The Company owns, unencumbered, the building at 4100 South Hulen Street, Fort Worth, Texas, in which its home office operation is conducted. A portion (approximately 4%) of this 128,000 square foot building is being leased to third parties. The Company owns one residential property in Fort Worth, Tarrant County, Texas, which is currently rented on a month to month basis to the Company's Director of Training. Monthly rent is currently paid to the Company for that portion of such residence personally used by this employee. The rent paid is $1,000 per month. The management of the Company considers the above monthly rent to be fair and reasonable in the view of the amount of personal living space rented in the residence by this individual. This residential
INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
The consolidated financial statements include the accounts of IRA, Inc. and its wholly-owned subsidiaries, USPA, IRA Hawaii, IRA Wyoming, IRA Montana, IRA New York, IRA Nevada and IRA Alabama and First Command Bank. All intercompany accounts and transactions have been eliminated.
Commissions revenue on sales of insurance policies and mutual fund investments by the Companies' sales agents are recognized when earned from the insurance and mutual fund companies. Commissions are paid to the Company usually monthly, as they are earned on investments made or premiums paid by the individual investors and policyholders to the mutual fund and insurance companies.
For purposes of the statement of cash flows, cash and cash equivalents includes Cash - Demand deposits, Cash - Money market mutual fund accounts and Bank cash and cash equivalents. The funds in the money market mutual fund accounts are with various investment companies. The invested funds earn interest at prevailing rates while on deposit and may be withdrawn on demand by check.
Financial instruments that potentially subject IRA, Inc. to concentrations of credit risk consist principally of temporary cash investments, commissions receivable and marketable securities. IRA, Inc. places its temporary cash investments and marketable securities with financial institutions and investment companies. Therefore, the majority of these funds are not FDIC insured. IRA,
Inc. does however limit the amount of credit exposure to any one company or institution. Concentrations of credit risk with respect to commissions receivable are limited due to the number of investment and insurance companies comprising IRA, Inc.'s supplier base. As of September 30, 1997, 1996 and 1995, IRA, Inc. had no significant concentrations of credit risk.
Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax basis of assets and liabilities that will result in taxable income or deductions in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.
Expenditures for maintenance, repairs and minor renewals are charged to operations as incurred. Upon retirement or other disposition of property or equipment, the carrying value and the related accumulated depreciation are removed from the accounts. Depreciation expense amounted to $1,207,927, $1,172,430 and $1,083,853 for the years ended September 30, 1997, 1996 and 1995, respectively.
conditions, and collection efforts, that the borrower's financial condition is such that collection of interest is doubtful. Uncollectible interest previously accrued is charged off or an allowance is established by means of a charge to interest income. Income is subsequently recognized only to the extent cash payments are received until, in management's judgment, the borrower's ability to make periodic interest and principal payments is back to normal, in which case the loan is returned to accrual status.
The excess of market over cost of $29,096,661, $16,273,021, and $13,176,068 is reflected net of taxes in a separate component of stockholders' equity as of September 30, 1997, 1996 and 1995 as follows:
The net change in the unrealized holding gain as reflected in a separate component of stockholders' equity as of September 30, 1997, 1996 and 1995 was calculated as follows:
During the year ended September 30, 1993 IRA, Inc. established a $1,000,000, one year revolving line of credit. The revolving line of credit has since been renewed on an annual basis. Bank advances on the credit line are payable on or before December 31, 1997 and carry an interest rate at the Bank's prime rate. The credit line is unsecured. IRA, Inc. had not made any draws on the credit line during the years ended September 30, 1997, 1996 and 1995.
1. All shareholders must be at all times duly contracted agents licensed to sell insurance in Texas.
2. In the event of a shareholder's death, or his desire to sell or otherwise dispose of stock, the shareholder or the shareholder's executor must offer such shares to IRA, Inc. IRA, Inc. will repurchase such shares within ninety (90) days after receipt of such notice at a price to be established at least annually by IRA, Inc. IRA, Inc. will pay all cash for such shares, or, may, as determined by IRA, Inc. at its sole discretion, issue a note as full or partial consideration for such repurchase.
On December 2, 1996, a cash dividend of $7.63 per share ($7,498,703) was paid by IRA, Inc. from retained earnings on its Class B common stock to its shareholders of record as of September 30, 1996.
For federal income tax purposes, IRA, Inc. and its subsidiaries have elected to file separate income tax returns for the years 1995 and 1996 and on a consolidated basis for 1997.
For the period ended September 30, 1997, the Bank had no losses resulting from the extension of credit. In addition, as of September 30, 1997, there are no impaired loans or loans on which the accrual of interest had been discontinued.
As of September 30, 1997, there are no loans to certain directors, executive officers and significant stockholders of the Company.
The Bank held related party deposits of approximately $32,880 at September 30, 1997.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation.
USPA is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC Rule 15c3-1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. At September 30, 1997, USPA had net capital of $14,126,621, which was $13,825,765 in excess of its required net capital of $300,856. The Company's net capital ratio was 0.32 to 1.
The Bank is subject to various regulatory capital requirements administered by its primary federal regulator, the Office of Thrift Supervision (OTS). Failure to meet the minimum regulatory capital requirements can initiate certain mandatory, and possible additional discretionary actions by regulators, that if undertaken, could have a direct effect on the Bank and the consolidated financial statements. Under the regulatory capital adequacy guidelines the Bank must meet specific capital guidelines involving quantitative measures of the Bank's assets, liabilities, and certain off- balance-sheet items as calculated under regulatory accounting practices. Under the most conservative of these guidelines, at September 30, 1997, the Bank's actual and required capital amounts were approximately $5,664,000 and $1,484,000, respectively.
The Company is planning a cash dividend of $7.73 per share ($8,142,450) to be paid on December 1, 1997 by IRA, Inc. from retained earnings on its Class B common stock to its shareholders of record as of September 30, 1997.
There has been no Form 8-K filed within 24 months prior to the date of the most recent financial statements reporting a change of accountants or reporting disagreements on any matter of accounting principle, practice, financial statement disclosure, or auditing scope or procedure.
A. Identification - The following is a list in tabular form of all Company Directors and Executive Officers as of December 1, 1997, providing their names, ages and positions held as well as the period of time they have served in each position. No arrangements or understandings exist between any of these individuals and any other persons pursuant to which they have been, or will be, selected as a Director or Executive Officer. The term of office of all Executive Officers is one year. The term of office of a Director is, under the Classified Board system of election adopted by the Company in 1989, three years.
(1.) Carroll H. Payne II and Naomi K. Payne are siblings. There are no other family relationships between any of the Directors and Executive Officers of the Company or its subsidiaries.
James N. Lanier - Mr. Lanier became an agent of the Company in 1983, a District Agent in 1986, an Assistant Regional Agent in 1987, and in 1988 he was elected a Director and Regional Vice President. In January 1990 he became Senior Vice President and Director of Marketing, in which positions he served until January 1992 at which time be became President and Chief Operating Officer, in which positions he continues to serve.
Howard M. Crump - Having been an agent and District Agent, Mr. Crump was appointed Assistant Regional Agent in 1983 and became Regional Agent in January 1990. Mr. Crump was elected Director and Regional Vice President in April 1990, in which capacities he served until January 1992 when he became Senior Vice President and Director of Marketing, in which positions he continues to serve.
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - Continued
Donaldson D. Frizzell - Having previously been an agent, Mr. Frizzell became Director of Investments in 1984 and was elected a Vice President effective January 1992. He continues to serve in these capacities. He was elected a Director effective January 1, 1994.
David P. Thoreson - Having previously been an agent and District Agent, Mr. Thoreson became a Regional Agent in 1988 and was elected a Director in 1994, in which capacities he continues to serve.
G. Norman Coder - Mr. Coder has been the Company's Secretary since its creation (1980). He has been on its Board of Directors since 1983.
Naomi K. Payne - Ms. Payne was elected a Director in 1983, and continues in that capacity. She has heretofore been engaged in working with, and coordinating assistance for, deaf and otherwise handicapped students through various agencies and institutions dedicated to such students.
Messrs. Smith, Lanier, Crump, and Payne also serve on the Executive Committee of the Company's Board of Directors. Messrs. Smith, Lanier and Crump also serve on the Boards of Directors of various subsidiaries of the Company, particularly of United Services Planning Association, Inc. (USPA), the Company's major subsidiary. All of the Company's Executive Officers serve in the same capacities for USPA.
The following Summary Compensation Table sets forth the cash compensation and certain other components of the compensation of the Chief Executive Officer and the other four most highly compensated executive officers of the Company in fiscal year 1997.
A profit sharing retirement plan exists for employees of the Company's subsidiary, USPA, under the terms of which up to fifteen percent (15%) of annual compensation, or $22,500 whichever is less, is contributed and held in trust of such employees until termination of employment, retirement or death/disability. During the Company's fiscal year ending September 30, 1997, the cash contribution to this plan on behalf of the highly compensated executive officers was limited to $22,500, and $112,500 was contributed on behalf of these Executive Officers as a group. No stock option plans exist or are contemplated as to the Company's stock.
The following table sets forth, as of September 30, 1997, the number of shares of Class A voting common stock and Class B non-voting common stock and the percentage of outstanding shares of each class owned of record by each person who beneficially owns more than five percent of a class of common stock, by each Executive Officer and Director of the Company, and by all Executive Officers and Directors as a group.
ITEM - 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - Continued
B. During the year ended September 30, 1997, 39,385 shares, of the Class B non-voting common stock were repurchased by the Company from then current Officers and/or Directors under the terms of the Stock Agreements with such persons for the total consideration of $1,064,970. A total of 78,485 shares of Class B non-voting common stock were repurchased by the Company from all persons under the terms of the Stock Agreements with such persons during this period for the total consideration of $2,122,235.
Independent Research Agency for Life Insurance, Inc. has no unconsolidated subsidiaries, no 50% or less owned companies accounted for by the equity method, no consolidated majority owned subsidiaries engaged in diverse financial activities, and no affiliates whose securities are pledged as collateral.
(b) Reports on Form 8-K: No reports on Form 8-K have been filed by the Registrant during the three months ended September 30, 1997.
INDEPENDENT RESEARCH AGENCY FOR LIFE INSURANCE, INC. EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: