Citizens Inc. Records Quarterly Loss; Goodwill Write-Off Cause.AUSTIN Austin. 1 City (1990 pop. 21,907), seat of Mower co., SE Minn., on the Cedar River, near the Iowa line; inc. 1868. The commercial and industrial center of a rich farm region, it is noted as home to the Hormel meatpacking company, whose Spam Town museum , Texas--(BUSINESS WIRE)--Nov. 16, 1998--Citizens Inc. (AMEX AMEX See: American Stock Exchange :CIA CIA: see Central Intelligence Agency. (1) (Confidentiality Integrity Authentication) The three important concerns with regards to information security. Encryption is used to provide confidentiality (privacy, secrecy). ) announced a loss of $8.6 million, or $(0.40), for the quarter ended Sept. 30, 1998, as a result of a non-recurring charge-off Eliminate or write off. The term charge-off is used to describe the process of removing from the records of a company something that was once regarded as an asset but has subsequently become worthless. of $9.5 million of goodwill related to a 1995 acquisition. Income for the same quarter in 1997 was $1.4 million, or $0.07, per share. The write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. was related to goodwill recorded in the 1995 acquisition of American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Liberty Financial Corporation. Following the acquisition of that company, Citizens was forced to decrease commissions paid to agents by 50% which resulted in a significant decline in new sales by that agency force. The commission reductions were necessary in order to preserve the profitability of the accident and health business written by that company which was negatively impacted by changes in state laws that established minimum claims ratios that severely limited profit margins, as well as a mandated change in interest rates used to compute To perform mathematical operations or general computer processing. For an explanation of "The 3 C's," or how the computer processes data, see computer. reserves on that business. During 1998, management was able to revive To renew. For example, revival is the act of renewing the legal force of a contract or debt, either by acknowledging it or by giving a new promise, when the contract or debt is no longer a sufficient foundation for a lawsuit because it is barred by the running of the Statute production from some of the largest producers of American Liberty; however, management's estimate of future production has been reevaluated based upon sales activity of the products sold by these agents during the three-month ended Sept. 30, 1998 (which was the peak production period for these agents), the size of the active agency force and the anticipated production to be achieved by them in subsequent years. In order to ascertain the recoverability of the goodwill balance, the company has continued to perform an analysis of the gross cash flows based upon the estimated production, net of policy acquisition costs, policyholder Policyholder An individual who owns an insurance policy. benefits and other general expenses. As a result of this analysis, it was determined that the production of future business did not support goodwill of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $9.5 million which was charged to earnings during the quarter. The company had previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). that the charge could amount to approximately $8 million. Revenues increased 4.8% to $19,049,196, compared to $18,172,671 for the third quarter of 1997. Investment income grew from $2.7 million in 1997 to $2.9 million in the quarter. Policy benefits increased to $12.3 million for the quarter from $11.2 million. As a result of the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. charge, a loss of $8.3 million, or $(0.39) per share, was incurred during the first nine months of 1998, compared to earnings of $1,760,991, or $0.09 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , for the same period in 1997. Revenues during the period increased 11.3% to $53.7 million from $48.2 million. Total assets increased to $251.5 million at Sept. 30, 1998, from $250 million at Dec. 31, 1997, despite the write-off. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. decreased to $74.6 million up from $79.8 million at year end, primarily due to the charge-off. The previously announced acquisition of First Investors Group Inc. of Springfield Springfield. 1 City (1990 pop. 105,227), state capital and seat of Sangamon co., central Ill., on the Sangamon River; settled 1818, inc. as a city 1840. , Ill., has received regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approval and is expected to close in the fourth quarter of the year. Citizens will issue approximately 610,000 of its Class A common shares in the transaction. -0-
CITIZENS INC.
COMPARATIVE CONSOLIDATED FINANCIAL HIGHLIGHTS
OPERATING STATEMENTS
--------------------
(Unaudited)
Nine Months Ended
September 30
1998 1997
------------ ------------
Premiums and Other Revenues
Premium income $ 43,382,121 $ 40,013,752
Net investment income 8,652,445 7,567,693
Other 1,637,292 649,917
------------ ------------
Total revenues $ 53,671,858 $ 48,231,362
Benefits and Expenses
Increase in future policy benefit
reserves $ 5,779,960 $ 6,531,145
Claims and surrenders 24,364,150 20,772,899
Policyholder dividends 2,221,872 2,261,711
Commissions 9,161,577 8,767,090
Underwriting and insurance expenses 8,351,083 6,283,652
Net change in deferred policy
acquisition costs (102,326) (618,977)
Other 11,912,304 1,233,643
------------ ------------
Total benefits and expenses $ 61,688,620 $ 45,688,117
------------ ------------
Income (loss) before federal
income tax $ (8,016,762) $ 2,543,245
Federal income tax expense $ 310,308 $ 782,254
------------ ------------
Net income (loss) $ (8,327,070) $ 1,760,991
============ ============
INCOME PER SHARE
----------------
Net income (loss) per share $ (0.39) $ 0.09
============ ============
Average shares outstanding 21,386,137 20,983,373
BALANCE SHEETS
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September 30, June 30,
1998 1998
------------ ------------
Total assets $251,495,726 $250,978,541
Total invested assets $179,099,245 $164,040,981
Stockholders' equity $ 74,582,837 $ 79,296,266
(Unaudited)
Three Months Ended
September 30
1998 1997
------------ ------------
Premiums and Other Revenues
Premium income $ 15,411,935 $ 15,423,872
Net investment income 2,949,012 2,672,981
Other 688,249 75,818
------------ ------------
Total revenues $ 19,049,196 $ 18,172,671
Benefits and Expenses
Increase in future policy benefit
reserves $ 1,944,907 $ 2,865,160
Claims and surrenders 9,401,832 6,978,631
Policyholder dividends 780,337 1,203,584
Commissions 3,204,024 3,317,928
Underwriting and insurance expenses 2,470,486 2,265,672
Net change in deferred policy
acquisition costs (639,645) (953,136)
Other 10,325,895 589,853
------------ ------------
Total benefits and expenses $ 27,487,836 $ 16,267,292
------------ ------------
Income (loss) before federal
income tax $ (8,438,640) $ 1,904,979
Federal income tax expense $ 200,870 $ 543,363
------------ ------------
Net income (loss) $ (8,639,510) $ 1,361,616
============ ============
INCOME PER SHARE
----------------
Net income (loss) per share $ (0.40) $ 0.07
============ ============
Average shares outstanding 21,386,137 21,212,623
BALANCE SHEETS
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March 31, December 31, September 30,
1998 1997 1997
------------ ------------ ------------
Total assets $249,677,615 $249,519,435 $235,500,797
Total invested assets $165,595,375 $162,651,692 $155,556,423
Stockholders' equity $ 79,773,008 $ 79,581,698 $ 77,206,259
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