Total revenues 92 4 -- 281 758 (63)%
---- ----- ------ ----
Expenses:
General and administrative 280 195 44% 497 418 19%
Interest 614 699 (12)% 1,228 1,379 (11)%
---- ---- ------ ------
Total expenses 894 894 -- 1,725 1,797 (4)%
---- ---- ------- -------
Loss before income taxes $ (802) $ (890) (10)% $(1,444) $(1,039) 39%
======= ======= ======== ========
</TABLE>
Increases in general and administrative expenses result from higher
infrastructure costs in the 1997 periods to support the growth of the Company's
business lines. Declines in interest expenses in the 1997 periods are due to
quarterly reductions in the outstanding balance of bank debt, principal payments
on which commenced March 31,1997, and changes in the variable interest rate
charged on the outstanding balance.
Inflation
- ---------
Inflation can negatively impact insurance and reinsurance operations by causing
higher claims settlements than may have originally been estimated, while not
necessarily allowing an immediate increase in premiums to a level necessary to
maintain profit margins. Historically, the Company has made no explicit
provisions for inflation, but trends are considered when setting underwriting
terms and claim reserves. Such reserves are subjected to a continual internal
and external 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 Company's investment
portfolio.
Liquidity and Capital Resources
- -------------------------------
The Company utilizes cash from operations and maturing investments to meet its
insurance obligations to policyholders and claimants, as well as to meet
operating costs. 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 USF RE's and USFIC's reinsurance and insurance contracts, debt
reduction, and operating expenses such as salaries, commissions, taxes and
general overhead. The Credit Agreement with the Company's lender contains
certain covenants, restrictions and dividend payment limitations with which the
Company was in compliance at June 30, 1997.
11
<PAGE>
The Company anticipates that it will continue to generate sufficient cash flow
from operations to cover its short-term (1-18 months) and long-term (18 months
to 3 years) liquidity needs. While the Company currently has no immediate plans
for significant capital outlays, from time to time it contemplates acquisition
opportunities that complement its business operations.
The Company currently invests primarily in the highest grades of bonds,
equities, certificates of deposit and short-term instruments. At June 30, 1997,
99% of the fixed income portfolio was in securities rated A or better. All such
securities are carried at quoted market values at the latest balance sheet date.
The Company does not invest in real estate, derivatives or high yield bonds.
Forward Looking Statements
- --------------------------
Some of the statements included within Management's Discussion and Analysis of
Financial Condition and Results of Operations and the Consolidated Financial
Statements and related Notes may be considered to be forward looking statements
(as that term is defined in the Private Securities Litigation Reform Act of
1995), and which are subject to certain risks and uncertainties. Among those
factors which could cause the actual results to differ materially from those
suggested by such statements are: catastrophe losses in the Company's insurance
lines or a material aggregation of losses; changes in federal or state law
affecting an employer's ability to self-insure; availability of adequate
retrocessional insurance coverage at appropriate prices; a downturn in the
general economy; the effects of competitive market pressures within the medical
lines or property/casualty marketplaces; the effect of changes required by
generally accepted accounting practices or statutory accounting practices; and
other risks which are described from time to time in the Company's filings with
the Securities and Exchange Commission.
12
<PAGE>
PART II OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company's 1997 Annual Meeting of Stockholders ("Annual
Meeting") was held on May 14, 1997 at the Company's offices in Costa Mesa,
California. A total of 5,633,555 shares were voted at the Annual Meeting by
proxy, representing 94.52% of the 5,960,148 shares of the Company's $.01 par
value common stock issued, outstanding and eligible to vote on the record date,
March 21, 1997.
(b) The Company's board currently consists of seven directors, each
serving for three years, who are divided into three classes. Two directors are
elected at two Annual Meetings and three directors are elected at a third Annual
Meeting. At this 1997 Annual Meeting, the Company's stockholders elected two of
the Company's seven directors for a term of three years expiring at the Annual
Meeting of Stockholders in the year 2000. Management nominated long-term
directors John F. Kooken and L. Steven Medgyesy, and no individuals were
nominated in opposition to management's slate of directors. Set forth below are
the results of the voting for the director nominees as reported by the Inspector
of Elections for the Company's Annual Meeting. There were no broker non-votes on
this proposal.
Name For Withhold
- ---- --- --------
John F. Kooken 5,590,157 43,398
L. Steven Medgyesy 5,593,157 40,398
The directors who are continuing in office are David L. Cargile, Bernard H.
Ross, Kenneth C. Tyler, Charles L. Schultz, and Howard S. Singer.
(c) The Company's stockholders were asked to consider five other
matters as noted below. The affirmative vote of a majority of the shares of the
Company's common stock present at the Annual Meeting in person or by proxy and
entitled to vote was required for adoption of each such matter. The results of
the vote on each of these proposals as reported by the Inspector of Elections
are set forth below.
(1) Approval of an amendment to the Company's Restated Certificate of
Incorporation to change the Company's name from US Facilities
Corporation to The Centris Group, Inc.
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
5,584,769 32,929 15,857 0
13
<PAGE>
(2) Approval of an amendment to the Company's Restated Certificate of
Incorporation to increase the number of shares of authorized common
stock from 20,000,000 to 40,000,000.
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
3,707,705 1,918,712 7,138 0
(3) Approval of the adoption of the Company's 1997 Long-Term Incentive-
Performance Unit plan.
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
4,671,105 897,244 16,431 48,775
(4) Approval of amendments to the Company's 1988 and 1991 Employee
Stock Option Plans.
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
3,097,255 1,392,540 15,219 1,128,541
(5) Ratification of the selection by the Board of Directors of KPMG
Peat Marwick LLP to continue to serve as the Company's independent
auditors for the fiscal year ending December 31, 1997.
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
5,339,368 287,343 6,884 0
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 Company'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; as Exhibit 3 to the
Company's Current Report on Form 8-K dated May 24, 1990,
and incorporated herein by this reference; and as Exhibit
3(i) to the Company's Current Report on Form 8-K dated
May 14, 1997, and incorporated herein by this reference.
14
<PAGE>
3.2, 4.2 Bylaws of the Company, as amended, as presently in effect.
Filed under the Company's former name as Exhibit 4.2 to
the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994, and incorporated herein
by this reference.
4.3* Common Stock Certificate of The Centris Group, Inc.
(reflecting new corporate name and new CUSIP number).
4.4 Rights Agreement. Filed as Exhibit 2 to the Company'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 Company'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 Company'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 as Exhibit 4
to the Company's Current Report on Form 8-K dated
September 28, 1995, and incorporated herein by this
reference.
11* The Centris Group, Inc. and Subsidiaries Computation of
Earnings Per Share.
15* Independent Auditors' review report regarding unaudited
interim financial information.
27* Financial Data Schedules
(b) During the second quarter of 1997, the Company filed with the
Securities and Exchange Commission a Current Report on Form 8-K dated May 14,
1997, reporting that at the Company's Annual Meeting of Stockholders held on May
14, 1997, stockholder approval was obtained to amend the Company's Restated
Certificate of Incorporation to change the Company's name from US Facilities
Corporation to The Centris Group, Inc., and to increase the number of authorized
common stock from 20,000,000 to 40,000,000 shares. The Certificate of Amendment
to the Restated Certificate of Incorporation was filed on May 14, 1997, with the
Secretary of State of Delaware and became effective on that date.
* Describes exhibits filed with this Quarterly Report on Form 10-Q.
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.
The Centris Group, Inc.
Date: August 7, 1996 By: /S/ DAVID L. CARGILE
--------------------
DAVID L. CARGILE
Chairman of the Board, President
and Chief Executive Officer
Date: August 7, 1996 By: /S/ CHARLES M. CAPORALE
----------------------
CHARLES M. CAPORALE
Senior Vice President, Chief
Financial Officer and Treasurer
(Principal Financial and Accounting
Officer)
16
<PAGE>
<PAGE>
EXHIBIT 4.3
COMMON STOCK PAR VALUE
$0.01
[VIGNETTE WITH HUMAN FIGURE]
NUMBER SHARES
[LOGO THE CENTRIS GROUP, INC.] SEE REVERSE FOR
RIGHTS LEGEND
INCORPORATED UNDER THE LAWS OF THE CUSIP 133904 10 5
STATE OF DELAWARE SEE REVERSE FOR
CERTAIN DEFINITIONS
This Certifies that
[STOCKHOLDER NAME]
SPECIMEN
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
The Centris Group, Inc. (hereinafter called the "Corporation"), transferrable
only on the books of the Corporation upon the surrender of this certificate
properly endorsed. This certificate is not valid unless countersigned and
registered by the Transfer Agent and Registrar. Wittness the facsimile and seal
of the Corporation and the facsimile signatures of its duly authorized officers.
Dated:
/s/ JOSE A. VELASCO [SEAL OF THE CENTRIS GROUP, INC.] /s/ DAVID L. CARGILE
Secretary Chairman of the Board
TRANSFERABLE IN THE CITY OF NEW YORK, NEW YORK
COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT AND REGISTRAR
BY:
AUTHORIZED SIGNATURE
1
<PAGE>
THE CENTRIS GROUP, INC.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER
WHO SO REQUESTS, THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES
THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES
AND/OR RIGHTS. ANY SUCH REQUEST MAY BE MADE TO THE EXECUTIVE OFFICE OF THE
CORPORATION.
This certificate also represents Rights that entitle the holder
hereof to certain rights as set forth in a Rights Agreement dated as of May 24,
1990 by and between the Corporation and American Stock Transfer & Trust Company,
as Rights Agent, as the same may be amended from time to time, (the "Rights
Agreement"), the terms and conditions of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive offices of
the Corporation. Under certain circumstances specified in the Rights Agreement,
such Rights will be represented by separate certificates and will no longer be
represented by this certificate. Under certain circumstances specified in the
Rights Agreement, Rights beneficially owned by certain persons may become null
and void. The Corporation will mail to the record holder of this certificate a
copy of the Rights Agreement without charge promptly following receipt of a
written request therefor.
The following abbreviations, when used in the inscription on the
face of this certificate, shall be construed as though they were written out in
full according to the applicable laws and regulations:
TEN COM - as tenants in common UNIF TRAN MIN ACT - _______Custodian________
(Cust) (Minor)
TEN ENT - as tenants by their entireties under Uniform Transfers to Minors Act
JT TEN - as joint tenants with right _______________________
of survivorship and not as (State)
tenants in common
UNIF GIFT MIN ACT - _______Custodian________
(Cust) (Minor)
under Uniform Gifts to Minors Act
________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ____________________________hereby sell, assign and transfer
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE )
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
of the common capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________________________________
_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated:_____________________________________
_____________________________________
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
certificate in every particular,
without alteration or enlargement or
any change whatever.
SIGNATURE(S) GUARANTEED:
By________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION (Banks,
Stockbrokers, Savings and Loan Associations
and Credit Unions) WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM PURSUANT TO S.E.C. RULE 17Ad-15.
3
<PAGE>
<PAGE>
EXHIBIT 11
The Centris Group, Inc.
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 of the
quarters and six-month periods ended June 30 as follows:
<TABLE>
<CAPTION>
(Dollars in Thousands)
Quarter Ended Six Months Ended
June 30 June 30
------- -------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $3,748 $3,585 $7,408 $7,393
====== ====== ====== ======
Weighted average shares outstanding during the period 5,960 5,851 5,961 5,837
Common stock equivalent shares 120 121 122 134
------ ------ ------ ------
Common and common stock equivalent shares outstanding
for purposes of calculating income per share 6,080 5,972 6,083 5,971
Incremental shares to reflect full dilution 30 -- 28 --
------ ------ ------ ------
Total shares for purpose of calculating fully diluted
income per share 6,110 5,972 6,111 5,971
===== ===== ===== =====
Net income per common and common
equivalent share $0.62 $ 0.60 $1.22 $ 1.24
===== ======= ===== ======
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 15
Independent Auditors' Review Report
-----------------------------------
The Board of Directors and Shareholders
The Centris Group, Inc.:
We have reviewed the condensed consolidated balance sheet of The Centris Group,
Inc. (formerly US Facilities Corporation) and subsidiaries as of June 30, 1997,
and the related condensed consolidated income statements for the quarters and
six-month periods ended June 30, 1997 and 1996, and condensed consolidated
statements of cash flows for the six-month periods ended June 30, 1997 and 1996.
These condensed 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 The Centris Group, Inc. (formerly
US Facilities Corporation) and subsidiaries as of December 31, 1996, and the
related consolidated income statement, statements of stockholders' equity and
cash flows for the year then ended (not presented herein); and in our report
dated February 4, 1997, 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, 1996,
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
July 28, 1997
<PAGE>
<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>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 202,455
<CASH> 35,278
<RECOVER-REINSURE> 26,868
<DEFERRED-ACQUISITION> 4,440
<TOTAL-ASSETS> 312,980
<POLICY-LOSSES> 106,684
<UNEARNED-PREMIUMS> 28,145
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 33,750
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 312,980
77,386
<INVESTMENT-INCOME> 5,403
<INVESTMENT-GAINS> 255
<OTHER-INCOME> 16,182
<BENEFITS> 55,522
<UNDERWRITING-AMORTIZATION> 22,992
<UNDERWRITING-OTHER> 10,129
<INCOME-PRETAX> 10,583
<INCOME-TAX> 3,175
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,408
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.21
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
