Properties The Company’s Home Office is located at 2801 Highway 280 South, Birmingham, Alabama. This campus includes the original 142,000 square-foot building which was completed in 1976 and a second contiguous 220,000 square-foot building which was completed in 1985. In addition, parking is provided for approximately 1,200 vehicles. In 2000, the Company began construction of a third contiguous building which will have approximately 315,000 square feet and parking for approximately 1,560 vehicles. The third building is expected to be completed during 2002. The Company has financed the construction under an operating lease arrangement.
The Company leases administrative and marketing office space in approximately 30 cities including approximately 88,151 square feet in Birmingham, with most leases being for periods of three to ten years. The aggregate annualized rent is approximately $8.7 million.
YEAR ENDED DECEMBER 31 -------------------------------------------------------------------------------- 2001 2000 1999 1998 1997 -------------------------------------------------------------------------------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Premium and policy fee................. $1,389,820 $ 1,175,898 $ 861,027 $ 790,584 $592,959 Reinsurance ceded...................... (771,151) (686,108) (462,297) (378,397) (227,623) --------- --------- --------- ---------- -------- Net of reinsurance ceded........... 618,669 489,790 398,730 412,187 365,336 Net investment income.................. 884,041 730,149 667,968 629,045 583,193 Realized investment gains (losses)..... Derivative financial instruments (11,431) 9,013 (2,279) All other investments (8,740) (16,056) 1,222 3,121 830 Other income........................... 131,678 151,833 89,680 60,022 31,506 --------- --------- --------- --------- -------- Total revenues..................... 1,614,217 1,364,729 1,155,321 1,104,375 980,865 Benefits and expenses.................. 1,404,621 1,153,054 951,932 922,404 832,325 Income tax expense..................... 68,538 74,321 71,941 63,309 49,702 Income (loss) from discontinued operations (1) (30,522) 16,122 21,642 12,119 13,155 Extraordinary loss(2) (1,763) Change in accounting principles (3) (7,593) --------- --------- ---------- --------- --------- Net income............................. $ 102,943 $ 153,476 $ 151,327 $ 130,781 $ 111,993
PER SHARE DATA(4) Income from continuing operations (5) basic.............................. $ 2.02 $ 2.09 $ 2.01 $ 1.87 $ 1.58 Net income - basic..................... $ 1.48 $ 2.33 $ 2.31 $ 2.06 $ 1.79 Average shares outstanding - basic..... 69,410,525 65,832,349 65,604,311 63,521,587 62,429,250 Operating income - diluted(6).......... $ 2.21 $ 2.15 $ 2.01 $ 1.83 $ 1.57 Income from continuing operations (5) - diluted.......................... $ 2.01 $ 2.08 $ 1.99 $ 1.85 $ 1.57 Net income - diluted................... $ 1.47 $ 2.32 $ 2.29 $ 2.04 $ 1.78 Average shares outstanding - diluted.............. 69,950,173 66,281,128 66,161,367 64,087,744 62,849,618 Cash dividends......................... $ .55 $ .51 $ .47 $ .43 $ .39 Share-owners' equity................... $ 20.42 $ 17.26 $ 13.41 $ 14.65 $ 12.30 Share-owners' equity excluding net unrealized gains and losses on investments..................... $ 19.63 $ 18.05 $ 15.68 $ 13.80 $ 11.30
(7) Excludes stable value contract account balances and annuity account balances which do not possess significant mortality risk. Such account balances totaled $3.9 billion, $3.4 billion, $2.9 billion, $3.0 billion, and $3.0 billion at December 31, 2001, 2000, 1999, 1998, and 1997, respectively.
Management's Discussion and Analysis of Financial Condition and Results of Operations Information regarding the Company’s financial condition and results of operations is included under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s 2001 Annual Report to Share Owners and is incorporated herein by reference.
Financial Statements and Supplementary Data The financial statements and supplementary data for the Company and its subsidiaries, which are included under the caption “Consolidated Financial Statements” in the Company’s 2001 Annual Report to Share Owners, are incorporated herein by reference.
Our audits of the consolidated financial statements referred to in our report dated March 1, 2002 appearing in the 2001 Annual Report to Share Owners of Protective Life Corporation and subsidiaries (which report and consolidated financial statements are incorporated by reference on this Annual Report on Form 10-K) also included an audit of the financial statement schedules listed in Item 14 (a) (2) of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
As discussed in Note 1 of the Notes to the Condensed Financial Statements, effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities”.
NET INCOME FROM CONTINUING OPERATIONS BEFORE EXTRAORDINARY LOSS AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 141,058 137,354 131,448
EXTRAORDINARY (LOSS) ON EARLY EXTINGUISHMENT OF DEBT, NET OF INCOME TAX (1,763) -------- -------- -------- CUMULATIVE EFFECT OF CHANGE IN 110,536 153,476 151,327 ACCOUNTING PRINCIPLE, NET OF INCOME TAX (7,593) -------- -------- -------- NET INCOME $102,943 $153,476 $151,327 ======== ======== ======== --------------- *Eliminated in consolidation. See notes to condensed financial statements.
DECEMBER 31 ----------- 2001 2000 ASSETS Investments: Fixed maturities $ 26,000 $ 24,511 Other long-term investments 20,303 18,027 Short-term investments 10 4,000 Investments in subsidiaries (equity method)* 1,942,449 1,594,462 --------- --------- 1,988,762 1,641,000
2001 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES ---- ---- ---- Net income $ 102,943 $ 153,476 $ 151,327 Adjustments to reconcile net income to net cash provided by operating activities: Realized investment (gains) losses 12,341 (6,856) 5,817 Equity in undistributed net income of subsidiaries* (105,418) (107,465) (130,177) Deferred income taxes (18,566) 25,947 7,935 Accrued income taxes 14,928 (43,080) 19,666 Accrued expenses 25,313 6,822 4,380 Accrued investment income 247 1,913 (2,160) Receivables from subsidiaries (7,823) 8,976 (8,746) Other (net) (20,400) (11,255) 5,884 -------- -------- -------- Net cash provided by operating activities 3,565 28,478 53,926 -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of and/or additional investments in subsidiaries* (133,406) (102,987) (28,638) Return of capital from subsidiaries 34,288 14,621 Principal payments received on loan to subsidiary* 4,000 4,000 4,000 Change in fixed maturities and long-term investments (7,020) 3,047 (5,516) Change in short-term investments 3,990 (2,000) (2,000) -------- -------- -------- Net cash used in investing activities (132,436) (63,652) (17,533) -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Borrowings under line of credit arrangements and long-term debt 159,160 237,104 106,800 Principal payments on line of credit arrangements and debt (93,729) (166,979) (41,538) Repayment of subsidiary debt (69,621) Issuance of guaranteed preferred beneficial interests 100,000 Purchase of Common Stock (217) (697) (621) Dividends to Share Owners (37,187) (32,919) (30,305) --------- -------- -------- Net cash provided by (used in) financing activities 128,027 36,509 (35,285) --------- -------- -------- INCREASE (DECREASE) IN CASH (844) 1,335 1,108 CASH AT BEGINNING OF YEAR 2,958 1,623 515 --------- -------- -------- CASH AT END OF YEAR $ 2,114 $ 2,958 $ 1,623 ========= ======== ======== ------------------ *Eliminated in consolidation. See notes to condensed financial statements.
2001 2000 1999 --------------------------------------------------- CASH PAID (RECEIVED) DURING THE YEAR FOR:
Reissuance of Treasury Stock to ESOP $ 879 $ 255 $ 440 ======== ======= ======== Change in unallocated Stock in ESOP $ 369 $ 357 $ 234 ======== ======= ======== Stock-based Compensation $ 3,589 $33,655 $ 1,092 ======== ======= ======== Redemption of FELINE PRIDES $113,414 ========
NOTE 4 - SUBSIDIARY SURPLUS DEBENTURES Protective Life Insurance Company (Protective Life) has issued surplus debentures to the Company in order to finance acquisitions and growth. At December 31, 2001, the balance of the surplus debentures was $6.0 million. The surplus debentures are included in receivables from subsidiaries. Protective Life must obtain the approval of the Tennessee Commissioner of Insurance before it may pay interest or repay principal on the surplus debentures.
COL. A COL. B COL. C COL. D COL. E COL. F ------ ------ ------ ------ ------ ------ PERCENTAGE OF CEDED TO OTHER ASSUMED FROM AMOUNT ASSUMED GROSS AMOUNT COMPANIES OTHER COMPANIES NET AMOUNT TO NET ---------------------------------------------------------------------------------------- Year Ended December 31, 2001: Life insurance in force $191,105,511 $171,449,182 $23,152,614 $42,808,943 54.1% ============ ============ =========== =========== =====
Premiums and policy fees: Life insurance $ 530,728 $ 368,139 $ 130,368 $ 292,957 44.5% Accident/health insurance 153,818 93,657 11,893 72,054 16.5% Property and liability insurance 34,109 501 111 33,719 0.3% ------------ ------------ ----------- ----------- TOTAL $ 718,655 $ 462,297 $ 142,372 $ 398,730 ============ ============ =========== ===========