<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
Frontier Adjusters of America, Inc.
-----------------------------------
(Name of Issuer)
Common Stock, $.01 par value per share
--------------------------------------
(Title of Class of Securities)
359050101
---------
(CUSIP Number)
David M. Schneider
Chief Legal Officer
6300 Wilson Mills Road
Mayfield Village, Ohio 44143
(440) 461-5000
--------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 30, 1999
--------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
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CUSIP NO. 359050101 13D PAGE 2 OF 10
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
The Progressive Corporation
34-0963169
2 CHECK APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 5,258,513
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON WITH 10 SHARED DISPOSITIVE POWER
5,258,513
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,258,513
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
-0-
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
53.3%
14 TYPE OF REPORTING PERSON
HC, CO
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CUSIP NO. 359050101 13D PAGE 3 OF 10
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
United Financial Adjusting Company
34-1750521
2 CHECK APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC and AF (WC of The Progressive Corporation)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 5,258,513
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0-
PERSON WITH 10 SHARED DISPOSITIVE POWER
5,258,513
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,258,513
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
-0-
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
53.3%
14 TYPE OF REPORTING PERSON
CO
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CUSIP NO. 359050101 13D PAGE 4 OF 10
ITEM 1. SECURITY AND ISSUER.
This Amendment No. 1 to Schedule 13D relates to the shares of
Common Stock, $.01 par value per share (the "Common Shares"), of Frontier
Adjusters of America, Inc., an Arizona corporation (the "Issuer"). The principal
executive offices of the Issuer are located at 45 East Monterey Way, Phoenix,
Arizona 85012.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is filed jointly by the following parties
(collectively, the "Reporting Persons"): (i) United Financial Adjusting Company,
an Ohio corporation ("UFAC"), and (ii) The Progressive Corporation, an Ohio
corporation ("Progressive"), by virtue of its ownership of all of the
outstanding capital stock of UFAC. The principal business and office address of
Progressive is 6300 Wilson Mills Road, Mayfield Village, Ohio 44143. The
principal business and office address of UFAC is 747 Alpha Drive, Highland
Heights, Ohio 44143.
Progressive is an insurance holding company whose insurance
subsidiaries and affiliates provide personal automobile insurance and other
specialty property-casualty insurance and related services throughout the United
States and in Canada. UFAC is a subsidiary of Progressive that provides claim
and administrative services to insurance carriers, managing general agents and
large self-insured companies. UFAC is also a majority shareholder of a vehicle
inspection company and a claims software company.
Set forth in Appendix A hereto are the names, residence or
business addresses, present principal occupation or employment, and the name,
principal business and address of any corporation or other organization in which
such employment is conducted, of each executive officer and director of
Progressive and UFAC. Each such person is a citizen of the United States.
During the last five years, none of Progressive, UFAC or any
of the persons named in Appendix A (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors), or (ii) was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws, or finding
any violations with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS.
UFAC funded the $6,836,067 purchase price of the Convertible
Shares (as defined herein) from its own working capital and from funds provided
to it by Progressive. Progressive used its own working capital to provide the
funds required by UFAC for such purpose.
ITEM 4. PURPOSE OF TRANSACTION.
Under a Stock Purchase Agreement dated as of November 20, 1998
(the "Purchase Agreement") between the Issuer and UFAC, UFAC agreed to purchase
5,258,513 shares (the "Convertible Shares") of the Issuer's Series A Convertible
Voting Preferred Stock, $.01 par value per share, in exchange for $6,836,067. On
April 29, 1999, the holders of the Common Shares approved the sale of the
Convertible Shares to UFAC pursuant to the Purchase Agreement. On April 30,
1999, UFAC purchased the Convertible Shares at the closing (the "Closing"). The
Convertible Shares have one vote per share, vote together with the Common Shares
as a class, and can be converted into Common Shares on a share-for-share basis
at certain times, subject to certain restrictions as described herein, prior to
June 30, 1999, after which time the Convertible Shares will be converted
automatically into Common Shares.
In the Purchase Agreement, the Issuer agreed to make a tender
offer for up to 1,000,000 outstanding Common Shares at a price of $2.90 per
Common Share (the "Tender Offer") as soon as reasonably practicable after the
Closing. Within 60 days after completion of the Tender Offer, the Issuer will
declare and pay a distribution of $1.60 per Common Share (the "Distribution") on
all remaining
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CUSIP NO. 359050101 13D PAGE 5 OF 10
outstanding Common Shares. Pending this Distribution, the Issuer has suspended
payment of its quarterly dividends. There can be no assurance that the payment
of regular quarterly dividends will be resumed after the Distribution. UFAC has
agreed not to tender any Convertible Shares or Common Shares in the Tender Offer
and not to convert any of the Convertible Shares into Common Shares until the
earlier of the following: (i) the record date for the payment of the
distribution described in this paragraph, and (ii) 180 days after the date of
the Purchase Agreement.
In accordance with the Purchase Agreement, the Issuer took all
actions that were necessary to cause the Board to consist of a majority of
nominees named by UFAC at the Closing. George M. Hill and William W. Strawthers,
Jr. resigned from the Board, and the Board was expanded to have 15 members.
Charles B. Chokel, John M. Davies, Jeffrey Jordan, Jeffrey R. Harcourt, Troy
Huth, Dane A. Shrallow, William A. White and Milo C. Bolender were appointed to
the fill vacancies in the Board as representatives of UFAC.
For so long as UFAC holds a number of Common Shares that is
greater than a simple majority of the outstanding Common Shares, UFAC will be
entitled to nominate at least a simple majority of the candidates to the Board.
The Issuer has agreed to cause UFAC's nominees to be included in the slate of
nominees recommended by the Board for election to the Board after the Closing,
and the Issuer agreed to use its reasonable efforts to cause the election of
such nominees.
Under the Purchase Agreement, an experienced claims manager
and attorney from UFAC will began working with William J. Rocke, the Issuer's
Chief Executive Officer, and Jean E. Ryberg, the Issuer's President, to assume
day-to-day responsibility for managing the Issuer's franchisee network and the
field offices owned and operated by the Issuer in Phoenix and Tuscon, Arizona,
and Las Vegas, Nevada. Mr. Rocke and Ms. Ryberg have each agreed to resign from
their positions as officers of the Issuer on June 30, 1999. Because UFAC's
representatives constitute a majority of the Board, they will have the ability
to designate the replacements for Mr. Rocke and Ms. Ryberg and to control the
management of the Issuer following the Closing.
Except as described herein, none of the Reporting Persons has
any current plans or proposals which relate to or would result in any of the
following: (a) the acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer, (b) any extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Issuer or any of its subsidiaries, (c) a sale or transfer of a
material amount of assets of the Issuer or any of its subsidiaries, (d) any
change in the Board or management of the Issuer, including any plans or
proposals to change the number or term of directors or to fill any existing
vacancies on the Board of the Issuer, (e) any material change in the present
capitalization or dividend policy of the Issuer, (f) any other material change
in the Issuer's business or corporate structure, (g) any changes in the Issuer's
articles of incorporation or code of regulations (h) causing a class of
securities of the Issuer to be delisted from a national securities exchange or
to cease to be authorized to be quoted in the inter-dealer quotation system of a
registered national securities association, (i) a class of equity securities of
the Issuer becoming eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of 1934, as amended, or (j) any
action similar to those enumerated above.
The foregoing response to this Item 4 is qualified in its
entirety by reference to the Purchase Agreement and the Terms of the Convertible
Shares, the full texts of which are respectively filed as Exhibits B and E
hereto and are incorporated herein by reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) UFAC may be deemed to beneficially own 5,258,513 Common
Shares, representing approximately 53.3% of the outstanding Common Shares,
issuable upon conversion of the Convertible Shares because such Common Shares
may be issued in the next 60 days. Progressive, as the parent of UFAC, may be
deemed to beneficially own all such Common Shares. John M. Davies, the
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CUSIP NO. 359050101 13D PAGE 6 OF 10
President of UFAC, owns 500 Common Shares. The Reporting Persons disclaim
beneficial ownership of the Common Shares owned by Mr. Davies. Assuming the
Issuer purchases 1,000,000 Common Shares in the Tender Offer and the conversion
of the Convertible Shares into Common Shares, the Reporting Persons may be
deemed to beneficially own approximately 59.3% of the outstanding Common Shares.
(b) Together, the Reporting Persons share voting and
dispositive power over the shares described in Item 5(a), however, the Reporting
Persons disclaim beneficial ownership of the Common Shares owned by Mr. Davies.
(c) Except as described herein, none of the Reporting Persons
or any of the persons identified in Appendix A has effected any transaction in
the Common Shares in the past 60 days.
(d) No person other than the Reporting Persons has the right
to receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, the Convertible Shares or the Common Shares issuable upon the
conversion thereof. Progressive, as the owner of all of the outstanding capital
stock of UFAC, has the ability to direct UFAC's receipt of dividends from, or
the proceeds from the sale of, the Convertible Shares or the Common Shares
issuable upon the conversion thereof.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENT, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
(a) PURCHASE AGREEMENT. The Issuer and UFAC are parties to the
Purchase Agreement. The material terms of the Purchase Agreement are summarized
in Item 4.
(b) INSIDER SUPPORT AGREEMENTS. The Insider Support Agreements
described in the initial Schedule 13D filed by the Reporting Persons terminated
by their terms on following the Closing on April 30, 1999 and the appointment of
UFAC's representatives to the Board.
(c) REGISTRATION RIGHTS AGREEMENT. The Issuer and UFAC are
parties to a registration rights agreement (the "Registration Rights Agreement")
relating to the Convertible Shares and the Common Shares issuable upon
conversion thereof. The Registration Rights Agreement provides that UFAC may
make one demand to have the Convertible Shares or the Common Shares issuable
upon conversion of the Convertible Shares registered pursuant to the Securities
Act of 1933, as amended (the "Securities Act"). These demand registration rights
are subject to certain customary blackout rights and limitations.
UFAC also has certain "piggy-back" registration rights. UFAC
must be notified prior to the filing of any registration statement under the
Securities Act by the Issuer. UFAC may include Convertible Shares or Common
Shares issuable upon conversion of the Convertible Shares in any such
registration statement. The Issuer must use its best efforts to include any such
shares in the registration statement.
(d) TERMS OF THE CONVERTIBLE SHARES. The Convertible Shares
were created prior to the Closing by a resolution by the Board. The Convertible
Shares vote with the Common Shares together as a single class and are
substantially equivalent to the Common Shares with respect to dividend and
liquidation rights. The conversion rights of the Convertible Shares and the
restrictions on UFAC's conversion of the Convertible Shares are summarized in
Item 4.
Except as stated in this Item 6, none of the Reporting Persons
has any contracts, arrangements, understandings or relationships (legal or
otherwise) with any other person with respect to the Common Shares, including
without limitation, any agreements concerning (i) transfer or voting of any
Common Shares, (ii) finder's fees, (iii) joint ventures, (iv) loan or option
arrangement, (v) puts or calls, (vi) guarantees of profits, (vii) division of
profits or losses, or (viii) the giving or withholding of proxies.
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CUSIP NO. 359050101 13D PAGE 7 OF 10
The foregoing response to this Item 6 is qualified in its
entirety by reference to the Purchase Agreement, the Form of Insider Support
Agreements, the Form of the Registration Rights Agreement and the Terms of the
Convertible Shares, the full texts of which are respectively filed as Exhibits B
through E hereto and are incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
A. Agreement among the Reporting Persons to file a joint
statement on Schedule 13D*
B. Stock Purchase Agreement**
C. Form of Insider Support Agreement with a List of the Voting
Persons and the Number of Common Shares Beneficially Owned by
each Voting Person attached**
D. Form of Registration Rights Agreement**
E. Terms of the Convertible Shares**
* Filed herewith
** Previously filed
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CUSIP NO. 359050101 13D PAGE 8 OF 10
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
THE PROGRESSIVE CORPORATION
By: /s/ Charles B. Chokel
Charles B. Chokel,
Chief Executive Officer--Insurance Operations
UNITED FINANCIAL ADJUSTING COMPANY
By: /s/ John M. Davies
John M. Davies, President
Dated as of May 3, 1999
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CUSIP NO. 359050101 13D PAGE 9 OF 10
APPENDIX A
DIRECTORS AND EXECUTIVE OFFICERS
OF THE REPORTING PERSONS
The following table sets forth the name, business address,
present principal occupation or employment, the name, principal business and
address of the principal office of any corporation or other organization in
which such employment is conducted of each director and executive officer of The
Progressive Corporation ("Progressive") and United Financial Adjusting Company
("UFAC").
<TABLE>
<CAPTION>
Principal Occupation or Employment and Name, Principal
Business and Address of Organization in which Employment is
Name and Business Address Conducted(1)
- ------------------------- ------------
<S> <C>
A. DIRECTORS OF PROGRESSIVE
Peter B. Lewis(2)...................................... Chairman of the Board, President, Chief Executive
Officer--Insurance Operations and a director of
Progressive; Chairman of the Board, President, Chief
Executive Officer and a director of Progressive
Casualty Insurance Company, the principal subsidiary
of Progressive
Milton N. Allen........................................ Director of various companies
12 Lieutenant River Lane
Old Lyme, Connecticut 06371-2308
B. Charles Ames........................................ Principal, Clayton, Dubilier & Rice, Inc., New York,
25700 Science Park New York (investment banking)
Landmark Center, Suite 180
Beachwood, Ohio 44122-7312
James E. Bennett III................................... Senior Executive Vice President, KeyCorp, Cleveland
127 Public Square, 55th Floor Ohio (banking)
Cleveland, Ohio 44114
Charles B. Choke(2).................................... Chief Executive Officer--Investments and Capital
Management and a Director of Progressive
Charles A. Davis....................................... President and Chief Executive Officer, Marsh &
20 Horse Neck Lane McLennan Capital, Inc. (global private equity firm)
Greenwich, Connecticut 06830
Stephen R. Hardis...................................... Chairman of the Board and Chief Executive Officer of
Eaton Center Eaton Corporation, Cleveland, Ohio (manufacturing)
1111 Superior Avenue
Cleveland, Ohio 44114-2507
Janet Hill............................................. President, Staubach Alexander Hill, LLC, Washington,
400 C Street, NW D.C. (commercial real estate consulting) and Vice
Washington, D.C. 20002 President, Alexander & Associates, Inc., Washington,
D.C. (management consulting)
</TABLE>
(1) The business address of the organization in which each person's employment
is conducted is the same as such person's business address.
(2) The business address of each such person is 6300 Wilson Mills Road,
Mayfield Village, Ohio 44143
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CUSIP NO. 359050101 13D PAGE 10 OF 10
<TABLE>
<CAPTION>
Principal Occupation or Employment and Name, Principal
Business and Address of Organization in which Employment is
Name and Business Address Conducted(1)
- ------------------------- ------------
<S> <C>
Norman S. Matthews..................................... Consultant, New York, New York
650 Madison Avenue
23rd Floor
New York, New York 10022-1004
Donald B. Shackelford.................................. Chairman of the Board, Fifth Third Bank of Central
21 East Broad Street Ohio, Columbus, Ohio (commercial bank)
Columbus, Ohio 43215-3403
Paul B. Sigler......................................... Henry Ford II Professor, Yale University and
260 Whitney Avenue/JWG 423 Investigator in the Howard Hughes Medical Institute,
P.O. Box 208114 New Haven, Connecticut
New Haven, Connecticut 06520-8114
B. EXECUTIVE OFFICERS OF PROGRESSIVE
Peter B. Lewis(2)...................................... See Section A. above
Alan R. Bauer(2)....................................... Internet Distribution Leader
Charles B. Chokel(2)................................... See Section A. above
W. Thomas Forrester, II(2)............................. Chief Financial Officer and Treasurer
Moira G. Lardakis(2)................................... Chief Communications Officer
Daniel R. Lewis(2)..................................... Independent Agent Distribution Leader
Robert J. McMillan(2).................................. Direct Distribution Leader
Brian J. Passell(2).................................... Chief Claim Officer
Glenn M. Renwick(2).................................... Chief Information Officer
David L. Roush(2)...................................... Strategic Alliance Distribution Leader
E. DIRECTORS AND EXECUTIVE OFFICERS OF UFAC
Peter B. Lewis(2)..................................... Director and Chairman
John M. Davies......................................... Director and President
747 Alpha Drive
Highland Heights, Ohio 44143
Janet A. Dolohanty(2).................................. Director and Vice President
David M. Schneider(2).................................. Secretary
Breck T. Platner(2).................................... Treasurer
</TABLE>
(1) The business address of the organization in which each person's employment
is conducted is the same as such person's business address.
(2) The business address of each such person is 6300 Wilson Mills Road,
Mayfield Village, Ohio 44143
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EXHIBIT A
This Exhibit A to Amendment No. 1 to Schedule 13D is filed
pursuant to the requirements of Rule 13d(1)(f)(1)(iii). The undersigned, The
Progressive Corporation and United Financial Adjusting Company, hereby agree
that the Amendment No. 1 to Schedule 13D to which this Exhibit is attached is
filed on behalf of each of the undersigned.
THE PROGRESSIVE CORPORATION
By: /s/ Charles B. Chokel
Charles B. Chokel,
Chief Executive Officer--Insurance Operations
UNITED FINANCIAL ADJUSTING COMPANY
By: /s/ John M. Davies
John M. Davies, President
Dated as of May 3, 1999
