1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the plan year ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Transition Period from to
-------------------- ----------------------
Commission File Number: 0-18786
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
PICO HOLDINGS, INC. EMPLOYEES 401(k) RETIREMENT PLAN AND TRUST
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
PICO HOLDINGS, INC.
875 PROSPECT STREET, SUITE 301
LA JOLLA, CALIFORNIA 92037
Index to Exhibits appears on Page 13
Page 1 of 14 pages
2
REQUIRED INFORMATION
--------------------
The following financial statements and schedules for PICO Holdings, Inc.
Employees 401(k) Retirement Plan and Trust are being filed herewith:
Signature
Independent Auditors' Report
Financial Statements:
Statements of Net Assets Available for Benefits, September 30, 2000 and 1999
Statement of Changes in Net Assets Available for Benefits for the Year Ended September 30, 2000
Notes to the Financial Statements
Supplemental Schedules:
Schedule H Item 4i - Schedule of Assets Held for Investment Purposes, September 30, 2000
Schedule H Item 4j - Schedule of Reportable Transactions for the Year Ended
September 30, 2000
Index to Exhibits
Exhibit 1 - Consent of Independent Auditors
2
3
SIGNATURE
---------
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
PICO HOLDINGS, INC. EMPLOYEES 401(k)
RETIREMENT PLAN AND TRUST
/s/ Maxim C.W. Webb
---------------------------------------
Date: July 27, 2001 Chief Financial Officer and Treasurer
3
4
INDEPENDENT AUDITORS' REPORT
PICO Holdings, Inc.
Employees 401(k) Retirement Plan and Trust
Columbus, Ohio:
We have audited the accompanying statements of net assets available for benefits
of PICO Holdings, Inc. Employees 401(k) Retirement Plan and Trust (the "Plan")
as of September 30, 2000 and 1999, and the related statement of changes in net
assets available for benefits for the year ended September 30, 2000. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
September 30, 2000 and 1999, and the changes in net assets available for
benefits for the year ended September 30, 2000 in conformity with accounting
principles generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules identified in
the index are presented for the purpose of additional analysis and are not a
required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedules are the responsibility of the Plan's
management. Such supplemental schedules have been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects when considered in relation
to the basic financial statements taken as a whole.
June 20, 2001
4
5
PICO HOLDINGS, INC.
EMPLOYEES 401(k) RETIREMENT PLAN AND TRUST
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
-------------------------------------------------------------------------------
ASSETS 2000 1999
INVESTMENTS:
Mutual funds $6,619,553 $6,468,597
Participant loans 22,946 25,350
---------- ----------
Total investments 6,642,499 6,493,947
RECEIVABLES:
Employer's matching contributions 20,238 8,835
Participants' contributions 20,472 10,573
Investment fund transfer 242,902 19,409
Profit sharing contributions 466,034 543,658
---------- ----------
Total receivables 749,646 582,475
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $7,392,145 $7,076,422
========== ==========
See notes to financial statements.
5
6
PICO HOLDINGS, INC.
EMPLOYEES 401(k) RETIREMENT PLAN AND TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
ADDITIONS:
Additions to net assets attributed to:
Net depreciation in fair value of investments $ (36,317)
Interest and dividends 288,513
-----------
Total 252,196
Contributions:
Participant 623,839
Employer 793,796
-----------
Total additions 1,669,831
DEDUCTIONS:
Deductions from net assets attributed to benefits paid to participants (1,354,108)
-----------
Net increase 315,723
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 7,076,422
-----------
End of year $ 7,392,145
===========
See notes to financial statements.
6
7
PICO HOLDINGS, INC.
EMPLOYEES 401(k) RETIREMENT PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999
--------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN
The following description of the PICO Holdings, Inc. Employees 401(k)
Retirement Plan and Trust (the "Plan") provides only general information.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
GENERAL - The Plan is a defined contribution 401(k) profit sharing plan
covering eligible employees, as defined in the Plan Agreement, of PICO
Holdings, Inc. (the Plan Sponsor). The Plan was adopted to provide
retirement benefits to employees of the Plan Sponsor. The Plan is subject
to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA) and has been determined to be qualified for tax exempt status by
the Internal Revenue Service (IRS). The Plan has been amended since
receiving the IRS determination letter. However, the Plan Sponsor believes
that the Plan is designed and is currently being operated in compliance
with the applicable requirements of the Internal Revenue Code.
CONTRIBUTIONS - Each year, participants may contribute up to 5% of pretax
annual compensation, as defined in the Plan, not to exceed $8,000 (based
on Section 401(a) (17) compensation limit of $160,000 as indexed). The
Plan Sponsor matches 100% of the elective deferral of base compensation
that a participant contributes to the Plan. The Plan Sponsor's matching
contribution does not begin until the first day of the quarter after an
employee completes one year of service. Additional amounts which represent
profit sharing, as defined in the Plan, may be contributed at the option
of the Plan Sponsor's Board of Directors.
PARTICIPANT ACCOUNTS - Each participant's account is credited with the
participant's contributions, employer matching contributions, earnings,
and withdrawals, as applicable, and allocations of (a) the Plan Sponsor's
discretionary profit sharing contributions and (b) Plan earnings, and
debited with an allocation of administrative expenses. Allocations are
based on participant compensation, as defined. Forfeited balances of
terminated participants' nonvested accounts are used to first reinstate
previously forfeited account balances of reemployed participants and any
remainder will be used to reduce the Plan Sponsor's discretionary profit
sharing contribution for the current or subsequent Plan year in which the
forfeiture occurs.
7
8
VESTING - Participants are immediately vested in their contributions, the
employer matching contributions, plus earnings thereon. Vesting in the
Plan Sponsor's discretionary profit sharing contribution portion of their
accounts plus actual earnings thereon is based on years of credited
service in accordance with the following schedule:
YEARS OF SERVICE PERCENTAGE
Less than three 0%
3 20%
4 40%
5 60%
6 80%
7 or more 100%
INVESTMENT OPTIONS - Effective June 1, 2000, upon enrollment in the Plan,
a participant may direct 100% of elective deferrals, employer match and
discretionary profit sharing amounts. A participant chooses from a number
of different mutual fund options. In addition, participants are able to
invest in the stock of PICO Holdings, Inc., the Plan Sponsor.
LOANS TO PARTICIPANTS - Loans to participants are not permitted under the
Plan. However, under Citation Insurance Group Salary Reduction Profit
Sharing Plan (the "Citation Plan") which was approved to merge into the
Plan effective December 31, 1997, participant loans were permitted to roll
over.
PAYMENT OF BENEFITS - Upon termination of service, a participant may elect
to receive either a lump-sum amount equal to the value of the
participant's vested interest in his or her account, or annual
installments. If the value of the participants' account is $5,000 or less,
the Trustee shall distribute the entire vested account to the participant.
Amounts payable to such participants at September 30, 2000 and 1999 were
$61,595 and $142,498, respectively.
PLAN TERMINATION - While the Plan Sponsor has not expressed any intent to
discontinue the Plan or their contributions thereto, they have the right
to do so at any time, subject to the provisions of ERISA. In the event of
partial or total termination of the Plan, participants' account balances
become fully vested and the disposition of the net assets must be made for
the benefit of the participants or their beneficiaries.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - The accounting records of the Plan are maintained
on the accrual basis. Purchases and sales of securities are recorded on
the trade date. Interest income is recorded as earned and dividend income
is recorded on the ex-dividend date.
INVESTMENT VALUATION - Investments are valued as follows: Mutual funds,
money market funds and PICO Holdings, Inc. common stock are valued at
quoted market prices.
ADMINISTRATIVE EXPENSES - The Plan's expenses are paid by the Plan
Sponsor.
USE OF ESTIMATES - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of net assets and the changes in net assets during
the
8
9
reporting period and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
The Plan has adopted Statement of position 99-3, "Accounting for and
Reporting of Certain Deferred Contribution Plan Investments and Other
Disclosure Matters." Accordingly, the financial statements do not disclose
by-fund information.
3. INVESTMENTS
The Plan's investments which exceeded 5% of net assets available for
benefits as of September 30 consisted of the following:
2000 1999
Smith Barney Money Market Government Portfolio $1,797,729
American Century Ultra Fund 877,492 $ 783,945
Neuberger Focus Trust Fund 662,668
PICO Stock Fund 651,362 544,041
Dreyfus Founders Discovery Fund 566,382
Strong Government Securities 517,538
Scudder International Fund 443,836
Separate Account B - Profit Sharing 540,295
Separate Account B 337,192
Separate Account A 695,801
Guaranteed Fund - Profit Sharing 1,072,643
Guaranteed Fund 1,256,821
American Century Select Fund 979,746
4. RELATED PARTY TRANSACTIONS
Plan investments include common stock of PICO Holdings, Inc. and Smith
Barney Money Market Government Portfolio. PICO Holdings, Inc. is the Plan
Sponsor and Salomon Smith Barney is the Plan Custodian and record keeper.
9
10
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500:
SEPTEMBER 30
1999
Net assets available for benefits per
the financial statements $7,076,422
Contribution receivable (10,443)
----------
Net assets available for benefits per
the Form 5500 $7,065,979
==========
******
10
11
PICO HOLDINGS, INC.
EMPLOYEES 401(k) RETIREMENT PLAN AND TRUST
SCHEDULE H ITEM 4i - SUPPLEMENTAL SCHEDULE OF ASSETS
HELD FOR INVESTMENT PURPOSES, SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
NUMBER FAIR
OF MARKET
DESCRIPTION SHARES COST VALUE
INVESTMENTS:
Alleghany Montag & Caldwell Growth - N Share 3,502 $ 111,537 $ 107,111
American Century Ultra Fund 19,889 902,435 877,492
Citi S&P 500 Index Funds 6,716 102,630 99,123
Dreyfus Founders Discovery 12,353 559,986 566,382
Dreyfus Premier Core Value 2,882 89,770 91,338
PICO Stock Fund 50,953 591,453 650,895
Huntington Treasury Market Fund IV 467 467 467
Gabelli Growth Fund 2,838 141,997 133,056
Loomis Sayles Bond Fund 702 8,146 8,087
Mercury HW International Value 1,017 27,874 26,287
Neuberger Berman Focus Trust 19,670 653,083 662,669
Pilgrim GNMA Income Fund 6,696 55,087 55,375
Pilgrim Emerging Countries Fund Class A 13,206 142,945 127,961
Royce Premier Fund 33,600 354,294 364,891
Scudder International Fund 8,202 474,911 443,836
Smith Barney Money Market - Government Portfolio 1,797,729 1,797,729 1,797,729
Strong Government Securities 50,295 515,655 517,538
Warburg Pincus Global Fixed Income Fund 9,217 90,413 89,316
Participant loans - 9.25% to 9.75%, maturing
January 16, 2001 to December 31, 2025 22,946 22,946
----------- -----------
TOTAL $ 6,643,358 $ 6,642,499
=========== ===========
11
12
PICO HOLDINGS, INC.
EMPLOYEES 401(k) RETIREMENT PLAN AND TRUST
SCHEDULE H ITEM 4j - SCHEDULE OF REPORTABLE TRANSACTIONS
SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
PURCHASES/ COST OF NET GAIN
TRANSFERS IN SALES ASSETS (LOSS)
IN SERIES (including individual transactions) -
Guaranteed Fund $ 559,458 $ 2,888,922 $ 2,888,922 $
INDIVIDUAL:
There were no individual transactions which exceeded 5% of Net Assets
Available for Benefits.
12
13
PICO HOLDINGS, INC.
EMPLOYEES 401(k) RETIREMENT PLAN & TRUST
ANNUAL REPORT ON FORM 11-K
FOR PLAN YEAR ENDED SEPTEMBER 30, 2000
INDEX TO THE EXHIBITS
---------------------
EXHIBIT NUMBER DESCRIPTION
-------------- ----------
1 Consent of Deloitte & Touche LLP, Independent Auditors
13