<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended June 30, 1996
-----------------------------------------------------
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 0-18298
-----------------------------------------------------------
Unitrin, Inc.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-4255452
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One East Wacker Drive, Chicago, Illinois 60601
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(312)661-4600
- -------------------------------------------------------------------------------
(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
--- ---
37,475,640 shares of common stock, $0.10 par value, were outstanding as of
June 30, 1996.
<PAGE>
UNITRIN, INC.
INDEX
Page
-------
PART I. Financial Information.
Item 1. Financial Statements.
Condensed Consolidated Statements of 1
Income for the Six and Three Months Ended
June 30, 1996 and 1995 (Unaudited).
Condensed Consolidated Balance Sheets as of 2
June 30, 1996 (Unaudited) and
December 31, 1995.
Condensed Consolidated Statements of Cash 3
Flows for the Six Months Ended
June 30, 1996 and 1995 (Unaudited).
Notes to the Condensed Consolidated 4-5
Financial Statements (Unaudited).
Item 2. Management's Discussion and Analysis of 6-8
Results of Operations and Financial Condition.
PART II. Other Information.
Item 4. Submission of Matters to a Vote of Securities Holders 9
Item 6. Exhibits and Reports on Form 8-K. 9-10
Signatures 11
<PAGE>
UNITRIN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
---------------------- ----------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Premiums $ 613.1 $ 530.3 $ 307.5 $ 265.7
Consumer Finance Revenues 58.9 51.2 30.1 26.3
Net Investment Income 89.5 97.0 44.4 48.1
Net Gains on Sales of Investments 1.2 33.7 0.1 33.2
-------- -------- -------- --------
Total Revenues 762.7 712.2 382.1 373.3
-------- -------- -------- --------
Insurance Claims and Policyholders' Benefits 411.9 351.4 205.9 182.1
Insurance Expenses 247.4 224.9 121.2 113.8
Consumer Finance Expenses 48.2 39.6 24.2 20.9
Interest and Other Expenses 7.3 16.9 3.7 9.3
-------- -------- -------- --------
Total Expenses 714.8 632.8 355.0 326.1
-------- -------- -------- --------
Income before Income Taxes and Equity
in Net Income of Investees 47.9 79.4 27.1 47.2
Income Tax Expense 15.8 27.2 9.0 16.0
-------- -------- -------- --------
Income before Equity in Net Income of Investees 32.1 52.2 18.1 31.2
Equity in Net Income of Investees 22.8 20.6 11.4 10.4
-------- -------- -------- --------
Net Income $ 54.9 $ 72.8 $ 29.5 $ 41.6
======== ======== ======== ========
Net Income Per Share - Note 2 $ 1.44 $ 1.75 $ 0.78 $ 1.03
======== ======== ======== ========
</TABLE>
The Notes to the Condensed Consolidated Financial Statements are an integral
part of these financial statements.
1
<PAGE>
UNITRIN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- ------------
(Unaudited)
<S> <C> <C>
Assets:
Investments:
Fixed Maturities at Fair Value (Amortized
Cost: 1996 - $2,252.8; 1995 - $2,365.1) $ 2,270.5 $ 2,457.1
Equity Securities at Fair Value
(Cost: 1996 - $139.4; 1995 - $97.7) 224.7 179.3
Investees at Cost Plus Cumulative Undistributed Earnings
(Fair Value: 1996 - $1,406.3; 1995 - $1,320.3) 629.6 595.2
Other 154.6 178.1
----------- ------------
Total Investments 3,279.4 3,409.7
----------- ------------
Cash 12.4 9.1
Consumer Finance Receivables 581.8 547.1
Other Receivables 376.7 250.4
Other Assets 589.8 602.4
----------- ------------
Total Assets $ 4,840.1 $ 4,818.7
=========== ============
Liabilities and Shareholders' Equity:
Insurance Reserves:
Life and Health $ 1,592.0 $ 1,569.5
Property and Casualty 439.9 437.8
----------- ------------
Total Insurance Reserves 2,031.9 2,007.3
----------- ------------
Investment Certificates and Passbook Accounts 560.9 519.0
Notes Payable 123.8 100.2
Accrued Expenses and Other Liabilities 680.9 667.7
----------- ------------
Total Liabilities 3,397.5 3,294.2
----------- ------------
Shareholders' Equity:
Common Stock, $0.10 par value, 100 million Shares Authorized;
37,475,640 and 38,490,287 Shares Outstanding at
June 30, 1996 and December 31, 1995 3.7 3.8
Additional Paid - in Capital 123.9 126.2
Retained Earnings 1,247.4 1,281.1
Net Unrealized Appreciation on Securities 67.6 113.4
----------- ------------
Total Shareholders' Equity 1,442.6 1,524.5
----------- ------------
Total Liabilities and Shareholders' Equity $ 4,840.1 $ 4,818.7
=========== ============
</TABLE>
The Notes to the Condensed Consolidated Financial Statements are an integral
part of these financial statements.
2
<PAGE>
UNITRIN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
---------------------------
June 30, June 30,
1996 1995
-------- --------
<S> <C> <C>
Operating Activities:
Net Income $ 54.9 $ 72.8
Adjustments to Reconcile Net Income to Net Cash
Provided by Operations:
Change in Deferred Policy Acquisition Costs 5.4 2.4
Equity in Net Income of Investees before Taxes (34.9) (31.5)
Cash Dividends from Investee 0.5 0.5
Amortization of Fixed Maturities 12.4 11.7
Increase in Insurance Reserves and Unearned Premiums (0.6) 12.4
Change in Accrued Expenses and Other Liabilities 11.2 20.2
Net Gains on Sales of Investments (1.2) (33.7)
Provision for Loan Losses 13.1 10.5
Other, Net 8.1 6.1
-------- --------
Net Cash Provided by Operating Activities 68.9 71.4
-------- --------
Investing Activities:
Sales and Maturities of Fixed Maturities 150.3 321.4
Purchases of Fixed Maturities (49.0) (288.9)
Sales of Equity Securities 6.6 41.2
Purchases of Equity Securities (47.6) (8.2)
Change in Consumer Finance Receivables (47.8) (60.9)
Change in Short-term Investments 18.5 4.9
Other, Net 0.7 (6.4)
-------- --------
Net Cash Provided by Investing Activities 31.7 3.1
-------- --------
Financing Activities:
Change in Investment Certificates and Passbook Accounts 41.9 51.1
Universal Life and Annuity Account Payments to Reinsurer (79.6) -
Other Changes in Universal Life and Annuity Accounts 7.7 9.3
Notes Payable Proceeds 117.0 308.0
Notes Payable Payments (93.4) (62.0)
Cash Dividends Paid (42.0) (41.6)
Common Stock Repurchases (50.0) (350.0)
Other, Net 1.1 2.6
-------- --------
Net Cash Used by Financing Activities (97.3) (82.6)
-------- --------
Increase (Decrease) in Cash 3.3 (8.1)
Cash, Beginning of Year 9.1 23.3
-------- --------
Cash, End of Period $ 12.4 $ 15.2
======== ========
</TABLE>
The Notes to the Condensed Consolidated Financial Statements are an integral
part of these financial statements.
3
<PAGE>
UNITRIN, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The unaudited Condensed Consolidated Financial Statements included herein have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission (the "Commission") but do not include all
information and footnotes required by generally accepted accounting principles.
In the opinion of management, the Condensed Consolidated Financial Statements
reflect all adjustments necessary for a fair presentation. The preparation of
interim financial statements relies heavily on estimates. This factor and
certain other factors, such as the seasonal nature of some portions of the
insurance business, as well as market conditions, call for caution in drawing
specific conclusions from interim results. The accompanying Condensed
Consolidated Financial Statements should be read in conjunction with the
Consolidated Financial Statements and related notes included in the Company's
Annual Report on Form 10-K filed with the Commission for the year ended
December 31, 1995.
Certain prior year amounts have been reclassified to conform to the current
year's presentation.
NOTE 2 - SHAREHOLDERS' EQUITY
On August 11, 1994, the Company's Board of Directors authorized the repurchase
of up to ten million shares of the Company's outstanding common stock, including
approximately 1.4 million shares remaining under its August 8, 1990 repurchase
authorization, in open market or privately negotiated transactions from time to
time subject to market conditions and other factors. On February 17, 1995, the
Company's Board of Directors authorized the repurchase of an additional five
million shares of the Company's outstanding common stock, for an aggregate
authorization of fifteen million shares. During the six months ended June 30,
1996, the Company repurchased 1,041,575 shares of its common stock in open
market transactions at an aggregate cost of $50.0 million, bringing the total
number of common shares repurchased since August 1994 to 14,528,033 at a total
cost of $711.3 million. Common Stock, Additional Paid-in Capital and Retained
Earnings have been reduced on a pro rata basis for the cost of the repurchased
shares.
In the first six months of 1996, the Compensation Committee of the Board of
Directors granted non-qualified stock options under the Company's 1990 Stock
Option Plan covering 437,572 common shares at exercise prices ranging from
$47.50 to $51.00, which equaled the fair market value of such shares on the date
of grant. The options granted are exercisable in installments beginning two
years from the date of grant and expire ten years from the date of grant. As of
June 30, 1996, options for 1,914,872 common shares were outstanding and options
covering 385,100 common shares were available for future grant under the 1990
Stock Option Plan.
On May 1, 1996, the Company's shareholders approved the 1995 Non-Employee
Director Stock Option Plan (the "Director Plan"). On May 1, 1996, two of the
Company's directors received options to purchase 2,000 shares of the Company's
common stock at an exercise price of $48.50 per common share which equaled the
fair market value of the shares on the date of grant. As of June 30, 1996,
options for 8,000 common shares were outstanding under the Director Plan.
Net Income Per Share was computed using 38,137,759 and 41,594,708 weighted
average shares for the six months ended June 30, 1996 and 1995, respectively,
and using 37,859,604 and 40,261,255 weighted average shares for the three months
ended June 30, 1996 and 1995, respectively. Common stock equivalents of
approximately 282,000 were excluded from the computation of both primary and
fully diluted net income per share for the six months ended June 30, 1996
because the effect of dilution of net income per share was less than 3 percent.
Common stock equivalents of approximately 267,000 were excluded from the
computation of both primary and fully diluted net income per share for the three
months ended June 30, 1996 because the effect of dilution of net income per
share was less than 3 percent. Common stock equivalents of approximately 323,000
were excluded from the computation of both primary and fully diluted net income
per share for the six months ended June 30, 1995 because the effect of dilution
of net income per share was less than 3 percent. Common stock equivalents of
approximately 333,000 were excluded from the computation of both primary and
fully diluted net income per share for the three months ended June 30, 1995
because the effect of dilution of net income per share was less than 3 percent.
4
<PAGE>
NOTE 3 - CONTINGENCIES
The Company and its subsidiaries are defendants in various legal actions
incidental to their businesses. Some of these actions seek substantial punitive
damages that bear no apparent relationship to the actual damages alleged.
Although no assurances can be given and no determination can be made at this
time as to the outcome of any particular legal action, the Company and its
subsidiaries believe there are meritorious defenses to these legal actions and
are defending them vigorously. The Company believes that resolution of these
matters will not have a material adverse effect on the Company's financial
position.
In connection with one action, Ronnie Dale Bleeker v. Trinity Universal
Insurance Company ("Trinity"), et al., the District Court of Hildalgo County,
Texas, on February 9, 1995 entered a judgment in the amount of $77.0 million,
including attorney's fees of $38.5 million, against Trinity, one of the
Company's subsidiaries. The case involves Trinity's alleged improper handling of
a claim made under a $40 thousand automobile insurance policy. Trinity has
strongly denied any wrongdoing and intends to pursue vigorously all avenues for
relief from the judgment. The matter is presently on appeal to the Thirteenth
Court of Appeals in Corpus Christi, Texas. The ultimate outcome of this
litigation cannot presently be predicted. However, the Company believes that
Trinity has a number of meritorious grounds for appeal and, accordingly, the
judgment has not been accrued in the financial statements.
Effective May 31, 1996, United Insurance Company of America, one of the
Company's Life and Health Insurance subsidiaries ("United"), entered into an
agreement to cede certain life insurance policies to a third party. Life
insurance reserves related to this agreement were $124.7 million. At June 30,
1996 the Company had not been relieved of its primary obligation to these
policyholders. In accordance with the provisions of SFAS Statement 113,
Accounting and Reporting for Reinsurance of Short Duration and Long Duration
Contracts, the Company therefore continues to include the life insurance
reserves related to this block of business on its balance sheet along with a
corresponding amount classified as Other Receivables. Other Receivables
increased by $124.7 million during the second quarter of 1996 due to this
transaction.
NOTE 4 - SUPPLEMENTAL CASH FLOW INFORMATION
Significant non-cash activity related to the Company's investments in Fixed
Maturities and Equity Securities for the six months ended June 30, 1996 were:
<TABLE>
<CAPTION>
(Dollars in Millions)
---------------------
<S> <C>
Decrease in Unrealized Appreciation on Securities $ (70.6)
Effect of Income Taxes 24.8
---------
Decrease in Net Unrealized Appreciation on Securities $ (45.8)
=========
</TABLE>
[This space left intentionally blank.]
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
UNITRIN, INC. AND SUBSIDIARIES
SUMMARIZED FINANCIAL INFORMATION
(Dollars in millions)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
---------------------- ----------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Property and Casualty Insurance:
Premiums $ 362.1 $ 271.8 $ 182.2 $ 136.1
Net Investment Income 24.9 21.4 12.5 10.5
-------- -------- -------- --------
Total Property and Casualty Insurance 387.0 293.2 194.7 146.6
-------- -------- -------- --------
Life and Health Insurance:
Premiums 251.0 258.5 125.3 129.6
Net Investment Income 62.6 74.1 31.3 36.9
-------- -------- -------- --------
Total Life and Health Insurance 313.6 332.6 156.6 166.5
-------- -------- -------- --------
Consumer Finance 58.9 51.2 30.1 26.3
-------- -------- -------- --------
Total Segment Revenues 759.5 677.0 381.4 339.4
-------- -------- -------- --------
Net Gains on Sales of Investments 1.2 33.7 0.1 33.2
Other Revenues 2.0 1.5 0.6 0.7
-------- -------- -------- --------
Total Revenues $ 762.7 $ 712.2 $ 382.1 $ 373.3
======== ======== ======== ========
Income before Income Taxes and
Equity in Net Income of Investees:
Property and Casualty Insurance $ 22.1 $ 17.1 $ 10.6 $ (1.5)
Life and Health Insurance 17.7 31.1 12.7 18.0
Consumer Finance 13.2 13.6 7.1 6.5
-------- -------- -------- --------
Total Segment Operating Profit 53.0 61.8 30.4 23.0
-------- -------- -------- --------
Net Gains on Sales of Investments 1.2 33.7 0.1 33.2
Net Corporate Interest Expense (0.9) (4.7) (0.7) (3.5)
Other Corporate Expense (5.4) (11.4) (2.7) (5.5)
-------- -------- -------- --------
Income before Income Taxes and
Equity in Net Income of Investees $ 47.9 $ 79.4 $ 27.1 $ 47.2
======== ======== ======== ========
</TABLE>
6
<PAGE>
PROPERTY AND CASUALTY INSURANCE
Premiums in the Property and Casualty Insurance segment increased by $46.1
million and $90.3 million, respectively, for the three and six months ended June
30, 1996, compared to the same periods in 1995, primarily due to the October 2,
1995 acquisition of Milwaukee Insurance Group, Inc. ("Milwaukee Insurance"). The
first six months of 1995 included $5.7 million of favorable premium adjustments
related to California Proposition 103. Net Investment Income in the Property and
Casualty Insurance segment excluding Milwaukee Insurance decreased by $1.9
million and $3.7 million, respectively, due a lower level of investments in
fixed maturities. Operating Profit in the Property and Casualty Insurance
segment increased by $12.1 million and $5.0 million, respectively, due primarily
to lower storm damage partially resulting from the Company's efforts to reduce
its concentration of business in storm prone areas. The acquisition of Milwaukee
Insurance increased Operating Profit in the Property and Casualty Insurance
segment by approximately $3.4 million and $1.5 million, respectively.
LIFE AND HEALTH INSURANCE
Premiums in the Life and Health Insurance segment decreased by $4.3 million and
$7.5 million, respectively, for the three and six months ended June 30, 1996,
compared to the same periods in 1995. Accident and Health Insurance premiums
decreased by $3.5 million and $6.6 million, respectively, primarily due to lower
volume. Net Investment Income in the Life and Health Insurance segment decreased
by $5.6 million and $11.5 million, respectively, due primarily to a lower level
of investments as a result of certain prior year intercompany transactions. The
Company expects that Net Investment Income recorded in the Life and Health
Insurance segment for the third quarter of 1996 will decrease compared to the
prior year period reflecting the full year impact of the intercompany
transactions. Operating Profit in the Life and Health Insurance segment
decreased by $5.3 million and $13.4 million, respectively, due to the lower net
investment income and unfavorable mortality experience in life insurance in the
second quarter of 1996, partially offset by lower underwriting expenses.
Effective May 31, 1996, United Insurance Company of America, one of the
Company's Life and Health Insurance subsidiaries ("United"), entered into an
agreement to cede certain life insurance policies to a third party. Life
insurance reserves related to this agreement were approximately $125 million. At
June 30, 1996 the Company had not been relieved of its primary obligation to
these policyholders. In accordance with the provisions of SFAS Statement 113,
Accounting and Reporting for Reinsurance of Short Duration and Long Duration
Contracts, the Company therefore continues to include the life insurance
reserves related to this block of business on its balance sheet along with a
corresponding amount classified as Other Receivables. Other Receivables
increased by approximately $125 million during the second quarter of 1996 due to
this transaction. As a result of this transaction annual premiums in the Life
and Health Insurance segment will decrease by approximately $13 million. The
effect of this transaction on Operating Profit is not significant.
CONSUMER FINANCE
Revenues in the Consumer Finance segment increased by $3.8 million and $7.7
million, respectively, for the three and six months ended June 30, 1996,
compared to the same periods in 1995, as a result of a higher level of loans
outstanding. Operating Profit in the Consumer Finance segment increased by $0.6
million for the second quarter of 1996, compared to the same period in 1995, due
primarily to the higher level of loans outstanding. Operating Profit in the
Consumer Finance segment decreased by $0.4 million for the first six months of
1996, compared to the same period in 1995, due primarily to higher provisions
for loan losses.
CORPORATE
Net Corporate Interest Expense decreased by $2.8 million and $3.8 million,
respectively, for the three and six months ended June 30, 1996, compared to the
same periods in 1995. The decreases in Net Corporate Interest Expense were
primarily the result of a $300 million extraordinary dividend paid from United
to the Unitrin, Inc. parent company in the third quarter of 1995. Proceeds from
this dividend were used to fund the Company's common stock repurchase program,
to reduce borrowings under the Company's revolving credit agreement and to
purchase certain investment securities from the Company's subsidiaries.
Other Corporate Expense decreased by $2.8 million and $6.0 million,
respectively, for the three and six months ended June 30, 1996, compared to the
same periods in 1995, due primarily to expenses incurred in 1995 attributed to
an unsolicited merger proposal.
7
<PAGE>
INVESTEES
Equity in Net Income of Investees increased by $1.0 million and $2.2 million,
respectively, for the three and six months ended June 30, 1996, compared to the
same periods in 1995, due to improved operating results at the investee
companies.
Litton Industries, Inc. ("Litton") announced in the first quarter of 1996 that
it had agreed to acquire Steerage Corp. ("Steerage") and that it would issue
approximately 2.2 million shares of Litton common stock to affect the
combination utilizing the pooling of interests method of accounting. Litton
subsequently announced that it paid all cash, instead of issuing shares of
Litton common stock, to affect the combination and that it accounted for the
Steerage acquisition utilizing the purchase method of accounting. Accordingly,
Unitrin's results were not affected by the completion of this transaction.
OTHER ITEMS
During the first six months of 1996, the Company repurchased 1,041,575 shares of
its common stock in open market transactions at an aggregate cost of $50.0
million. The repurchases were made with general corporate funds. At June 30,
1996, the unused commitment under the Company's revolving credit agreement was
$233 million. In addition, for the remainder of 1996, the Company's subsidiaries
would be able to pay approximately $161 million in dividends to the Company
without prior regulatory approval.
[This space left intentionally blank.]
8
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
The Annual Meeting of Shareholders of Unitrin, Inc. was held on May 1, 1996 for
the purpose of electing seven directors and to consider and act upon a proposal
to approve the 1995 Non-Employee Director Stock Option Plan (the "Plan").
The final tabulation for each of the seven nominees for director is as follows:
<TABLE>
<CAPTION>
Votes Votes
Nominee For Withheld
------------------ ---------- ---------
<S> <C> <C>
James E. Annable 34,472,474 238,786
Reuben L. Hedlund 34,467,840 288,420
Jerrold V. Jerome 34,498,529 257,731
George A. Roberts 34,492,984 263,276
Fayez S. Sarofim 34,497,431 258,829
Henry E. Singleton 33,470,137 1,286,123
Richard C. Vie 34,497,714 258,546
</TABLE>
Shareholders approved the Plan by casting 32,673,239 votes for approval,
1,707,154 votes against, and 375,867 votes abstained.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Exhibits.
<C> <S>
3.1 Certificate of Incorporation (Incorporated herein by reference to
Exhibit 3.1 to Unitrin's Registration Statement on Form 10 dated
February 15, 1990.)
3.2 Amended and Restated By-Laws (Incorporated herein by reference to
Exhibit 3.2 to the Company's 1994 Annual Report on Form 10-K.)
4 Rights Agreement between the Company and First Chicago Trust Company
of New York, as rights agent, dated as of August 3, 1994
(incorporated herein by reference to Exhibit 1 to the Company's
Registration Statement on Form 8-A dated August 3, 1994)
10.1 Unitrin, Inc. 1990 Stock Option Plan as Amended and Restated
(Incorporated herein by reference to Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995.)
10.2 Amendments, dated May 1, 1996, to the Unitrin, Inc. 1990 Stock Option
Plan
10.3 1995 Non-Employee Director Stock Option Plan (Incorporated herein by
reference to Exhibit 10.3 to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1995.)
10.4 Unitrin, Inc. Retirement Plan for Salaried Employees (Incorporated by
reference to Exhibit 10.2 to Unitrin's Annual Report on Form 10-K for
the year ended December 31, 1994.)
10.5 Amendment No. 1 to Unitrin, Inc. Retirement Plan for Salaried
Employees (Incorporated by reference to Exhibit 10.3 to Unitrin's
Annual Report on Form 10-K for the year ended December 31, 1994.)
10.6 Amendment No. 2 to Unitrin, Inc. Retirement Plan for Salaried
Employees (Incorporated herein by reference to Exhibit 10.4 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1995.)
10.7 Unitrin, Inc. Pension Equalization Plan (Incorporated by reference to
Exhibit 10.4 to Unitrin's Annual Report on Form 10-K for the year
ended December 31, 1994.)
</TABLE>
9
<PAGE>
<TABLE>
<C> <S>
10.8 Unitrin is a party to individual severance agreements (the form of
which is incorporated herein by reference to Exhibit 10.5 to the
Company's 1994 Annual Report on Form 10-K), with the following
executive officers:
Jerrold V. Jerome (Chairman)
Richard C. Vie (President and Chief Executive Officer)
David F. Bengston (Vice President)
James W. Burkett (Vice President)
Thomas H. Maloney (Vice President and General Counsel)
Eric J. Draut (Treasurer)
(Note: Each of the foregoing agreements is identical except that the
severance compensation multiple is 2.99 for Messrs. Jerome and Vie
and 2.0 for the other executive officers. The term of these
agreements has been extended by action of Unitrin's board of
directors through December 31, 1996.)
10.9 Severance Compensation Plan After Change of Control (Incorporated
herein by reference to Exhibit 10.6 to the Company's 1994 Annual
Report on Form 10-K; the term of this plan has been extended by
Unitrin's board of directors through December 31, 1996.)
10.10 Credit Agreement, dated January 24, 1995 among Unitrin, Inc.,
NationsBank, N.A. (Carolinas), The First National Bank of Chicago and
First Interstate Bank of California (Incorporated by reference to
Exhibit 10.7 to Unitrin's Annual Report on Form 10-K for the year
ended December 31, 1994.)
10.11 First Amendment to Credit Agreement, dated July 14, 1995
(Incorporated herein by reference to Exhibit 10.10 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1995.)
10.12 Tax Allocation Agreement by and among Company and its Subsidiaries
and Teledyne, Inc. (Incorporated by reference to Amendment No. 1,
dated April 5, 1990, on Form 8 to the Company's Registration
Statement on Form 10.)
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K.
The following report on Form 8-K was filed by the Company during the
quarter ended June 30, 1996.
<TABLE>
<CAPTION>
Date of 8-K Item Reported
----------- -------------
<C> <S>
May 7, 1996 The Company reported that one of its investee companies,
Litton Industries, Inc. ("Litton"), announced it had agreed
to amend the terms of its acquisition of Steerage Corp. to
pay all cash instead of issuing shares of Litton common
stock. Accordingly, the Company reported it will not record a
loss upon Litton's completion of the Steerage Acquisition.
</TABLE>
10
<PAGE>
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.
Unitrin, Inc.
Date: July 25, 1996 /s/ Richard C. Vie
-------------------------------------
Richard C. Vie
President and Chief Executive Officer
Date: July 25, 1996 /s/ Eric J. Draut
-------------------------------------
Eric J. Draut
Treasurer and Controller
11
<PAGE>
<TABLE>
<CAPTION>
Exhibit Index
<C> <S>
3.1 Certificate of Incorporation (Incorporated herein by reference to Exhibit
3.1 to Unitrin's Registration Statement on Form 10 dated February 15,
1990.)
3.2 Amended and Restated By-Laws (Incorporated herein by reference to Exhibit
3.2 to the Company's 1994 Annual Report on Form 10-K.)
4 Rights Agreement between the Company and First Chicago Trust Company of
New York, as rights agent, dated as of August 3, 1994 (incorporated
herein by reference to Exhibit 1 to the Company's Registration Statement
on Form 8-A dated August 3, 1994)
10.1 Unitrin, Inc. 1990 Stock Option Plan as amended and Restated
(Incorporated herein by reference to Exhibit 10.1 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.)
10.2 Amendments, dated May 1, 1996, to the Unitrin, Inc. 1990 Stock Option
Plan
10.3 1995 Non-Employee Director Stock Option Plan (Incorporated herein by
reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1995.)
10.4 Unitrin, Inc. Retirement Plan for Salaried Employees (Incorporated by
reference to Exhibit 10.2 to Unitrin's Annual Report on Form 10-K for the
year ended December 31, 1994.)
10.5 Amendment No. 1 to Unitrin, Inc. Retirement Plan for Salaried Employees
(Incorporated by reference to Exhibit 10.3 to Unitrin's Annual Report on
Form 10-K for the year ended December 31, 1994.)
10.6 Amendment No. 2 to Unitrin, Inc. Retirement Plan for Salaried Employees
(Incorporated herein by reference to Exhibit 10.4 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.)
10.7 Unitrin, Inc. Pension Equalization Plan (Incorporated by reference to
Exhibit 10.4 to Unitrin's Annual Report on Form 10-K for the year ended
December 31, 1994.)
10.8 Unitrin is a party to individual severance agreements (the form of which
is incorporated herein by reference to Exhibit 10.5 to the Company's 1994
Annual Report on Form 10-K), with the following executive officers:
Jerrold V. Jerome (Chairman)
Richard C. Vie (President and Chief Executive Officer)
David F. Bengston (Vice President)
James W. Burkett (Vice President)
Thomas H. Maloney (Vice President and General Counsel)
Eric J. Draut (Treasurer)
(Note: Each of the foregoing agreements is identical except that the
severance compensation multiple is 2.99 for Messrs. Jerome and Vie and
2.0 for the other executive officers. The term of these agreements has
been extended by action of Unitrin's board of directors through December
31, 1996.)
10.9 Severance Compensation Plan After Change of Control (Incorporated herein
by reference to Exhibit 10.6 to the Company's 1994 Annual Report on Form
10-K; the term of this plan has been extended by Unitrin's board of
directors through December 31, 1996.)
10.10 Credit Agreement, dated January 24, 1995 among Unitrin, Inc.,
NationsBank, N.A. (Carolinas), The First National Bank of Chicago and
First Interstate Bank of California (Incorporated by reference to Exhibit
10.7 to Unitrin's Annual Report on Form 10-K for the year ended December
31, 1994.)
10.11 First Amendment to Credit Agreement, dated July 14, 1995 (Incorporated
herein by reference to Exhibit 10.10 to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1995.)
10.12 Tax Allocation Agreement by and among Company and its Subsidiaries and
Teledyne, Inc. (Incorporated by reference to Amendment No. 1, dated April
5, 1990, on Form 8 to the Company's Registration Statement on Form 10.)
27 Financial Data Schedule
</TABLE>
12
<PAGE>
Exhibit 10.2
UNITRIN, INC.
CERTIFIED RESOLUTIONS
The undersigned hereby certifies that he is the Secretary of Unitrin, Inc., a
corporation organized and existing under the laws of the State of Delaware; that
the resolutions set forth below were duly passed by the Board of Directors of
Unitrin, Inc. at a meeting held on May 1, 1996, at which meeting a quorum was at
all times present and acting. Such resolutions have not been in any way amended,
altered or repealed and remain in full force and effect as of the date hereof.
RESOLVED, that Section 7 of the Unitrin, Inc. 1990 Stock Option Plan, as
amended and restated effective November 1, 1995 (the "Plan"), is hereby
amended to read in its entirety as follows:
"Each option granted under this Plan shall be exercisable in such
installments during the period prior to its expiration date as the
Committee shall determine, but in no event shall any option be
exercisable for at least six months after grant except in the case of
the death or disability of the option holder; provided that, unless
otherwise determined by the Committee, if the option holder shall not
in any given installment period purchase all of the shares which the
option holder is entitled to purchase in such installment period, then
the option holder's right to purchase any shares not purchased in such
installment period shall continue until the expiration date or sooner
termination of the option holder's option. No option may be exercised
for a fraction of a share and no partial exercise of any option may be
for less than fifty (50) shares.
Upon the exercise of an option by an option holder by delivering
(whether actually or constructively) previously-acquired shares of
Common Stock of the Company in full or partial payment for the shares
received upon such exercise (as provided in Section 6), the Committee
shall grant the option holder a "restorative stock option" to purchase
additional shares of Common Stock of the Company. A restorative stock
option shall also be granted to an option holder who delivers
previously-acquired shares or has shares withheld from an exercise (as
provided in Section 10) to satisfy all or any portion of such option
holder's income tax withholding liability arising from such exercise.
The number of shares of Common Stock subject to a restorative stock
option shall be equal to the number of shares delivered in payment of
the purchase price of the initial option and/or the number of shares
delivered or withheld to satisfy the option holder's withholding tax
obligation. The purchase price of the restorative stock option shall
not be less than one hundred percent (100%) of the fair market value
of such Common Stock on the date the restorative stock option is
granted. All other terms of restorative stock options granted
hereunder, including, but not limited to, vesting and expiration,
shall be identical to the terms of the initial option upon which the
restorative stock option is granted."
13
<PAGE>
RESOLVED, that paragraph 2 of Section 10 of the Plan, is hereby amended to
read as follows:
"Any holder of an option or stock appreciation right hereunder may
elect to deliver previously-acquired shares of Common Stock of the
Company or to have the Company withhold shares that would otherwise
have been issued pursuant to the exercise of an option or a stock
appreciation right, the number of such withheld or surrendered shares
to be sufficient to satisfy all or any portion of such individual's
income tax withholding liability that arises upon the exercise or
other event giving rise to income tax withholding liability with
respect to the option or stock appreciation right."
DATED: July 25, 1996
/s/ Scott Renwick
-----------------
Scott Renwick
Secretary
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CAPTION> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<DEBT-HELD-FOR-SALE> 2,270,500
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 224,700
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 3,279,400
<CASH> 12,400
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 4,840,100
<POLICY-LOSSES> 2,031,900
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 123,800
<COMMON> 3,700
0
0
<OTHER-SE> 1,438,900
<TOTAL-LIABILITY-AND-EQUITY> 4,840,100
613,100
<INVESTMENT-INCOME> 89,500
<INVESTMENT-GAINS> 1,200
<OTHER-INCOME> 58,900
<BENEFITS> 411,900
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 302,900<F1>
<INCOME-PRETAX> 47,900
<INCOME-TAX> 15,800
<INCOME-CONTINUING> 54,900<F2>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,900
<EPS-PRIMARY> 1.44
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1> Includes Consumer Finance Expenses of $48,200 and Interest and Other
Expenses of $7,300.
<F2> Includes Equity in Net Income of Investees of $22,800.
</FN>
</TABLE>
