(3) The Company leases an additional 5,747 square feet of the facility to unrelated third parties for approximately $109,000 per year, under leases which expire at various dates after 2000.
Name of Date Viewing Square Mortuary Location Acquired Room(s) Chapel(s) Footage - ------------- ----------------- --------- -------- -------- -------- Memorial Mortuary 5850 South 900 East Salt Lake City, UT 1973 3 1 20,000
Paradise Chapel Funeral Home 3934 East Indian School Road Phoenix, AZ 1989 2 1 9,800
Tolleson Funeral Home 9386 West VanBuren Tolleson, AZ 1995 0 1 3,460
(1) As of December 31, 2000 there were mortgages of approximately $301,500 collateralized by the property and facilities of Camelback Sunset Funeral Home. (2) As of December 31, 2000, there were mortgages of approximately $1,862,000 collateralized by the property and facilities at Deseret Mortuary, Cottonwood Mortuary, Holladay Memorial Park, Lakehills Cemetery and Colonial Mortuary. (3) As of December 31, 2000, there was a mortgage of approximately $214,600, collateralized by the property and facilities of Crystal Rose Funeral Home.
(3) Reflects the acquisition of SSLIC Holding Company and subsidiaries as of December 17, 1998.
On December 17, 1998, the Company purchased all of the outstanding shares of common stock of SSLIC Holding Company ("SSLIC Holding") (formerly "Consolidare Enterprises, Inc.") and Insuradyne Corporation ("Insuradyne") for a total cost of $12,248,194. As of December 31, 2000, SSLIC Holding owns approximately 71.5% of the outstanding shares of common stock of Southern Security Life Insurance Company ("Southern Security").
Total revenues increased by $9,356,000, or 18.8%, from $49,657,000 for fiscal year 1999 to $59,013,000 for fiscal year 2000. Contributing to this increase in total revenues was a $1,505,000 increase in net investment income, a $173,000 increase in net mortuary and cemetery sales, a $8,418,000 increase in mortgage fee income, and a $111,000 increase in realized gains on investments and other assets.
During 2000, there was a net increase of $955,000 in death benefits, surrender and other policy benefits, and an increase in future policy benefits from $11,976,000 in 1999 to $12,931,000 in 2000. This increase was primarily due to additional interest credited on annuities and reserve increases on traditional products. This increase was reasonable based on the underlying actuarial assumptions.
General and administrative expenses increased by $9,103,000, from $26,959,000 in 1999 to $36,062,000 in 2000. Contributing to this increase was a $6,666,000 increase in commission expenses from $11,851,000 in 1999 to $18,517,000 in 2000. Salaries increased $258,000 from $7,409,000 in 1999 to $7,667,000 in 2000. Other expenses increased $2,179,000, from $7,699,000 in 1999 to $9,878,000 in 2000. These increases were primarily the result of an increased number of loan originations made by the Company's mortgage subsidiary in 2000.
Cost of the mortuary and cemetery goods and services sold increased by $164,000, from $3,295,000 in 1999 to $3,459,000 in 2000. This increase was primarily due to the increase in at-need sales.
General and administrative expenses increased by $5,331,000, from $19,649,000 in 1998 to $24,980,000 in 1999. Commission expenses increased by $3,868,000, from $7,618,000 in 1998 to $11,486,000 in 1999. Salaries increased $987,000 from $5,359,000 in 1998 to $6,346,000 in 1999. Other expenses increased $477,000, from $6,671,000 in 1998 to $7,148,000 in 1999. These increases were primarily the result of an increased number of loan originations made by the Company's mortgage subsidiary in 1999.
of other investments. The mortgage subsidiary realizes cash flow from fees generated by originating and refinancing mortgage loans and interest earned on mortgages sold to investors. The Company considers these sources of cash flow to be adequate to fund future policyholder and cemetery and mortuary liabilities, which generally are long-term, and adequate to pay current policyholder claims, annuity payments, expenses on the issuance of new policies, the maintenance of existing policies, debt service, and to meet operating expenses.
If market conditions were to cause interest rates to change, the market value of the fixed income portfolio (approximately $80,263,000) could change by the following amounts based on the respective basis point swing (the change in the market values were calculated using a modeling technique):
Lapse rates measure the amount of insurance terminated during a particular period. The Company's lapse rate for life insurance in 2000 was 15%, as compared to a rate of 10% in 1999.
On December 17, 1998, the Company completed the acquisition of Consolidare Enterprises, Inc., a Florida corporation ("Consolidare") pursuant to the terms of the Acquisition Agreement which the Company entered into on April 17, 1998 with Consolidare and certain shareholders of Consolidare for the purchase of all of the outstanding shares of common stock of Consolidare. Consolidare owns approximately 71.5% of the outstanding shares of common stock of Southern Security Life Insurance Company, a Florida corporation ("SSLIC"), and all of the outstanding shares of stock of Insuradyne Corp., a Florida corporation ("Insuradyne").
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, was issued in June 1998 and amended by SFAS No. 138, issued in June 2000. The requirements of SFAS No. 133, as amended, will be effective for the Company in the first quarter of the fiscal year beginning January 1, 2001. The standard establishes accounting and reporting standards for derivative instruments embedded in other contracts and for hedging activities. Under the standard, certain contracts that were not formerly considered derivatives may now meet the definition of a derivative. The Company has determined SFAS 133 to have no impact on the Company's financial position and results of operations because the Company has no derivative activity.
Consolidated Balance Sheet, December 31, 2000 and 1999. . . . . . . . . . . . . . . . . . . .27
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . .33
II. Condensed Financial Information of Registrant. . . . . . . . . . . . . . . . . . . . .62
IV. Reinsurance . . . . . . . . . . . . . . . . . . . .68
All other schedules to the consolidated financial statements required by Article 7 of Regulation S-X are not required under the related instructions or are inapplicable and therefore have been omitted.
We have audited the accompanying consolidated balance sheet of Security National Financial Corporation and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of earnings, stockholders' equity, and cash flows for the years then ended. In connection with our audit of the financial statements, we have also audited the amounts included in the financial statement schedules as listed in the accompanying index under Item 8. These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with U.S. generally accepted auditing standards. Those standards 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
December 31, Assets: 2000 1999 - ------- ----- ------ Insurance-related investments: Fixed maturity securities held to maturity, at amortized cost (market $39,283,266 and $39,453,452 for 2000 and 1999) $39,384,168 $39,629,851 Fixed maturity securities available for sale, at market (cost $23,556,864 in 2000 and 24,957,347 in 1999) 23,504,989 24,119,190 Equity securities available for sale, at market (cost $1,617,363 and $4,350,139 for 2000 and 1999) 2,774,077 5,745,213 Mortgage loans on real estate 17,435,178 18,926,628 Real estate, net of accumulated depreciation of $3,088,761 and $2,722,024 for 2000 and 1999 8,564,395 7,629,952 Policy, student and other loans 11,277,742 11,607,993 Short-term investments 1,027,927 1,290,310 ------------ ------------ Total insurance-related investments 103,968,476 108,949,137 Restricted assets of cemeteries and mortuaries 4,841,819 4,258,987 Cash 11,275,030 12,422,864 Receivables: Trade contracts 5,342,380 4,232,030 Mortgage loans sold to investors 26,886,162 29,071,913 Receivable from agents 2,225,784 2,272,624 Receivable from officers 111,500 118,400 Other 3,503,320 3,847,079 ----------- ------------ Total receivables 38,069,146 39,542,046 Allowance for doubtful accounts (1,656,223) (1,467,954) ----------- ------------ Net receivables 36,412,923 38,074,092 Policyholder accounts on deposit with reinsurer 7,434,750 7,806,866 Land and improvements held for sale 8,485,523 8,522,687 Accrued investment income 1,302,552 1,493,013 Deferred policy acquisition costs 12,043,527 10,630,086 Property, plant and equipment, net 10,824,700 10,566,508 Cost of insurance acquired 8,729,264 9,597,306 Excess of cost over net assets of acquired subsidiaries 1,172,599 1,305,333 Other 695,683 671,558 ------------ ------------ Total assets $207,186,846 $214,298,437 ============ =-==========
Year Ended December 31, 2000 1999 1998 Revenues: ------ ------- ------- - --------- Insurance premiums and other considerations $12,875,585 $13,175,825 $5,915,659 Net investment income 12,136,072 10,631,302 7,458,743 Net mortuary and cemetery sales 10,351,416 10,178,246 9,225,801 Realized gains on investments and other assets 423,805 313,013 74,121 Mortgage fee income 22,921,585 14,503,388 10,082,330 Other 304,886 855,604 62,949 ----------- ----------- ----------- Total revenue 59,013,349 49,657,378 32,819,603
Benefits and expenses: Death benefits 3,959,811 4,780,063 2,432,822 Surrenders and other policy benefits 1,702,251 1,494,863 1,145,812 Increase in future policy benefits 7,268,720 5,700,784 3,353,287 Amortization of deferred policy acquisition costs and cost of insurance acquired 3,188,752 4,857,662 1,273,394 General and administrative expenses: Commissions 18,517,408 11,850,763 7,618,335 Salaries 7,667,263 7,409,298 5,358,743 Other 9,877,461 7,698,779 6,671,823 Interest expense 2,126,169 1,119,402 999,123 Cost of goods and services sold of the mortuaries and cemeteries 3,459,391 3,294,983 2,940,220 ----------- ----------- ----------- Total benefits and expenses 57,767,226 48,206,597 31,793,559 ----------- ----------- ----------- Earnings before income taxes 1,246,123 1,450,781 1,026,044 Income tax expense (304,640) (230,516) (254,815) Minority income (45,754) (244,370) -- ----------- ----------- ----------- Net earnings $895,729 $975,895 $771,229 =========== =========== =========== Net earnings per common share $0.21 $0.22 $0.18 ===== ===== ===== Weighted average outstanding common shares 4,317,779 4,397,141 4,272,516
Net earnings per common share- assuming dilution $0.21 $0.22 $0.18 ===== ===== ===== Weighted average outstanding common shares assuming-dilution 4,335,044 4,397,141 4,272,516
Security National Financial Corporation and its wholly-owned subsidiaries (the "Company") operates in three main business segments; life insurance, cemetery and mortuary, and mortgage loans. The life insurance segment is engaged in the business of selling and servicing selected lines of life insurance, annuity products and accident and health insurance marketed primarily in the intermountain west, California, Florida, Oklahoma, and Texas. The cemetery and mortuary segment of the Company consists of five cemeteries in Utah, one cemetery in California, eight mortuaries in Utah and six mortuaries in Arizona. The mortgage loan segment is an approved governmental and conventional lender that originates and underwrites residential and commercial loans for new construction, existing homes and real estate projects primarily in California, Colorado, Florida and Utah.
Interest Rate Risk - the risk that interest rates will change which may cause a decrease in the value of the Company's investments or impair the ability of the Company to market its mortgage and cemetery/mortuary products. This change in rates may cause certain interest- sensitive products to become uncompetitive or may cause disintermediation. The Company mitigates this risk by charging fees for non-conformance with certain policy provisions, by offering products that transfer this risk to the purchaser, and/or by attempting to match the maturity schedule of its assets with the expected payouts of its liabilities. To the extent that liabilities come due more quickly than assets mature, the Company might have to borrow funds or sell assets prior to maturity and potentially recognize a gain or loss.
The accompanying consolidated financial statements include the accounts and operations of the Company. The Company's subsidiaries at December 31, 2000, are as follows:
On December 17, 1998, the Company purchased all of the outstanding shares of common stock of SSLIC Holding Company (formerly Consolidare Enterprises, Inc.), (SSLIC Holding) and Insuradyne Corporation (Insuradyne) for a total cost of $12,248,194. SSLIC Holding owns approximately 71.5% of the outstanding shares of common stock of Southern Security Life Insurance Company (Southern Security). The acquisition was accounted for using the purchase method. The assets and liabilities of SSLIC Holding and Insuradyne have been included in the Company's balance sheet at December 31, 1998. The results of operations of SSLIC Holding and Insuradyne were not material to the financial statements of the Company from the date of acquisition through December 31, 1998 and, consequently, have not been included in the Consolidated Statements of Earnings for the year then ended.
Premiums for traditional life insurance products (which include those products with fixed and guaranteed premiums and benefits and consist principally of whole life insurance policies, limited-payment life insurance policies, and certain annuities with life contingencies) are recognized as revenues when due from policyholders. Revenues for interest-sensitive insurance policies (which include universal life policies, interest-sensitive life policies, deferred annuities, and annuities without life contingencies) consist of policy charges for the cost of insurance, policy administration charges, and surrender charges assessed against policyholder account balances during the period.
SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2000, 1999, and 1998
Future policy benefit reserves for interest-sensitive insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policy account balances. Interest crediting rates for interest-sensitive insurance products ranged from 4% to 6.5% in 2000, 1999 and 1998.
Participating business constitutes 6%, 5%, and 4% of insurance in force for 2000, 1999 and 1998, respectively. The provision for policyholders' dividends included in policyholder obligations is based on dividend scales anticipated by management. Amounts to be paid are determined by the Board of Directors.
The Company has entered into coinsurance agreements with unaffiliated insurance companies under which the Company assumed 100% of the risk for certain life insurance policies and certain other policy-related liabilities of the insurance company.
The Company computes earnings per share in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share". This Standard requires presentation of two new amounts, basic and diluted earnings per share. Basic earnings per share are computed by dividing net earnings by the weighted average number of common shares outstanding during each year presented, after the effect of the assumed conversion of Class C Common Stock to Class A Common Stock, the acquisition of treasury stock, and the retroactive effect of stock dividends declared. Diluted earnings per share is computed by dividing net earnings by the weighted average number of common shares outstanding during the year plus the incremental shares that would have been outstanding under certain deferred compensation plans.
The weighted average fair value of options granted in 2000 under the 1993 Plan and the 2000 Plan is estimated at $1.50 as of the grant date using the Black Scholes Option Pricing Model with the following assumptions: dividend yield of 0%, volatility of 30.8%, risk-free interest rate of 6.6%, and an expected life of five to ten years.
The weighted average fair value of each option granted in 1999 under the 1993 Plan is estimated at $1.61 as of the grant date using the Black Scholes option-pricing model with the following assumptions: dividend yield of 0%, volatility of 28.83%, risk-free interest rate of 6.0%, and an expected life of ten years.
Certain amounts in prior years have been reclassified to conform with the 2000 presentation.
The amortized cost and estimated fair value of fixed maturity securities at December 31, 2000, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Estimated Amortized Fair Available for Sale: Cost Value ----------- ----------- Due in 2001 $ 2,773,071 $ 2,774,159 Due in 2002 through 2005 14,149,826 14,088,461 Due in 2006 through 2010 6,471,463 6,469,372 Due after 2010 97,669 108,090 Mortgage-backed securities 64,835 64,907 ----------- ----------- $23,556,864 $23,504,989 =========== ===========
2000 1999 1998 -------- ---------- -------- Fixed maturity securities held to maturity: Gross realized gains $ 3,125 $ 87,859 $ 43,154 Gross realized losses (53) (1,895) (26,470)
Securities available for sale: Gross realized gains 884,199 14,138 66,589 Gross realized losses (463,466) (12) (3,887)
Other assets -- 212,923 (5,265) -------- -------- -------- Total $423,805 $313,013 $ 74,121 ========= ======== ========
Fixed maturity securities $4,629,916 $4,720,838 $3,293,949 Equity securities 235,491 226,857 219,785 Mortgage loans on real estate 1,735,590 1,451,214 1,036,132 Real estate 1,507,239 1,711,771 1,384,311 Policy loans 641,272 725,383 170,752 Short-term investments 402,350 650,035 405,848 Other 3,962,362 2,142,527 1,899,643 ---------- ----------- ----------- Gross investment income 13,114,220 11,628,625 8,410,420 Investment expenses (978,148) (997,323) (951,677) ---------- ----------- ----------- Net investment income $12,136,072 $10,631,302 $7,458,743 =========== =========== ==========
Net investment income includes net investment income earned by the restricted assets of the cemeteries and mortuaries of approximately $717,000, $733,000 and $683,000 for 2000, 1999, and 1998, respectively.
Securities on deposit for regulatory authorities as required by law amounted to $8,815,733 at December 31, 2000 and $9,632,937 at December 31, 1999.
2000 1999 1998 ------ ------ ------ Balance at beginning of year $9,597,306 $10,462,446 $3,370,018 Cost of insurance acquired -- -- 7,389,340
Presuming no additional acquisitions, net amortization charged to income is expected to approximate $824,000, $759,000, $702,000, $649,000, and $587,000 for the years 2001 through 2005. Actual amortization may vary based on changes in assumptions or experience.
December 31, 2000 1999 ----------- ----------- Land and Buildings $10,828,916 $10,171,943 Furniture and equipment 6,694,925 6,384,208 ----------- ----------- 17,523,841 16,556,151 Less accumulated depreciation (6,699,141) (5,989,643) ----------- ----------- Total $ 10,824,700 $10,566,508 ============ ===========
December 31, 2000 1999 Bank prime rate plus 1/2% (10.0% at December 31, 2000) note payable in monthly installments of $36,420 including principal and interest, collateralized by 15,000 shares of Security National Life stock, due December 2004 $1,425,967 $1,697,397
Bank prime rate plus 1/2% (10.0% at December 31, 2000) note payable in monthly installments of $7,235 including principal and interest, collateralized by real property, which book value is approximately $852,000, due August 2004 301,516 370,748
Other collateralized bank loans payable 497,116 264,175 ----------- ----------- Total bank loans 9,805,118 10,768,098
Less current installments 1,596,600 1,143,823 ----------- ----------- Bank loans, excluding current installments $8,208,518 $9,624,275 ==========- ========== $15 million revolving line of credit at LIBOR plus 1.50% (7.32% at December 31, 1999), payable within 30 days collateralized by receivable from mortgage loans sold to investors $ -- $8,687,023 =========== ===========
9% note payable in monthly installments of $10,000 including principal and interest collateralized by real property, which book value is approximately $2,908,000, due July 2008 665,318 727,847
Due to Memorial Estates Endowment Care Trust Fund for the remodel of the Cottonwood Funeral Home. 6% note payable in monthly installments of $5,339 including principal and interest collateralized by the Funeral Home, which book value is approximately $1,348,000 due March 2030 899,500 890,500
Other notes payable 596,537 643,366 ----------- ---------- Total notes and contracts payable 4,240,830 3,885,684 Less current installments 615,291 414,421 ----------- ---------- Notes and contracts, excluding current installments $3,625,539 $3,471,263 ========== ==========
2001 $ 2,211,891 2002 2,198,823 2003 2,118,151 2004 2,270,124 2005 1,813,758 Thereafter 3,433,201 ----------- Total $14,045,948 ===========
The Company owns and operates several endowment care cemeteries, for which it has established and maintains an endowment care fund. The Company records a liability to the fund for each space sold at current statutory rates. The Company is not required to transfer assets to the fund until the spaces are fully paid for. As of December 31, 2000 and 1999 the Company had transferred $20,373 and $179,939, respectively in excess of the required contribution to the fund.
Cash and cash equivalents $385,659 $2,361,597 Mutual funds 169,865 132,945 Fixed maturity securities 297,331 295,771 Equity securities 77,778 77,778 Participation in mortgage loans with Security National Life 3,877,490 1,357,200 Time certificate of deposit 33,696 33,696 ---------- ---------- Total $4,841,819 $4,258,987 ========== ==========
2000 1999 ------- -------- Assets Future policy benefits $(2,021,798) $(1,740,203) Unearned premium (1,939,023) (1,950,587) Difference between book and tax basis of bonds (49,498) (56,489) Net operating loss carryforwards expiring in the years 2001 through 2010 (210,848) (219,249) Other (633,007) (329,361) ----------- ----------- Total deferred tax assets (4,854,174) (4,295,889)
The Company paid $94,365 in income taxes for 2000 and did not pay any income taxes for 1999 and 1998. The Company's income tax expense (benefit) is summarized as follows:
The insurance companies have remaining loss carry forwards for tax purposes of approximately $1,679,000, approximately $286,000 of which is subject to an annual limitation of approximately $300,000.
The Company follows the procedure of reinsuring risks in excess of a specified limit, which ranged from $30,000 to $75,000 at December 31, 2000 and 1999. The Company is liable for these amounts in the event such reinsurers are unable to pay their portion of the claims. The Company has also assumed insurance from other companies having insurance in force amounting to $580,287,000 at December 31, 2000 and $581,296,000 at December 31, 1999.
As part of the acquisition of Southern Security, the Company has a co-insurance agreement with The Mega Life and Health Insurance Company ("MEGA"). On December 31, 1992 Southern Security ceded to MEGA 18% of all universal life policies in force at that date. MEGA is entitled to 18% of all future premiums, claims, policyholder loans and surrenders relating to the ceded policies. In addition, Southern Security receives certain commission and expense reimbursements. The funds held related to reinsurance treaties of $1,417,216 and policyholders' account balances on deposit with reinsurer of $7,434,750 represent the 18% share of policy loans and policyholder account balances ceded to MEGA as of December 31, 2000.
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 $0, $56,277, and $59,613 for 2000, 1999, and 1998, respectively. At December 31, 2000 the ESOP held 553,322 shares of Class A and 1,277,690 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.
Class A Class C ---------- --------- Balance at December 31, 1997 4,326,588 5,200,811
The Company has two classes of common stock with shares outstanding, Class A and Class C. Class C shares vote share for share with the Class A shares on all matters except election of one-third of the directors who are elected solely by the Class A shares, but generally are entitled to a lower dividend participation rate. Class C shares are convertible into Class A shares at any time on a ten to one ratio. Also Class A shares can be converted into Class C shares, but the conversion rights have numerous restrictions.
Dividend 7,770 Exercised -- --------- Outstanding at December 31, 1998 163,170 $4.08 - $4.49
Dividend 8,566 Exercised -- --------- Outstanding at December 31, 2000 179,895 $3.70 - $4.07 ======== Exercisable at end of year 179,895 ========
Available options for future grant 1987 Stock Incentive Plan -0- ========
On June 21, 1993, the Company adopted the Security National Financial Corporation 1993 Stock Incentive Plan (the "1993 Plan"), which reserved 300,000 shares of Class A Common
Stock for issuance thereunder. The 1993 Plan allows the Company to grant options and issue shares as a means of providing equity incentives to key personnel, giving them a proprietary interest in the Company and its success and progress.
The 1993 Plan has a term of ten years. The Board of Directors may amend or terminate the 1993 Plan at any time, subject to approval of certain modifications to the 1993 Plan by the shareholders of the Company as may be required by law or the 1993 Plan.
Number Option of Shares Price ---------- -------- Outstanding at December 31, 1997 292,284 $2.58 - $4.31 Dividend 30,869 Granted 148,000 Exercised (63,814) -------- Outstanding at December 31, 1998 407,339 $2.34 - $4.16
On October 16, 2000, the Company adopted the Security National Financial Corporation 2000 Director Stock Option Plan (the "2000 Plan"), which reserved 50,000 shares of Class A Common Stock for issuance thereunder. Effective November 1, 2000, and on each anniversary date thereof during the term of the 2000 Plan, each outside Director who shall first join the Board after the effective date shall be granted an option to purchase 1,000 shares upon the date which such person first becomes an outside Director and an annual grant of an option to purchase 1,000 shares on each anniversary date thereof during the term of the 2000 Plan. The options granted to outside Directors shall vest in their entirety on the first anniversary date of the grant.
The Company's reportable segments are business units that offer different products and are managed separately due to the different products and the need to report to the various regulatory jurisdictions.
Investment Contracts: The fair values for the Company's liabilities under investment- type insurance contracts are estimated based on the contracts' cash surrender values. The carrying amount and fair value as of December 31, 2000 were approximately $88,189,000 and $83,919,000, respectively.
2000 1999 1998 ------ ------ ------- Unrealized gains (losses) on available for-sale securities $736,803 $(696,162) $405,047 Less: reclassification adjustment for net realized gains in net income (420,739) (14,126) (62,702) --------- --------- -------- Net unrealized gains (losses) 316,064 (710,288) 342,345 Tax expense on net unrealized gain (losses) (145,004) 294,866 (92,171) --------- --------- -------- Other comprehensive income (loss) $171,060 $(415,422) $250,174 ========= ========= =========
December 31, 2000 1999 Assets ------- ------- - ------ Cash $ (29,690) $ (15,639)
Receivables: Receivable from affiliates 1,731,480 1,629,966 Other 18,008 18,566 ----------- ----------- Total receivables 1,749,488 1,648,532
Property, plant and equipment, at cost, net of accumulated depreciation of $344,296 for 2000 and $314,392 for 1999 537,433 10,535
Other assets 47,004 72,641 ------------ ----------- Total assets $43,258,978 $43,458,071 =========== ===========
Income taxes 764,676 401,601 ------------ ------------ Total liabilities 16,517,617 16,968,378 ------------ ------------ Stockholders' equity: Common Stock: Class A: $2 par value, authorized 10,000,000 shares, issued 5,107,631 shares in 2000 and 4,863,731 shares in 1999 10,215,262 9,727,462 Class C: $0.20 par value, authorized 7,500,000 shares, issued 5,827,805 shares in 2000 and 5,555,350 shares in 1999 1,165,561 1,111,070 ------------ ------------ Total common stock 11,380,823 10,838,532
Additional paid-in capital 10,054,714 10,015,942 Accumulated other comprehensive income 836,751 665,691 Retained earnings 7,831,306 7,516,640 Treasury stock at cost (1,233,064 Class A shares and 65,078 Class C shares in 2000; 966,139 Class A shares and 61,979 Class C shares in 1999, held by affiliated companies) (3,362,233) (2,547,112) ------------ ------------ Total stockholders' equity 26,741,361 26,489,693 ------------ ------------ Total liabilities and stockholders' equity $43,258,978 $43,458,071 ============ ===========
Revenue: Net investment income $96 $39,694 $18,145 Fees from affiliates 3,878,458 3,838,704 755,951 ---------- ---------- --------- Total revenue 3,878,554 3,878,398 774,096 ---------- ---------- --------- Expenses: General and administrative expenses 1,873,323 2,396,015 195,148 Interest expense 593,228 641,282 257,162 ---------- ---------- --------- Total expenses 2,466,551 3,037,297 452,310 ---------- ---------- --------- Earnings (loss) before income taxes, and earnings of subsidiaries 1,412,003 841,101 321,786
Equity in earnings (loss) of subsidiaries (143,199) 412,604 563,789 ---------- ---------- --------- Net earnings $895,729 $975,895 $771,229 -========= ========== =========
Bank prime rate plus 1/2% (10.0% at December 31, 2000) note payable in monthly installments of $36,420 including principal and interest, collateralized by 15,000 shares of Security National Life stock, due December 2004 1,425,967 1,697,397 ----------- ----------- Total bank loans 6,330,393 7,307,508
Less current installments 1,035,585 841,767 ----------- ----------- Bank loans, excluding current installments $5,294,808 $6,465,741 =========== ==========
Due to former stockholders of Civil Service Employees Life Insurance Company resulting from the acquisition of such entity. 7% note payable in seven annual principal payments of $151,857 due December 2003 303,714 455,571
Other 425 425 -------- -------- Total notes and contracts 304,675 456,531 -------- -------- Less current installments 152,818 152,818 --------- -------- Notes and contracts, excluding current installments $151,857 $303,713 ========= ========
3) Advances from Affiliated Companies December 31, 2000 1999 Non-interest bearing advances from affiliates: Cemetery and Mortuary subsidiary $1,366,930 $1,366,930 Life Insurance subsidiary 7,227,066 6,923,767 Mortgage subsidiary 10,000 -- ---------- ---------- $8,603,996 $8,290,697 ========== ==========