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 (Date of earliest event reported):
December 31, 1996
INDEPENDENCE HOLDING COMPANY
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-10306 58-1407235
(State or Other (Commission File Number) (IRS Employer
Jurisdiction Identification
of Incorporation) No.)
96 Cummings Point Road 06902
Stamford CT 06902 (Zip Code)
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code:
(203) 358-8000
Not Applicable
(Former Name or Former Address, if Changed
Since Last Report)
The Exhibit Index is located on page 8 of this filing.
Item 2. ACQUISITIONS OR DISPOSITIONS OF ASSETS.
On December 31, 1996, Independence Holding Company
("IHC") effected the distribution (the "Distribution") of 100%
of the shares of common stock, par value $.01 per share
("Zimmerman Common Stock"), of Zimmerman Sign Company, a Texas
corporation ("Zimmerman"), held by IHC to holders of IHC's
common stock, par value $1.00 per share ("IHC Common Stock").
Such shares of Zimmerman Common Stock were distributed by IHC
to its shareholders of record as of the close of business on
December 20, 1996 (the "Record Date") on the basis of one
share of Zimmerman Common Stock for every five shares of IHC
Common Stock. Holders of IHC Common Stock who otherwise would
have been entitled to receive fractional shares of Zimmerman
Common Stock, however, have received or will receive cash in
lieu thereof from the proceeds of the sale of such shares by
the distribution agent following the Distribution. No
consideration was paid by IHC shareholders for the shares of
Zimmerman Common Stock received in the Distribution.
Immediately following the Distribution, IHC owned no shares of
Zimmerman Common Stock. IHC and Zimmerman entered into a
distribution agreement which is filed as an exhibit to this
Current Report on Form 8-K and is incorporated herein by
reference.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(b) Pro Forma Financial Information
Set forth hereunder is the pro forma financial
information required to be furnished by IHC with respect to
the transaction described in Item 2 above.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
----------------------------------------
Prior to the Distribution Date, Zimmerman had been
operating as part of IHC. The following Unaudited Pro Forma
Statement of Operations sets forth the historical Statement of
Operations of IHC for the fiscal year ended December 31, 1995
and for the nine months ended September 30, 1996, and as
adjusted for the Distribution and the related transactions and
events described in the Notes to such Unaudited Pro Forma
Statements of Operations as if the Distribution and such
transactions and events had been consummated on January 1,
1995 and January 1, 1996, respectively. It should be noted
that IHC's historical Statements of Operations reflect
Zimmerman as discontinued operations for all periods
presented. The following Unaudited Pro Forma Condensed Balance
Sheet sets forth the historical Balance Sheet of IHC as of
September 30, 1996, and as adjusted for the Distribution and
the related transactions and events described in the Notes to
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such Unaudited Pro Forma Balance Sheet as if the Distribution
and such transactions and events had been consummated on
September 30, 1996.
Management believes that the assumptions used provide a
reasonable basis on which to present such Unaudited Pro Forma
Statements of Operations and Unaudited Pro Forma Balance Sheet
(collectively referred to as the "Unaudited Pro Forma
Financial Statements"). The Unaudited Pro Forma Financial
Statements should be read in conjunction with IHC's historical
Consolidated Financial Statements and Notes thereto contained
in its Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 and Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1996. The Unaudited Pro
Forma Financial Statements are provided for informational
purposes only and should not be construed to be indicative of
IHC's results of operations or financial condition had the
Distribution and the transactions and events described above
been consummated on the dates assumed, and are not necessarily
indicative of IHC's future results of operations or finanical
condition.
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UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
SEPTEMBER 30, 1996
Historical Adjustments Pro forma
---------- ----------- -----------
ASSETS:
Cash and cash equivalents..........$ 7,741,000 $ 18,470,000 (D) $ 16,211,000
(10,000,000)(E)
Investments........................ 222,704,000 222,704,000
Trade accounts, notes and other
receivables....................... 3,935,000 3,935,000
Deferred insurance acquisition
costs............................. 11,052,000 11,052,000
Property, plant and equipment, net. 1,638,000 1,638,000
Due from reinsurers................ 41,308,000 41,308,000
Due from brokers................... 6,518,000 6,518,000
Other assets....................... 7,933,000 7,933,000
Net assets of discontinued
operations........................ 8,719,000 (18,470,000)(D) -
2,281,000 (F)
7,470,000 (G)
----------- ----------- -----------
Total assets....................$311,548,000 $ (249,000) $311,299,000
=========== =========== ===========
LIABILITIES:
Insurance liabilities..............$190,761,000 $190,761,000
Financial instruments sold, but not
yet purchased..................... 66,000 66,000
Due to brokers..................... 15,723,000 15,723,000
Due to reinsurers.................. 3,039,000 3,039,000
Accounts payable, accruals and other
liabilities....................... 13,955,000 $ 2,500,000 (F) 16,455,000
Income taxes, principally deferred. 3,655,000 3,655,000
Liabilities of business transferred 7,470,000 (G) 7,470,000
Long-term debt..................... 10,056,000 (10,000,000)(E) 56,000
----------- ---------- -----------
Total liabilities.............. 237,255,000 (30,000) 237,225,000
----------- ---------- -----------
STOCKHOLDERS' EQUITY:
Common stock....................... 7,432,000 7,432,000
Paid-in capital.................... 76,240,000 (219,000)(F) 76,021,000
Unrealized losses.................. (3,160,000) (3,160,000)
Accumulated deficit................ (6,219,000) (6,219,000)
----------- ---------- -----------
Total stockholders' equity..... 74,293,000 (219,000) 74,074,000
----------- ---------- -----------
Total liabilities and
stockholders' equity..........$311,548,000 $ (249,000) $311,299,000
=========== ========== ===========
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UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED
DECEMBER 31, 1995
As Reported Adjustments Pro forma
----------- ----------- -----------
Revenues:
Insurance Premiums.........$56,401,000 $56,401,000
Net investment income...... 13,885,000 $ 606,000 (C) 14,491,000
Other income............... 1,141,000 1,141,000
---------- ---------- ----------
71,427,000 606,000 72,033,000
---------- ---------- ----------
Expenses:
Insurance related expenses. 41,243,000 41,243,000
Interest expense........... 1,101,000 (777,000)(B) 324,000
Selling, general and
administrative............ 24,311,000 24,311,000
---------- ---------- ----------
66,655,000 (777,000) 65,878,000
---------- ---------- ----------
Operating income before
taxes..................... 4,772,000 1,383,000 6,155,000
Income tax benefit......... (1,400,000) 1,252,000 (A) (148,000)
---------- ---------- ----------
Income from continuing
operations, net...........$ 6,172,000 $ 131,000 $ 6,303,000
========== ========== ==========
INCOME PER COMMON SHARE:
Income from continuing
operations................ $0.82 $0.84
========== ==========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING......... 7,489,000 7,489,000
========== ==========
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UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
NINE MONTHS ENDED
SEPTEMBER 30, 1996
As Reported Adjustments Pro forma
Revenues: ----------- ----------- ----------
Insurance Premiums.........$50,632,000 $50,632,000
Net investment income...... 12,099,000 $ 329,000 (C) 12,428,000
Net realized and
unrealized losses......... (453,000) (453,000)
Other income............... 3,154,000 3,154,000
---------- --------- ----------
65,432,000 329,000 65,761,000
---------- --------- ----------
Expenses:
Insurance related expenses. 39,585,000 39,585,000
Interest expense........... 657,000 (532,000)(B) 125,000
Selling, general and
administrative............ 20,971,000 20,971,000
---------- --------- ----------
61,213,000 (532,000) 60,681,000
---------- --------- ----------
Operating income before
taxes..................... 4,219,000 861,000 5,080,000
Income tax expense
(benefit)................. (569,000) 973,000 (A) 404,000
---------- --------- ----------
Income from continuing
operations, net...........$ 4,788,000 $ (112,000) $ 4,676,000
========== ========= ==========
INCOME PER COMMON SHARE:
Income from continuing
operations................ $0.64 $0.62
========== ==========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING......... 7,489,000 7,489,000
========== ==========
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NOTES TO UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS
(A) Gives effect to the elimination of the tax benefit
associated with the utilization of net operating loss
carryforwards against Zimmerman's income combined with
the effect of no taxes being provided on income
attributable to footnotes B and C as the result of the
utilization of net operating loss carryforwards.
(B) Gives effect to the reduction of actual interest expense
for the repayment of $10,000,000 in long term debt. The
average interest rate in effect for the year ended
December 31, 1995 and the nine months ended September 30,
1996, was 7.77% and 7.09%, respectively.
(C) Assumes remaining cash, after the repayment of
$10,000,000 of long term debt, from the $18,470,000
special cash dividend paid to a subsidiary of IHC by
Zimmerman (the "Special Dividend") is invested in U.S.
treasury securities at the rate of 7.15% and 5.16% as of
January 1, 1995 and January 1, 1996, respectively.
(D) Gives effect to the Special Dividend.
(E) Reflects the repayment by a subsidiary of IHC of all of
its $10,000,000 of long-term debt at September 30, 1996
from the proceeds of the Special Dividend.
(F) Reflects the exchange of minority common stock holdings,
which were included in net assets of discontinued
operations, in a subsidiary of IHC for common stock of
Zimmerman and preferred stock of such subsidiary.
(G) Gives effect to the distribution of Zimmerman common
stock and the guaranty of subordinated debt of Zimmerman
by a subsidiary of IHC. IHC will record a credit to
stockholders' equity at such time as the guaranty is
eliminated.
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(c) EXHIBITS.
99.1 Distribution Agreement dated as of November 26,
1996 between Independence Holding Company and
Zimmerman Sign Company.
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 hereunto duly
authorized.
Dated: January 10, 1997 INDEPENDENCE HOLDING COMPANY
By:/s/ Roy T.K. Thung
-----------------------
Roy T.K. Thung
Chief Financial Officer
and Treasurer
EXHIBIT INDEX
99.1 Distribution Agreement dated as of November 26,
1996 between Independence Holding Company and
Zimmerman Sign Company.
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