The following selected consolidated statement of operations data and balance sheet data of the Company as of and for the years ended December 31, 1994, 1995, 1996, 1997 and 1998, have been derived from the Consolidated GAAP Financial Statements of the Company, which have been audited by PricewaterhouseCoopers LLP, independent accountants.
(2) For a discussion of policy acquisition costs, see "Management's Discussion and Analysis of Financial Condition and Results of Operations".
The following table sets forth the components of the Company's condensed statements of operations for the years ended December 31, 1996, 1997 and 1998, expressed as a percentage of total revenues.
Year Ended December 31, --------------------------- 1996 1997 1998 ---- ---- ---- Statement of Operations Data: ---------------------------- Revenues: Accident and health: First year premiums 32.7% 29.7% 32.5% Renewal premiums 56.7% 58.3% 54.1% Life: First year premiums 1.0% 0.6% 0.3% Renewal premiums 1.5% 1.3% 1.1% ------ ------ ------ Total premiums 91.9% 89.9% 88.0%
Benefits and expenses: Benefits to policyholders 59.3% 66.4% 60.7% First year commissions 21.7% 20.3% 22.9% Renewal commissions 8.9% 9.3% 8.7% Net policy acquisition costs deferred -13.5% -15.2% -18.5% General and administrative expense 11.1% 11.1% 10.3% Interest expense 0.4% 2.6% 1.9% ------ ------ ------ Total benefits and expenses 88.0% 94.5% 86.0% ------ ------ ------ ------ ------ ------
The Company develops and markets insurance products primarily designed for the care of individuals age 65 and over. The Company's principal products are individual fixed, defined benefit accident and health insurance policies which consist of nursing home care, home health care, Medicare supplement and long-term disability insurance. The Company's underwriting practices rely upon the base of experience, which it has developed over twenty-four years of providing nursing home care insurance, as well as upon available industry and actuarial information. As the home health care market has developed, the Company has encouraged the purchase of both nursing home care and home health care coverage, and has introduced new life insurance products as well, thus providing policyholders with enhanced protection while broadening the Company's policy base. In late 1996, the Company introduced its Personal Freedom Plan and Assisted Living Plan. Both plans are designed to provide comprehensive nursing home and home health care coverage. During 1998, the Company developed its Secured Risk Nursing Facility and Post Acute Recovery Plans, which provide limited benefits to higher risk applicants. Long-term nursing home care and home health care policies accounted for approximately 93% of the Company's total annualized premiums in-force as of December 31, 1998 and approximately 82% of its consolidated revenues for 1998.
when cash flows from maturing investments are reinvested at prevailing market rates. As of December 31, 1998, approximately 5.1% of the Company's invested assets were committed to high quality large capitalization common stocks.
Accident and Health Premiums. First year accident and health premiums earned by the Company, excluding disability premiums, in the twelve month period ended December 31, 1998, increased 51.0% to $81,760, compared to $54,136 in 1997. First year long-term care premiums in 1998 increased 51.9% to $80,126, compared to $52,747 in 1997. The Company attributes its growth to continued improvements in product offerings that competitively meet the needs of the long term care marketplace. In addition, the Company actively recruits and trains agents to sell its products. First year Medicare supplement premiums earned by the Company in 1998 increased to $1,634 from $1,388 in 1997. The Company uses Medicare supplement products as a marketing tool to compliment its other long-term care offerings.
In addition, ANIC, which the Company acquired on August 30, 1996, generated disability premiums of $6,715 during 1998, down from $6,822 recognized in 1997.
Life Premiums. First year life premiums earned by the Company decreased 20.7% to $837, in 1998, compared to $1,056 in 1997. The Company's life business has fluctuated between periods as the Company is focusing its marketing efforts on its long-term care products. Renewal life premiums in 1998 increased to $2,711, compared to $2,482 in 1997. This increase was primarily the result of renewals of first-year policies written in 1997.
Net Investment Income. Net investment income earned by the Company for 1998 increased 19.8% to $20,376 from $17,009 for 1997, which is a result of higher invested assets achieved through cash receipts from premiums with corresponding reserve increases. During 1998, the Company sold its entire equity securities portfolio, or approximately $21,000 of invested assets. From this sale, the Company recognized an approximate $6,400 capital gain. Also, the Company liquidated its tax-exempt bond holdings in order to recognize higher tax equivalent yields. This sale generated an approximate $1,500 gain. The Company recognized $1,417 of capital gains in 1997. The Company s average yield on invested assets and cash balances was 6.1% in 1998 compared to 6.0% in 1997.
Benefits to Policyholders. Benefits to policyholders in 1998 increased 24.6% to $154,300, compared to $123,865 in 1997. Accident and health benefits to policyholders in 1998 increased 24.4% to $151,247 compared to $121,608 in 1997. The 1998 loss ratio for accident and health business was 68.7%, compared to 74.1% in 1997. The decrease in the Company's loss ratio is attributable in part to the impact of improved persistency upon the reserves held for future anticipated losses. However, in 1997 the Company added approximately $12,000 to this reserve in 1997 as a result of its reassessment of assumptions utilized in the actuarial determination of reserves for current reserves. This resulted in a higher loss ratio for 1997. The remaining growth in benefits is attributable to new premium growth. Management expects the loss ratio to increase with time due to the impact of a maturing portfolio. Also, due to the Company's policy of discounting reserves, reserve releases will typically be less than actual claims payments. Management believes that interest earnings from invested assets will be sufficient to offset the difference between claims payments and reserve releases. During 1998, expenses for care management services of approximately $1,684 were classified as benefits to policyholders. The Company utilizes care management services in order to attempt to reduce overall claims expense and as a result in 1997, the Company included approximately $1,041 of care management expenses as benefits to policyholders.
Net Income. Net income of $24,048 for 1998 was $16,449 or 216.5% above 1997 income of $7,599. Net income includes income tax provisions of $11,578 and $2,695, for the 1998 and 1997 periods, respectively. Income before federal income taxes increased in 1998 by $25,332 or 246.1% to $35,626. This increase was primarily attributable to premium growth and capital gains realized from bond and equity sales. The Company made a 1998 provision for federal income taxes of $11,578, reflecting an effective rate of 32.5%, as compared to an effective 1997 tax rate of 26.2%.
Twelve Months Ended December 31, 1997 and 1996 (amounts in thousands, except per share data)
SFAS 128, however, prescribes that if the components of diluted earnings per share are anti-dilutive, then diluted earnings per share will not differ from basic earnings per share. In 1997, the Company reported basic and diluted earnings per share of $1.01 and $.98, respectively. Since the exclusion of the impact of interest expense from the Company's convertible debt would be anti-dilutive, the future anticipated conversion of the debt into additional shares is not included in the calculation of diluted earnings per share. The Company anticipates that approximately 2,600 additional shares will be issued in the future for the conversion of debt. However, the Company also expects that approximately $3,550 of annual after-tax interest expense due to this convertible debt would be excluded from the diluted earnings per share calculation.
In 1997, the FASB also issued Statement 131, "Disclosures about Segments of an Enterprise and Related Information," establishing standards for the way that public business enterprises report information about operating segments in annual and interim financial statements and requiring presentation of a measure of profit or loss, certain specific revenue and expense items and segment assets. The Company has no reportable operating segments as a monoline long-term care insurer.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as "derivatives") and for hedging activities. SFAS No. 133 requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. While the Company is presently evaluating the impact of SFAS No. 133, the adoption of SFAS No. 133 is not expected to have a material impact on the Company's financial condition or results of operations.
As many computer systems and other equipment with embedded chips or processors use only two digits to represent the year, they may be unable to accurately process certain data before, during or after the year 2000. As a result, business and governmental entities are at risk for possible miscalculations or systems failures causing disruptions in their business operations. This is commonly known as the Year 2000 ("Y2K") issue. The Y2K issue can arise at any point in the Company's supply, billing, processing, sales or financial chains.
The Company and each of its subsidiaries are in the process of implementing a Y2K readiness program with the objective of having all of their significant operations functioning properly with respect to Y2K before January 1, 2000. The first component of the Y2K project was to identify all systems and hardware, which would be impacted by the Y2K issue. This portion of the project has been completed for the Company and for all of its subsidiaries.
The second component of the Y2K project involves the actual remediation and replacement of various systems and hardware, which will be affected by the Y2K issue. The Company and its insurance subsidiaries are using both internal and external resources to complete this process. Each system has been assigned a priority for Y2K completion, beginning with the most critical projects. All application systems that are not Y2K compliant have been slated for replacement with a new Y2K compliant system. The Company expects to complete the installation and conversion to these new systems by the summer of 1999.
As part of the Y2K project, significant service providers, vendors, suppliers, and customers that are believed to be critical to business operations after January 1, 2000, have been identified and steps are being undertaken in an attempt to reasonably ascertain their level of readiness through questionnaires, interviews, on-site visits and other available means.
The Company's consolidated liquidity requirements have historically been created and met from the operations of its insurance subsidiaries. The Company's primary sources of cash are premiums, investment income and maturities of investments. The Company has provided, and may continue to provide, cash through public offerings of its common stock, capital markets activities or debt instruments. The primary uses of cash are policy acquisition costs (principally commissions), payments to policyholders, investment purchases and general and administrative expenses.
Statutory requirements allow insurers to pay dividends only from statutory earnings as approved by the state insurance commissioner. Statutory earnings are generally lower than publicly-reported earnings due to the immediate or accelerated recognition of all costs associated with premium growth and benefit reserves. The Company has not and does not intend to pay shareholder dividends in the near future due to these requirements, choosing to retain statutory surplus to support continued premium growth. See "Dividend Policy" and "Business-Government Regulation."
Cash increased in 1996 by $42,733, which was primarily due to $72,208 in proceeds from the Company's convertible debt issuance. This increase, coupled with $31,268 provided by operations, was more than sufficient to provide for $93,046 of bond and equity purchases in 1996.
As of December 31, 1998, shareholders' equity was increased by $8,381 due to unrealized gains of $12,698 in the investment portfolio. As of December 31, 1997, shareholders' equity was increased by $7,838 due to unrealized gains of $11,875 in the investment portfolio. As of December 31, 1996, shareholders' equity was increased by $2,261 due to unrealized gains of $3,426 in the investment portfolio.
In November 1996, the Company contributed $5,000,000 of the net proceeds of its July 1995 public offering to PTNA. In December 1996, the Company contributed $20,000, $20,000 and $5,000 to the surplus of PTLIC, PTNA and ANIC, respectively, from the proceeds of the convertible subordinated debt. In March 1998, the Company contributed approximately $6,000 of the proceeds from the debt offering to AINIC to initially capitalize the subsidiary. The remaining funds were retained at the parent level in order to service the future interest payments on the debt. In 1998, ANIC paid a dividend of $493 to the Company. The Company believes that its insurance subsidiaries' capital and surplus presently meet or exceed the requirements in all jurisdictions in which they are licensed.
On November 26, 1998, the Company entered a purchase agreement to acquire all of the common stock of United Insurance Group Agency, Inc., a Michigan based consortium of long-term care insurance agencies. The acquisition was effective January 1, 1999 for the amount of $18,192, of which $8,078 was in the form of a three year installment note.
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income and comprehensive income, of shareholders' equity and of cash flows, present fairly, in all material respects, the financial position of Penn Treaty American Corporation and Subsidiaries (the "Company") at December 31, 1998 and 1997 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standard, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
Notes to Consolidated Financial Statements (amounts in thousands, except per share information)
The Company is subject to interest rate risk to the extent its investment portfolio cash flows are not matched to its insurance liabilities. Management believes it manages this risk through analyis of investment cash flows and actuarial input regarding future insurance liabilities.
The Company sells accident and health, life and disability insurance through its wholly-owned subsidiaries. The Company's principal lines of business are long-term care products and home health care products. The Company distributes its products principally through managing general agents and independent agents. The Company operates its home office in Allentown, Pennsylvania and has satellite offices in California, Florida, New York and Vermont, whose principal functions are to market and underwrite new business. State regulatory authorities have powers relating to granting and revoking licenses to transact business, the licensing of agents, the regulation of premium rates and trade practices, the form and content of insurance policies, the content of advertising material, financial statements and the nature of permitted practices. The Company is licensed to operate in 50 states. Sales in Florida, Pennsylvania, and California accounted for approximately 24%, 13% and 15%, respectively, of the Company's premiums for the year ended December 31, 1998. No other state sales accounted for more than 10% of the Company's premiums for the year ended December 31, 1998.
The Company accounts for its investments according to the provisions of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No. 115"). SFAS No. 115 requires all entities to allocate their investments among three categories as applicable: (1) trading, (2) available for sale and (3) held to maturity. Management categorized all of its investment securities as available for sale since they may be sold in response to changes in interest rates, prepayments and similar factors. Investments in this classification are reported as
Cash and cash equivalents include highly liquid debt instruments purchased with a maturity of three months or less.
The costs in excess of fair value of net assets acquired (goodwill) for acquisitions made under purchase accounting methods are being amortized to expense on a straight-line basis over a 10- to 40-year range. During 1998, 1997 and 1996, approximately $316, $316 and $400 was amortized to expense, respectively.
In late 1994, the Company began marketing its Independent Living policy, a home health care insurance product which provides coverage over the full term of the policy for services furnished by a homemaker or companion who is not a qualified or licensed care provider. In late 1996, the Company began marketing its Personal Freedom policy, a comprehensive nursing home and home health care product, and its Assisted Living policy, a revised nursing home with attached home
The Company discounts all policy and contract claims, which involve fixed periodic payments extending beyond one year. This is consistent with the method allowed for statutory reporting, the long duration of claims, and industry practice for long-term care policies. Benefits are payable over periods ranging from six months to five years, and are also available for lifetime coverage. These liabilities are discounted using an assumed rate of 6.75% for 1998 and 1997, 7% for 1996, 6% for 1995, 1994, 1993 and 1992 claims and 8% for claims in 1991 and prior.
As of January 1, 1998, the Company adopted SFAS No. 130, "Comprehensive Income," which establishes standards for the reporting and disclosure of comprehensive income and its components (revenues, expenses, gains and losses). SFAS No. 130 requires that all items required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements.
In 1997, the FASB also issued Statement 131, "Disclosures about Segments of an Enterprise and Related Information," establishing standards for the way that public business enterprises report information about operating segments in annual and interim financial statements and requiring presentation of a measure of profit or loss, certain specific revenue and expense items and segment assets. The Company has no reportable operating segments because long-term care represents 93% of the Company's premium if at December 31, 1998.
The amortized cost and estimated market value of investments in debt securities as of December 31, 1998 and 1997 are as follows:
The amortized cost and estimated market values of mortgage-backed securities at December 31, 1998 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Policy reserves have been computed principally by the net level premium method based upon estimated future investment yield, mortality, morbidity, withdrawals and other benefits. The composition of the policy reserves at December 31, 1998 and 1997 and the assumptions pertinent thereto are presented below:
The Company has net operating loss carry-forwards of approximately $5,714, which have been generated by taxable losses at the Company's non-life parent, and if unused, will expire during 2012 and 2013.
Total reserves, including policy and contract claims, reported to statutory authorities were approximately $159,861 and $7,652 less than those recorded for GAAP as of December 31, 1998 and 1997, respectively. This increase is attributable to a funds withheld financial reinsurance agreement entered into on December 31, 1998. For further discussion, see Note 11.
The National Association of Insurance Commissioners (NAIC) has established risk-based capital standards that life and health insurers and reinsurers must meet. In concept, risk-based capital standards are designed to measure the acceptable amount of capital an insurer should have based on the inherent and specific risks of each insurer. Insurers failing to meet their benchmark capital level may be subject to scrutiny by the insurer's domiciled insurance department and, ultimately, rehabilitation or liquidation. Based on the NAIC's currently adopted standards, the Company has capital and surplus in excess of the required levels. The differences in statutory net income compared to GAAP are primarily due to the immediate expensing of acquisition costs, reserving methodologies, reinsurance and deferred income taxes. Due to these differences, under statutory accounting there is a net loss and decrease in surplus, called surplus strain, in years of high growth. The surplus needed to sustain growth must be raised externally or from profits from existing business.
Until August 1, 1996, the Company maintained a defined contribution pension plan covering substantially all employees. The Company contributed 3% of each eligible employee's annual covered payroll to the plan. All contributions were subject to limitations imposed by the Internal Revenue Code on retirement plans and Section 401(k) plans. Upon the termination of the plan on August 1, 1996, each participant became fully vested. A pro rata portion of the 1996 scheduled contribution was put into the plan upon termination. Expense for this pension plan was $30 for the year ended December 31, 1996.
On August 1, 1996, the Company adopted a 401(k) retirement plan, covering substantially all employees with one year of service. Under the plan, participating employees may contribute up to 15% of their annual salary on a pre-tax basis. The Company, under the plan, equally matches employee contributions up to the first 3% of the employee's salary. The Company and employee portion of the plan is vested immediately. The Company's expense related to this 401(k) plan was $98, $93 and $36 for the years ended December 31, 1998, 1997 and 1996, respectively. The Company may elect to make a discretionary contribution to the plan, which will be contributed proportionately to each eligible employee. The Company did not make a discretionary contribution in 1998, 1997 or 1996.
ANIC maintained a defined benefit pension plan for all ANIC employees in 1996. This plan was subsequently terminated in 1997, with all eligible employees joining the Company's 401(k) plan. There was no 1997 or 1996 contribution expense for this plan. Upon the termination of the plan, the Company completed an actuarial review of its liability to plan participants. As a result of this review, the Company recognized approximately $125 of reduced expense in 1997 due to the overaccrual of its liability upon the purchase of ANIC in 1996.
Compensation cost is estimated using an option-pricing model with the following assumptions for 1996, 1997 and 1998: an expected life ranging from 5.3 to 8.3 years, volatility of 27.9% for 1996 and 26.4% for 1997 and a risk free rate ranging from 5.71% to 6.35%. The weighted average fair value of those options granted in years prior to and including 1996 and 1997 was $8.25 and $12.24, respectively. No options were granted under these plans in 1998. No compensation expense is calculated for those options granted prior to 1995.
Effective May 1995, the Company adopted a Participating Agent Stock Option Plan which provides for the granting of options to purchase up to 300 shares of common stock. The exercise price of all options granted under the plan may not be less than the fair market value of the shares on the date of grant. The maximum allowable term of each option is ten years, and the options become exercisable in four equal, annual installments commencing one year from the option grant date.SFAS No. 123 requires that the deemed value of options granted to non-employees be recognized as compensation expense over the estimated life of the option. The estimated fair value of these options was $7.77 and $11.56 for options granted in 1996 and 1997, respectively. No agent options were granted in 1998.
The following is a summary of the Company's option activity, including grants, exercises, forfeitures and average price information:
Outstanding Remaining Exercisable at December Contractual at December Range of Exercise Prices 31, 1998 Life (Yrs) 31, 1998 ----------------------------------- 8.71 5 2 5 8.92 27 4 26 9.81 45 4 45 11.17 14 3 14 12.28 26 3 26 12.38 78 7 57 12.63 15 7 11 13.61 48 7 21 20.50 126 8 59 22.55 48 8 14 32.25 93 9 23 35.48 29 9 4 ---------- ---------- 554 305 ---------- ---------- ---------- ----------
The total net rental expenses under all leases amounted to approximately $260, $202 and $174 for the years ended December 31, 1998, 1997 and 1996, respectively.
In June 1997, the Company was given an unsecured, uncommitted line of credit from a bank for up to $3,000, which was unused at December 31, 1998. The line of credit is renewable annually, carries no origination or carrying fees, and if used, will carry a variable rate of interest equal to the London Interbank Offering Rate (LIBOR) plus .75% annually on the outstanding balance.
The Company is a defendant in various lawsuits arising in the ordinary course of business. In the opinion of management, the resolution of these lawsuits will not have a material effect on the financial condition or results of operations of the Company.
PTNA is party to reinsurance agreements to cede 100% of benefits exceeding 36 months on certain home health care policies. Total reserve credits taken related to this agreement as of December 31, 1997 and 1996 were approximately $2,912 and $859, respectively. Effective January 1, 1998, no new business was reinsured under this facility.
Effective December 31, 1998, PTNA entered a funds withheld financial reinsurance agreement with an unaffiliated reinsurer. Under the agreement, PTNA ceded the claims risk of a material portion of its long-term care policies. This transference of risk qualifies the agreement for statutory treatment of reinsurance. PTNA expects, but is not obligated to recapture the ceded policies and their cumulative profits after December 31, 2000. The agreement is not considered reinsurance according to FASB Statement 113 "Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts", and is therefore not treated as reinsurance in the Company's Consolidated Financial Statements other than the $300 financing fee paid to the reinsurer, which is recorded as commission expense. As a result of this agreement, 1998 statutory surplus was increased by approximately $14,700.
ANIC reinsures approximately $500 of its risk with three reinsuring companies, all of which are authorized to do business in the State of Vermont.
The Company has assumed and ceded reinsurance on certain life and accident and health contracts under various agreements. The tables below highlight the amounts shown in the accompanying consolidated statements of operations, which are net of reinsurance activity:
Ceded to Assumed Gross Other from Other Net Amount Companies Companies Amount ------ --------- --------- ------ December 31, 1998 - - ----------------- Ordinary Life Insurance In-Force $66,644 $14,848 $ 0 $51,796 Premiums: Accident and health 222,895 3,294 544 220,145 Life 3,970 425 2 3,547 Benefits to Policyholders: Accident and health 78,179 1,625 297 76,851 Life 2,005 22 0 1,983 Inc (dec) in Policy Reserves: Accident and health 75,356 940 (20) 74,396 Life 1,248 178 0 1,070 Commissions $80,929 $739 $ 83 $80,273
Irv Levit Insurance Management Corporation ("IMC"), an insurance agency which is owned by the President of the Company, produced approximately $41, $50 and $55 of new and renewal premiums for PTLIC, for the years ended December 31, 1998, 1997 and 1996, respectively, for which it received commissions of approximately $10, $13 and $12 respectively.
IMC also received commission overrides on business written for PTLIC by certain agents, principally general agents who were IMC agents prior to January 1979 and any of their sub-agents hired prior and subsequent to January 1979. For the years ended December 31, 1998, 1997 and 1996, IMC commission overrides totaled approximately $559, $534 and $539, respectively.
A managing general agent accounted for approximately 17%, 18% and 21% of total premiums in 1998, 1997 and 1996, respectively.
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and investments. The Company places its cash and cash equivalents and investments with high quality financial institutions, and attempts to limit the amount of credit exposure to any one institution. However, at December 31, 1998, and at other times during the year, amounts in any one institution exceeded the Federal Deposit Insurance Corporation limits.
Investments -- The fair value of fixed maturities and equity securities are based on quoted market prices. It is not practicable to determine the fair value of policy loans since such loans are not separately transferable and are often repaid by reductions to benefits and surrenders.
Cash and cash equivalents -- The statement value approximates fair value.
December 31, 1998 December 31, 1997 -------------------- ---------------------- Carrying Fair Carrying Fair Amount Value Amount Value -------- ----- -------- ----- Financial assets: Investments Bonds, available for sale $ 321,448 $ 321,448 $ 278,148 $ 278,148 Equity securities 17,334 17,334 23,554 23,554 Policy loans 107 107 85 85 Cash and cash equivalents 38,402 38,402 11,241 11,241
Financial liabilities: Convertible debt $ 74,750 $ 69,133 $ 74,750 $ 58,058 Mortgage and other debt 1,800 1,800 2,002 2,002