The following table sets forth selected financial and statistical data for the Company as of the dates and for the periods indicated. As a result of the 1998 fourth quarter acquisition of TPN, Inc. ("TPN") that was accounted for as a pooling of interests, the 1995 through 1998 periods have been restated to include the operating results of TPN, which was formed in August 1994 but did not commence significant operations until 1995. The 1998 balance sheet data contained herein reflects the December 30, 1998 acquisition of Universal Fidelity Life Insurance Company ("UFL") that was accounted for as a purchase transaction and accordingly, no operating results of UFL prior to 1999 are included in the income statement data. Beginning in 1999, UFL's operating results are included in other revenues and expenses. This information is not necessarily indicative of the Company's future performance. The following information should be read in conjunction with the Company's Consolidated Financial Statements and Notes thereto included elsewhere herein.
Membership Fees and Membership Benefit Costs The Company's principal revenues are derived from Membership fees, most of which are collected on a monthly basis. Memberships are generally guaranteed renewable and non-cancelable except for fraud, non-payment of Membership fees or upon written request by the member.
Interest income for 1999 increased 31% to $3.4 million from $2.6 million for 1998. Interest income increased primarily as a result of increased commission advances, which, under certain circumstances, incur an interest charge at prime rate. At December 31, 1999 the Company reported $37.4 million in cash and investments (after utilizing more than $29.4 million to repurchase approximately 1.2 million shares of its common stock) compared to $50.1 million at December 31, 1998.
Commissions The Company has a level membership commission schedule of approximately 25% of annual fee revenue for all Membership years. This commission schedule results in the Company incurring commission expense related to the sale of its legal expense plans on a basis consistent with the collection of the fees generated by the sale of such Memberships. The Company currently advances the equivalent of three years of commissions on new Membership sales. In January 1997, the Company implemented a new policy whereby associates receive only earned commissions on the first three Memberships submitted unless the associate successfully completes a Company training program, produces three Memberships and recruits three associates within 60 days from becoming an associate. Prior to March 1, 1995, first year commissions payable on the sale of a Membership, and earned in the first Membership year, were approximately 70% of annual Membership fees while renewal commissions (payable as earned after the first Membership year) were approximately 16% of annual fees.
December 31, ------------------ 1999 1998 -------- -------- Available-for-sale investments (current)........ $ 2,252 $ 2,368 Available-for-sale investments (non-current..... 19,628 36,624 Investments pledged............................. 5,288 2,922 -------- -------- Total........................................... $ 27,168 $41,914 ======== ========
The Company's ability to pay dividends is dependent in part on its ability to derive dividends from its subsidiaries. The payment of dividends by PPLCI and UFL is restricted under the Oklahoma Insurance Code to available surplus funds derived from realized net profits. At December 31, 1999, PPLCI and UFL did not have funds available for payment of significant dividends without the approval of the Oklahoma Insurance Commissioner.