UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A-1
(Admendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Earliest Event Reported: May 13, 1997
Jefferson-Pilot Corporation
(Exact name of registrant as specified in its charter)
North Carolina 1-5955 56-0896180
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
100 North Greene Street, Greensboro, North Carolina 27401
(Address of principal executive offices) (Zip Code)
(910) 691-3691
(Registrant's telephone number, including area code)
Introductory Note
Effective April 30, 1997 for financial reporting purposes, Jefferson-Pilot
Corporation (JP Corp) acquired all of the outstanding common stock of
Chubb Life Insurance Company of America (Chubb Life) from The Chubb
Corporation (Seller). This Form 8-K/A-1 amends the Form 8-K previously
filed which reported the acquisition, to provide pro-forma financial
information.
The cost of the acquisition consisted of $775 million cash paid by JP Corp
to Seller, plus other acquisition costs. In addition, Chubb Life paid a
$100 million special dividend to Seller which was funded through
liquidation of short-term investments. The $775 million was financed
through liquidation of invested assets, the issuance of $150 million
Mandatorily Exchangeable Debt Securities ($75 million at 6.95% issued in
April 1997, and $75 million at 6.65% issued in June 1997), net proceeds of $297
from the issuance of 8.14% Capital Securities, Series A and 8.285% Capital
Securities, Series B (issued in January 1997 and March 1997, respectively),
and the issuance of commercial paper.
Under the Stock Purchase Agreement, there may be post closing adjustments
based on Closing Date Financial Statements to be provided by Chubb Life.
The pro-forma financial information contained herein does not reflect any
such adjustments.
Item 7. Financial Statements and Exhibits
Unaudited pro-forma condensed consolidated financial statements, reflecting
the acquisition of Chubb Life and its subsidiaries, including:
- Unaudited pro-forma condensed consolidated balance sheet as of
March 31, 1997
- Unaudited pro-forma condensed consolidated statement of income for
the year ended December 31, 1997
- Unaudited pro-forma condensed consolidated statement of income for
the three months ended March 31, 1997
- Notes to unaudited pro-forma condensed consolidated financial statements
SIGNATURES
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
Unaudited Pro-forma Condensed Consolidated Financial Statements
The unaudited pro-forma condensed consolidated financial statements are
based on the historical financial statements of JP Corp and Chubb
Life. The unaudited pro-forma condensed consolidated statements of
income for the three months ended March 31, 1997, and for the year ended
December 31, 1996, present the consolidated operating results for
JP Corp as if the acquisition of Chubb Life had occurred on January
1, 1996. The unaudited pro-forma condensed consolidated balance sheet as
of March 31, 1997 gives effect to the acquisition as if it had occurred on
that date, consolidating the JP Corp March 31, 1997 balance sheet with the
Chubb Life April 30, 1997 balance sheet (which amounts are not significantly
different from the Chubb Life amounts as of March 31, 1997).
The acquisition is being accounted for using the purchase method of
accounting. For purposes of the accompanying pro-forma financial
statements, the purchase price has been allocated to Chubb Life's tangible
and identifiable intangible assets and liabilities based on management's
preliminary estimate of their respective fair market values with the
difference allocated to cost in excess of net assets acquired. The
allocation of the purchase price is subject to revision when any post closing
adjustments are known and when additional information concerning asset and
liability valuations is obtained.
The pro-forma financial statements do not purport to represent the results of
operations or financial positions of JP Corp had the acquisition occurred on
the dates indicated, or to project for any future period or date the results
of operations or financial position. These pro-forma financial statements
do not reflect any potential savings that may result from the combined
operations of JP Corp and Chubb Life, or transition expenses associated
with integrating systems and processes.
The pro-forma financial statements should be read in conjunction with the
separate historical consolidated financial statements of JP Corp and
Chubb Life for the three months ended March 31, 1997, and the year ended
December 31, 1996, which have been previously filed.
Unaudited Pro-forma Condensed Consolidated Balance Sheet
March 31, 1997
(Dollars in thousands)
Jefferson- Chubb
Pilot Life & Note
Corporation Subsidiaries Adjustments Reference Pro-forma
----------- ------------ ----------- --------- ----------
ASSETS
CASH AND INVESTMENTS:
Debt securities held to maturity $ 3,868,272 $ 374,489 ($374,489) (5) $ 3,868,272
Debt securities available for sale 6,508,416 2,439,193 (135,200) (2)
(25,449) (3)
24,550 (4)
374,489 (5) 9,185,999
Equity securities 827,538 17,844 (125,100) (2) 720,282
Mortgage loans 1,346,853 7,930 1,354,783
Policy loans 1,211,091 222,076 1,433,167
Cash, short-term and other 534,098 85,561 (100,000) (1)
investments (307,400) (2)
(1,836) (5)
48,906 (5) 259,329
----------- ---------- ---------- -----------
Total invested assets 14,296,268 3,147,093 (621,529) 16,821,832
Accrued investment income 164,895 51,428 216,323
Accounts receivable and agents'
balance 108,463 8,772 117,235
Reinsurance recoverable 1,296,127 198,474 1,494,601
Property and equipment 111,761 35,692 (14,285) (4)
1,836 (5) 135,004
Deferred policy acquisition cost 695,735 667,865 (667,865) (3) 695,735
Value of business acquired 279,555 34,256 (34,256) (3)
481,600 (4) 761,155
Cost in excess of net assets acquired 163,593 62,468 (62,468) (3)
other intangible assets 149,742 (4) 313,335
Other assets 110,379 133,544 (329) (4)
(48,906) (5) 194,688
Separate account assets 511,579 452,107 963,686
----------- ---------- ---------- -----------
$17,738,355 $4,791,699 ($816,460) $21,713,594
=========== ========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Policy liabilities $13,741,852 $3,290,783 ($49,577) (4) $16,983,058
Tax liabilities 171,700 39,268 (39,892) (3)
(68,777) (4) 102,299
Obligations under repurchase
agreement 236,598 236,598
Short-term debt 1,493 50,500 67,800 (2) 119,793
Automatic common exchange securities,
mandatorily exchangeable debt
securities and other debt 167,887 4,066 150,000 (2) 321,953
Accounts payable and accrued
expenses 172,806 26,828 8,259 (4) 207,893
Other liabilities 90,144 24,166 114,310
Net liability for discontinued
operations 0 10,908 8,800 (4) 19,708
Separate account liabilities 511,579 452,107 963,686
----------- ---------- -------- -----------
Total liabilities 15,094,059 3,898,626 76,613 19,069,298
Guaranteed preferred beneficial interest
in subordinated debentures
("capital securities") 300,000 300,000
Mandatorily redeemable preferred
stock 53,000 53,000
Total stockholders' equity 2,291,296 893,073 (100,000) (1)
(785,500) (2)
(750,146) (3)
742,573 (4) 2,291,296
----------- ---------- ---------- -----------
Total liabilities & equity $17,738,355 $4,791,699 ($816,460) $21,713,594
=========== ========== ========== ===========
See Notes to Unaudited Pro-forma Condensed Consolidated Financial Statements.
Unaudited Pro-forma Condensed Consolidated Statement of Income
Year Ended December 31, 1996
(Dollars in thousands except per share amounts)
Jefferson- Chubb
Pilot Life & Note
Corporation Subsidiaries Adjustments Reference Pro-forma
----------- ------------ ----------- --------- ---------
REVENUE:
Premiums and other
considerations $ 994,399 $ 395,283 $1,389,682
Net investment income 892,977 237,530 ($35,277) (6) 1,095,230
Communications 187,092 187,092
Realized investment gains 45,620 12,587 58,207
Other income 4,133 3,299 7,432
---------- ---------- --------- ----------
2,124,221 648,699 (35,277) 2,737,643
BENEFITS AND EXPENSES:
Policy benefits 1,210,938 365,045 1,575,983
Insurance commissions 153,127 98,770 251,897
Communications operations 130,897 130,897
General, administrative and
other expenses 186,326 111,950 14,640 (6)
(101,975) (7)
65,979 (8) 276,920
---------- ---------- --------- ----------
1,681,288 575,765 (21,356) 2,235,697
Income before income taxes 442,933 72,934 (13,921) 501,946
Provision for income taxes 148,943 24,443 (12,098) (9) 161,288
---------- ---------- --------- ----------
Income from continuing operations 293,990 48,491 (1,823) 340,658
Dividends on mandatorily
redeemable preferred stock (3,462) (24,923) (6) (28,385)
---------- ---------- --------- ----------
Income from continuing operations
to common shareholders $ 290,528 $ 48,491 ($26,746) $ 312,273
========== ========== ========= ==========
Income per share:
Operating income to common
shareholders $3.66 $3.85
Gain from sale of investments
net of tax 0.43 0.54
---------- ----------
Income from continuing operations
to common shareholders $4.09 $4.39
========== ==========
Shares used in earnings
per share calculation 71,074,000 71,074,000
========== ==========
See Notes to Unaudited Pro-forma Condensed Consolidated Financial Statements.
Unaudited Pro-forma Condensed Consolidated Statement of Income
Three Months Ended March 31, 1997
(Dollars in thousands except per share amounts)
Jefferson- Chubb
Pilot Life & Note
Corporation Subsidiaries Adjustments Reference Pro-forma
----------- ------------ ----------- --------- ---------
REVENUE:
Premiums and other
considerations $ 239,996 $ 87,417 $ 327,413
Net investment income 238,037 61,474 ($11,547) (6) 287,964
Communications 50,798 50,798
Realized investment gains 60,333 3,441 (47,333) (6) 16,441
Other income 1,268 947 2,215
---------- -------- --------- ----------
590,432 153,279 (58,880) 684,831
BENEFITS AND EXPENSES:
Policy benefits 296,252 80,717 376,969
Insurance commissions 40,832 20,670 61,502
Communications operations 34,041 34,041
General, administrative and
other expenses 48,525 17,331 3,660 (6)
(29,443) (7)
39,669 (8) 79,742
---------- -------- -------- ----------
419,650 118,718 13,886 552,254
Income before income taxes 170,782 34,561 (72,766) 132,577
Provision for income taxes 57,478 8,432 (25,974) (9) 39,936
---------- -------- --------- ----------
Income from continuing operations 113,304 26,129 (46,792) 92,641
Dividends on Capital Securities
and mandatorily redeemable
preferred stock (4,529) (2,515) (6) (7,044)
---------- -------- --------- ----------
Income from continuing operations
to common shareholders $ 108,775 $ 26,129 ($49,307) $ 85,597
========== ======== ========= ==========
Income per share:
Operating income to common
shareholders $0.98 $1.06
Gain from sale of investments
net of tax 0.56 0.15
---------- ----------
Income from continuing operations
to common shareholders $1.54 $1.21
========== ==========
Shares used in earnings
per share calculation 70,745,700 70,745,700
========== ==========
See Notes to Unaudited Pro-forma Condensed Consolidated Financial Statements.
Notes to Unaudited Pro-forma Condensed Consolidated Financial Statements
Background Information:
The preliminary fair value adjustments to assets and liabilities of Chubb
Life as of April 30, 1997, are as follows (dollars in thousands):
Stockholder's equity as reported by Chubb Life $ 893,073
Special dividend by Chubb Life to Seller (100,000)
-----------
793,073
Fair value adjustments:
Debt securities available for sale (899)
Property and equipment (14,285)
Deferred policy acquisition costs (667,865)
Value of business acquired 447,344
Deferred federal income taxes 108,669
Cost in excess of net assets acquired 87,274
Other assets (329)
Policy liabilities 49,577
Accounts payable and accrued expenses (8,259)
Net liability for discontinued operations (8,800)
-----------
Total cost of the acquisition $ 785,500
===========
Unaudited Pro-forma Condensed Consolidated Balance Sheet Adjustments (dollars
in thousands):
(1) To record special dividend paid by Chubb Life
to Seller:
Short-term investments $ 100,000
===========
(2) To record the cost of acquisition of Chubb Life:
Equity securities $ (125,100)
Debt securities available for sale (135,200)
Short-term investments (including
proceeds of Capital Securities) (307,400)
Mandatorily exchangeable debt securities (150,000)
Short-term debt (67,800)
-----------
$ (785,500)
===========
(3) Elimination of the following historical balances
of Chubb Life:
Debt securities available for sale -
unrealized gain $ (25,449)
Deferred policy acquisition costs (667,865)
Deferred federal income taxes 39,892
Value of business acquired (34,256)
Cost in excess of net assets acquired (62,468)
-----------
$ (750,146)
===========
(4) Adjustments as a result of the allocation of
the purchase price based on the fair values of
assets and liabilities of Chubb Life:
Debt securities available for sale $ 24,550
Property and equipment (14,285)
Value of business acquired (actuarially
determined using a risk rate of return
discount rate) 481,600
Deferred federal income taxes 68,777
Cost in excess of net assets acquired 149,742
Other assets (329)
Policy liabilities 49,577
Accounts payable and accrued expenses (8,259)
Net liability for discontinued operations (8,800)
-----------
$ 742,573
============
The expected approximate amortization for the next five years of value of
business acquired related to the purchase of Chubb Life is as follows:
Year ended Amortization
December 31 Amount
----------- ------------
1997 $31,400
1998 48,400
1999 47,100
2000 42,500
2001 37,900
(5) Reclassifications and other adjustments related to the acquisition of
Chubb Life:
Debt securities held to maturity $ (374,489)
Debt securities available for sale 374,489
Short-term investments (1,836)
Property 1,836
Short-term investments 48,906
Other assets (48,906)
------------
$ 0
============
Unaudited Pro-forma Condensed Consolidated Statements of Income Adjustments:
Three month
Year ended period ended
December 31 March 31
1996 1997
------------ ------------
Increase (decrease) to income
(6) Adjustments to reduce investment income
and increase financing costs include
the following:
Decrease in investment income as a
result of liquidation of invested assets
to fund cost of the acquisition $ (28,312) $ (7,079)
Decrease in investment income from
amortization of the acquisition date
market value adjustment of the debt
securities portfolio (6,965) (1,741)
Elimination of investment income on
proceeds of Capital Securities
from their issuance up to the
acquisition date -- (2,727)
---------- ----------
Total investment income adjustment (35,277) (11,547)
Increase in interest expense on debt
(reflected as an additional general
and administrative expense) (14,640) (3,660)
Decrease in realized investment gains
as a result of liquidation of invested
assets to fund cost of the acquisition -- (47,333)
Increase in dividends on Capital Securities (24,923) (2,515)
---------- ----------
$ (74,840) $ (65,055)
========== ==========
(7) Adjustments to reduce general, administrative
and other expenses include the following:
Decrease in the expense for postretirement
benefits other than pensions for the Chubb
Life plan. $ 1,583 $ --
Decrease in depreciation expense reflecting
the purchase accounting adjustments to
reduce the basis in property and equipment
to fair value. 1,079 242
Reversal of Chubb Life's historical
amortization for:
Deferred policy acquisition costs 92,878 27,694
Value of business acquired 4,249 963
Cost in excess of net assets acquired 2,186 544
--------- ---------
$ 101,975 $ 29,443
========= =========
(8) Adjustments to increase general,
administrative and other expenses
include the following:
Reversal of gain on transfer of obligation
for postretirement benefits other than
pensions to Chubb Corp $ -- $ (18,500)
Increase in the expense for postretirement
benefits other than pensions assuming
participation by Chubb Life employees in
JP Corp's Plan effective January 1,
1996 (201) (50)
Amortization of the cost in excess of net
assets acquired over a 35 year period on a
straight-line basis (4,278) (1,069)
Amortization of the value of business acquired
over the related contract periods, using
current crediting rates to accrete interest
for FAS 97 business and assumed asset yields
to accrete interest for FAS 60 business, with
amortization in proportion to estimated future
profits on the FAS 97 business and in
proportion to premiums on FAS 60 business (47,100) (12,250)
Amortization of deferred policy acquisition costs
associated with costs deferred subsequent to
January 1, 1996 (14,400) (7,800)
---------- ----------
$ (65,979) $ (39,669)
========== ==========
(9) Pro-forma income tax effects of the foregoing
adjustments based on the statutory tax rate of
35% except that the amortization of the cost in
excess of net assets acquired in the Chubb
Life acquisition is not tax-effected $ (12,098) $ (25,974)
========== ==========