FORM 10-Q
REQUIRED
SECURITIES AND EXCHANGE COMMISSION
REQUIRED
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACTION OF 1934
For the transition period from _______________________ to _____________________.
Commission file number 811-407
1150 Liquidating Corporation
(formerly SBM Company)
((Exact name of registrant as specified in its charter)
Minnesota 41-0557530
(State or other jurisdiction of (IRS Employer
incorporation of organization) Identification Number)
8400 Normandale Lake Boulevard, Suite 1150, Minneapolis, Minnesota 55437
(Address of principal executive offices)
(Zip Code)
(612) 835-0097
(Registrant's telephone number, including area code)
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 ___
Number of shares of Common Stock outstanding at June 30, 1995: 2,179,714
1150 LIQUIDATING CORPORATION
INDEX
Part I - Financial Information Page(s)
Item I - Financial Statements (Unaudited)
Statement of Net Assets in Liquidation and Consolidated Balance Sheet 1
Statement of Changes in Net Assets in Liquidation 2
Condensed Consolidated Statements of Income 3
Condensed Consolidated Statements of Cash Flows 4
Notes to Consolidated Financial Statements 5-6
Item II - Management's Discussion and Analysis
of Financial Condition and Results
of Operations 7-9
Part II - Other Information 10-11
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
1150 LIQUIDATING CORPORATION
(formerly SBM COMPANY AND SUBSIDIARIES)
STATEMENT OF NET ASSETS IN LIQUIDATION as of June 30, 1995 (Note A)
CONSOLIDATED BALANCE SHEET (going concern historical cost basis) as of
December 31, 1994
<TABLE>
<CAPTION>
June 30 December 31
1995 1994
(Unaudited)
<S> <C> <C>
ASSETS
Investments
Debt securities available-for-sale at market -- $653,207,076
Debt securities held-to-maturity at amortized cost -- 13,944,234
Marketable equity securities at market -- 683,089
Mortgage loans -- 36,257,214
Policy loans -- 22,153,936
Other invested assets -- 1,694,506
Short-term investments -- 37,602,490
Total investments -- 765,542,545
Cash and cash equivalents 13,135,632 3,565,693
Accrued investment income -- 8,470,103
Receivable from reinsurer -- 105,806,093
Deferred policy acquisition costs, less accumulated amortization -- 76,950,470
Land, building and equipment, at cost less accumulated
depreciation of $2,470,302 -- 1,417,796
Deferred income taxes -- 3,091,000
Refundable income taxes -- 3,003,386
Other assets 238,279 1,517,067
$ 13,373,911 $969,364,153
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Future policy benefits -- $910,104,179
Face amount certificate reserves -- 60,355,015
Accounts payable and other liabilities 790,711 9,252,047
Income taxes payable 465,979 --
Deferred compensation and retirement benefits for officers -- 1,227,284
Total liabilities 1,256,690 980,938,525
Mandatory redeemable voting convertible
preferred stock, par value $1,000 (includes dividends in arrears:
June 30, 1995 - $0, December 31, 1994 - $760,000).
Authorized 19,000, shares; issued 19,000 shares, liquidation
value $19,000,000, plus dividends in arrears -- 18,485,868
Common stock held by employee benefit plans; 304,693 shares - Note B 1,693,815 1,916,519
Commitments and contingencies
Common stock, no par value.
Authorized 20,000,000 shares;
issued and outstanding 2,179,714 shares;
less 304,693 shares held by employee benefit plans 2,945,606
Unrealized losses on marketable equity securities,
net of income tax benefit of $0 and $131,048, respectively (254,388)
Unrealized losses on debt securities, net (59,691,765)
Retained earnings 25,023,788
Total stockholders' equity (deficit) (31,976,759)
$969,364,153
Net assets in liquidation $ 10,423,406
Number of common shares outstanding less 304,693 shares
held by employee benefit plans. 1,875,021
Net assets in liquidation per outstanding share $ 5.56
</TABLE>
See notes to consolidated financial statements.
1150 LIQUIDATING CORPORATION
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
For the Period from December 31, 1994 to June 30, 1995
(Unaudited)
Shareholders' equity (deficit) at December 31, 1994
(going concern historical cost basis) $(31,976,759)
Net loss from operations January 1 - May 31, 1995 (844,592)
Decrease in unrealized losses on marketable equity and
debt securities, net of taxes January 1 - May 31, 1995 50,736,738
Shareholders' equity at May 31, 1995 (going concern
historical cost basis) 17,915,387
Loss from sale of Company operations (Note A) (6,542,608)
Net gain from operations June 1 - June 30, 1995 107,728
Preferred stock liquidation amount in excess of carrying value (1,279,805)
Allocation of net loss and carrying value to common stock
held by employee benefit plans 222,704
Net assets in liquidation at June 30, 1995 $ 10,423,406
See notes to consolidated financial statements.
1150 LIQUIDATING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(going concern historical cost basis)
(Unaudited)
<TABLE>
<CAPTION>
Two Months Three Months Five Months Six Months
Ended Ended Ended Ended
May 31, 1995 June 30, 1994 May 31, 1995 June 30, 1994
<S> <C> <C> <C> <C>
Revenues:
Net investment income $ 9,804,543 $ 16,186,437 $ 24,909,308 $ 31,954,306
Underwriting, sales service and distribution fees 439,889 743,112 1,172,832 1,718,350
Life insurance premiums 70,263 92,695 171,103 197,018
Advisory and other fees from affiliated mutual funds 247,495 360,202 617,996 731,852
Realized investment (losses) gains, net 43,115 (11,481) (408,498) (929)
Other income 371,840 459,297 989,332 909,045
Total revenues 10,977,145 17,830,262 27,452,073 35,509,642
Benefits and expenses:
Provisions for benefits:
Annuities and life insurance 7,013,400 10,390,193 17,893,660 21,198,198
Face amount certificate reserves (interest) 488,800 914,302 1,224,738 1,872,758
Loan and real estate losses 50,000 50,000 50,000 200,000
Death and other benefits 113,665 243,480 234,599 324,046
Commissions, wages and benefits 1,408,838 1,747,683 3,260,594 3,687,044
Interest expense -- 41,455 -- 83,856
Amortization of deferred policy acquisition costs 1,193,555 1,180,017 2,971,790 2,332,551
Occupancy and equipment 242,418 344,765 557,763 692,445
State guaranty association assessments 50,587 226,298 126,137 452,508
Other expenses 661,319 764,988 1,388,370 1,292,722
Total benefits and expenses 11,222,582 15,903,181 27,707,651 32,136,128
Income (loss) from operations before income taxes (245,437) 1,927,081 (255,578) 3,373,514
Income taxes (benefit) (130,834) 733,000 (139,834) 1,226,000
Net income (loss) $ (114,603) $ 1,194,081 $ (115,744) $ 2,147,514
Mandatory redeemable voting convertible
preferred stock dividends $ 268,840 $ 380,000 $ 671,792 $ 760,000
Discount accretion on preferred stock 22,844 34,014 57,056 67,962
Net income (loss) applicable to common stock $ (406,287) $ 780,067 $ (844,592) $ 1,319,552
Earnings per common share:
Primary $ (.19) $ .36 $ (.39) $ .60
Fully diluted $ (.19) $ .36 $ (.39) $ .60
Weighted average common shares
outstanding (primary) 2,179,714 2,179,714 2,179,714 2,195,376
Weighted average common shares
outstanding (fully diluted) 2,179,714 3,367,214 2,179,714 3,382,876
</TABLE>
See notes to consolidated financial statements.
1150 LIQUIDATING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(going concern historical cost basis)
(Unaudited)
<TABLE>
<CAPTION>
Five Months Six Months
Ended Ended
May 31, 1995 June 30, 1994
<S> <C> <C>
Net cash provided by operating activities $ 25,874,110 $ 23,207,681
Cash flows from investing activities:
Proceeds from maturities and repayment of debt securities 5,764,960 105,568,862
Proceeds from sales of debt securities available-for-sale 54,978,153 --
Cost of debt securities acquired -- (89,862,032)
Sales (purchases) of short term investments, net (43,117,345) (32,577,234)
Loan principal repayments 9,130,780 9,012,876
Loans funded (5,478,877) (5,369,840)
Proceeds from (additions to) land, building and equipment, net (39,394) 88,601
Net cash provided by (used in) investing activities 21,238,277 (13,138,767)
Cash flows from financing activities:
Payments to face amount certificate holders (11,117,664) (12,879,787)
Reserve payments from face amount certificate holders 6,022,253 9,428,157
Deposits received from annuitants, net 29,831,611 39,574,577
Payments to annuitants (74,190,148) (42,733,607)
Purchase of common stock -- (1,511,346)
Dividends on common stock -- (446,000)
Dividends on preferred stock -- (760,000)
Principal payments on notes payable -- (92,307)
Net cash used in financing activities (49,453,948) (9,420,313)
Net increase (decrease) in cash (2,341,561) 648,601
Cash at beginning of period 3,565,693 898,726
Cash at end of period $ 1,224,132 $ 1,547,327
</TABLE>
See notes to consolidated financial statements.
1150 LIQUIDATING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. Sale and Liquidation of the Company
Effective May 31, 1995, SBM Company (the "Company") sold substantially all of
the business operations and assets of the Company to ARM Financial Group, Inc.,
(ARM) (the Transaction) for a purchase price of $34.5 million, net of $4.1
million of liabilities assumed, pursuant to an Amended and Restated Stock and
Asset Purchase Agreement dated February 16, 1995 between the Company and ARM. As
part of the Transaction, ARM acquired all of the outstanding stock of the
Company's wholly owned subsidiaries (State Bond and Mortgage Life Insurance
Company ("SBM Life"), SBM Certificate Company ("SBMC") and SBM Financial
Services, Inc.) and certain assets of the Company, including the investment
adviser function of six mutual funds, and assumed certain liabilities of the
Company. The following summarizes the proceeds from and net assets sold of the
Transaction:
Proceeds from the sale $ 34,445,877
Assets sold
Investments 808,543,939
Receivable from reinsurer 85,202,588
Deferred acquisition costs 61,683,713
Other assets 14,863,970
970,294,210
Liabilities assumed:
Future policy benefits 861,067,924
Face amount certificate reserves 56,439,745
Accounts payable and other liabilities 12,508,983
930,016,652
Net assets sold 40,277,558
Less costs of the Transaction including
income taxes of $408,000 710,927
Net loss on sale of Company operations $ (6,542,608)
The Company intends to wind up and liquidate the Company as soon as practicable.
The Company has adopted a Plan of Dissolution effective May 31, 1995. At
closing, the Series A Preferred Stock was redeemed for $20.5 million (including
$1.5 million of dividends in arrears) as a result of its senior rights over the
common stock.
The Company's shareholders approved the Transaction and the Plan of Dissolution
(the "Plan") at their regular shareholder meeting on May 18, 1995. The Company
also changed its name to "1150 Liquidating Corporation" effective June 14, 1995.
The accompanying financial statements for June 1995 have been prepared on a
liquidation basis of accounting and include adjustments which would result from
the Transaction and Plan of Dissolution. Accordingly, assets have been valued at
estimated net realizable value and liabilities include estimated costs
associated with carrying out the plan of liquidation. Estimated costs include
legal and audit fees and potential tax liabilities. No provision has been made
for normal operating costs beyond May 31, 1995, because the Company expects that
the income from investments will be sufficient to offset continuing operating
costs. No provision has been made for the costs of litigation with the trustee
of the employee benefit plans (see Note B to the financial statements) as these
costs are uncertain at this time.
The financial statements included in this Form 10-Q have been prepared by the
Company without audit. The condensed consolidated statements of income and the
condensed consolidated statements of cashflows and the consolidated balance
sheet as of December 31, 1994 have been prepared using the going concern
historical cost basis of accounting. In the opinion of management, all
adjustments necessary to present fairly the financial positions, results of
operations and cashflows for all periods presented have been made.
1150 LIQUIDATING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Certain information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the financial statements and notes thereto included
in the SBM Company and Subsidiaries' Annual Report on Form 10-K for the year
ended December 31, 1994.
B. Common Stock Held by Employee Benefit Plans
The Company's two employee benefit plans ("Plans") own 304,693 shares of Company
common stock. The value of such shares has been classified as a separate line
outside of net assets in liquidation on the Company's Statement of Net Assets in
Liquidation as of June 30, 1995 and outside of stockholders' equity on the
Company's Consolidated Balance Sheet as of December 31, 1994 because of the
Company's obligation to repurchase such shares, under certain circumstances,
under a stock agreement, or stock repurchase agreement or put agreement ("Put
Agreement"), between the Company and the Plans' trustee dated September 30,
1993.
On the June 30, 1995 Statement of Net Assets in Liquidation the value of the
shares owned by the Plans has been shown as the pro-rata estimated liquidation
value of all of the Company's common shares pursuant to the Plan of Dissolution
described above in Note A; on the December 31, 1994 balance sheet the share
value was shown as the appraised fair market value of the shares since such
value greatly exceeded the adjusted book value of such shares as determined by
the Company. The appraised value at June 30, 1994 was used in the December 31,
1994 balance sheet as an approximation of the December 31, 1994 appraised value
because the Company had not received an appraisal as at the latter date.
In January 1995, the trustee of the Plans notified the Company that it was
tendering all shares held by the Plans to the Company for purchase by the
Company under the Put Agreement. Under the Put Agreement, in certain
circumstances, the Company has agreed to purchase common shares tendered to it
by the Plans at a price equal to the higher of adjusted book value (as defined
in the Put Agreement) or fair market value. The trustee asserted in its tender
that the correct basis under the Put Agreement to determine the value of the
shares for purposes of the Company's repurchase obligation is to determine their
adjusted book value at December 31, 1994 based on the books of the Company but
using the amortized cost of the Company's investment portfolios, rather than
their fair market value. The Company maintains that such value under the Put
Agreement must be based on the books of the Company which, after the
effectiveness of SFAS 115 on January 1, 1994, must use the market value, rather
than the amortized cost, of the substantial portion of the Company's investment
portfolios which must be classified as "available-for-sale" under applicable
accounting principles. In the alternative, the Company maintains that the tender
was invalid in the circumstances under which it was made and, even if valid,
that the correct value under such circumstances is the pro-rata estimated
liquidation value of all of the Company's common shares pursuant to the Plan of
Dissolution, rather than any value based upon the books of the Company as
prepared on the going concern historical cost basis.
The Company declined to repurchase such shares for various reasons including
those stated above and commenced a declaratory judgment action in Minnesota
District Court in March 1995 to determine its repurchase obligation and the
applicable price under the Put Agreement. If the views of the Company or those
of a large shareholder which is a party to such litigation prevail, either the
Company will have no obligation to repurchase the shares held by the Plans under
the Put Agreement or the price at which any such repurchase obligation exists
will be based either on the December 31, 1994 appraised value of the shares,
under an appraisal now in final draft form and soon expected to be received by
the Company, or the pro-rata estimated liquidation value of all of the Company's
common shares pursuant to the Plan of Dissolution (estimated for purposes of the
June 30, 1995 statement of net assets in liquidation to be $5.56 per share). If
the views of the trustee prevail, the Company will have the obligation to
repurchase all of the shares held by the Plans at the December 31, 1994 adjusted
book value of such shares on the books of the Company using the amortized cost
of the Company's investment portfolios (estimated to be approximately $13.75 per
share).
While the Company believes its interpretation of the Put agreement is correct,
the determination that the views of the Trustee are correct would have the
effect at June 30, 1995 of increasing the value of the shares held by the Plans
by approximately $2.5 million and reducing net assets in liquidation available
for other shareholders by a like amount, thereby reducing the anticipated per
share liquidating value under the Plan of Dissolution of all other shares by
about $1.33 per share.
The litigation is expected to reach the trial stage in early 1996 and the
court's decision at trial may be appealed. Accordingly, there may not be a
definitive resolution of this matter for as long as two years, or longer.
1150 LIQUIDATING CORPORATION
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Sale of Company Operations
The Company closed on the sale of its operations to ARM Financial Group, Inc.
("ARM") on June 14, 1995 which for accounting purposes became effective May 31,
1995 and incurred a loss of $6.5 million (see Note A to the consolidated
financial statements). The purchase price was determined pursuant to an Amended
and Restated Purchase Agreement dated February 16, 1995 between the Company and
ARM. The gain or loss on the sale recorded by the Company was subject to
fluctuation through the effective date based on the market value of the
available-for-sale securities and the associated unrealized gains/losses.
In 1994, as a result of a combination of factors as discussed below, the Company
was required to look to outside sources for capital and ultimately entered into
the sale of the Company's operations to ARM. The events leading to the sale of
the Company's operations to ARM included the following: The required adoption of
Statement of Financial Accounting Standards No. 115 (SFAS 115) effective January
1, 1994, in combination with the rapidly rising interest rates in 1994 resulted
in significantly reduced market values in the Company's investment portfolio,
especially its CMOs, which adversely impacted stockholders' equity through the
recording of unrealized losses. This decline in investment portfolio value and
stockholders' equity caused regulatory concerns regarding the capital adequacy
of the Company. In addition, A.M. Best reduced the Company's rating to B+ (as
discussed below) which caused significant concern in the marketplace along with
further concern by regulators as to the adequacy of the Company's capital base.
As such the sale of the Company's operations became the solution to the capital
issues.
Subsequent to the sale, the Company has no operations. Upon closing of the sale,
the Company redeemed its preferred stock at liquidation value ($19 million) plus
$1.5 million of dividends in arrears. The remaining proceeds from the
Transaction have been invested in a short-term government money market fund. The
Company is in the process of paying its remaining liabilities and making an
initial distribution to shareholders. The remaining proceeds will be distributed
once the litigation with the trustee of the employee benefit plans has been
resolved (see Note B to the consolidated financial statements) and all other
liabilities are satisfied.
The results of operations for SBM Life, SBM Company and SBM Financial Services
are for the five months ended May 31, 1995 compared to the six months ended June
30, 1994, which must be taken into account in the following discussion.
Annuities and Life Insurance Segment - SBM Life
In November 1994, A.M. Best informed SBM Life that its rating was being reduced
from A- (excellent) to B+ (very good). A.M. Best indicated that the reasons for
the rating change were SBM Life's concentration in CMOs even after the
disposition of $186 million of CMOs earlier in 1994 and its desire that SBM Life
increase its capital level to at least replace losses realized by such sales of
CMOs. Also, during the third quarter of 1994, several adverse newspaper articles
were written concerning SBM Life's investment portfolio and the unrealized
depreciation associated with it. The combination of these announcements and the
reduction by A.M. Best of SBM Life's rating negatively impacted new sales,
especially in the Tax Sheltered Annuity ("TSA") marketplace. Policy withdrawals
and surrenders also increased as a result of the above. These factors should be
considered in the review of the following discussion.
The Company's life insurance subsidiary (SBM Life) has seen a decrease in
annuity premiums during the five months of 1995 compared to the six months of
1994 with premium being $28.5 million in 1995 compared to $38.3 million in 1994.
The decrease has been in both single premium deferred annuities and first year
premium on sales of 403(b) tax sheltered flexible premium deferred annuities.
This decrease is mainly due to the A.M. Best rating change and adverse publicity
discussed above and, to a lesser degree, product changes to its TSA product line
which have not been fully accepted by some agents and competition from
competitive products such as variable annuities.
Annuity surrenders and withdrawals for SBM Life for the five months ended May
31, 1995 compared to the six month period last year were $73.2 million and $41.6
million, respectively. This increase in withdrawals is mainly attributable to
the various factors discussed above. The higher interest rates during 1994 and
early 1995, as compared to the renewal crediting rates being paid on older
annuities, have also caused some increase in withdrawals as annuity holders look
for other investments or annuities which have higher rates of return.
Operating income, (loss) before taxes, excluding the effect of realized
portfolio gains/losses, for SBM Life for the five months ended May 31, 1995, was
($70,898) compared to $3,559,414 for the six month period in 1994. This decrease
was the result of two main items. First, the spread between investment income
earned on its investment portfolio and the interest credited on the outstanding
annuities significantly decreased. Return on invested assets excluding realized
gains and losses for the five months ended May 31, 1995 and six months of 1994
was 7.28% and 7.64%, respectively. This decrease in investment return was the
result of SBM Life carrying higher than normal levels of short term investments
to insure adequate liquidity during the previously described period of adverse
publicity and A.M. Best Rating downgrade and the reinvestment of the proceeds
from the CMO sales into lower yielding corporate bonds. The average rate of
interest credited on annuities was 5.53% and 5.53% for the periods ended May 31,
1995 and June 30, 1994, respectively, resulting in a year-to-date net spread of
1.75% in 1995 and 2.11% in 1994. Second, the increase in withdrawals and
surrenders during the first five months of 1995 resulted in increased
amortization of deferred acquisition costs. Amortization to date in 1995 was
$2,770,000 compared to $2,075,000 for the six month period last year.
Face Amount Certificate Segment - SBM Certificate Company ("SBMC")
Net investment income after income taxes for the five months ended May 31, 1995
was $184,000 compared to $125,000 for the six month period in 1994. The increase
in net investment income is mainly due to a higher spread earned on SBMC's
investment portfolio in relation to interest paid on outstanding certificates.
Administrative and building expense decreases also contributed to the increase
in net investment income.
As a result of the increasing interest rate environment through early 1995, SBMC
increased the interest rates offered on new Series 503 certificates throughout
1994 and on January 25, 1995. SBMC decreased the interest rates offered in May
1995 in response to the decrease in the interest rate environment in the second
quarter of 1995.
Sales of new certificates for the first five months of 1995 are approximately
88% of the level of sales for the six month period in 1994 and the average
monthly new sales for 1995 was slightly higher than 1994's average. In addition,
during the first five months of 1995, certificate renewal rates were consistent
with historical renewal levels and 1994's rates. SBMC has adjusted its rates to
remain as competitive as possible in order to attempt to maintain its historical
certificate renewal rates and generate new certificate sales while still
maintaining adequate operating spreads.
Also, in the first five months of 1995, SBMC recognized $(314,000) in investment
capital losses as a result of selling $5 million of various securities and
reinvesting the proceeds in commercial paper. This was done in anticipation of
greater amounts of scheduled maturities in the first half of 1995.
Mutual Fund Investment Advisory Segment
Mutual fund sales continued to decrease during 1995 with total fund sales
(excluding the State Bond Cash Management Fund) of approximately $5.3 million
for the five months ended May 31, 1995 compared to approximately $8.7 million
for the six month period in 1994. Redemptions increased from $8.9 million in
1994 to $12.1 million in 1995. Assets under management grew from $204 million at
December 31, 1994 to $217 million at May 31, 1995 as a result of increases in
value in both the stock and bond markets.
Capital Resources and Liquidity
As noted in Note A to the consolidated financial statements and under "Sale of
the Operations of the Company" herein, the Company has no remaining operations
and therefore no capital resources or liquidity issues. As previously discussed,
the Company is in the process of liquidating and distributing the proceeds from
the sale of its operations to the Company's shareholders. An initial
distribution is in process at the time of this report. The final distribution
will be made as soon as practicable after the litigation (mentioned in Note B to
the consolidated financial statements) is resolved and all other liabilities are
satisfied..
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
A regular meeting of the shareholders of the Registrant was held on May 18,
1995. At the meeting, Kennon V. Rothchild and Robert W. Winslow were elected as
Common Stock directors. The votes received were as follows:
FOR AGAINST ABSTAIN
Kennon V. Rothchild (Class I) 2,867,655 0 85,381
Robert W. Winslow (Class III) 2,867,365 300 85,381
The following other director's term continued after the meeting:
Richard M. Evjen (Class II).
At the meeting, the shareholders also voted to adopt the following amendment in
its entirety of Article V of the Articles of Incorporation of the Registrant:
ARTICLE V
The business and affairs of the Corporation shall be managed by or
under the direction of a Board of Directors consisting of not less than
one person. Whenever the holders of any one or more classes of
preferred or preference stock issued by the Corporation pursuant to
Article III of these Articles of Incorporation have the right by the
terms of their class of stock, voting separately by class or series, to
elect directors at a regular or special meeting of shareholders, the
elections, term of office, filling of vacancies and other features of
such directorships shall be governed by or pursuant to the applicable
terms of those classes or series of shares.
The votes received on the amendment were as follows:
FOR AGAINST ABSTAIN
2,866,255 59,043 27,748
The shareholders also voted to approved the following:
1. Sale of substantially all of the Registrant's assets to
ARM Financial Group, Inc. (the "Sale");
2. Liquidation and dissolution of the Registrant subsequent to the
completion of the Sale pursuant to a Plan of Dissolution adopted
by the Board of Directors of the Registrant;
3. Change of Registrant's name to 1150 Liquidating Corporation.
FOR AGAINST ABSTAIN
2,879,055 61,671 12,319
Item 6. Exhibits and Reports on Form 8-K
(b) Form 8-K, Items 5 and 7, June 16, 1995.
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.
SBM COMPANY
Date __________________ By: ___________________________________
Charles A. Geer
Its: President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995<F2>
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 0
<CASH> 13,135,632
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 13,373,911
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
<COMMON> 0
0
0
<OTHER-SE> 10,423,406<F3>
<TOTAL-LIABILITY-AND-EQUITY> 13,373,911
171,103
<INVESTMENT-INCOME> 24,909,308<F1>
<INVESTMENT-GAINS> (408,498)
<OTHER-INCOME> 2,780,160<F1>
<BENEFITS> 19,352,997
<UNDERWRITING-AMORTIZATION> 2,971,790
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> (255,578)<F1>
<INCOME-TAX> (139,834)<F1>
<INCOME-CONTINUING> (115,744)<F1>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (115,744)<F1>
<EPS-PRIMARY> (.39)
<EPS-DILUTED> (.39)
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1> January 01, 1995 through May 31, 1995.
<F2> The Company is currently using Liquidation Accounting.
<F3> Net asset and liquidation
</FN>
</TABLE>
