UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 2)
[X] QUARTERLY REPORT UNDER SECTION 13 AND 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-18540
UNITED INCOME, INC.
(Exact name of registrant as specified in its charter)
Ohio 37-1224044
(State or other jurisdiction (IRS Employer
incorporation or organization) Identification No.)
5250 South Sixth Street
P.O. Box 5147
Springfield, IL 62705
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (217) 241-6300
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
[]
The number of shares outstanding of the registrant's common stock as of July 31,
1998, was 1,391,919.
<PAGE>
UNITED INCOME, INC.
(The "Company")
TABLE OF CONTENTS
Part 1: Financial Information 3
Balance Sheets as of June 30, 1998 and December 31, 1997 3
Statements of Operations for the six and three months
ended June 30, 1998 and 1997 4
Statement of Changes in Shareholders' Equity for the
period ended June 30,1998 5
Statements of Cash Flows for the six months ended
June 30, 1998 and 1997 6
Notes to Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
Part II - Other Information 21
Item 5. Other information 21
Item 6. Exhibits 21
Signatures 22
2
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
UNITED INCOME, INC.
Balance Sheet
June 30, December 31,
1998 1997
ASSETS
<TABLE>
<S> <C> <C>
Cash and cash equivalents $ 639,086 $ 710,897
Mortgage loans 170,803 121,520
Notes receivable from affiliate 864,100 864,100
Accrued interest income 12,308 12,068
Property and equipment
(net of accumulated
depreciation $94,065 and $93,648) 653 1,070
Investment in affiliates 11,212,204 11,060,682
Receivable from affiliates 25,800 23,192
Other assets (net of accumulated
amortization $157,318 and $138,810) 27,750 46,258
Total assets $ 12,952,704$ 12,839,787
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities and accruals:
Convertible debentures $ 902,300 $ 902,300
Other liabilities 1,415 1,534
Total liabilities 903,715 903,834
Shareholders' equity:
Common stock - no par value,
stated value $.033 per share.
Authorized 2,310,001 shares -
1,391,919 and 1,391,919 shares
issued after deducting treasury
shares of 177,590 and 177,590 45,934 45,934
Additional paid-in capital 15,242,365 15,242,365
Unrealized depreciation of investments
held for sale of affiliate (236,965) (19,603)
Accumulated deficit (3,002,345) (3,332,743)
Total shareholders' equity 12,048,989 11,935,953
Total liabilities and shareholders'
Equity $ 12,952,704$ 12,839,787
</TABLE>
See accompanying notes
3
<PAGE>
UNITED INCOME, INC.
Statement of Operations
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
Revenues:
<TABLE>
<S> <C> <C> <C> <C>
Interest income $ 12,220 $ 2,680 $ 23,771 $ 5,339
Interest income
from affiliates 20,708 20,171 41,196 40,127
Service agreement income
from affiliate 197,581 287,596 434,939 581,691
Other income
from affiliates 19,962 23,214 37,916 49,161
250,471 333,661 537,822 676,318
Expenses:
Management fee
to affiliates 116,226 247,558 258,641 474,015
Operating expenses 10,203 9,682 60,343 60,000
Interest expense 21,429 21,430 42,859 42,296
147,858 278,670 361,843 576,311
Income before provision
Income before
provision for income
taxes and equity income
of investees 102,613 54,991 175,979 100,007
Provision for income
taxes 0 0 0 0
Equity in income
of investees 122,608 29,950 154,419 40,506
Net income $ 225,221 $ 84,941 $ 330,398 $ 140,513
Basic earnings per
share from continuing
operations and
net income $ 0.16 $ 0.06 $ 0.24 $ 0.10
Diluted earnings per
share from continuing
operations and
net income $ 0.17 $ 0.07 $ 0.26 $ 0.13
BASIC WEIGHTED
AVERAGE SHARES
OUTSTANDING 1,391,919 1,392,019 1,391,919 1,392,074
DILUTED WEIGHTED
AVERAGE SHARES
OUTSTANDING 1,428,242 1,428,342 1,428,242 1,428,397
</TABLE>
See accompanying notes
4
<PAGE>
UNITED INCOME, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD ENDED JUNE 30,1998
<TABLE>
<S> <C> <C>
COMMON STOCK
BALANCE, BEGINNING
OF YEAR $ 45,934
ISSUED DURING
YEAR 0
PURCHASE TREASURY
STOCK 0
BALANCE, END
OF PERIOD 45,934
ADDITIONAL PAID-IN CAPITAL
BALANCE, BEGINNING
OF YEAR 15,242,365
ISSUED DURING
YEAR 0
PURCHASE TREASURY
STOCK 0
BALANCE, END
OF PERIOD 15,242,365
RETAINED EARNINGS
(ACCUMULATED DEFICIT)
BALANCE, BEGINNING
OF YEAR (3,332,743)
NET INCOME 330,398 $ 330,398
BALANCE, END
OF PERIOD (3,002,345)
ACCUMULATED OTHER
COMPREHENSIVE INCOME
BALANCE, BEGINNING
OF YEAR (19,603)
UNREALIZED DEPRECIATION
ON SECURITIES (217,362)
FOREIGN CURRENCY TRANSLATION
ADJUSTMENTS 0
MINIMUM PENSION LIABILITY
ADJUSTMENT 0
OTHER COMPREHENSIVE
INCOME (217,362) (217,362)
COMPREHENSIVE
INCOME $ 113,036
BALANCE, END
OF PERIOD (236,965)
TOTAL SHAREHOLDER'S EQUITY,
END OF PERIOD $ 12,048,989
</TABLE>
See accompanying notes
5
<PAGE>
UNITED INCOME, INC.
Statement of Cash Flows
Six Months Ended
June 30, June 30,
1998 1997
<TABLE>
<S> <C> <C>
Decrease in cash and cash equivalents
Cash flows from operating activities:
Net income $ 330,398 $ 140,513
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 18,925 19,267
Accretion of discount on mortgage loan (131) (133)
Equity in (income) loss of investees (154,419) (40,506)
Changes in assets and liabilities:
Change in accrued interest income (240) 74
Change in receivable from affiliates (2,608) 54,010
Change in other liabilities (119) (364)
Net cash provided by operating
Activities 191,806 172,861
Cash flows from investing activities:
Payment for fractional shares
from reverse stock split 0 (2,128)
Purchase of investments in affiliates (25,832) (16,765)
Purchase of note receivable (188,633) 0
Issuance of mortgage loan (50,000) 0
Payments received on mortgage loans 848 784
Net cash used in investing activities (263,617) (18,109)
Net increase (decrease) in
cash and cash equivalents (71,811) 154,752
Cash and cash equivalents
at beginning of period 710,897 439,676
Cash and cash equivalents at end
of period $ 639,086 $ 594,428
</TABLE>
See accompanying notes
6
<PAGE>
UNITED INCOME, INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying financial statements have been prepared by United Income,
Inc. ("UII") pursuant to the rules and regulations of the Securities and
Exchange Commission. Although UII and its affiliates believe the
disclosures are adequate to make the information presented not be
misleading, it is suggested that these financial statements be read in
conjunction with the financial statements and the notes thereto presented
in UII's Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 1997.
The information furnished reflects, in the opinion of UII, all adjustments
(which include only normal and recurring accruals) necessary for a fair
presentation of the results of operations for the periods presented.
Operating results for interim periods are not necessarily indicative of
operating results to be expected for the year or of UII's future financial
condition.
At June 30, 1998, the affiliates of United Income, Inc., were as depicted
on the following organizational chart.
ORGANIZATIONAL CHART
United Trust, Inc. ("UTI") is the ultimate controlling company. UTI owns
53% of United Trust Group ("UTG") and 41% of United Income, Inc. ("UII").
UII owns 47% of UTG. UTG owns 79% of First Commonwealth Corporation
("FCC") and 100% of Roosevelt Equity Corporation ("REC"). FCC owns 100% of
Universal Guaranty Life Insurance Company ("UG"). UG owns 100% of United
Security Assurance Company ("USA"). USA owns 84% of Appalachian Life
Insurance Company ("APPL") and APPL owns 100% of Abraham Lincoln Insurance
Company ("ABE").
7
<PAGE>
2. STOCK OPTION PLANS
UII has a stock option plan under which certain directors, officers and
employees may be issued options to purchase up to 31,500 shares of common
stock at $13.07 per share. Options become exercisable at 25% annually
beginning one year after date of grant and expire generally in five years.
In November 1992, 10,437 option shares were granted. At June 30, 1998,
options for 451 shares were exercisable and options for 20,576 shares were
available for grant. No options were exercised during 1998.
A summary of the status of UII's stock option plan for the periods ended
June 30, 1998 and December 31, 1997, and changes during the periods ending
on those dates is presented below.
June 30, 1998 December 31, 1997
Exercise Exercise
Shares Price Shares Price
Outstanding at beginning
of period 451 $ 13.07 10,888 $ 13.07
Granted 0 0.00 0 0.00
Exercised 0 0.00 0 0.00
Forfeited 0 0 10,437 13.07
Outstanding at end
of period 451 $ 13.07 451 $ 13.07
Options exercisable at
period end 451 $ 13.07 451 $ 13.07
The following information applies to options outstanding at June 30, 1998:
Number outstanding 451
Exercise price $ 13.07
Remaining contractual life 2.5 years
On January 15, 1991, UII adopted an additional Non-Qualified Stock Option
Plan under which certain employees and sales personnel may be granted
options. The plan provides for the granting of up to 42,000 options at an
exercise price of $.47 per share. The options generally expire five years
from the date of grant. Options for 10,220 shares of common stock were
granted in 1991, options for 1,330 shares were granted in 1993 and options
for 301 shares were granted in 1995. A total of 11,620 option shares have
been exercised as of June 30, 1998. At June 30, 1998, 231 options have
been granted and are exercisable. No options were exercised during 1998
and 1997, respectively.
A summary of the status of UII's stock option plan for the periods ended
June 30, 1998 and December 31, 1997, and changes during the periods
ending on those dates is presented below.
June 30, 1998 December 31, 1997
Exercise Exercise
Shares Price Shares Price
Outstanding at beginning
of period 231 $ 0.47 231 $ 0.47
Granted 0 0.00 0 0.00
Exercised 0 0.00 0 0.00
Forfeited 0 0.00 0 0.00
Outstanding at end
of period 231 $ 0.47 231 $ 0.47
Options exercisable at
period end 231 $ 0.47 231 $ 0.47
Fair value of options granted
during the year $ 0.00 $ 0.00
8
<PAGE>
The following information applies to options outstanding at June 30, 1998:
Number outstanding 231
Exercise price $ 0.47
Remaining contractual life 2.5 years
3. COMMITMENTS AND CONTINGENCIES
The insurance industry has experienced a number of civil jury verdicts
which have been returned against life and health insurers in the
jurisdictions in which UII and its affiliates do business involving the
insurers' sales practices, alleged agent misconduct, failure to properly
supervise agents, and other matters. Some of the lawsuits have resulted in
the award of substantial judgements against the insurer, including material
amounts of punitive damages. In some states, juries have substantial
discretion in awarding punitive damages in these circumstances.
Under insurance guaranty fund laws in most states, insurance companies
doing business in a participating state can be assessed up to prescribed
limits for policyholder losses incurred by insolvent or failed insurance
companies. Although UII and its affiliates cannot predict the amount of
any future assessments, most insurance guaranty fund laws currently provide
that an assessment may be excused or deferred if it would threaten an
insurer's financial strength. Those mandatory assessments may be partially
recovered through a reduction in future premium taxes in some states. UII
and its affiliates do not believe such assessments will be materially
different from amounts already provided for in the financial statements.
UII and its affiliates are named as defendants in a number of legal actions
arising primarily from claims made under insurance policies. Those actions
have been considered in establishing UII and its affiliates liabilities.
Management is of the opinion that the settlement of those actions will not
have a material adverse effect on UII and its affiliates financial position
or results of operations.
4. EARNINGS PER SHARE
The following is a reconciliation of the numerators and denominators of the
basic and diluted EPS computations as presented on the income statement.
For the YTD period ended June 30, 1998
Income Shares Per-Share
(Numerator) (Denominator) Amount
<TABLE>
<S> <C> <C> <C>
BASIC EPS
Income available to common
shareholders $ 330,398 1,391,919 $ 0.24
EFFECT OF DILUTIVE SECURITIES
Convertible debentures 42,859 36,092
Options 231
DILUTED EPS
Income available to common
shareholders and assumed
conversions 373,257 1,428,242 $ 0.26
</TABLE>
9
<PAGE>
For the second quarter ended June 30, 1998
Income Shares Per-Share
(Numerator) (Denominator) Amount
<TABLE>
<S> <C> <C> <C>
BASIC EPS
Income available to common
shareholders $ 225,221 1,391,919 $ 0.16
EFFECT OF DILUTIVE SECURITIES
Convertible debentures 21,429 36,092
Options 231
DILUTED EPS
Income available to common
shareholders and assumed
conversions 246,650 1,428,242 $ 0.17
</TABLE>
For the YTD period ended June 30, 1997
Income Shares Per-Share
(Numerator) (Denominator) Amount
<TABLE>
<S> <C> <C> <C>
BASIC EPS
Income available to common
shareholders $ 140,513 1,392,074 $ 0.10
EFFECT OF DILUTIVE SECURITIES
Convertible debentures 42,296 36,092
Options 231
DILUTED EPS
Income available to common
shareholders and assumed conversions 182,809 1,428,397 $ 0.13
</TABLE>
For the second quarter ended June 30, 1997
Income Shares Per-Share
(Numerator) (Denominator) Amount
<TABLE>
<S> <C> <C> <C>
BASIC EPS
Income available to common
shareholders $ 84,941 1,392,019 $ 0.06
EFFECT OF DILUTIVE SECURITIES
Convertible debentures 21,430 36,092
Options 231
DILUTED EPS
Income available to common
shareholders and assumed
conversions 106,371 1,428,342 $ 0.07
</TABLE>
UII has stock options outstanding during the second quarter of 1998 and
1997 for 451 shares of common stock at $13.07 per share that were not
included in the computation of diluted EPS because the exercise price was
greater than the average market price of the common shares. Due to the
limited trading of the stock of UII, market price is assumed to be equal to
book value for purposes of this calculation.
10
<PAGE>
5. PROPOSED MERGER OF UNITED TRUST INC. AND UNITED INCOME INC.
On March 25, 1997, the Board of Directors of UTI and UII voted to recommend
to the shareholders a merger of the two companies. Under the Plan of
Merger, UTI would be the surviving entity with UTI issuing one share of its
stock for each share held by UII shareholders.
UTI owns 53% of United Trust Group, Inc., an insurance holding company, and
UII owns 47% of United Trust Group, Inc. Neither UTI nor UII have any
other significant holdings or business dealings. The Board of Directors of
each company thus concluded a merger of the two companies would be in the
best interests of the shareholders. The merger will result in certain cost
savings, primarily related to costs associated with maintaining a
corporation in good standing in the states in which it transacts business.
A vote of the shareholders of UTI and UII regarding the proposed merger is
anticipated to occur prior to the end of 1998. The proposed merger is not
contingent upon the pending change in control of UTI.
6. PENDING CHANGE IN CONTROL OF UNITED TRUST, INC.
On April 30, 1998, UTI and First Southern Funding, a Kentucky corporation
("FSF"), signed a Definitive Agreement ("the FSF Agreement") whereby FSF
will make an equity investment in UTI. Mr. Jesse T. Correll who signed the
initial letter of intent with UTI dated February 19, 1998, is the majority
shareholder of FSF. Under the terms of the FSF Agreement, FSF will buy
473,523 authorized but unissued shares of UTI common stock for $15.00 a
share and will also buy 389,715 shares of UTI common stock that UTI
purchased during the last year in private transactions at the average price
UTI paid for such stock, plus interest, or approximately $10.00 per share.
FSF will also purchase 66,667 shares of UTI common stock and $2,560,000 of
face amount convertible bonds which are due and payable on any change in
control of UTI, in private transactions, primarily from officers of UTI.
In addition, FSF will be granted a three year option to purchase up to
1,450,000 shares of UTI common stock for $15.00 per share.
Management of UTI intends to use the equity that is being contributed to
expand their operations through the acquisition of other life insurance
companies. The transaction is subject to the receipt of regulatory and
other approvals; and the satisfaction of certain conditions. The
transaction is expected to be completed during the third quarter 1998.
There can be no assurance that the transaction will be completed. The
pending change in control of UTI is not contingent upon the merger of UTI
and UII.
FSF is an affiliate of First Southern Bancorp, Inc., a bank holding company
that owns five banks that operate out of 14 locations in central Kentucky.
7. OTHER CASH FLOW DISCLOSURE
On a cash basis, UII paid $42,859 and $42,296 in interest expense through
the second quarter of 1998 and 1997, respectively. UII paid $0 and $0 of
federal income tax through the second quarter of 1998 and 1997,
respectively.
UII acquired for $188,633 a note receivable from an outside party which was
payable by UTG. Immediately upon acquisition of the note, it was
contributed to UTG as a capital contribution.
11
<PAGE>
8. SUMMARIZED FINANCIAL INFORMATION OF UNITED TRUST GROUP, INC.
The following provides summarized financial information for UII's 50% or
less owned affiliate:
June 30, December 31,
1998 1997
<TABLE>
<S> <C> <C>
ASSETS
Total investments $ 217,656,349 $ 222,601,494
Cash and cash equivalents 22,604,773 15,763,639
Cost of insurance acquired 43,724,400 45,009,452
Other assets 63,403,300 64,576,450
TOTAL ASSETS $ 347,388,822 $ 347,951,035
LIABILITIES AND SHAREHOLDERS' EQUITY
Policy liabilities $ 268,451,035 $ 268,237,887
Notes payable 18,172,841 19,081,602
Deferred taxes 11,935,314 12,157,685
Other liabilities 4,289,108 4,053,293
TOTAL LIABILITIES 302,848,298 303,530,467
Minority interests in
consolidated subsidiaries 10,055,297 10,130,024
Shareholders' equity
Common stock no par value 46,577,216 45,926,705
Authorized 10,000 shares - 100 issued
Unrealized depreciation of
investments in stocks (504,180) (41,708)
Accumulated deficit (11,587,809) (11,594,453)
TOTAL SHAREHOLDERS' EQUITY 34,485,227 34,290,544
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 347,388,822 $ 347,951,035
</TABLE>
12
<PAGE>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
<TABLE>
<S> <C> <C> <C> <C>
Premium and policy
fees, net of
reinsurance $ 7,111,079 $ 7,808,782 $ 14,342,560 $ 15,735,168
Net investment income 3,797,376 3,839,519 7,535,481 7,699,394
Other (471,495) 39,586 (360,363) 35,203
10,436,960 11,687,887 21,517,678 23,469,765
Benefits, claims
and settlement
expenses 6,287,460 6,861,699 13,114,500 14,579,714
Other expenses 4,195,406 4,258,355 8,502,934 8,813,872
10,482,866 11,120,054 21,617,434 23,393,586
Income (loss) before income tax
and minority interest (45,906) 567,833 (99,756) 76,179
Income tax (provision)
credit 95,045 (477,295) 198,538 (18,222)
Minority interest
income of consolidated
subsidiaries (73,806) (63,187) (92,138) (54,171)
Net income (loss) $ (24,667) $ 27,351 $ 6,644 $ 3,786
</TABLE>
9. ACCOUNTING AND LEGAL DEVELOPMENTS
THE FASB HAS ISSUED SFAS 130 ENTITLED REPORTING COMPREHENSIVE INCOME, WHICH
IS EFFECTIVE FOR FINANCIAL STATEMENTS FOR FISCAL YEARS BEGINNING AFTER
DECEMBER 15, 1997. SFAS 130 ESTABLISHES STANDARDS FOR REPORTING AND
PRESENTATION OF COMPREHENSIVE INCOME AND ITS COMPONENTS IN A FULL SET OF
FINANCIAL STATEMENTS. COMPREHENSIVE INCOME INCLUDES ALL CHANGES IN
SHAREHOLDERS' EQUITY, EXCEPT THOSE ARISING FROM TRANSACTIONS WITH
SHAREHOLDERS, AND INCLUDES NET INCOME AND NET UNREALIZED GAINS (LOSSES) ON
SECURITIES. SFAS 130 WAS ADOPTED AS OF JANUARY 1, 1998. ADOPTING THE NEW
STANDARD REQUIRED US TO MAKE ADDITIONAL DISCLOSURES IN THE FINANCIAL
STATEMENTS, BUT DID NOT AFFECT THE COMPANY'S FINANCIAL POSITION OR RESULTS
OF OPERATIONS.
ALL ITEMS OF OTHER COMPREHENSIVE INCOME REFLECT NO RELATED TAX EFFECT,
SINCE THE COMPANY HAS AN ALLOWANCE AGAINST THE COLLECTION OF ANY FUTURE TAX
BENEFITS. IN ADDITION, THERE WAS NO SALE OR LIQUIDATION OF INVESTMENTS
REQUIRING A RECLASSIFICATION ADJUSTMENT FOR THE PERIOD PRESENTED.
THE FASB HAS ISSUED SFAS 131 ENTITLED, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION, WHICH IS EFFECTIVE FOR FINANCIAL
STATEMENTS FOR FISCAL YEARS BEGINNING AFTER DECEMBER 15, 1997. SFAS 131
REQUIRES THAT A PUBLIC BUSINESS ENTERPRISE REPORT FINANCIAL AND DESCRIPTIVE
INFORMATION ABOUT ITS REPORTABLE OPERATING SEGMENTS. OPERATING SEGMENTS
ARE COMPONENTS OF AN ENTERPRISE ABOUT WHICH SEPARATE FINANCIAL INFORMATION
IS AVAILABLE THAT IS EVALUATED REGULARLY IN DECIDING HOW TO ALLOCATE
RESOURCES AND IN ASSESSING PERFORMANCE. SFAS 131 WAS ADOPTED AS OF JANUARY
1, 1998. ADOPTING THE NEW STANDARD HAD NO AFFECT THE COMPANY'S FINANCIAL
POSITION OR RESULTS OF OPERATIONS, SINCE THE COMPANY HAS NO REPORTABLE
OPERATING SEGMENTS.
THE FASB HAS ISSUED SFAS 132 ENTITLED, EMPLOYERS' DISCLOSURES ABOUT
PENSIONS AND OTHER POSTRETIREMENT BENEFITS, WHICH IS EFFECTIVE FOR
FINANCIAL STATEMENTS FOR FISCAL YEARS BEGINNING AFTER DECEMBER 15, 1997.
SFAS 132 REVISES CURRENT DISCLOSURE REQUIREMENTS FOR EMPLOYER PROVIDED POST-
RETIREMENT BENEFITS. THE STATEMENT DOES NOT CHANGE RETIREMENT MEASUREMENT
OR RECOGNITION ISSUES. . SFAS 132 WAS ADOPTED AS OF JANUARY 1, 1998.
ADOPTING THE NEW STANDARD HAD NO AFFECT ON OUR FINANCIAL POSITION OR
RESULTS OF OPERATIONS, SINCE THE COMPANY HAS NO PENSION PLAN OR OTHER
OBLIGATION FOR POST-RETIREMENT BENEFITS.
13
<PAGE>
THE FASB HAS ISSUED SFAS 133 ENTITLED, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, WHICH IS EFFECTIVE FOR ALL FISCAL
QUARTERS OF FISCAL YEARS BEGINNING AFTER JUNE 15, 1999. SFAS 133 REQUIRES
THAT AN ENTITY RECOGNIZE ALL DERIVATIVES AS EITHER ASSETS OR LIABILITIES IN
THE STATEMENT OF FINANCIAL POSITION AND MEASURE THOSE INSTRUMENTS AT FAIR
VALUE. IF CERTAIN CONDITIONS ARE MET, A DERIVATIVE MAY BE SPECIFICALLY
DESIGNATED AS A SPECIFIC TYPE OF EXPOSURE HEDGE. THE ACCOUNTING FOR
CHANGES IN THE FAIR VALUE OF A DERIVATIVE DEPENDS ON THE INTENDED USE OF
THE DERIVATIVE AND THE RESULTING DESIGNATION. THE ADOPTION OF SFAS 133 IS
NOT EXPECTED TO HAVE A MATERIAL EFFECT ON OUR FINANCIAL POSITION OR RESULTS
OF OPERATIONS, SINCE THE COMPANY HAS NO DERIVATIVE OR HEDGING TYPE
INVESTMENTS.
14
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
At June 30, 1998 and December 31, 1997, the balance sheet reflects the
assets and liabilities of UII and its 47% equity interest in UTG. The
statements of operations and statements of cash flows presented include the
operating results of UII.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Any forward-looking statement contained herein or in any other oral or
written statement by UII and its affiliates or any of its officers,
directors or employees is qualified by the fact that actual results of UII
and its affiliates may differ materially from any such statement due to the
following important factors, among other risks and uncertainties inherent
in the business of UII and its affiliates:
1. Prevailing interest rate levels, which may affect the ability of UII
and its affiliates to sell its products, the market value of UII and
its affiliates investments and the lapse ratio of UII and its
affiliates policies, notwithstanding product design features intended
to enhance persistency of UII and its affiliates products.
2. Changes in the federal income tax laws and regulations which may
affect the relative tax advantages of UII and its affiliates products.
3. Changes in the regulation of financial services, including bank sales
and underwriting of insurance products, which may affect the
competitive environment for UII and its affiliates products.
4. Other factors affecting the performance of UII and its affiliates,
including, but not limited to, market conduct claims, insurance
industry insolvencies, stock market performance, and investment
performance.
RESULTS OF OPERATIONS
(A) REVENUES
UII's primary source of revenues is derived from service fee income, which
is provided via a service agreement with USA. The agreement was originally
established upon the formation of USA, which was a 100% owned subsidiary of
UII. Changes in the affiliate structure have resulted in USA no longer
being a direct subsidiary of UII, though still a member of the same
affiliated group. The original service agreement has remained in place
without modification. The fees are based on a percentage of premium
revenue of USA. The percentages are applied to both first year and renewal
premiums at different rates. Under the current structure, FCC pays all
general operating expenses of the affiliated group. FCC then receives
management and service fees from the various affiliates, including UTI and
UII.
UII holds $864,100 of notes receivable from affiliates. The notes
receivable from affiliates consists of three separate notes. The $700,000
note bears interest at the rate of 1% above the variable per annum rate of
interest most recently published by the Wall Street Journal as the prime
rate. Interest is payable quarterly with principal due at maturity on May
8, 2006. In February 1996, FCC borrowed an additional $150,000 from UII to
provide additional cash for liquidity. The note bears interest at the rate
of 1% over prime as published in the Wall Street Journal, with interest
payments due quarterly and principal due upon maturity of the note on June
1, 1999. The remaining $14,100 are 20 year notes of UTG with interest at
8.5% payable semi-annually. At current interest levels, the notes will
generate approximately $80,000 annually.
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Interest income increased significantly when comparing the three and six
months ended June 30, 1998 to the same periods one-year ago. The increase
in interest income is due to the increase in yield on UII's cash and cash
equivalent accounts. The increase in yield is directly related to a change
in banking relationships of UII. UII was able to obtain preferred interest
rates in conjunction with the financing of FCC's senior debt by First of
America Bank.
(B) EXPENSES
UII's primary source of expenses is derived from management fee expense,
which is derived from an agreement with UTI. The agreement between UII and
UTI was originally established upon the formation of USA, which was a 100%
owned subsidiary of UII. Changes in the affiliate structure have resulted
in USA no longer being a direct subsidiary of UII, though still a member of
the same affiliated group. The original management agreement has remained
in place without modification. The calculation of the management fee from
UII to UTI is 60% of the revenues derived from UII's service agreement with
USA. Under the current structure, FCC pays all general operating expenses
of the affiliated group. FCC then receives management and service fees
from the various affiliates, including UTI and UII.
Management fee incurred to UTI is comprised of $258,641 and $349,015 for
six months ended June 30, 1998 and 1997, respectively and $116,226 and
$172,558 for the three months ended June 30, 1998 and 1997, respectively.
Management fee incurred to FCC is comprised of $0 and $125,000 for the six
months ended June 30, 1998 and 1997, respectively and $0 and $75,000 for
the three months ended June 30, 1998 and 1997, respectively.
Operating expenses consist primarily of governmental fees and other
expenses associated with maintaining a corporation in good standing with
various regulatory authorities. UII is a holding company and does not have
significant day to day operations of its own.
Interest expense increased slightly when comparing the first six months of
1998 to the same period one-year ago. The interest expense is directly
attributable to the convertible debentures. The Debentures bear interest
at a variable rate equal to one percentage point above the prime rate
published in the Wall Street Journal from time to time.
(C) EQUITY IN INCOME OF INVESTEES
Equity in income of investees represents UII's 47% share of the net income
of UTG. Following is a discussion of the results of operations of UTG and
its consolidated subsidiaries ("UTG"):
Revenues of UTG
Premiums and policy fees, net of reinsurance decreased 9% when
comparing the six and three months ended June 30, 1998 to the same
periods in 1997. The Company currently writes little new traditional
business, consequently, traditional premiums will decrease as the
amount of traditional business in-force decreases. Collected premiums
on universal life and interest sensitive products is not reflected in
premiums and policy revenues because Generally Accepted Accounting
Procedures ("GAAP") requires that premiums collected on these types of
products be treated as deposit liabilities rather than revenue.
Unless the Company acquires a block of in-force business or marketing
changes its focus to traditional business, premium revenue will
continue to decline.
Another cause for the decrease in premium revenues is related to the
potential change in control of UTI over the last two years to two
different parties. During September of 1996, it was announced that
control of UTI would pass to an unrelated party, but the change in
control did not materialize. At this writing, a contract is pending
with a different unrelated party for the change in control of UTI.
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Please refer to the Notes to the Consolidated Financial Statements for
additional information. The possible changes and resulting
uncertainties have hurt the insurance companies' ability to recruit
and maintain sales agents.
Net investment income decreased 2% and 1% when comparing the six and
three months ended June 30, 1998 to the same period one year-ago,
respectively. The decrease in net investment income is due to the
decrease in invested assets. The decrease in invested assets and the
increase in cash and cash equivalents is a short-term fluctuation as
management positions the Company for the pending change in control of
UTI.
The overall investment yields for 1998 and 1997, are 7.3% and 7%,
respectively. The Company's investments are generally managed to
match related insurance and policyholder liabilities. The comparison
of investment return with insurance or investment product crediting
rates establishes an interest spread. The minimum interest spread
between earned and credited rates is 1% on the "Century 2000"
universal life insurance product, which currently is the Company's
primary sales product. The Company monitors investment yields, and
when necessary adjusts credited interest rates on its insurance
products to preserve targeted interest spreads. It is expected that
monitoring of the interest spreads by management will provide the
necessary margin to adequately provide for associated costs on the
insurance policies the Company currently has in force and will write
in the future.
Expenses of UTG
Benefits, claims and settlement expenses decreased 10% and 8% for the
six and three months ended June 30, 1998 as compared to the same
periods one year-ago, respectively. The decrease in benefits is due
to the decrease in premium revenues that resulted in lower benefit
reserve increases. In addition, policyholder benefits decreased due
to a decrease in death benefit claims of $1,329,000 and $722,000 for
the six and three months ended June 30, 1998 compared to the same
periods one year-ago, respectively. There is no single event that
caused death benefits to decrease. Death claims vary from year to
year and therefore, fluctuations in death benefits are to be expected
and are not considered unusual by management.
Other expenses decreased 4% and 1% for the six and three months ended
June 30, 1998 as compared to the same periods one year-ago,
respectively. The decrease in other expenses is due to the decrease
in salaries. The decrease in salaries is due to a 10% reduction in
staff compared to the previous year, including the retirement of an
executive officer. Interest expense increased 15% for the six and
three months ended June 30, 1998 as compared to the same periods one
year-ago. Since June 30, 1997, notes payable increased approximately
$1,938,000. The increase in outstanding indebtedness was due to the
issuance of convertible notes to seven individuals, all officers or
employees of UTI. In March 1997, the base interest rate for most of
the notes payable increased a quarter of a point. The base rate is
defined as the floating daily, variable rate of interest determined
and announced by First of America Bank. Please refer to Note 3 "Notes
Payable" in the Notes to the Consolidated Financial Statements for
more information.
(D) NET INCOME
UII recorded net income of $330,398 for the first six months of 1998
compared to $140,513 for the same period one-year ago. UII recorded net
income of $225,221 for second quarter of 1998 compared to $84,941 for the
same period one-year ago. The improvement in net income is the result of a
combination of improved operating results of UII and improved earnings of
UTG.
FINANCIAL CONDITION
UII owns 47% equity interest in UTG, which controls total assets of
approximately $347,000,000.
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LIQUIDITY AND CAPITAL RESOURCES
Since UII is a holding company, funds required to meet its debt service
requirements and other expenses are primarily provided by its affiliates.
UII's cash flow is dependent on revenues from a management agreement with
USA and its earnings received on invested assets and cash balances. At
June 30, 1998, substantially all of the shareholders equity represents
investment in affiliates. UII does not have significant day to day
operations of its own. Cash requirements of UII primarily relate to the
payment of interest on its convertible debentures and expenses related to
maintaining UII as a corporation in good standing with the various
regulatory bodies which govern corporations in the jurisdictions where UII
does business. The payment of cash dividends to shareholders is not
legally restricted. However, insurance company dividend payments are
regulated by the state insurance department where the insurance company is
domiciled. UTI is the ultimate parent of UG through ownership of several
intermediary holding companies. UG can not pay a dividend directly to UII
due to the ownership structure. Please refer to Note 1 of the Notes to the
Financial Statements. UG's dividend limitations are described below
without effect of the ownership structure.
Ohio domiciled insurance companies require five days prior notification to
the insurance commissioner for the payment of an ordinary dividend.
Ordinary dividends are defined as the greater of: a) prior year statutory
earnings or b) 10% of statutory capital and surplus. For the year ended
December 31, 1997, UG had a statutory gain from operations of $1,779,000.
At December 31, 1997, UG statutory capital and surplus amounted to
$10,997,000. Extraordinary dividends (amounts in excess of ordinary
dividend limitations) require prior approval of the insurance commissioner
and are not restricted to a specific calculation.
UII currently has $639,086 in cash and cash equivalents. UII holds two
mortgage loans. Operating activities of UII produced cash flows of
$191,806 and $172,861 for the six months ended June 30, 1998 and 1997,
respectively. UII had uses of cash from investing activities of $263,617
and $18,109 for the six months ended June 30, 1998 and 1997, respectively.
UTI and UII acquired a 53% and 47%, respectively interest in a note
receivable from an outside party which was payable by UTG. Immediately
upon acquisition of the note, UTI and UII contributed their interest in the
note to UTG as a capital contribution. UTG did not have the cash available
to acquire the note the directly. UTI, UII and UTG deemed the retirement
of this debt advantageous in relation to the interest earned from cash
versus interest costs of the debt.
In early 1994, UII received $902,300 from the sale of Debentures. The
Debentures were issued pursuant to an indenture between UII and First of
America Bank - Southeast Michigan, N.A., as trustee. The Debentures are
general unsecured obligations of UII, subordinate in right of payment to
any existing or future senior debt of UII. The Debentures are exchangeable
and transferable, and are convertible at any time prior to March 31, 1999
into UII's Common Stock at a conversion price of $25 per share, subject to
adjustment in certain events. The Debentures bear interest from March 31,
1994, payable quarterly, at a variable rate equal to one percentage point
above the prime rate published in the Wall Street Journal from time to
time. On or after March 31, 1999, the Debentures will be redeemable at
UII's option, in whole or in part, at redemption prices declining from 103%
of their principal amount. No sinking fund will be established to redeem
the Debentures. The Debentures will mature on March 31, 2004. The
Debentures are not listed on any national securities exchange or the NASDAQ
National Market System.
UII and its affiliates are not aware of any litigation that will have a
material adverse effect on the financial position of UII and its
affiliates. In addition, UII and its affiliates do not believe that the
regulatory initiatives currently under consideration by various regulatory
agencies will have a material adverse impact on UII and its affiliates.
UII and its affiliates are not aware of any material pending or threatened
regulatory action with respect to UII or any of its affiliates. UII and
its affiliates do not believe that any insurance guaranty fund assessments
will be materially different from amounts already provided for in the
financial statements.
Management believes that the overall sources of liquidity available to UII
will be more than sufficient to satisfy its financial obligations.
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YEAR 2000 ISSUE
The "Year 2000 Issue" is the inability of computers and computing
technology to recognize correctly the Year 2000 date change. The problem
results from a long-standing practice by programmers to save memory space
by denoting Years using just two digits instead of four digits. Thus,
systems that are not Year 2000 compliant may be unable to read dates
correctly after the Year 1999 and can return incorrect or unpredictable
results. This could have a significant effect on UII and its affiliates
business/financial systems as well as products and services, if not
corrected.
UII and its affiliates established a project to address year 2000
processing concerns in September of 1996. In 1997 UII and it affiliates
completed the review of internally and externally developed software, and
made corrections to all year 2000 non-compliant processing. UII and its
affiliates also secured verification of current and future year 2000
compliance from all major external software vendors. In December of 1997,
a separate computer operating environment was established with the system
dates advanced to December of 1999. A parallel model office was
established with all dates in the data advanced to December of 1999.
Parallel model office processing is being performed using dates from
December of 1999 to January of 2001, to insure all year 2000 processing
errors have been corrected. Testing was completed by the end of the first
quarter of 1998. Periodic regression testing will be performed to monitor
continuing compliance. By addressing year 2000 compliance in a timely
manner, compliance will be achieved using existing staff and without
significant impact on UII and its affiliates operationally or financially.
PROPOSED MERGER
On March 25, 1997, the Board of Directors of UTI and UII voted to recommend
to the shareholders a merger of the two companies. Under the Plan of
Merger, UTI would be the surviving entity with UTI issuing one share of its
stock for each share held by UII shareholders.
UTI owns 53% of United Trust Group, Inc., an insurance holding company, and
UII owns 47% of United Trust Group, Inc. Neither UTI nor UII have any
other significant holdings or business dealings. The Board of Directors of
each company thus concluded a merger of the two companies would be in the
best interests of the shareholders. The merger will result in certain cost
savings, primarily related to costs associated with maintaining a
corporation in good standing in the states in which it transacts business.
A vote of the shareholders of UTI and UII regarding the proposed merger is
anticipated to occur sometime during the third quarter of 1998. The
proposed merger is not contingent upon the pending change in control of
UTI.
PENDING CHANGE IN CONTROL OF UNITED TRUST INC.
On April 30, 1998, UTI and First Southern Funding, a Kentucky corporation
("FSF"), signed a Definitive Agreement ("the FSF Agreement") whereby FSF
will make an equity investment in UTI. Mr. Jesse T. Correll who signed the
initial letter of intent with UTI dated February 19, 1998, is the majority
shareholder of FSF. Under the terms of the FSF Agreement, FSF will buy
473,523 authorized but unissued shares of UTI common stock for $15.00 a
share and will also buy 389,715 shares of UTI common stock that UTI
purchased during the last year in private transactions at the average price
UTI paid for such stock, plus interest, or approximately $10.00 per share.
FSF will also purchase 66,667 shares of UTI common stock and $2,560,000 of
face amount convertible bonds which are due and payable on any change in
control of UTI, in private transactions, primarily from officers of UTI.
In addition, FSF will be granted a three year option to purchase up to
1,450,000 shares of UTI common stock for $15.00 per share.
Management of UTI intends to use the equity that is being contributed to
expand their operations through the acquisition of other life insurance
companies. The transaction is subject to the receipt of regulatory and
other approvals; and the satisfaction of certain conditions. The
transaction is not expected to be completed during the third quarter 1998,
and there can be no assurance that the transaction will be completed. The
pending change in control of UTI is not contingent upon the merger of UTI
and UII.
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FSF is an affiliate of First Southern Bancorp, Inc., a bank holding company
that owns five banks that operate out of 14 locations in central Kentucky.
ACCOUNTING AND LEGAL DEVELOPMENTS
THE FASB HAS ISSUED SFAS 130 ENTITLED REPORTING COMPREHENSIVE INCOME, WHICH
IS EFFECTIVE FOR FINANCIAL STATEMENTS FOR FISCAL YEARS BEGINNING AFTER
DECEMBER 15, 1997. SFAS 130 ESTABLISHES STANDARDS FOR REPORTING AND
PRESENTATION OF COMPREHENSIVE INCOME AND ITS COMPONENTS IN A FULL SET OF
FINANCIAL STATEMENTS. COMPREHENSIVE INCOME INCLUDES ALL CHANGES IN
SHAREHOLDERS' EQUITY, EXCEPT THOSE ARISING FROM TRANSACTIONS WITH
SHAREHOLDERS, AND INCLUDES NET INCOME AND NET UNREALIZED GAINS (LOSSES) ON
SECURITIES. SFAS 130 WAS ADOPTED AS OF JANUARY 1, 1998. ADOPTING THE NEW
STANDARD REQUIRED US TO MAKE ADDITIONAL DISCLOSURES IN THE FINANCIAL
STATEMENTS, BUT DID NOT AFFECT THE COMPANY'S FINANCIAL POSITION OR RESULTS
OF OPERATIONS.
ALL ITEMS OF OTHER COMPREHENSIVE INCOME REFLECT NO RELATED TAX EFFECT,
SINCE THE COMPANY HAS AN ALLOWANCE AGAINST THE COLLECTION OF ANY FUTURE TAX
BENEFITS. IN ADDITION, THERE WAS NO SALE OR LIQUIDATION OF INVESTMENTS
REQUIRING A RECLASSIFICATION ADJUSTMENT FOR THE PERIOD PRESENTED.
THE FASB HAS ISSUED SFAS 131 ENTITLED, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION, WHICH IS EFFECTIVE FOR FINANCIAL
STATEMENTS FOR FISCAL YEARS BEGINNING AFTER DECEMBER 15, 1997. SFAS 131
REQUIRES THAT A PUBLIC BUSINESS ENTERPRISE REPORT FINANCIAL AND DESCRIPTIVE
INFORMATION ABOUT ITS REPORTABLE OPERATING SEGMENTS. OPERATING SEGMENTS
ARE COMPONENTS OF AN ENTERPRISE ABOUT WHICH SEPARATE FINANCIAL INFORMATION
IS AVAILABLE THAT IS EVALUATED REGULARLY IN DECIDING HOW TO ALLOCATE
RESOURCES AND IN ASSESSING PERFORMANCE. SFAS 131 WAS ADOPTED AS OF JANUARY
1, 1998. ADOPTING THE NEW STANDARD HAD NO AFFECT THE COMPANY'S FINANCIAL
POSITION OR RESULTS OF OPERATIONS, SINCE THE COMPANY HAS NO REPORTABLE
OPERATING SEGMENTS.
THE FASB HAS ISSUED SFAS 132 ENTITLED, EMPLOYERS' DISCLOSURES ABOUT
PENSIONS AND OTHER POSTRETIREMENT BENEFITS, WHICH IS EFFECTIVE FOR
FINANCIAL STATEMENTS FOR FISCAL YEARS BEGINNING AFTER DECEMBER 15, 1997.
SFAS 132 REVISES CURRENT DISCLOSURE REQUIREMENTS FOR EMPLOYER PROVIDED POST-
RETIREMENT BENEFITS. THE STATEMENT DOES NOT CHANGE RETIREMENT MEASUREMENT
OR RECOGNITION ISSUES. . SFAS 132 WAS ADOPTED AS OF JANUARY 1, 1998.
ADOPTING THE NEW STANDARD HAD NO AFFECT ON OUR FINANCIAL POSITION OR
RESULTS OF OPERATIONS, SINCE THE COMPANY HAS NO PENSION PLAN OR OTHER
OBLIGATION FOR POST-RETIREMENT BENEFITS.
THE FASB HAS ISSUED SFAS 133 ENTITLED, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, WHICH IS EFFECTIVE FOR ALL FISCAL
QUARTERS OF FISCAL YEARS BEGINNING AFTER JUNE 15, 1999. SFAS 133 REQUIRES
THAT AN ENTITY RECOGNIZE ALL DERIVATIVES AS EITHER ASSETS OR LIABILITIES IN
THE STATEMENT OF FINANCIAL POSITION AND MEASURE THOSE INSTRUMENTS AT FAIR
VALUE. IF CERTAIN CONDITIONS ARE MET, A DERIVATIVE MAY BE SPECIFICALLY
DESIGNATED AS A SPECIFIC TYPE OF EXPOSURE HEDGE. THE ACCOUNTING FOR
CHANGES IN THE FAIR VALUE OF A DERIVATIVE DEPENDS ON THE INTENDED USE OF
THE DERIVATIVE AND THE RESULTING DESIGNATION. THE ADOPTION OF SFAS 133 IS
NOT EXPECTED TO HAVE A MATERIAL EFFECT ON OUR FINANCIAL POSITION OR RESULTS
OF OPERATIONS, SINCE THE COMPANY HAS NO DERIVATIVE OR HEDGING TYPE
INVESTMENTS.
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PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Proposed Merger of United Trust, Inc. and United Income, Inc.
On March 25, 1997, the Board of Directors of UTI and UII voted to recommend
to the shareholders a merger of the two companies. Under the Plan of
Merger, UTI would be the surviving entity with UTI issuing one share of its
stock for each share held by UII shareholders.
UTI owns 53% of United Trust Group, Inc., an insurance holding company, and
UII owns 47% of United Trust Group, Inc. Neither UTI nor UII have any
other significant holdings or business dealings. The Board of Directors of
each company thus concluded a merger of the two companies would be in the
best interests of the shareholders. The merger will result in certain cost
savings, primarily related to costs associated with maintaining a
corporation in good standing in the states in which it transacts business.
A vote of the shareholders of UTI and UII regarding the proposed merger is
anticipated to occur prior to the end of 1998. The proposed merger is not
contingent upon the pending change in control of UTI.
Pending Change in Control of United Trust Inc.
On April 30, 1998, UTI and First Southern Funding, a Kentucky corporation
("FSF"), signed a Definitive Agreement ("the FSF Agreement") whereby FSF
will make an equity investment in UTI. Mr. Jesse T. Correll who signed the
initial letter of intent with UTI dated February 19, 1998, is the majority
shareholder of FSF. Under the terms of the FSF Agreement, FSF will buy
473,523 authorized but unissued shares of UTI common stock for $15.00 a
share and will also buy 389,715 shares of UTI common stock that UTI
purchased during the last year in private transactions at the average price
UTI paid for such stock, plus interest, or approximately $10.00 per share.
FSF will also purchase 66,667 shares of UTI common stock and $2,560,000 of
face amount convertible bonds which are due and payable on any change in
control of UTI, in private transactions, primarily from officers of UTI.
In addition, FSF will be granted a three year option to purchase up to
1,450,000 shares of UTI common stock for $15.00 per share.
Management of UTI intends to use the equity that is being contributed to
expand their operations through the acquisition of other life insurance
companies. The transaction is subject to the receipt of regulatory and
other approvals; and the satisfaction of certain conditions. The
transaction is expected to be completed during the third quarter 1998.
There can be no assurance that the transaction will be completed. The
pending change in control of UTI is not contingent upon the merger of UTI
and UII.
FSF is an affiliate of First Southern Bancorp, Inc., a bank holding company
that owns five banks that operate out of 14 locations in central Kentucky.
ITEM 6. EXHIBITS
UII hereby incorporates by reference the exhibits as reflected in the Index
to Exhibits of UII's Form 10-K for the year ended December 31, 1997.
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SIGNATURES
The undersigned registrant hereby amends the following items, financial
statements, exhibits, or other portions of its June 30, 1998 filing of Form
10-Q as set forth on the index page:
Each amendment as shown on the index page is amended to replace
the existing item, statement or exhibit reflected in the
June 30, 1998 Form 10-Q filing.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED INCOME, INC.
(Registrant)
Date: January 15, 1999 By /s/ James E. Melville
James E. Melville
President, Chief Operating Officer
and Director
Date: January 15, 19998 By /s/ Theodore C. Miller
Theodore C. Miller
Senior Vice President and Chief
Financial Officer
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