SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: April 10, 1996
LIFE PARTNERS GROUP, INC.
State of Incorporation:
Delaware
Commission File Number IRS Employer Id. Number
No. 1-11195 No. 75-2301836
Address of Principal Executive Offices:
7887 Belleview Avenue
Englewood, Colorado 80111
Telephone No.
(303) 779-1111
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LIFE PARTNERS GROUP, INC. AND SUBSIDIARIES
ITEM 5. OTHER EVENTS.
Attached as Exhibit 99.1 is the pro forma condensed consolidated statement
of operations of Life Partners Group, Inc. and its subsidiaries (collectively
"Life Partners") for the year ended December 31, 1995, giving pro forma effect
to the acquisition of Lamar Financial Group, Inc. and its subsidiaries
(collectively "Lamar") as described in the notes accompanying such pro forma
consolidated statement of operations.
The pro forma financial statement presented herein is not necessarily
indicative of what the results of operations actually would have been if the
acquisition of Lamar had occurred at the date indicated. Furthermore, the pro
forma financial statement is not intended to be indicative of Life Partners'
future results of operations and should be read in conjunction with historical
consolidated financial statements and the related notes thereto included in Life
Partners' Form 10-K for the year ended December 31, 1995.
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LIFE PARTNERS GROUP, INC. AND SUBSIDIARIES
ITEM 7(c). EXHIBIT.
99.1 Pro forma Condensed Consolidated Financial Statement of Life Partners
Group, Inc. and Subsidiaries
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LIFE PARTNERS GROUP, 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.
Date: April 10, 1996
LIFE PARTNERS GROUP, INC.
By:/s/DONALD CAMPBELL
------------------------------
Donald Campbell
Executive Vice President &
General Counsel
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LIFE PARTNERS GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED FINANCIAL STATEMENTS
DESCRIPTION OF PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statement
for Life Partners Group, Inc. and its subsidiaries (collectively, "Life
Partners") presents Life Partners' results of operations for the year ended
December 31, 1995, giving pro forma effect to the acquisition of Lamar Financial
Group, Inc. and its subsidiaries (collectively, "Lamar"), as described in the
notes accompanying such financial statement.
The pro forma financial statement presented herein is not necessarily
indicative of what the results of operations actually would have been if the
acquisition of Lamar had occurred at the date indicated. Furthermore, the pro
forma financial statement is not intended to be indicative of Life Partners'
future results of operations and should be read in conjunction with historical
consolidated financial statements and the related notes thereto included in Life
Partners' Form 10-K for the year ended December 31, 1995.
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<TABLE>
<CAPTION>
LIFE PARTNERS GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
(In thousands, except share and per share amounts)
(Unaudited)
Historical
------------------------------------
Lamar
Life Partners Financial
Group, Inc. Group, Inc.
----------- -----------
Year Ended Three Months
December 31, Ended March 31, Adjustments
1995 1995 Add (Deduct) Pro Forma
---- ---- ------------ ---------
<S> <C> <C> <C> <C>
Income:
Total premium income and
other considerations.............. $ 280,080 $ 7,836 $ -- $ 287,916
Net investment income............... 277,068 14,644 (332)(2) 291,380
Net realized gains.................. 15,785 113 (113)(3) 15,785
Other income........................ 3,183 49 -- 3,232
--------- -------- ------- --------
576,116 22,642 (445) 598,313
--------- -------- ------- --------
Benefits, expenses and costs:
Policyholder benefits............... 153,307 1,672 154,979
Interest credited to policyholders.. 165,415 7,943 173,358
Amortization of deferred policy
acquisition costs, cost of
insurance acquired and
deferred policy fees.............. 148,659 3,560 (3,560)(4) 154,111
5,452 (4)
Other operating expenses............ 94,784 5,063 99,847
Amortization of goodwill............ 2,745 60 (60)(5) 2,864
119 (5)
Interest expense.................... 27,861 1,084 (463)(1) 28,073
(1,084)(6)
675 (6)
--------- -------- ------- --------
592,771 19,382 1,079 613,232
--------- -------- ------- --------
Operating earnings (loss) before
income taxes........................ (16,655) 3,260 (1,524) (14,919)
Federal income tax expense (benefit).... (3,271) 1,154 (513)(7) (2,630)
--------- -------- ------- --------
Net earnings (loss) applicable to
common stock........................ $ (13,384) $ 2,106 $ (1,011) $ (12,289)
========= ======== ======== =========
Weighted average common shares
and common equivalent shares
outstanding......................... 27,127,171 650,017 27,777,188
========== ======= ==========
Net earnings (loss) per common
share and common equivalent
share outstanding................... $(0.49) $(0.44)
====== ======
<FN>
The accompanying notes are an integral part of
the pro forma condensed consolidated
financial statement.
</FN>
</TABLE>
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LIFE PARTNERS GROUP, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENT
(Unaudited)
1. Basis of Presentation
On April 28, 1995, Life Partners Group, Inc. ("Life Partners") consummated
the acquisition of Lamar Financial Group, Inc. ("Lamar"), together with all
its subsidiaries, including Lamar Life Insurance Company of Jackson,
Mississippi. Under the terms of the transaction, Life Partners issued common
stock valued at approximately $39 million and paid approximately $88 million
in cash, $36 million of which was provided by drawing upon Life Partners'
$50 million revolving credit facility.
The unaudited pro forma condensed consolidated statement of operations
presents the consolidated results of operations of Life Partners and Lamar
for the year ended December 31, 1995, as if this acquisition had been
effective January 1, 1995, after giving effect to the purchase accounting
and other pro forma adjustments described in the related notes.
The unaudited pro forma condensed consolidated financial statement and the
related notes reflect the application of the purchase method of accounting
for the Lamar acquisition. Under this method, the purchase price was
allocated to the assets acquired and liabilities assumed based on their
respective estimated fair values at the date of acquisition, including an
adjustment for income tax effects for the difference between the assigned
values and the tax bases of the assets and liabilities.
Life Partners' historical results of operations for the year ended December
31, 1995, include the results of operations of Lamar from the date of
acquisition only. As a practical matter, the historical operations of Life
Partners include the gross revenues and expenses of Lamar for the nine
months ended December 31, 1995, with an offsetting net charge recorded as
interest expense of $0.5 million relating to the net earnings of Lamar from
April 1, 1995, to April 28, 1995, the date of closing. Such net charge was
eliminated in the pro forma adjustments.
The actual consolidated statement of operations of Life Partners reflecting
the Lamar acquisition will differ from the pro forma financial statement
included herein. The unaudited pro forma condensed consolidated financial
statement is intended for informational purposes only and may not be
indicative of Life Partners' future results of operations.
Life Partners anticipates cost savings as a result of consolidating the
majority of Lamar's operations at Life Partners in the year of acquisition.
Such cost savings, as well as anticipated future cost savings, have not been
included as adjustments in the pro forma condensed consolidated financial
statement.
2. Net Investment Income
Cash used in the acquisition was assumed to be obtained from available cash
and short term investments and through the sale of fixed maturity
investments available-for-sale resulting in a reduction of historical
investment income. In addition, Lamar's historical investment yields were
revised based on market yields at the purchase date.
3. Net Realized Losses
Net realized losses recorded on Lamar's historical consolidated financial
statements were reversed for purposes of the pro forma condensed
consolidated financial statements. These losses would not have been realized
as Lamar's purchased bases in the investments sold would have been adjusted
to fair value, assuming the transaction occurred at January 1, 1995.
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LIFE PARTNERS GROUP, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENT
(CONTINUED)
(Unaudited)
4. Deferred Policy Acquisition Costs, Cost of Insurance Acquired
and Deferred Policy Fees
Historical deferred policy acquisition costs, cost of
insurance acquired, deferred policy fees and the related
amortization of such accounts were eliminated as the amounts
were reflected in the determination of the acquisition cost of
insurance acquired.
A portion of the purchase price paid for Lamar was allocated
to the cost of insurance acquired based on the actuarially
determined future profits from policies acquired in the
purchase of Lamar. The asset is amortized with interest in
relation to the expected gross profits, including direct
charge-offs for any excess of the unamortized asset over the
expected gross profits.
5. Goodwill
Goodwill recorded on Lamar's historical consolidated financial
statements was eliminated under purchase accounting. The
excess of the cost of the investment in Lamar over the fair
value of the net assets was allocated to acquisition goodwill.
Acquisition goodwill is being amortized on the straight-line
basis over a 40-year period.
6. Lamar Notes Payable
Notes payable and the related interest expense recorded on
Lamar's historical consolidated financial statements were
eliminated because part of the acquisition proceeds was used
to pay off the notes. Interest expense was further adjusted to
reflect the borrowing of $36 million on the Life Partners
revolving credit facility.
7. Federal Income Taxes
The pro forma consolidated financial statement adjustments are
tax effected at 35%, as applicable.
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