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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-Q/A
AMENDMENT NO. 1 TO
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
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: 0-18786
PICO HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-2723335
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
875 PROSPECT STREET, SUITE 301
LA JOLLA, CALIFORNIA 92037
(619) 456-6022
(Address and telephone number of principal executive offices)
Indicate by check mark whether 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
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The number of shares outstanding of the Registrant's Common Stock, $0.001 par
value, was 13,328,770 as of March 31, 1999. As of such date, 4,394,127 shares of
common stock were held by the registrant and subsidiaries of the registrant.
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FORM 10 - Q/A
AMENDMENT NO. 1
The undersigned registrant hereby amends Item 3, QUANTITATIVE AND
QUALITATIVE DISCLOSURE ABOUT MARKET RISK, of its Quarterly Report on Form 10-Q
for the quarter ended March 31, 1999 to read in full as follows:
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company's balance sheet includes a significant amount of assets and
liabilities whose fair value are subject to market risk. Market risk is the risk
of loss arising from adverse changes in market interest rates or prices. The
Company currently has interest rate risk as it relates to its fixed maturity
securities and mortgage loans, equity price risk as it relates to its marketable
equity securities, and foreign currency risk as it relates to investments
denominated in foreign currencies. The Company's bank debt is short-term in
nature as the Company generally secures rates for periods of approximately one
to two years and therefore approximates fair value. At March 31, 1999, the
Company had $31.5 million of fixed maturity securities and mortgage loans, $71.5
million of marketable equity securities that were subject to market risk, and
$38.6 million of investments denominated in foreign currencies, primarily Swiss
Francs. The Company's investment strategy is to manage the duration of the
portfolio relative to the duration of the liabilities while managing interest
rate risk.
The Company uses two models to analyze the sensitivity of its assets and
liabilities subject to the above risks. For its fixed maturity securities, and
mortgage loans, the Company uses duration modeling to calculate changes in fair
value. For its marketable securities the Company uses a hypothetical 20%
decrease in the fair value to analyze the sensitivity of its market risk assets
and liabilities. For investments denominated in foreign currencies the Company
uses a hypothetical 20% decrease in the local currency of that investment.
Actual results may differ from the hypothetical results assumed in this
disclosure due to possible actions taken by management to mitigate adverse
changes in fair value and because the fair value of a securities may be affected
by credit concerns of the issuer, prepayment rates, liquidity, and other general
market conditions. The sensitivity analysis duration model produced a loss in
fair value of $300,000 on its fixed securities and mortgage loans. The
hypothetical 20% decrease in fair value of the Company's marketable equity
securities produced a loss in fair value of $12.2 million that would impact the
unrealized appreciation in shareholders' equity. The hypothetical 20% decrease
in the local currency of the Company's foreign denominated investments produced
a loss of $6.2 million that would impact the unrealized appreciation and foreign
currency translation in shareholders' equity.
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FORM 10 - Q/A
AMENDMENT NO. 1
PICO HOLDINGS, INC. AND SUBSIDIARIES
SIGNATURE
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.
PICO HOLDINGS, INC.
Dated: May 19, 1999 By: /s/ Gary W. Burchfield
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Gary W. Burchfield
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
