27201 Tourney Rd., Ste. 121 Valencia, CA Mortgage Sales Leased (6) 1,600
Net investment income decreased by $407,000, from $12,947,000 in 2001 to $12,540,000 in 2002. This decrease was primarily attributable to reduced interest earned as a result of lower interest rates during 2002.
December 31, Assets: 2002 2001 - ------- ---- ---- Insurance-related investments: Fixed maturity securities held to maturity, at amortized cost (market $33,927,051 and $28,697,986 for 2002 and 2001) $33,015,097 $27,799,909 Fixed maturity securities available for sale, at market (cost $17,153,223 in 2002 and $20,565,833 in 2001) 18,514,943 21,470,729 Equity securities available for sale, at market (cost $1,929,540 and $1,605,980 for 2002 and 2001) 2,642,093 2,641,549 Mortgage loans on real estate 21,016,008 15,479,305 Real estate, net of accumulated depreciation and allowances for losses of $3,728,539 and $3,523,912 for 2002 and 2001 9,331,248 9,051,691 Policy, student and other loans 10,974,165 11,277,975 Short-term investments 5,335,478 1,453,644 ------------- ------------ Total insurance-related investments 100,829,032 89,174,802 Restricted assets of cemeteries and mortuaries 5,332,736 5,339,436 Cash 38,199,041 8,757,246 Receivables: Trade contracts 11,358,027 6,945,274 Mortgage loans sold to investors 89,455,105 50,695,073 Receivable from agents 2,054,071 2,061,541 Receivable from officers 70,290 102,200 Other 1,131,977 1,183,927 ------------- ------------ Total receivables 104,069,470 60,988,015 Allowance for doubtful accounts (2,385,309) (2,287,241) ------------- ------------ Net receivables 101,684,161 58,700,774 Policyholder accounts on deposit with reinsurer 6,955,691 7,148,068 Land and improvements held for sale 8,429,215 8,346,448 Accrued investment income 928,287 1,059,789 Deferred policy and pre-need acquisition costs 15,917,257 14,453,023 Property, plant and equipment, net 10,921,635 10,802,387 Cost of insurance acquired 15,984,340 7,615,348 Excess of cost over net assets of acquired subsidiaries 1,029,562 1,065,045 Other 945,805 597,209 ------------- ------------ Total assets $307,156,762 $213,059,575 ============= ============
Future policy benefit reserves for traditional life insurance are computed using a net level method, including assumptions as to investment yields, mortality, morbidity, withdrawals, and other assumptions based on the life insurance subsidiaries experience, modified as necessary to give effect to anticipated trends and to include provisions for possible unfavorable deviations. Such liabilities are, for some plans, graded to equal statutory values or cash values at or prior to maturity. The range of assumed interest rates for all traditional life insurance policy reserves was 4.5% to 10%. Benefit reserves for traditional limited-payment life insurance policies include the deferred portion of the premiums received during the premium-paying period. Deferred premiums are recognized as income over the life of the policies. Policy benefit claims are charged to expense in the period the claims are incurred.
The Company has two fixed option plans (the "1993 Plan" and the "2000 Plan"). In accordance with APB Opinion No. 25, no compensation cost has been recognized for these plans. Had compensation cost for these plans been determined based upon the fair value at the grant date consistent with the methodology prescribed under SFAS No. 123, the Company's net income would have been reduced by approximately $533,520, $3,143, and $0 in 2002, 2001, and 2000, respectively. As a result, basic and diluted earnings per share would have been reduced by $.07, $0, and $0 in 2002, 2001 and 2000, respectively.
The Company and its subsidiaries have a noncontributory Employee Stock Ownership Plan (ESOP) for all eligible employees. Eligible employees are primarily those with more than one year of service, who work in excess of 1,040 hours per year. Contributions, which may be in cash or stock of the Company, are determined annually by the Board of Directors. The Company's contributions are allocated to eligible employees based on the ratio of each eligible employee's compensation to total compensation for all eligible employees during each year. ESOP contribution expense totaled $99,612, $191,557, and $0 for 2002, 2001, and 2000, respectively. At December 31, 2002 the ESOP held 507,490 shares of Class A and 1,408,653 shares of Class C common stock of the Company. All shares held by the ESOP have been allocated to the participating employees and all shares held by the ESOP are considered outstanding for purposes of computing earnings per share.
The Company has a 401(k) savings plan covering all eligible employees, as defined above, which includes employer participation in accordance with the provisions of Section 401(k) of the Internal Revenue Code. The plan allows participants to make pretax contributions up to the lesser of 15% of total annual compensation or the statutory limits. The Company may match up to 50% of each employee's investment in Company stock, up to 1/2% of the employee's total annual compensation. The Company's match will be Company stock and the amount of the match will be at the discretion of the Company's Board of Directors. The Company's matching 401(k) contributions for 2002, 2001, and 2000 were $7,975, $18,458, and $0 respectively. Also, the Company may contribute at the discretion of the Company's Board of Directors an Employer Profit Sharing Contribution to the 401(k) savings plan. The Employer Profit Sharing Contribution shall be divided among three different classes of participants in the plan based upon the participant's title in the Company. The Company contributions for 2002, 2001 and 2000 were $142,218, $260,350, and $0, respectively. All amounts contributed to the plan are deposited into a trust fund administered by an independent trustee.
The Company has Deferred Compensation Agreements with its Chief Executive Officer and its past Senior Vice President. The Deferred Compensation is payable on the retirement or death of these individuals either in monthly installments (120 months) or in a lump sum settlement, if approved by the Board of Directors. The amount payable
Available options for future grant 1987 Stock Incentive Plan -- =========
Property, plant and equipment, at cost, net of accumulated depreciation of $575,724 for 2002 and $457,338 for 2001 415,144 427,345