Pages - 27
Exhibit Index - Page 5
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Earliest Event Reported: October 6, 1995
Jefferson-Pilot Corporation
(Exact name of registrant as specified in its charter)
North Carolina 1-5955 56-0896180
(State or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) Identification No.)
100 North Greene Street, Greensboro, NC 27401
(Address of principal executive offices) (Zip Code)
(910) 691-3691
(Registrant's telephone number, including area code)
Item 5. Other Events
On November 15, 1995, Jefferson-Pilot Life Insurance Company ("JP Life") was
served with a Complaint in Romig v. Jefferson-Pilot Life Insurance Company, an
action filed in the Superior Court of Guilford County, North Carolina on
November 6, 1995. This purported class action follows a large number of
similar class actions filed against insurance companies nationwide. The
Complaint alleges deceptive practices and fraudulent and negligent
misrepresentation in the sale of life insurance policies using illustrations
showing some or all of the future premiums being paid from policy values
rather than directly by the insured. Actual policy values exceeded those
illustrated on a guaranteed basis, but were less than those illustrated on a
then current basis due primarily to interest or dividend rates that declined
along with the overall decline in interest rates in recent years.
Plaintiff seeks certification of class action status and asks for unspecified
compensatory damages, treble or punitive damages, costs and equitable relief.
While JP Life cannot assess the possible outcome of this action, it believes
that it has made appropriate disclosures to policyholders as a matter of
practice. If this matter is certified as a class action, JP Life intends to
defend the suit vigorously.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
(e) Financial Statements of Business Acquired
Unaudited combined balance sheets at September 30, 1995 and December 31, 1994,
unaudited combined statements of income and cash flows for the nine months
ended September 30, 1995 and 1994, and unaudited note to combined financial
statements, for Alexander Hamilton Life Insurance Company of America and the
acquired subsidiaries.
(f) Unaudited pro forma financial information
Unaudited pro forma condensed consolidated statements of income of Jefferson-
Pilot Corporation for the year ended December 31, 1994, for the nine months
ended September 30, 1995 and 1994, and unaudited pro forma condensed
consolidated balance sheet as of September 30, 1995 for Jefferson-Pilot
Corporation giving effect to the pro forma adjustments related to the
acquisition of Alexander Hamilton Life Insurance Company of America and its
two acquired subsidiaries as described in Item 2 of the Form 8-K filed on
October 19, 1995 to report this acquisition. The 1994 condensed pro forma
income statement and a six-month condensed, pro forma income statement to,
and balance sheet as of, June 30, 1995 were included in Form 8-K/A
(Amendment No. 1). The statements included herein reflect more current data.
(g) Unaudited supplemental pro forma information.
Unaudited analyses of pro forma net income and pro forma earnings per share
available to common shareholders for the year ended December 31, 1994 and the
nine months ended September 30, 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.
JEFFERSON-PILOT CORPORATION
By: /s/Robert A. Reed
(name) Robert A. Reed
(title) Vice President
Dated: November 21, 1995
Index to Exhibits
Exhibit No. Description Pages
(e) Financial Statements of Business
Acquired (9/30/95)
(f) Pro forma financial information
(9/30/95)
(g) Unaudited Supplemental pro forma
information (9/30/95)
Exhibit (e)
ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA,
FIRST ALEXANDER HAMILTON LIFE INSURANCE COMPANY, AND
ALEXANDER HAMILTON CAPITAL MANAGEMENT, INC.
UNAUDITED CONDENSED COMBINED BALANCE SHEETS
(Dollar Amounts in Thousands)
September 30, December 31,
ASSETS 1995 1994
(Unaudited)
CASH AND INVESTMENTS:
Cash and cash equivalents $ 50,362 $ 10,380
Debt securities available for sale,
at fair value 3,919,360 3,515,628
Debt securities held to maturity, at
amortized cost 2,721,532 2,737,720
Equity securities available for sale,
at market value 148,780 53,289
Mortgage loans on real estate 198,003 161,883
Policy loans 794,989 544,198
Real estate 29,501 81,153
Other investments - 1,722
Total cash and investments 7,862,527 7,105,973
ACCRUED INVESTMENT INCOME 113,628 103,929
ACCOUNTS RECEIVABLE AND AGENTS' BALANCES 25,622 57,607
DUE FROM REINSURERS 92,942 82,165
RECEIVABLE FROM AFFILIATE 65,067 -
PROPERTY AND EQUIPMENT 17,286 20,088
DEFERRED POLICY ACQUISITION COSTS, net
of amortization 464,993 618,652
INCOME TAX RECEIVABLE 9,619 -
DEFERRED INCOME TAX ASSETS 55,863 68,994
OTHER ASSETS - 9,330
TOTAL ASSETS $8,707,547 $8,066,738
The accompanying note is an integral part of these combined statements.
ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA,
FIRST ALEXANDER HAMILTON LIFE INSURANCE COMPANY, AND
ALEXANDER HAMILTON CAPITAL MANAGEMENT, INC.
UNAUDITED CONDENSED COMBINED BALANCE SHEETS
(Dollar Amounts in Thousands)
September 30, December 31,
LIABILITIES AND COMBINED COMPANIES EQUITY 1995 1994
(Unaudited)
POLICY LIABILITIES:
Future policy benefits $7,709,900 $7,087,065
Dividend accumulations and other policyholder
funds on deposit 2,493 2,021
Policy and contract claims 40,288 36,439
Unearned premium reserves 3,790 3,502
Total policy liabilities 7,756,471 7,129,027
INCOME TAXES PAYABLE - 20,008
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 113,928 157,620
PAYABLE TO AFFILIATE 2,440 67,768
NOTE PAYABLE TO PARENT 50,000 50,000
Total liabilities 7,922,839 7,424,423
COMBINED COMPANIES EQUITY:
Combined companies equity 785,835 733,076
Net unrealized gain (loss) on securities available
for sale 6,730 (81,835)
Net unrealized losses or foreign exchange
transactions (7,857) (8,926)
Total combined companies equity 784,708 642,315
TOTAL LIABILITIES AND COMBINED COMPANIES EQUITY $8,707,547 $8,066,738
The accompanying note is an integral part of these combined statements.
ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA,
FIRST ALEXANDER HAMILTON LIFE INSURANCE COMPANY, AND
ALEXANDER HAMILTON CAPITAL MANAGEMENT, INC.
COMBINED STATEMENTS OF INCOME
(Dollar Amounts in Thousands)
Nine Months Ended
September 30,
1995 1994
(Unaudited) (Unaudited)
REVENUE:
Life premiums $ 35,159 $ (7,859)
Accident and health premiums 19,967 18,879
Contract revenue 99,651 100,752
Total premiums and other considerations 154,777 111,772
Net investment income 98,025 64,118
Realized investment gains (losses) 2,769 27,223
255,571 203,113
BENEFITS AND EXPENSES:
Life benefits 58,444 56,615
Accident and health benefits 7,410 10,777
(Decrease) increase in reserves 3,265 (46,705)
Other policyholder benefits (3,854) 4,243
Total benefits 65,265 24,930
Insurance commissions 54,750 41,658
General and administrative 41,483 42,672
Insurance taxes, licenses, and fees 13,285 11,198
Interest expense 3,663 -
Total expenses 113,181 95,528
INCOME FROM OPERATIONS BEFORE INCOME TAXES 77,125 82,655
INCOME TAXES 27,567 29,094
NET INCOME $ 49,558 $ 53,561
The accompanying note is an integral part of these combined statements.
ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA,
FIRST ALEXANDER HAMILTON LIFE INSURANCE COMPANY, AND
ALEXANDER HAMILTON CAPITAL MANAGEMENT, INC.
COMBINED STATEMENTS OF CASH FLOWS
(Dollar Amounts in Thousands)
Nine Months Ended
September 30,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 49,558 $ 53,561
Adjustments to reconcile net income to net cash
provided by operating activities:
Policy liabilities 627,444 616,082
Deferred policy acquisition costs (54,314) (62,391)
Depreciation and amortization 54,714 34,360
Deferred income taxes (benefit) (5,999) 456
Amounts receivable and other assets (53,847) (70,556)
Accounts payable and accrued expenses (63,702) 33,647
Realized investment (gains) losses (2,769) (27,223)
Total adjustments 501,527 524,375
Net cash provided by operating activities 551,085 577,936
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities (2,696,501) (2,857,664)
Proceeds from sales and maturities of investment
securities 2,499,935 2,240,028
Purchases of mortgage loans and real estate (81,850) (7,998)
Proceeds from sales of real estate - 14,117
Proceeds from payments on mortgage principle 37,807 66,067
Policy loans, net (250,791) (89,861)
Additions to property, plant and equipment (1,075) ( 2,621)
Net cash used in investing activities (492,475) (637,932)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution received from parent company 46,700 -
Increase (decrease) in note payable and payable
to affiliate (65,328) 50,383
Net cash provided by (used for) financing activities (18,628) 50,383
Net decrease in cash and cash equivalents 39,982 (9,613)
CASH AND CASH EQUIVALENTS, beginning of year 10,380 13,821
CASH AND CASH EQUIVALENTS, end of year $ 50,362 $ 4,208
The accompanying note is an integral part of these combined statements.
ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA
FIRST ALEXANDER HAMILTON LIFE INSURANCE COMPANY, AND
ALEXANDER HAMILTON CAPITAL MANAGEMENT, INC.
NOTE TO COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION
The accompanying combined condensed financial statements include Alexander
Hamilton Life Insurance Company of America ("AHLIC"), First Alexander Hamilton
Life Insurance Company ("FAHL"), and Alexander Hamilton Capital Management,
Inc. ("AHCM") and are unaudited, but, in the opinion of management, reflect
all adjustments necessary to present fairly the combined condensed September
30, 1995 balance sheet and statements of income and cash flows for the nine
months ended September 30, 1995 and 1994. Such adjustments consist only of
normal recurring accruals and adjustments. These financial statements have
been combined and prepared as a result of the Stock Purchase Agreement between
the Household Group, Household International, Inc., Alexander Hamilton Life
Insurance Company of America, and Jefferson-Pilot Corporation dated August 9,
1995 and exclude certain AHLIC subsidiaries that have not been acquired.
These combined condensed financial statements should be read in conjunction
with the audited combined financial statements and related notes. Combined
net income and cash flows for the interim periods reflected in the
accompanying combined condensed financial statements are not necessarily
indicative of those to be expected for the entire fiscal year.
Exhibit (f)
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated balance sheet of
Jefferson-Pilot Corporation (Company) and its consolidated subsidiaries as of
September 30, 1995 is based on the historical condensed consolidated balance
sheet of the Company, and is presented as if the acquisition (Alexander
Hamilton acquisition) of Alexander Hamilton Life Insurance Company of America,
First Alexander Hamilton Life Insurance Company, and Alexander Hamilton
Capital Management, Inc. (Alexander Hamilton Companies) and related borrowings
had occurred on September 30, 1995. The unaudited pro forma consolidated
condensed balance sheet gives effect to the Alexander Hamilton acquisition
under the purchase method of accounting and is based upon a preliminary
allocation of the purchase price and the assumptions and adjustments described
in the accompanying notes. This unaudited pro forma condensed consolidated
balance sheet should be read in conjunction with the Company's consolidated
financial statements and the combined financial statements of the companies
acquired in the Alexander Hamilton acquisition. This pro forma information is
not necessarily indicative of the financial position that would have been
reported had such events actually occurred on the date specified, nor is it
indicative of the Company's future financial position.
The unaudited pro forma condensed consolidated statements of income for the
year ended December 31, 1994 and the nine months ended September 30, 1995 and
1994 are based on the historical consolidated financial statements of the
Company and the combined financial statements of companies acquired in the
Alexander Hamilton acquisition, and are presented as if the Alexander Hamilton
acquisition (including borrowings related to the acquisition) had occurred at
the beginning of the periods presented. The unaudited pro forma statements of
income give effect to the Alexander Hamilton acquisition under the purchase
method of accounting and are based on a preliminary allocation of the purchase
price and the assumptions and adjustments described in the accompanying notes.
These unaudited pro forma statements of income should be read in conjunction
with the Company's consolidated financial statements and the combined
financial statements of the companies acquired in the Alexander Hamilton
acquisition. The pro forma information is not necessarily indicative of the
results of operations that would have been reported had such events actually
occurred on the date specified, nor is it indicative of the Company's future
results.
For a description of the Alexander Hamilton acquisition, including the
reinsurance (coinsurance) transactions and related transfers of assets and
liabilities associated with the credit insurance, periodic payment annuity,
and company owned life insurance lines of business to companies retained by
the prior owner, see Item 2 of the Form 8-K being amended hereby.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1995
Jefferson- Alexander
Pilot Hamilton
Corporation Companies(8) Adjustments Pro Forma
ASSETS (dollar amounts in thousands)
Cash and investments:
Debt securities available
for sale, at fair value $2,742,888 $3,395,173 $ - $ 6,138,061
Debt securities held to
maturity, at amortized cost 2,020,371 1,799,382 29,245 (1) 3,848,998
Equity securities 850,454 53,986 - 904,440
Mortgage loans 839,569 198,003 - 1,037,572
Cash and all other investments 333,433 183,540 (246,592)(1)(2) 270,381
Accrued investment income 85,604 85,468 - 171,072
Accounts receivable and agents'
balances 61,019 30,706 - 91,725
Due from reinsurers 34,323 2,254,531 - 2,288,854
Property and equipment, net 98,471 16,552 (250)(1) 114,773
Deferred policy acquisition
costs 560,459 448,029 (448,029)(1) 560,459
Deferred tax asset - 41,514 34,136 (1) 75,650
Organization costs - - 2,100 (1) 2,100
Value of business acquired - - 324,600 (1)(6) 324,600
Goodwill - - 53,959 (1) 53,959
Other assets 87,099 9,619 - 96,718
Separate account assets 275,956 - - 275,956
$7,989,646 $8,516,503 $(250,831) $16,255,318
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Policy liabilities $4,856,554 $7,756,471 $ - $12,613,025
Income tax liabilities 250,591 - - 250,591
Obligations under repurchase
agreements 266,057 - - 266,057
Short-term notes payable 76,500 - 315,000 (3) 391,500
Accounts payable and accrued
expenses 78,305 130,792 - 209,097
Other liabilities 186,565 - 13,409 (1)(5) 199,974
Note payable - 50,000 (50,000)(7) -
Separate account liabilities 275,956 - - 275,956
5,990,528 7,937,263 278,409 14,206,200
Redeemable preferred stock - 50,000(4) - 50,000
Stockholders' equity 1,999,118 529,240 (529,240) 1,999,118
$7,989,646 $8,516,503 $(250,831) $16,255,318
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
NOTES TO
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1995
(In Thousands)
(1) Represents the allocation of the purchase price of $575,000 to adjust
acquired assets and liabilities to fair value.
(2) Includes $210,000 of cash applied toward the purchase price in connection
with the acquisition.
(3) Represents the issuance of $315,000 short-term debt in connection with the
acquisition.
(4) Represents the issuance of $50,000 redeemable preferred stock in
connection with the acquisition.
(5) The other liabilities adjustment includes approximately $11,400 of costs
to relocate employees and integrate systems and processes as a result of the
acquisition and $2,000 to record post retirement benefits at fair value.
(6) The value of business acquired represents the actuarially determined
present value of future gross profits for the businesses acquired, discounted
at a risk rate of return. The value of business acquired is amortized over
the life of the business at a constant rate based on the present value of the
estimated gross profit amounts expected to be realized over the life of the
business. Amortization amounts for the years ending 1995 through 1999 would
be as follows: 1995 - $28,600, 1996 - $33,200, 1997 - $33,200, 1998 - $31,700,
1999 - $30,000.
(7) Represents elimination of intercompany note payable.
(8) The amounts for the Alexander Hamilton Companies represent the assets and
liabilities acquired in connection with the transaction. Certain assets of
the Alexander Hamilton Companies were not acquired. These amounts are
presented as follows.
Alexander Adjustments Amounts
Hamilton For Items Not Shown
Companies Acquired Above
ASSETS
Cash and investments:
Debt securities available for
sale, at fair value $3,919,360 $ (524,187)(A)(B)(C) $3,395,173
Debt securities held to maturity,
at amortized cost 2,721,532 (922,150)(A)(B)(C) 1,799,382
Equity securities available for
sale, at market value 148,780 (94,794)(A)(B)(C) 53,986
Mortgage loans 198,003 - 198,003
Cash and all other investments 924,852 (741,312)(A) 183,540
Accrued investment income 113,628 (28,160)(A) 85,468
Accounts receivable and agents'
balances 90,689 (59,983)(A) 30,706
Due from reinsurers 92,942 2,161,589 (A) 2,254,531
Property and equipment, net 17,286 (734)(D) 16,552
Deferred policy acquisition costs 464,993 (16,964)(A) 448,029
Deferred tax asset 55,863 (14,349)(A) 41,514
Other assets 9,619 - 9,619
$8,757,547 $ (241,044) $8,516,503
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Policy liabilities $7,756,471 $ - $7,756,471
Accounts payable and accrued
expenses 113,928 16,864 (A) 130,792
Other liabilities 2,440 (2,440)(A) -
Note payable 50,000 - 50,000
7,922,839 14,424 7,937,263
Redeemable preferred stock 50,000 - 50,000
(734)(D) (734)
(60,000)(B) (60,000)
Stockholders' equity 784,708 (194,734)(C) 589,974
$8,757,547 $ (241,044) $8,516,503
(A) Represents the transfer of assets and liabilities associated with the
credit insurance, periodic payment annuity, and company owned life insurance
lines of business and the establishment of the related reinsurance receivable
as if those lines of business were reinsured.
(B) Represents dividend of net income (as defined in the Stock Purchase
Agreement) for 1995.
(C) Represents capital contribution to entities not being sold per the Stock
Purchase Agreement.
(D) Represents dividend of property and equipment.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 1994
Alexander
Jefferson- Hamilton
Pilot Companies
Corporation (11) Adjustments Pro Forma
(dollar amounts in thousands, except per share data)
REVENUE:
Premiums and other
considerations $ 655,302 $ 80,542 $ - $ 735,844
Net investment income 375,196 78,062 (26,962)(1)(2) 426,296
Communications 172,501 - - 172,501
Realized investment gains 61,426 12,991 - 74,417
Other income 4,385 - 5,000 (9) 9,385
1,268,810 171,595 (21,962) 1,418,443
BENEFITS AND EXPENSES:
Policy benefits 627,862 (419) - 627,443
Insurance commissions 71,752 62,899 - 134,651
Communications operations 120,833 - - 120,833
General and administrative 117,819 41,312 807 (3) 159,938
Taxes, licenses, & fees 23,351 15,432 - 38,783
Interest - 1,230 17,749 (4) 18,979
Amortization of value of
business acquired - - 28,600 (5) 28,600
Amortization of goodwill - - 2,158 (6) 2,158
Increase in deferred
acquisition costs, net (40,410) (17,151) (51,966)(7) (109,527)
921,207 103,303 ( 2,652) 1,021,858
Income before income taxes 347,603 68,292 (19,310) 396,585
Provision for income taxes 117,707 23,388 (6,003)(8) 135,092
Income from continuing
operations $ 229,896 $ 44,904 $(13,307) $ 261,493
Income from continuing
operations, per share $ 4.73 $ 5.30(10)
Shares used in earnings
per share calculation 48,641,880 48,641,880
See Notes to Unaudited Pro Forma Condensed Consolidated Statement of Income.
NOTES TO
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 1994
(In Thousands)
(1) Represents foregone interest of $15,162 a rate of 7.22% on the $210,000 of
the purchase price obtained from internal funds.
(2) Represents amortization of $11,800 on the difference between the market
value and the carrying amounts of investments acquired.
(3) Represents adjustment for estimated net periodic pension cost subsequent
to the acquisition.
(4) Represents interest expense at a rate of 6.025% on the $315,000 of debt
incurred in connection with the acquisition and elimination of $1,230 of
intercompany interest associated with the note payable.
(5) Represents amortization of the value of business acquired in the
transaction, in accordance with SFAS 97. See note 6 of the pro forma balance
sheet.
(6) Represents amortization of goodwill over a period of 25 years.
(7) Represents removal of amortization of the deferred acquisition cost of the
Alexander Hamilton Companies subsequent to the acquisition.
(8) Represents the net tax effect of the pro forma adjustments excluding
goodwill amortization at statutory income tax rates.
(9) Reflects fees received on reinsurance business.
(10) The computation of earnings per share is based upon the weighted average
number of common shares outstanding during the period. Preferred stock
dividends of $3,562 are reflected in the earnings per share computation.
(11) The amounts for the Alexander Hamilton Companies in the pro forma
statement of income represent the effects on earnings of the assets and
liabilities acquired in the transaction. The adjustment of the historical
statement of income of the Alexander Hamilton Companies to arrive at the
effects of the business acquired by Jefferson-Pilot Corporation are presented
as follows.
Alexander Adjustments Amounts
Hamilton For Items Not Shown
Companies Acquired Above
REVENUE:
Premiums and other
considerations $ 159,957 $ (79,415) (A) $ 80,542
Net investment income 96,573 (18,511) (A) 78,062
Realized investment gains 21,072 (8,081) (A) 12,991
277,602 (106,007) 171,595
BENEFITS AND EXPENSES:
Policy benefits 36,197 (36,616) (A) (419)
Insurance commissions 73,698 (10,799) (A) 62,899
General and administrative 55,782 (14,470) (A) 41,312
Taxes, licenses, and fees 17,834 (2,402) (A) 15,432
Interest 1,230 - 1,230
Increase in deferred acquisition
costs, net (17,151) - (17,151)
167,590 (64,287) 103,303
Income before income taxes 110,012 (41,720) 68,292
Provision for income taxes 38,407 (15,019) (B) 23,388
Income from continuing operations $ 71,605 $ (26,701) $ 44,904
(A) Represents the reduction of revenue, benefits, and expenses for the year
ended December 31, 1994 had the credit insurance, periodic payment annuity,
and company owned life insurance lines of business been reinsured on
January 1, 1994.
(B) Represents the net tax effect of the pro forma adjustments at statutory
income tax rates.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended September 30, 1995
Alexander
Jefferson- Hamilton
Pilot Companies
Corporation (11) Adjustments Pro Forma
(dollar amounts in thousands, except per share data)
REVENUE:
Premiums and other
considerations $ 471,712 $ 92,994 $ - $ 564,706
Net investment income 322,037 81,098 (20,172)(1)(2) 382,963
Communications 114,778 - - 114,778
Realized investment
gains (losses) 26,066 (1,526) - 24,540
Other income 91,086 - 3,750 (9) 94,836
1,025,679 172,566 (16,422) 1,181,823
BENEFITS AND EXPENSES:
Policy benefits 547,284 35,599 - 582,883
Insurance commissions 71,095 47,127 - 118,222
Communications operations 78,124 - - 78,124
General and administrative 91,585 27,350 787 (3) 119,722
Taxes, licenses, & fees 19,448 11,584 - 31,032
Interest - 3,375 10,859 (4) 14,234
Amortization of value of
business acquired - - 21,450 (5) 21,450
Amortization of goodwill - - 1,619 (6) 1,619
Increase in deferred
acquisition costs, net (32,166) ( 2,497) (39,535)(7) (74,198)
775,370 122,538 ( 4,820) 893,088
Income before income taxes 250,309 50,028 (11,602) 288,735
Provision for income taxes 81,884 17,383 (3,494)(8) 95,773
Income from continuing
operations $ 168,425 $ 32,645 $ (8,108) $ 192,962
Income from continuing
operations, per share $ 3.51 $ 3.97(10)
Shares used in earnings
per share calculation 47,905,902 47,905,902
See Notes to Unaudited Pro Forma Condensed Consolidated Statement of Income.
NOTES TO
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended September 30, 1995
(In Thousands)
(1) Represents foregone interest of $11,372 at a rate of 7.22% on the $210,000
of the purchase price obtained from internal funds.
(2) Represents amortization of $8,800 on the difference between the market
value and the carrying amounts of investments acquired.
(3) Represents adjustment for estimated net periodic pension cost subsequent
to the acquisition.
(4) Represents interest expense at a rate of 6.025% on the $315,000 of debt
incurred in connection with the acquisition less elimination of $3,375 of
inter-company interest expense on the note payable.
(5) Represents amortization of the value of business acquired in the
transaction, in accordance with SFAS 97. See note 6 of the pro forma balance
sheet.
(6) Represents amortization of goodwill over a period of 25 years.
(7) Represents removal of amortization of the deferred acquisition costs of
the Alexander Hamilton companies subsequent to the acquisition.
(8) Represents the net tax effect of the pro forma adjustments excluding
goodwill amortization at statutory income tax rates.
(9) Represents estimated fees for reinsurance business.
(10) The computation of earnings per share is based upon the weighted average
number of common shares outstanding during the period. Preferred stock
dividends of $2,672 are reflected in the earnings per share computation.
(11) The amounts for the Alexander Hamilton Companies in the pro forma
statement of income represent the effects on earnings of the assets and
liabilities acquired in the transaction. The adjustment of the historical
statement of income of the Alexander Hamilton Companies to arrive at the
effects of the business acquired by the Company are presented as follows.
Alexander Adjustments
Hamilton For Items Not
Companies Acquired Pro Forma
REVENUE:
Premiums and other considerations $ 154,777 $ (61,783) (A) $ 92,994
Net investment income 98,025 (16,927) (A) 81,098
Realized investment gains(losses) 2,769 (4,295) (A) (1,526)
255,571 (83,005) 172,566
BENEFITS AND EXPENSES:
Policy benefits 65,265 (29,666) (A) 35,599
Insurance commissions 57,247 (10,120) (A) 47,127
General and administrative 41,483 (14,133) (A) 27,350
Taxes, licenses, and fees 13,285 (1,701) (A) 11,584
Interest 3,663 (288) (A) 3,375
Increase in deferred acquisition
costs, net (2,497) - ( 2,497)
178,446 (55,908) 122,538
Income before income taxes 77,125 (27,097) 50,028
Provision for income taxes 27,567 (10,184) (B) 17,383
Income from continuing operations $ 49,558 $ (16,913) $ 32,645
(A) Represents the reduction of revenue, benefits, and expenses for the nine
months ended September 30, 1995 had the credit insurance, periodic payment
annuity, and company owned life insurance lines of business been reinsured on
January 1, 1995.
(B) Represents the net tax effect of the pro forma adjustments at statutory
income tax rates.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended September 30, 1994
Alexander
Jefferson- Hamilton
Pilot Companies
Corporation (11) Adjustments Pro Forma
(dollar amounts in thousands, except per share data)
REVENUE:
Premiums and other
considerations $ 437,255 $ 50,141 $ - $ 487,396
Net investment income 280,588 51,893 (20,172)(1)(2) 312,309
Communications 118,866 - - 118,866
Realized investment
gains 42,470 20,137 - 62,607
Other income 54,990 - 3,750 (9) 58,740
934,169 122,171 (16,422) 1,039,918
BENEFITS AND EXPENSES:
Policy benefits 470,403 (6,093) - 464,310
Insurance commissions 52,406 70,574 - 122,980
Communications operations 82,064 - - 82,064
General and administrative 87,838 31,656 605 (3) 120,099
Taxes, licenses, & fees 17,459 9,532 - 26,991
Interest - - 14,234 (4) 14,234
Amortization of value of
business acquired - - 21,450 (5) 21,450
Amortization of goodwill - - 1,619 (6) 1,619
Increase in deferred
acquisition costs, net (27,596) (38,966) (36,802)(7) (103,364)
682,574 66,703 1,106 750,383
Income before income taxes 251,595 55,468 (17,528) 289,535
Provision for income taxes 86,010 19,232 (5,568)(8) 99,674
Income from continuing
operations $ 165,585 $ 36,236 $(11,960) $ 189,861
Income from continuing
operations, per share $ 3.40 $ 3.84(10)
Shares used in earnings
per share calculation 48,705,568 48,705,568
See Notes to Unaudited Pro Forma Condensed Consolidated Statement of Income.
NOTES TO
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended September 30, 1994
(In Thousands)
(1) Represents foregone interest of $11,372 at a rate of 7.22% on the $210,000
of the purchase price obtained from internal funds.
(2) Represents amortization of $8,800 on the difference between the market
value and the carrying amounts of investments acquired.
(3) Represents adjustment for estimated net periodic pension cost subsequent
to the acquisition.
(4) Represents interest expense at a rate of 6.025% on the $315,000 of debt
incurred in connection with the acquisition.
(5) Represents amortization of the value of business acquired in the
transaction, in accordance with SFAS 97. See note 6 of the pro forma balance
sheet.
(6) Represents amortization of goodwill over a period of 25 years.
(7) Represents removal of amortization of the deferred acquisition costs of
the Alexander Hamilton companies subsequent to the acquisition.
(8) Represents the net tax effect of the pro forma adjustments excluding
goodwill amortization at statutory income tax rates.
(9) Represents fees for reinsurance business.
(10) The computation of earnings per share is based upon the weighted average
number of common shares outstanding during the period. Preferred stock
dividends of $2,672 are reflected in the earnings per share computation.
(11) The amounts for the Alexander Hamilton Companies in the pro forma
statement of income represent the effects on earnings of the assets and
liabilities acquired in the transaction. The adjustment of the historical
statement of income of the Alexander Hamilton Companies to arrive at the
effects of the business acquired by the Company are presented as follows.
Alexander Adjustments
Hamilton For Items Not
Companies Acquired Pro Forma
REVENUE:
Premiums and other considerations $ 111,772 $ (61,631) (A) $ 50,141
Net investment income 64,118 (12,225) (A) 51,893
Realized investment gains 27,223 (7,086) (A) 20,137
203,113 (80,942) 122,171
BENEFITS AND EXPENSES:
Policy benefits 24,930 (31,023) (A) (6,093)
Insurance commissions 80,624 (10,050) (A) 70,574
General and administrative 42,672 (11,016) (A) 31,656
Taxes, licenses, and fees 11,198 (1,666) (A) 9,532
Interest - - -
Increase in deferred acquisition
costs, net (38,966) - (38,966)
120,458 (53,755) 66,703
Income before income taxes 82,655 (27,187) 55,468
Provision for income taxes 29,094 (9,862) (B) 19,232
Income from continuing operations $ 53,561 $ (17,325) $ 36,236
(A) Represents the reduction of revenue, benefits, and expenses for the nine
months ended September 30, 1994 had the credit insurance, periodic payment
annuity, and company owned life insurance lines of business been reinsured on
January 1, 1994.
(B) Represents the net tax effect of the pro forma adjustments at statutory
income tax rates.
Exhibit (g)
UNAUDITED SUPPLEMENTAL SUMMARY PRO FORMA INFORMATION
The following unaudited supplemental presentation is intended to assist
shareholders and securities analysts in understanding the financial effect on
the Company of the Alexander Hamilton acquisition by summarizing certain pro
forma information in the format historically used for summary presentation of
the Company's results.
Unaudited Analysis of Pro Forma Net Income
Year Ended December 31, 1994
Jefferson- Alexander
Pilot Hamilton
Corporation Companies Adjustments Pro Forma
(dollar amounts in thousands)
Income before realized
investment gains:
Continuing operations $190,976 $41,949 (A) $(13,307) $219,618
Discontinued operations 9,247 - - 9,247
Operating income 200,223 41,949 (13,307) 228,865
Realized investment gains
(net of income taxes):
Continuing operations 38,920 2,955 (A) - 41,875
Discontinued operations 92 - - 92
Realized investment gains 39,012 2,955 - 41,967
Net income:
Continuing operations 229,896 44,904 (13,307) 261,493
Discontinued operations 9,339 - - 9,339
Net income $239,235 $44,904 $(13,307) $270,832
Unaudited Analysis of Per Share Pro Forma Earnings Applicable to Common
Shareholders
Year Ended December 31, 1994
Jefferson- Alexander
Pilot Hamilton
Corporation Companies Adjustments Pro Forma
Income before realized
investment gains:
Continuing operations $ 3.93 $ 0.86 (A) $ (0.27) $ 4.52
Discontinued operations 0.19 - - 0.19
Operating income 4.12 0.86 (0.27) 4.71
Realized investment gains
(net of income taxes):
Continuing operations 0.80 0.06 (A) - 0.86
Discontinued operations - - - -
Realized investment gains 0.80 0.06 - 0.86
Net income:
Continuing operations 4.73 0.92 (0.27) 5.30(B)
Discontinued operations 0.19 - - 0.19
Net income $ 4.92 $ 0.92 $ (0.27) $ 5.49(B)
(A) Realized investment gains are shown net of deferred acquisition cost
reductions which are reflected in operating income from continuing operations.
(B) The pro forma earnings per share applicable to common shareholders
reflects dividends on redeemable preferred stock of $3,562 or $0.07 per share.
Unaudited Analysis of Pro Forma Net Income
Nine Months Ended September 30, 1995
Jefferson- Alexander
Pilot Hamilton
Corporation Companies Adjustments Pro Forma
(dollar amounts in thousands)
Income before realized
investment gains:
Continuing operations $ 150,189 $ 32,992 (A) $(8,108) $175,073
Discontinued operations 2,178 - - 2,178
Operating income 152,367 32,992 (8,108) 177,251
Realized investment gains
(net of income taxes):
Continuing operations 18,236 (347)(A) - 17,889
Discontinued operations 16,363 - - 16,363
Realized investment gains 34,599 (347) - 34,252
Net income:
Continuing operations 168,425 32,645 (8,108) 192,962
Discontinued operations 18,541 - - 18,541
Net income $ 186,966 $ 32,645 $(8,108) $211,503
Unaudited Analysis of Per Share Pro Forma Earnings Applicable to Common
Shareholders
Nine Months Ended September 30, 1995
Jefferson- Alexander
Pilot Hamilton
Corporation Companies Adjustments Pro Forma
Income before realized
investment gains:
Continuing operations $ 3.13 $ 0.69 (A) $ (0.17) $ 3.65
Discontinued operations 0.05 - - 0.05
Operating income 3.18 0.69 (0.17) 3.70
Realized investment gains
(net of income taxes):
Continuing operations 0.38 (0.01)(A) - 0.37
Discontinued operations 0.34 - - 0.34
Realized investment gains 0.72 (0.01) - 0.71
Net income:
Continuing operations 3.51 0.68 (0.17) 3.97(B)
Discontinued operations 0.39 - - 0.39
Net income $ 3.90 $ 0.68 $ (0.17) $ 4.36(B)
(A) Realized investment gains are shown net of deferred acquisition cost
reductions which are reflected in operating income from continuing operations.
(B) The pro forma earnings per share applicable to common shareholders
reflects dividends on redeemable preferred stock of $2,672 or $0.05 per share.
Unaudited Analysis of Pro Forma Net Income
Nine Months Ended September 30, 1994
Jefferson- Alexander
Pilot Hamilton
Corporation Companies Adjustments Pro Forma
(dollar amounts in thousands)
Income before realized
investment gains:
Continuing operations $ 139,180 $ 31,655 (A) $(11,960) $158,875
Discontinued operations 5,769 - - 5,769
Operating income 144,949 31,655 (11,960) 164,644
Realized investment gains
(net of income taxes):
Continuing operations 26,405 4,581(A) - 30,986
Discontinued operations 79 - - 79
Realized investment gains 26,484 4,581 - 31,065
Net income:
Continuing operations 165,585 36,236 (11,960) 189,861
Discontinued operations 5,848 - - 5,848
Net income $ 171,433 $ 36,236 $(11,960) $195,309
Unaudited Analysis of Per Share Pro Forma Earnings Applicable to Common
Shareholders
Nine Months Ended September 30, 1994
Jefferson- Alexander
Pilot Hamilton
Corporation Companies Adjustments Pro Forma
Income before realized
investment gains:
Continuing operations $ 2.86 $ 0.65 (A) $ (0.25) $ 3.26
Discontinued operations 0.12 - - 0.12
Operating income 2.98 0.65 (0.25) 3.38
Realized investment gains
(net of income taxes):
Continuing operations 0.54 0.09(A) - 0.63
Discontinued operations - - - -
Realized investment gains 0.54 0.09 - 0.63
Net income:
Continuing operations 3.40 0.74 (0.25) 3.84(B)
Discontinued operations 0.12 - - 0.12
Net income $ 3.52 $ 0.74 $ (0.25) $ 3.96(B)
(A) Realized investment gains are shown net of deferred acquisition cost
reductions which are reflected in operating income from continuing operations.
(B) The pro forma earnings per share applicable to common shareholders
reflects dividends on redeemable preferred stock of $2,672 or $0.05 per share.
November 22, 1995
VIA EDGAR
Securities and Exchange Commission
ATTENTION: Filing Desk, Stop 1-4
450 Fifth Street N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
SUBJECT: Jefferson-Pilot Corporation
File No. 1-5955
Enclosed herewith is Form 8-K/A (Amendment No. 2) amending the Current Report
on Form 8-K for Jefferson-Pilot Corporation that was filed on October 19,
1995, to update the interim financial statements, and the pro forma financial
statements to September 30, 1995. The statements are related to the
acquisition on October 6, 1995 of Alexander Hamilton Life Insurance Company of
America.
This update is not required by Form 8-K rules but is needed to complete
(through incorporation by reference) the requirements relevant to seeking
acceleration of our Form S-3 Registration Statement (No. 33-63521).
Please confirm receipt of this filing by notifying the CompuServe mailbox
maintained by Jefferson-Pilot.
Very truly yours,
/s/ Robert A. Reed
Robert A. Reed
Vice President, Secretary
and Associate General Counsel
Jefferson-Pilot Corporation