Net income applicable to common stock totaled $53.8 million in 1998, $73.7 million in 1997 and $80.6 million in 1996. The decreases in net income are attributable primarily to the impact of realized gains and losses on investments. Adjusted operating income applicable to common stock, which does not include the impact of realized gains and losses on investments and other items that management believes are not indicative of operating trends, totaled $56.0 million in 1998, $47.0 million in 1997 and $42.5 million in 1996. The following is a reconciliation of net income to adjusted operating income.
AMORTIZATION OF DEFERRED POLICY ACQUISITION COSTS increased 20.0% in 1998, to $10.2 million, and decreased 2.2% in 1997, to $8.5 million. The increase in 1998 is primarily attributable to an increase in the profitability of the underlying business. The decrease in 1997 is the result of the impact of realized gains and losses on investments backing the related policyholder liabilities.
Through its membership in the Federal Home Loan Bank of Des Moines, Farm Bureau Life is eligible to establish and borrow on a line of credit to provide it additional liquidity. The line of credit available is based on the amount of capital stock of the Federal Home Loan Bank of Des Moines owned by Farm Bureau Life, which supported a borrowing capacity of $54.0 million as of December 31, 1998. Interest is payable at the current market rate on the date of issuance. As of December 31, 1998, the line of credit was not established and no borrowings were outstanding.
On March 17, 1998, the Company's Board of Directors approved a two-for-one common stock split payable in the form of a 100% stock dividend to stockholders of record as of April 6, 1998. The additional shares were distributed April 17, 1998. As required by the Company's Articles of Incorporation, holders of the Class B common stock received Class A common shares in payment of the stock dividend. In addition, the 5.0 million shares of Series B preferred stock have non-dilutive voting rights. As a result, voting rights on these shares increased proportionately while the number of shares outstanding did not change. All references to the number of common shares and per share amounts in this report have been restated to reflect the effect of the stock dividend.
The change in net unrealized investment gains/losses are recorded net of deferred income taxes and other adjustments for assumed changes in the amortization pattern of deferred policy acquisition costs, value of insurance in force acquired and unearned revenue reserve totaling $1.2 million in 1998, $16.6 million in 1997 and ($20.9) million in 1996.
The Company has management agreements with Farm Bureau Mutual and other affiliates under which the Company provides general business, administrative and management services. Fee income for these services totaled $0.5 million, $0.2 million and $0.2 million during 1998, 1997 and 1996, respectively. In addition, Farm Bureau Management Corporation, a wholly-owned subsidiary of the Iowa Farm Bureau Federation, provides certain management services to the Company under a separate arrangement. During 1998, 1997 and 1996, the Company incurred related expenses totaling $0.7 million, $0.8 million and $2.6 million, respectively.
The Company leases its home office properties under a 15-year operating lease. Future remaining minimum lease payments under this lease as of December 31, 1998 are as follows: 1999 - $1.7 million; 2000 - $2.1 million; 2001 - $2.1 million; 2002 - $2.1 million; 2003 - $2.3 million and thereafter, through 2013 - $23.6 million. Rent expense for the lease during 1998 totaled $1.3 million, net of $1.0 million in amortization of the deferred gain on the exchange of home office properties for common stock (see Note 2).
Transactions between segments are recorded at negotiated rates generally intended to be at levels commensurate with charges that would be assessed to unaffiliated parties. Interest expense and expenditures for long-lived assets were not significant during 1998, 1997 and 1996.