The Company's executive office is located at 600 Fifth Avenue, New York, New York. The home office of the insurance operations of the Company is located in Farmington, Connecticut. The New York office facilities consist of approximately 12,000 square feet and are leased at an average annual rental, over ten years, of $465,000. The Farmington office consists of approximately 140,000 square feet and is leased at an annual rental of $4,310,000.
Orion Capital Corporation ("Orion") and its wholly-owned subsidiaries (collectively the "Company") operate principally in the property and casualty insurance business which is reported as three segments - Regional Operations, Reinsurance/Special Programs and Guaranty National Companies. Regional Operations provides workers compensation insurance products through EBI Companies and Nations' Care. Reinsurance/Special Programs includes (i) DPIC Companies ("DPIC"), which markets professional liability insurance, (ii) Connecticut Specialty Insurance Group ("Connecticut Specialty"), which writes specialty insurance programs, (iii) SecurityRe Companies ("SecurityRe"), a reinsurer and (iv) a 20.0% interest in Intercargo Corporation ("Intercargo") which underwrites insurance coverages for international trade. The third segment consists of the Company's interest in Guaranty National Companies, which specializes in nonstandard commercial and personal automobile insurance. The miscellaneous income and expenses (primarily interest, general and administrative expenses and other consolidating elimination entries) of the parent company are reported as a fourth segment.
The Company's insurance operations have experienced favorable trends for the past several years, as indicated by its combined ratio which has improved from 109.4% in 1991, to 105.4% in 1992, 103.2% in 1993 and 101.2% in 1994. Operating earnings (defined as earnings after taxes, excluding the effects of the adoption of new accounting principles, extraordinary items and after-tax realized investment gains) were $52,818,000, $51,100,000 and $42,679,000, or $3.68, $3.47 and $3.33 per share, in 1994, 1993, and 1992, respectively, based on weighted average shares outstanding of 14,348,000 in 1994, 14,598,000 in 1993 and 10,914,000 in 1992. Preferred stock dividends of $409,000 in 1993 and $6,358,000 in 1992 were deducted from earnings in order to compute earnings per common share.
Earnings (loss) by segment before federal income taxes, cumulative effect of the adoption of new accounting principles and extraordinary item are summarized as follows for the three years ended December 31, 1994:
Net premiums written increased 12.0% ($76,469,000) to $712,055,000 in 1994 from $635,586,000 in 1993 and 12.0% ($68,156,000) in 1993 from $567,430,000 in 1992. The results by segment are as follows:
- Reinsurance/Special Programs' net premiums written increased 16.7% ($61,813,000) to $432,317,000 in 1994 from $370,504,000 in 1993 and 24.4% ($72,624,000) in 1993 from $297,880,000 in 1992. Net written premiums by DPIC for professional liability insurance, the largest special program, were $173,205,000, $123,637,000 and $111,837,000 in 1994, 1993 and 1992, respectively. The increase in 1994 is primarily attributable to the discontinuation on January 1, 1994 of a reinsurance contract in order to retain more of DPIC's profitable business. The premium increases in 1994 and 1993 reflect both new business and a continuation of a high level of policy renewals. Premium volume for Connecticut Specialty decreased 4.6% ($8,819,000) to $183,427,000 in 1994 from $192,246,000 in 1993 and increased 21.8% ($34,360,000) in 1993 from $157,886,000 in 1992. The decrease in 1994 is largely attributable to the cancellation of a personal injury protection program in Florida and a physical damage program in Texas, where the Company has had unfavorable loss experience, offset in part by increased premiums written in the truck liability program and the introduction of an additional marine program. The largest increases for 1993 were in the automobile personal injury protection and physical damage programs. The percentage of treaty and facultative reinsurance assumed to total net premiums written for Reinsurance/Special Programs amounted to 17.5%, 14.7% and 11.7% in 1994, 1993 and 1992, respectively. The Company's reinsurance operations are benefitting from A.M. Best Company's upgrade in 1993 of the rating applicable to the Company's principal insurance subsidiaries to "A (Excellent)". A.M. Best Company ratings are not primarily designed for investors and do not constitute recommendations to buy, sell or hold any security.
Premiums earned increased 12.0% ($73,819,000) to $691,223,000 in 1994 from $617,404,000 in 1993 and 10.2% ($57,199,000) in 1993 from $560,205,000 in 1992. Premiums earned for 1994 and 1993 reflect the recognition in income of the changing levels of net premium writings.
Pre-tax net investment income amounted to $84,915,000, $91,803,000 and $82,483,000 in 1994, 1993 and 1992, respectively. The year-to-year changes in net investment income are attributable to a decrease in equity earnings from limited partnership investments of $8,648,000 from 1993 to 1994, and an increase in limited partnership income of $5,708,000 from 1992 to 1993. The increase in 1993 stems principally from several large gains on sales of real properties by certain of these partnerships. The decrease in 1994 reflects the absence of such gains, and the poor performance of the investment markets during 1994. Net investment income was increased in both years by income generated from the employment of operating cash flow of $118,779,000 in 1994 and $123,154,000 in 1993. The pre-tax yields on the average investment portfolio were 6.5% in 1994 and 7.4% for both 1993 and 1992, reflecting the fluctuation in earnings from limited partnership investments and an increase in each year in the Company's investments in tax-advantaged securities, which generally yield less than fully taxable securities. The after-tax yields on the average investment portfolio were 5.0% in 1994, 5.5% in 1993 and 5.3% in 1992. The carrying value of the Company's investment portfolio amounted to $1,319,040,000 at December 31, 1994 and $1,322,536,000 at December 31, 1993.
The Company closely monitors the financial condition of the issuers of securities that it owns. When conditions are deemed appropriate, the Company ceases to accrete discount, or accrue interest and dividends, and, in cases where the value of such investments is deemed to be other than temporarily impaired, recognizes losses. The Company's non-investment grade investments are highly diversified, with an average investment per issuer of approximately $1,665,000 at December 31, 1994. Only six non-investment grade investments aggregating $41,147,000 were in excess of $5,000,000 at December 31, 1994.
Year Ended December 31, -------------------------------- 1994 1993 1992 ---- ---- ---- Loss and loss adjustment expenses ....... 72.1% 74.4% 75.7% Policy acquisition and other insurance expenses .............................. 27.0 26.8 27.3 ----- ----- ----- Total before policyholders' dividends.. 99.1 101.2 103.0 Policyholders' dividends ................ 2.1 2.0 2.4 ----- ----- ----- Total after policyholders' dividends .. 101.2% 103.2% 105.4% ===== ===== =====
The loss ratio for Regional Operations was 67.1% in 1994, 72.0% in 1993 and 80.1% in 1992. These loss ratios reflect continued improvement in workers compensation insurance, reduced losses due to the cancellation in 1992 of participation in a workers compensation loss sharing pool and decreasing levels of losses applicable to discontinued business that is being runoff, principally from closed offices and from the Company having ceased writing commercial package business.
Provisions for losses and loss adjustment expenses include development of loss and loss adjustment expense reserves relating to prior accident years, which increased the calendar year combined ratio by 2.5 percentage points in 1994, 3.9 percentage points in 1993 and 4.7 percentage points in 1992. The loss ratios were adversely affected by loss development in the reinsurance and pool and association businesses (including assigned risk pools) where loss reserves are established by the Company based on information provided from sources outside the Company, and where loss patterns were significantly different than in the past. Other contributing factors were higher than anticipated reported losses for automobile liability business and reserve strengthening for certain other lines of business, including discontinued programs. In 1994 adverse development was reduced by the continued improvement in workers compensation insurance from the application of risk management and loss control procedures.
Management believes that the Company's reserves for loss and loss adjustment expenses make reasonable and sufficient provision for the ultimate cost of all losses on claims incurred. However, there can be no assurance that changes in loss trends will not result in additional development of prior years' reserves in the future. Variability in claim emergence and settlement patterns and other trends in loss experience can result in future development patterns different than expected. The Company believes that any such development will continue at the low levels experienced in recent years, considering actions taken to increase reserving levels, to improve underwriting standards and to emphasize loss control and prevention. The Company's loss ratios in recent years, including development of prior years' losses, have compared favorably with loss ratios experienced by the industry.
Establishing reserve liabilities for environmental claims is subject to significant uncertainties that make reserve estimation difficult. Legal decisions have tended to expand insurance coverage beyond the intent of the original policies. The disposition of such claims often requires lengthy and costly litigation. Uncertainties as to required clean-up remedies and difficulties in identifying the responsible parties add further to the complexity of reserve estimation for these claims. In recent years, the Company has intensified its efforts to settle and close environmental claims. To help minimize the cost of losses and claims, the Company maintains a dedicated environmental claims staff which administers and continually evaluates each claim and its defense and settlement possibilities. In 1994, 1993 and 1992, the Company paid $7,233,000, $5,557,000 and $4,221,000, respectively, for the costs of defending and settling such claims. Payments in 1994, 1993 and 1992 related to 292, 216 and 117 claims, respectively, for the Company's direct business. Claim counts have been aggregated by year of coverage for each occurrence for which policyholders are being defended, and often include numerous claimants.
As of December 31, 1994 and 1993, the Company has environmental claims- related loss and loss adjustment expense reserves, net of reinsurance recoverables, of $20,601,000 and $17,189,000, respectively, which include 467 and 512 claims, respectively, for direct business written by the Company. In estimating liabilities for environmental-related claims, the Company considers all pertinent information as it becomes available.
Interest expense was $13,597,000 in 1994, $13,044,000 in 1993 and $12,754,000 in 1992. The 4.2% increase in interest expense in 1994 is primarily attributable to an increase in average interest rates. The 2.3% increase from 1992 to 1993 reflects an increase in the average amount of debt outstanding in 1993 as compared to 1992, including debt incurred to redeem the Company's Adjustable Rate Preferred Stock, offset for the most part by lower average interest rates.
Equity in earnings of affiliates includes the Company's portion of earnings from Guaranty National and Intercargo. Earnings (loss) of $342,000 and ($122,000) were recorded from the Intercargo investment in 1994 and 1993, respectively. The Company's portion of Guaranty National's net earnings before the cumulative effect of adopting changes in accounting principles was $11,244,000 in 1994, $9,509,000 in 1993 and $9,994,000 for 1992 based on Guaranty National's earnings of $22,551,000, $19,285,000 and $20,271,000, respectively. Gross premiums written for Guaranty National increased to $364,348,000 in 1994 from $321,766,000 in 1993 and $273,400,000 in 1992. Guaranty National's combined ratios were 97.5% in 1994, 99.6% in 1993 and 97.7% in 1992.
Operating earnings before income taxes were $71,546,000, $72,505,000 and $46,714,000 for 1994, 1993 and 1992, respectively. The 1.3% decrease in pre- tax earnings from 1993 to 1994 reflects an increase in insurance operations profitability of $5,082,000 and a decrease in realized investment gains of $6,041,000. The 55.2% increase in pre-tax earnings for 1993 over 1992 reflects an improvement in insurance operations profitability of $19,980,000 and an increase in realized investment gains of $5,811,000.
Federal income taxes on pre-tax operating results and the related effective tax rates amounted to $16,301,000 (22.8%), $15,517,000 (21.4%) and $922,000 (2.0%) in 1994, 1993 and 1992, respectively. The Company files consolidated federal income tax returns. Effective January 1, 1993, the Company adopted SFAS No. 109, "Accounting for Income Taxes." Upon adoption of SFAS No. 109, the Company recorded a benefit of $16,881,000 which was principally attributable to its deferred tax benefits that had not been recognized due to limitations under prior accounting standards. The Company's effective tax rates for 1994 and 1993 reflect both the absence of such deferred tax benefits and the benefit of income derived from tax-advantaged securities. The tax rate for 1993 reflects a tax benefit of $450,000 from the effect of the increase in the federal tax rate on the Company's deferred tax asset. The consolidated federal income tax provision for 1992 was reduced by the recognition of deferred tax benefits to the extent that the Company was able to utilize its NOL for financial reporting purposes under SFAS No. 96, "Accounting for Income Taxes."
Cash provided by operating activities decreased $4,375,000 to $118,779,000 in 1994 from $123,154,000 in 1993 and increased $42,621,000 in 1993 from $80,533,000 in 1992. In 1994 operating cash flow included a $10,223,000 receipt from DPIC's discontinuation of a reinsurance contract. Cash flow for 1993 included a receipt of $17,096,000 under a retrospectively rated program written by DPIC, and the benefit of an income tax overpayment of approximately $4,000,000 from 1992. Also, cash provided by operations in 1992 was decreased by an $18,410,000 payment for reinsurance applicable to a 1991 contract. Excluding these one-time items, year-to-year operating cash flows increased $6,498,000 from 1993 to 1994 and decreased $885,000 from 1992 to 1993. The increase in 1994 is primarily due to an increase in premiums collected offset by increases in paid losses, policy acquisition costs and federal income tax payments. The change in operating cash flow for 1993 is attributable to an increase in premiums collected, particularly for Connecticut Specialty, more than offset by an increase in paid losses.
The terms of the Loan Agreement and Orion's Indenture for its 9 1/8% Senior Notes limit the amount of additional borrowings, prepayments on existing indebtedness, liens and guarantees by the Company. Management does not believe that any of these limitations unduly restrict the Company's operations or limit Orion's ability to pay dividends on its stock. At December 31, 1994 the Company was in compliance with the terms of its debt agreements. Management believes that the Company continues to have substantial sources of capital and liquidity from the capital markets and bank borrowings.
On October 1, 1992 and December 21, 1992, Orion called for redemption its $1.90 Preferred Stock and $2.125 Preferred Stock on November 2, 1992 and January 21, 1993, respectively. In both cases, the market price of the shares of common stock that a holder would receive upon conversion of the preferred stock was substantially higher than the redemption price of $21.30 per share and $25.76 per share, respectively. Consequently, most holders converted into common stock prior to the redemption dates, resulting in the issuance of 2,558,173 shares of common stock prior to December 31, 1992 and 1,423,544 shares of common stock in January 1993. Holders of 2,730 shares of $1.90 Preferred Stock and 21,605 shares of $2.125 Preferred Stock, who did not elect to convert, redeemed their shares for an aggregate of $58,000 and $557,000, respectively.
The Company repurchased 442,327 shares, 177,658 shares and 22,420 shares of its common stock at an aggregate cost of $13,746,000, $5,472,000 and $554,000 in 1994, 1993 and 1992, respectively. The Company's remaining stock purchase authorization from its Board of Directors amounted to $2,135,000 at December 31, 1994.
Orion and its subsidiaries are routinely engaged in litigation incidental to their businesses. Management believes that there are no significant legal proceedings pending against the Company or its subsidiaries which, net of reserves established therefor, are likely to result in judgments for amounts that are material to the financial condition, liquidity or results of operations of Orion and its consolidated subsidiaries, taken as a whole. (See also Note I to the consolidated financial statements).
The management of Orion Capital Corporation is responsible for the consolidated financial statements and the information included therein. The consolidated financial statements are fairly presented and have been prepared in accordance with generally accepted accounting principles appropriate in the circumstances, and, where necessary, include amounts based on management's informed estimates and judgments.
The Company has a system of internal controls which it believes provides reasonable assurance that assets are safeguarded from loss or unauthorized use, transactions are recorded in accordance with management's policies and that the financial records are reliable for preparing financial statements. The system of internal controls includes written policies and procedures which are communicated to all appropriate personnel and updated as necessary.
The Audit Committee of the Board of Directors is comprised of independent directors, and has general responsibility for oversight of financial controls and audit activities of the Company and its subsidiaries. The Audit Committee, which reports to the Board, annually reviews the qualifications of the independent auditors and meets periodically with them, the internal auditors and management to review the plans and results of the audits. Both internal and independent auditors have free access to the Audit Committee, without members of management present, to discuss the adequacy of the system of internal controls and any other matters which they believe should be brought to the attention of the Committee.
We have audited the accompanying consolidated balance sheets of Orion Capital Corporation and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1994. Our audits also included the financial statement schedules listed in the Index at Item 14(a)2. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.
Other long-term investments had aggregate carrying values of $52,564,000 at December 31, 1994 and $50,682,000 at December 31, 1993 including mortgage loans on real estate of $1,764,000 and $1,690,000, respectively. Estimated market values of mortgage loans and other long-term investments approximate their carrying values.
The carrying value of the Company's investments in principal-only securities and interest-only securities totalled approximately $14,038,000, or 1.1% of total invested assets at December 31, 1994. The Company does not have any derivative financial instruments and does not actively engage in hedging its investment positions or its foreign currency and/or interest rate exposures.
The carrying value of securities on deposit with state regulatory authorities in accordance with statutory requirements totalled $234,265,000 and $283,537,000 at December 31, 1994 and 1993, respectively. Excluding investments in Guaranty National and securities of the United States Government and its agencies, the Company did not have any investments in securities of any one issuer that exceeded $20,000,000. The Company had $1,344,000 and $226,000 of fixed maturity investments for which it was not accruing income for the years ended December 31, 1994 and 1993, respectively.
In the normal course of business, the Company's insurance subsidiaries reinsure certain risks, generally on an excess-of-loss or pro rata basis, with other companies in order to limit losses. Reinsurance does not discharge the primary liability of the original insurer. As of December 31, 1994 and 1993, recoverables for reinsurance ceded to the Company's three largest reinsurers were an aggregate of $82,679,000 and $106,414,000, respectively. At December 31, 1994 and 1993, these reinsurers provided qualified trust accounts for the benefit of the Company of $43,526,000 and $46,167,000 and letters of credit totalling $1,770,000 and $4,372,000, respectively. The table below illustrates the effect of reinsurance on premiums written and premiums earned:
Reinsurance recoverables and prepaid reinsurance includes prepaid reinsurance of $31,708,000 at December 31, 1994 and $55,043,000 at December 31, 1993.
An analysis of the Company's loss and loss adjustment expense environmental reserves and related claim counts for 1994 and 1993 is presented below:
Establishing reserve liabilities for environmental claims is subject to significant uncertainties that make reserve estimation difficult. Legal decisions have tended to expand insurance coverage beyond the intent of the original policies. The Company does not use discounting in determining its reserves for environmental claims. IBNR of $13,791,000 and $6,680,000 is included in net reserves for environmental claims at December 31, 1994 and 1993, respectively.
Notes payable are recorded at face value less unamortized discount. The carrying value and estimated market value of notes payable consists of the following:
Minimum lease commitments at December 31, 1994, with the majority having initial lease periods from one to twenty-five years, are as follows:
1995 ....................................... $10,894 1996 ....................................... 9,072 1997 ....................................... 7,951 1998 ....................................... 5,725 1999 ....................................... 4,960 2000 and thereafter ........................ 40,983 ------- Minimum rental commitments ............... $79,585 =======
Rent expense amounted to $11,519,000, $11,976,000 and $12,224,000 net of sublease rentals of $9,000, $419,000 and $765,000 in 1994, 1993 and 1992, respectively. Substantially all leases are for office space and equipment. A number of lease commitments contain renewal options ranging from one to thirty years.
refunds for the rollback year only to the extent that it would not deprive the insurer of a fair and reasonable rate of return. Workers compensation insurance and reinsurance are excluded from the California Proposition's rate rollback provisions.
The Insurance Department of the State of California ("Department") subsequently issued regulations with respect to California Proposition 103. On August 18, 1994, the Supreme Court of the State of California upheld the validity of the Department's current regulations. In January 1995 the newly elected Commissioner of the Department announced that he would like to quickly resolve all Proposition 103 liability with California insurers through negotiation. On January 31, 1995, the Department advised the Company that it had an indicated rollback liability under the regulations of approximately $4,000,000, plus interest. The Department asked the Company to provide information, including California specific data, that would impact its calculation. The data used by the Department to determine the rollback liability was based on national figures and contained some inapplicable information as to the Company's California business. The regulations provide for the use of California data where available and reliable. When the calculation under the regulations is performed using the Company's California specific data, the Company has no rollback liability. The Company intends to resolve the matter with the Department during 1995.
Orion and its subsidiaries are routinely engaged in litigation incidental to their businesses. Management believes that there are no significant legal proceedings pending against the Company or its subsidiaries which, net of reserves established therefor, are likely to result in judgments for amounts that are material to the financial condition, liquidity or results of operations of Orion and its consolidated subsidiaries, taken as a whole.
Orion declared a 5-for-4 split of its common stock which was paid on November 15, 1993 to shareholders of record on October 15, 1993. The Company had also paid a 5-for-4 common stock split on December 7, 1992 to shareholders of record on November 20, 1992. All common stock and per common share data presented in the financial statements give effect to these stock splits.
issuance of 3,579 shares of common stock in December 1992 and 1,423,544 shares of common stock in January 1993. Holders of 21,605 shares of $2.125 Preferred Stock, who did not elect to convert, redeemed their shares for an aggregate of $557,000.
Orion issued 2,601,050 shares of common stock for conversions elected by holders of 1,581,470 shares of its $1.90 Convertible Exchangeable Preferred Stock (the "$1.90 Preferred Stock"), in 1992. These conversions were primarily the result of Orion calling this issue on November 2, 1992 at the redemption price of $21.30 per share including accrued dividends. The remaining 2,730 shares of $1.90 Preferred Stock were redeemed for approximately $58,000.
become exercisable if an acquiror gains a 20% or greater beneficial ownership interest in Orion's common stock, on other than fair and favorable terms to all stockholders. Each Right not owned by such acquiror will enable the holder to purchase, at an initial exercise price of $80, common stock having a value of twice the Right's exercise price. In addition, under certain circumstances if Orion is involved in a merger each Right will entitle its holder to purchase, at the Right's then current exercise price, common shares of such other company having a value of twice the Right's exercise price.
The Company maintains a Stock Savings and Retirement Plan (the "Plan"), qualified under Internal Revenue Code Section 401(k), for eligible employees of the Company. Employee and employer matched contributions to the savings funds are limited to the extent allowable under the Plan and federal income tax law. The Plan also provides for defined contribution savings and retirement benefits that allow the Company to make annual contributions to the Plan based on a percentage of employees' compensation. Employees vest in the Company's contributions over a six-year period with vesting credit given for prior service with the Company. The Company has adopted a Surplus Benefit Plan which provides deferred benefits for those employees who received less than the full employer contribution to the Company's 401(k) plan as a result of federal tax limitations on participation in the Plan.
Orion also maintains a non-qualified defined benefit retirement plan for members of the Board of Directors who are not employees. Benefits are based on years of service and director fee levels at retirement. The Board of Directors approved a stock option plan for non-employee directors in 1994.
The Company provides postretirement medical benefits to full-time employees who have worked for 10 years and attained age 55 while in service with the Company. The Company's postretirement health care plan is not funded. The accumulated postretirement benefit obligation of the plan included in other liabilities in the consolidated balance sheet is as follows:
Retirees ................................. $2,143 $2,260 Fully eligible active plan participants .. 976 1,425 Other active plan participants ........... 3,234 4,104 Unrecognized net gains ................... 2,496 - ------ ------ $8,849 $7,789 ====== ======
The expected health care cost trend rate used as of December 31, 1994 was 10.25% for 1995, and 9.5% in 1996 decreasing linearly each year until it reaches 6% for 2003 and future years. At December 31, 1993 the expected health care cost trend rates used were 16% for 1994 and 10% for 1995. A one- percentage-point increase in the assumed health care cost trend rate for each year would increase the aggregate service cost and interest cost for 1994 and 1993 by $289,000 and $145,000, respectively, and increase the accumulated postretirement benefit obligation as of December 31, 1994 and 1993 by $953,000 and $1,325,000, respectively. A one-percentage-point decrease in the health care cost rate would decrease service and interest costs and the accumulated post retirement benefit obligation by similar amounts. The assumed discount rate used in determining the accumulated postretirement benefit obligation was 8.5% at December 31, 1994 and 7.0% at December 31, 1993.
The Company's insurance operations are organized and reported as three business segments: Regional Operations, Reinsurance/Special Programs and Guaranty National Companies. Regional Operations provides workers compensation insurance products through EBI Companies and Nations' Care. Reinsurance/Special Programs includes DPIC Companies (which markets professional liability insurance), Connecticut Specialty Insurance Group (which writes specialty insurance programs), SecurityRe Companies (a reinsurer), and a 20% interest in Intercargo (which underwrites international trade). The third segment consists of the Company's interest in Guaranty National Companies, which specializes in nonstandard commercial and personal automobile insurance. The Company includes its share of Guaranty National's earnings using the equity method of accounting. The miscellaneous income and expenses (primarily interest, general and administrative expenses and other consolidating elimination entries) of the parent company are reported as a fourth segment. Identifiable assets of the Regional Operations and Reinsurance/Special Programs segments are primarily allocated based on the cash flows of these segments.
Financial information for the Company's segments for 1994, 1993 and 1992 is shown below: