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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1 to
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended Commission File
December 31, 2001 No. 1-7361
AMERICAN FINANCIAL CORPORATION
Incorporated under IRS Employer I.D.
the Laws of Ohio No. 31-0624874
One East Fourth Street, Cincinnati, Ohio 45202
(513) 579-2121
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This Form 10-K/A provides information required by Items 10, 11, 12, & 13
of Form 10-K.
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PART III
ITEM 10
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
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The directors and executive officers of American Financial Corporation
("AFC") at March 31, 2002, were as follows:
Director or
Age (a) Position Executive Since
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Carl H. Lindner 82 Chairman of the Board and Chief Executive Officer 1959
S. Craig Lindner 47 Co-President and a Director 1979
Keith E. Lindner 42 Co-President and a Director 1981
Carl H. Lindner III 48 Co-President and a Director 1980
Theodore H. Emmerich 75 Director 1995
James E. Evans 56 Senior Vice President and General Counsel
and a Director 1976
Thomas M. Hunt (b) 78 Director 1995
William R. Martin 72 Director 1995
Keith A. Jensen 51 Senior Vice President 1999
Thomas E. Mischell 54 Senior Vice President - Taxes 1985
Fred J. Runk 59 Senior Vice President and Treasurer 1978
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(a) As of March 31, 2002.
(b) Mr. Hunt has informed AFC that he will retire from AFC's Board of
Directors in 2002.
CARL H. LINDNER Mr. Lindner is the Chairman of the Board and Chief Executive
Officer of American Financial Group, Inc. ("AFG") and AFC. He is Chairman of
the Board of Directors of Great American Financial Resources, Inc., an
83%-owned subsidiary of AFC that markets tax-deferred annuities principally to
employees of educational institutions and offers life and health insurance
products, and a director of Chiquita Brands International, Inc., a worldwide
marketer and producer of bananas and other food products. Mr. Lindner is the
father of Carl H. Lindner III, S. Craig Lindner and Keith E. Lindner.
KEITH E. LINDNER For more than five years, Mr. Lindner has served as
Co-President and a director of AFC and AFG. From March 1997 until March 2002,
Mr. Lindner was Vice Chairman of the Board of Directors of Chiquita. For more
than five years prior to that time, Mr. Lindner had been President and Chief
Operating Officer and a director of Chiquita.
CARL H. LINDNER III For more than five years, Mr. Lindner has served as
Co-President and a director of AFC and AFG. For over ten years, Mr. Lindner has
been principally responsible for the AFC's property and casualty insurance
operations.
S. CRAIG LINDNER For more than five years, Mr. Lindner has served as
Co-President and a director of AFC and AFG. He is also President and a
director of Great American Financial Resources, Inc. Mr. Lindner is also
President of American Money Management Corporation, a subsidiary that provides
investment services for AFC and its affiliated companies.
THEODORE H. EMMERICH Prior to his retirement in 1986, Mr. Emmerich was
managing partner of the Cincinnati office of the independent accounting firm
of Ernst & Whinney. He is also a director of AFC and AFG and Summit Mutual
Funds, Inc.
JAMES E. EVANS For more than five years, Mr. Evans has served as Senior Vice
President and General Counsel of AFC and AFG. Mr. Evans is also a director of
AFG.
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WILLIAM R. MARTIN During the past five years, Mr. Martin has been Chairman of
the Board of MB Computing, Inc., a computer software and services company.
Mr. Martin is also a director of Great American Financial Resources and AFG.
THOMAS M. HUNT During the past five years, Mr. Hunt has been Chairman of the
Board of Hunt Petroleum Corporation, an oil and gas production company. He is
also a director of AFG. Mr. Hunt has informed AFC that he will retire from the
Board of Directors of AFC and AFG in 2002.
KEITH A. JENSEN Mr. Jensen was named a Senior Vice President of AFC and AFG in
February 1999. He served as a Senior Vice President of Great American Financial
Resources from February 1997 until he was named Executive Vice President of that
company in May 1999.
THOMAS E. MISCHELL Mr. Mischell has served as Senior Vice President - Taxes of
AFC and AFG for over five years.
FRED J. RUNK Mr. Runk has served as Senior Vice President and Treasurer of AFC
and AFG for more than five years.
In March 2002, Chiquita completed a comprehensive financial
restructuring that included a prepackaged plan of reorganization filed in
November of the prior year under Chapter 11 of the Bankruptcy Code. Carl H.
Lindner and Keith E. Lindner were executive officers of Chiquita at the time of
the bankruptcy filing.
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ITEM 11
EXECUTIVE COMPENSATION
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The following table summarizes the aggregate cash compensation for 2001,
2000 and 1999 of AFC's Chairman of the Board and Chief Executive Officer and its
four other most highly compensated executive officers during 2001 (the "Named
Executive Officers"). Such compensation includes amounts paid by AFC and its
subsidiaries and certain affiliates during the years indicated.
SUMMARY COMPENSATION TABLE
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Long-Term
Annual Compensation Compensation
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Securities
Name Other Annual Underlying All Other
And Compensation Options Granted Compensation
Principal Position Year Salary (a) Bonus (b) (c) (# of Shares) (d) (e)
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2001 $950,000 $415,600 $47,000 --- $48,000
Carl H. Lindner 2000 950,500 0 54,000 --- 44,000
Chairman of the Board and 1999 968,000 600,000 65,000 --- 68,000
Chief Exeutive Officer
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2001 950,000 415,600 26,000 --- 29,400
Keith E. Lindner 2000 950,500 0 35,000 110,000 34,000
Co-President 1999 968,000 600,000 56,000 50,000 44,000
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2001 950,000 415,600 74,000 --- 30,400
Carl H. Lindner III 2000 950,500 0 79,000 110,000 29,000
Co-President 1999 968,000 600,000 106,000 50,000 34,000
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2001 950,000 415,600 106,000 --- 30,400
S. Craig Lindner 2000 950,500 0 98,000 110,000 28,000
Co-President 1999 968,000 600,000 75,000 50,000 33,000
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2001 950,000 400,000 4,000 --- 33,400
James E. Evans 2000 950,500 290,000 500 100,000 30,000
Senior Vice President and 1999 968,000 580,000 2,000 45,000 36,000
General Counsel
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(a) This column includes salaries paid by Chiquita to Keith E. Lindner of
$55,000 in 2001, $47,500 in 2000 and $50,000 in 1999, and to Carl H.
Lindner of $70,000 in 2001, $62,500 in 2000 and $50,000 in 1999.
(b) Bonuses are for the year shown, regardless of when paid. Approximately
one-fourth of the bonuses for each individual was paid in shares of AFG
common stock.
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(c) This column includes amounts for personal homeowners and automobile
insurance coverage, and the use of corporate aircraft and automobile
service as follows.
Aircraft &
Name Year Insurance Automobile
-------------------- ---- --------- ----------
Carl H. Lindner 2001 $24,000 $ 23,000
2000 25,000 29,000
1999 21,000 44,000
Keith E. Lindner 2001 21,000 5,000
2000 21,000 14,000
1999 42,000 14,000
Carl H. Lindner III 2001 37,000 47,000
2000 32,000 47,000
1999 29,000 77,000
S. Craig Lindner 2001 43,000 63,000
2000 44,000 54,000
1999 32,000 43,000
James E. Evans 2001 -- 4,000
2000 -- 500
1999 -- 2,000
(d) The number of options shown as granted during 2000 includes the 2001
grant, which was made in late December 2000.
(e) Includes AFG or subsidiary contributions or allocations under the (i)
defined contribution retirement plans and (ii) employee savings plan in
which the following Named Executive Officers participate (and related
accruals for their benefit under a benefit equalization plan which
generally makes up certain reductions caused by Internal Revenue Code
limitations in contributions to certain retirement plans) and company
paid group life insurance as set forth below.
AFG Auxiliary Retirement Directors'
Name Year RASP Plan Savings Plan Fees Term Life
--------------------- ---- ------------- ---------- ------------ ---------- ---------
Carl H. Lindner 2001 $16,500 $8,500 -- -- $23,000
2000 16,500 8,500 -- -- 19,000
1999 20,400 9,600 -- $15,000 23,000
Keith E. Lindner 2001 16,500 8,500 $3,400 -- 1,000
2000 16,500 8,500 8,000 -- 1,000
1999 20,400 9,600 12,000 -- 2,000
Carl H. Lindner III 2001 16,500 8,500 3,400 -- 2,000
2000 16,500 8,500 2,000 -- 2,000
1999 20,400 9,600 2,000 -- 2,000
S. Craig Lindner 2001 16,500 8,500 3,400 -- 2,000
2000 16,500 8,500 2,000 -- 1,000
1999 20,400 9,600 2,000 -- 1,000
James E. Evans 2001 16,500 8,500 3,400 -- 5,000
2000 16,500 8,500 2,000 -- 3,000
1999 20,400 9,600 2,000 -- 4,000
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STOCK OPTIONS
No AFC stock options were granted to, or exercised by, the Named
Executive Officers during 2001. Certain executive officers of AFC also serve as
executive officers of AFG and certain AFC subsidiaries and may be granted
employee stock options by such companies. The table below shows stock options
exercised by the Named Executive Officers during 2001, and the number and value
of unexercised options held by them at December 31, 2001. While no options were
granted to such persons in 2001, the expiration dates of certain of the options
held by two of AFC's Co-Presidents were extended to April 2005. No options were
granted to the CEO in 2000 or 2001.
AGGREGATED OPTION EXERCISES IN 2001 AND 2001 YEAR-END OPTION VALUES
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Number of Securities
Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired on at Year End at Year End (a)
Exercise Value --------------------------- ----------------------------
Name Company (# of Shares) Realized Exercisable Unexercisable Exercisable Unexercisable
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Carl H. Lindner AFG - - - - - -
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Carl H. Lindner III AFG 1,091 $5,047 497,272 144,000 $329,281 $418,440
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S. Craig Lindner AFG 1,091 $6,118 497,272 144,000 $336,287 $418,440
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Keith E. Lindner AFG 1,091 $4,779 497,272 144,000 $331,548 $418,440
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James E. Evans AFG - - 234,000 127,000 $95,100 $380,400
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(a) The value of unexercised in-the-money options is calculated based on
the New York Stock Exchange closing market price of AFG's common stock
at year-end 2001. This price was $24.55 per share.
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ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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PRINCIPAL SHAREHOLDERS
The following shareholders are the only persons known to own
beneficially 5% or more of AFC's outstanding voting securities as of March 31,
2002.
Name and Address Amount and Nature
of of Voting Percent of
Beneficial Owner Securities Held Voting Securities
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American Financial Group, Inc. (a)
One East Fourth Street
Cincinnati, Ohio 45202 10,593,000 (b) 79.0%
(a) Carl H. Lindner, Carl H. Lindner III, S. Craig Lindner, Keith E.
Lindner and trusts for their benefit (collectively the "Lindner
Family") are the beneficial owners of approximately 44% of the voting
stock of AFG. AFG and the Lindner Family may be deemed to be
controlling persons of AFC.
(b) 100% of the shares of Common Stock. Voting securities also include
shares of Series J Preferred.
SECURITIES OWNERSHIP
The voting equity securities of AFC consist of its Common Stock and
voting preferred stock. All of AFC's Common Stock is owned by AFG. At March 31,
2002, the beneficial ownership of AFC voting preferred stock and the equity
securities of AFC's parent and subsidiaries by each director, nominee for
director, the executive officers named in the Summary Compensation Table and
by all directors and executive officrs as a group was as set forth below.
Mr. Martin and all directors and executive officers as a group beneficially
own 40,126 (1.4%) and 61,870 (2.1%) shares, respectively, of the voting
preferred stock of AFC. Messrs. Emmerich, Evans, Hunt, S.C. Lindner, Martin
and all directors and executive officers as a group beneficially own 1,561;
11,138; 382; 115,873; 11,271; and 273,226 shares, respectively, of the common
stock of Great American Financial Resources. Beneficial ownership of shares
of common stock of AFG was as follows: Carl H. Lindner - 9,754,275 (14.5%);
Carl H. Lindner III - 6,155,917 (9.1%); S. Craig Lindner - 6,155,917 (9.1%);
Keith E. Lindner - 6,155,917 (9.1%); Mr. Emmerich - 26,901; Mr. Evans - 385,050;
Mr. Hunt - 28,560; Mr.Martin - 52,871; and all directors and executive officers
as a group - 29,450,868 (42.3%).
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ITEM 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTION
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Various business has been transacted between AFC and certain
affiliates, including rentals, investment management services, insurance and
sales of assets. The financial terms (costs, interest rates, collateral, risks
of collectibility and other) of these transactions are comparable to those
prevailing at the time of consummation which would apply to unrelated parties,
unless noted otherwise.
ASSET TRANSACTIONS
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In 2001, an AFC subsidiary purchased a 29% interest in an aircraft for
$1.6 million (fair value as determined by independent third party) from an
entity owned by one of Carl H. Lindner's brothers. The remaining interests in
the aircraft are owned by Carl H. Lindner and his two brothers. Costs of
operating the aircraft are being borne proportionately. During 2001 and prior to
the purchase, AFC and its subsidiaries had chartered the aircraft from the same
entity. The total charges for such aircraft usage were $584,000.
In 1997, Carl H. Lindner and Great American Financial Resources, Inc.
(an 83%-owned subsidiary of AFC) purchased 51% and 49%, respectively, of the
outstanding common stock of a newly incorporated entity formed to acquire the
assets of a company engaged in the production of ethanol. In 2000, the ethanol
company repurchased the 49% interest from GAFRI for amounts which included an
$18.9 million subordinated debenture bearing interest at 12 1/4% with scheduled
repayments through 2005. The balance owned on the subordinated debenture at
year-end 2001 was $12.9 million. Another AFC subsidiary has a working capital
credit facility in place under which the ethanol company may borrow up to $10
million at a rate of prime plus 3%. There were no borrowings outstanding under
this facility in 2001. In 1998, GAFRI made a loan to the ethanol company in the
amount of $4 million, bearing interest at the rate of 14% and maturing in
September 2008.
An AFC subsidiary is the lender under a credit agreement with American
Heritage Holding Corporation, a Florida-based homebuilder which is 49% owned by
AFC and 51% owned by brothers of Carl H. Lindner. The homebuilder may borrow up
to $8 million at 13% per annum, with interest deferred and added to principal.
In January 200l, the maturity date of this loan was extended from March 31, 2001
to March 31, 2003. The highest outstanding balance owed to the AFC subsidiary
during 2001 was $8.0 million and the balance at year-end 2001 was $6.4 million.
OPERATIONS (INCOME/EXPENSE) TRANSACTIONS
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Members of the Lindner Family are the principal owners of Provident
Financial Group, Inc. ("Provident"). In 2001, AFC paid Provident $245,000 in
connection with an expense sharing arrangement for a cafeteria operated by
Provident for the employees of both companies. AFC provides security guard and
surveillance services at the main office of Provident for which Provident paid
$100,000 in 2001. Provident leases its main banking and corporate office from
AFC for which Provident paid rent of $3,125,000 in 2001. A subsidiary of
Provident leases equipment to subsidiaries of AFC for which Provident was paid
an aggregate of $805,000 during 2001.
During 2001, AFC paid the Cincinnati Reds $109,000 for tickets to
baseball games. Carl H. Lindner is the Chief Executive Officer of the Reds.
In addition, a subsidiary of AFC, and a company owned by Carl H. Lindner,
Carl H. Lindner III, Keith E. Lindner and S. Craig Lindner, are part owners
of the Reds.
In July 2000, AFC's principal insurance company subsidiary, Great
American Insurance Company, entered into a thirty-year agreement with the
Reds, pursuant to which the Reds' home stadium will be named "Great American
Ball Park" upon its expected completion in time for the 2003 baseball season.
Great American paid the Reds $2 million during 2001, and will pay the Reds
approximately $2.3 million annually over the term of the agreement. For these
payments, Great American will also receive approximately $1.3 million of
premium seating, marketing credits, and related sponsorship rights.
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SIGNATURES
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Pursuant to the requirements of section 13 of the Securities Exchange
Act of 1934, American Financial Corporation has duly caused this Report to be
signed on its behalf by the undersigned, duly authorized.
American Financial Corporation
Signed: April 29, 2002
BY:s/FRED J. RUNK
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Fred J. Runk
Senior Vice President and
Treasurer
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