SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission file number 0-3722
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
Atlantic American Corporation
401(k) Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the
plan and the address of its principal executive office:
Atlantic American Corporation
4370 Peachtree Road, N.E.
Atlanta, Georgia 30319
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
The following exhibits are filed herewith:
Exhibit 99.1 Financial Statements and Schedules as of December 31, 1996
and 1995 together with auditor's report.
Exhibit 99.2 Consent of Arthur Andersen LLP
SIGNATURES
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.
Atlantic American Corporation
401(k) Retirement Savings Plan
-------------------------------------------------
(Name of Plan)
Date: June 30, 1997 John W. Hancock
------------- -------------------------------------------------
Senior Vice President - Treasurer
Atlantic American Corporation
EXHIBIT 99.1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of the
Atlantic American Corporation 401(k)
Retirement Savings Plan:
We have audited the accompanying financial statements and supplemental schedules
of the ATLANTIC AMERICAN CORPORATION 401(k) RETIREMENT SAVINGS PLAN as of
December 31, 1996 and 1995 and for the year ended December 31, 1996, as listed
in the accompanying table of contents. These financial statements and the
schedules are the responsibility of the Plan'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 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the
Atlantic American Corporation 401(k) Retirement Savings Plan as of December 31,
1996 and 1995 and the changes in its net assets available for plan benefits for
the year ended December 31, 1996 in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for purposes
of additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of Labor
Rules and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. The supplemental schedules have been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
Arthur Andersen, LLP
Atlanta, Georgia
May 16, 1997
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1996 AND 1995
TABLE OF CONTENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits--December 31, 1996 and 1995
Statement of Changes in Net Assets Available for Benefits for the Year
Ended December 31, 1996
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
SCHEDULES SUPPORTING FINANCIAL STATEMENTS
Schedule I: Item 27a--Schedule of Assets Held for Investment Purposes--
December 31, 1996
Schedule II: Item 27d--Schedule of Reportable Transactions for the Year
Ended December 31, 1996
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1996 AND 1995
1996 1995
------ ------
ASSETS:
Cash $ 28,963 $ 3,109
Investments, at market value:
Participant-directed:
Common stock--Atlantic American Corporation 450,033 294,991
INVESCO Industrial Income Fund 415,985 332,442
INVESCO Intermediate Government Bond Fund 299,669 330,226
INVESCO Total Return Fund 539,575 493,790
INVESCO Dynamics Fund 644,193 444,160
INVESCO Cash Reserves Fund 426,508 605,051
Nonparticipant-directed:
Common stock--Atlantic American Corporation 35,269 11,635
Participant loans 1,240 0
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $2,841,435 $2,515,404
========== ==========
The accompanying notes are an integral part of these statements.
3
SCHEDULE II
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
Nonparticipant- Participant-Directed
---------------------------------------------------
Directed Atlantic INVESCO INVESCO INVESCO
----------------- American Cash Industrial Intermediate
Atlantic American Corporation Reserves Income Government
Corporation Common Stock Fund Fund Bond Fund
Common Stock
----------------------------------------------------------------------
ADDITIONS:
Participant contributions $ 0 $ 18,832 $ 10,271 $ 73,321 $ 17,109
Employer contributions 16,686 73,398 0 0 0
----------------------------------------------------------------------
Total contributions 16,686 92,230 10,271 73,321 17,109
Net appreciation (depreciation) in
fair market value of investments 6,948 89,261 0 46,069 (15,301)
Interest and dividend income 0 0 21,870 10,935 17,530
----------------------------------------------------------------------
Total additions 23,634 181,491 32,141 130,325 19,338
----------------------------------------------------------------------
DEDUCTIONS:
Benefit payments to participants 0 (13,492) (209,339) (19,411) (40,663)
Participant loans 0 0 0 (387) (346)
----------------------------------------------------------------------
Total deductions 0 (13,492) (209,339) (19,798) (41,009)
----------------------------------------------------------------------
TRANSFERS BETWEEN FUNDS 0 (12,957) (1,345) (26,984) (8,886)
----------------------------------------------------------------------
NET INCREASE (DECREASE) 23,634 155,042 (178,543) 83,543 (30,557)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 11,635 294,991 605,051 332,442 330,226
----------------------------------------------------------------------
End of year $35,269 $450,033 $426,508 $415,985 $299,669
======================================================================
4
Participant-Directed
--------------------------------------------
INVESCO INVESCO
Total Dynamics
Return Fund Other Total
Fund
--------------------------------------------
ADDITIONS:
Participant contributions $ 60,348 $ 78,448 $ 0 $ 258,329
Employer contributions 0 0 13,404 103,488
--------------------------------------------
Total contributions 60,348 78,448 13,404 361,817
Net appreciation (depreciation) in
fair market value of investments 42,568 80,121 (1,514) 248,152
Interest and dividend income 17,969 648 15 68,967
--------------------------------------------
Total additions 120,885 159,217 11,905 678,936
--------------------------------------------
DEDUCTIONS:
Benefit payments to participants (50,516) (19,484) 0 (352,905)
Participant loans (507) 0 1,240 0
--------------------------------------------
Total deductions (51,023) (19,484) 1,240 (352,905)
--------------------------------------------
TRANSFERS BETWEEN FUNDS (24,077) 60,300 13,949 0
--------------------------------------------
NET INCREASE (DECREASE) 45,785 200,033 27,094 326,031
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 493,790 444,160 3,109 2,515,404
--------------------------------------------
End of year $539,575 $644,193 $30,203 $2,841,435
============================================
The accompanying notes are an integral part of this statement.
5
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1996 AND 1995
1. PLAN DESCRIPTION
General
The Atlantic American Corporation 401(k) Retirement Savings Plan (the
"Plan") is a defined contribution plan established by the Atlantic American
Corporation (the "Company") under the provisions of Section 401(a) of the
Internal Revenue Code (the "Code"), which includes a qualified cash or
deferred arrangement as described in Sections 401(k) and 401(m) of the Code,
for the benefit of eligible employees of the Company. All employees of the
Company who have completed one year of service, as defined, are eligible to
participate. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended. Participants should
refer to the plan agreement for a complete description of the Plan.
Plan Administration
Effective May 1, 1995, INVESCO Trust Company (the "Trustee") was appointed
Trustee of the Plan. The Trustee has custodial responsibility for the Plan's
assets and has been given the authority and power to, among other things,
invest the principal and income of the Plan's assets.
Contributions
Eligible employees can contribute an amount up to 16% of annual
compensation, as defined by the Plan, subject to certain limitations under
the Code. The Company provides a matching contribution equal to 50% of the
first 6% of each participant's contribution. All company matching
contributions are invested in Atlantic American Corporation common stock. A
participant can elect to transfer the company contribution into another
investment fund only after the participant is fully vested in the company
matching contributions.
Vesting
Participants are always fully vested in their own contributions. Each
participant becomes vested in the employer contributions based on years of
continuous service. Participants become fully vested after seven years of
service with no intervening breaks in service of five years or more. A
participant is credited with one year of service each calendar year in which
the participant works 1,000 hours. A break in service is deemed to be any
year in which the participant does not complete more than 500 hours of
service. The participants vested percentage in employer contributions with
years of service is as follows:
6
Years of Vested
Service Percentage
--------------- ----------
Less than one 0%
One 10
Two 20
Three 30
Four 40
Five 60
Six 80
Seven or more 100
Benefits
Upon termination of service due to death, disability, or retirement, a
participant may elect to receive an amount equal to the value of the
participant's vested interest in his/her account. The form of payment,
selected by the participant, is either a lump-sum distribution, an annuity
to be paid in monthly installments over a fixed period of years, or a direct
rollover into a qualified retirement plan or IRA.
Participant Accounts
Individual accounts are maintained for each of the Plan's participants and
reflect the participant's contributions, employer contributions, and the
participant's share of the Plan's income. Allocations are based on the
proportion that each participant's account balance bears to the total of all
participant account balances.
Investment Options
Participants may direct their contributions and any related earnings into
several investment options in 10% increments. Participants may change their
investment elections once each calendar quarter. The participants in the
Plan can invest in any of the following options:
o Atlantic American Corporation Stock--Funds are invested in common
stock of Atlantic American Corporation.
o INVESCO Cash Reserves Fund--Funds are invested in short-term
obligations such as commercial paper, U.S. government and government
agency obligations, and repurchase agreements.
o INVESCO Intermediate Government Bond Fund--Funds are invested in
obligations of the U.S. government and government agencies maturing in
three to five years.
o INVESCO Total Return Fund--Funds are invested in common stocks and
in fixed and variable income securities.
o INVESCO Industrial Income Fund--Funds are invested in
dividend-paying common stocks of large U.S. companies and in
convertible bonds, debt issues, and preferred stocks.
o INVESCO Dynamics Fund--Funds are invested with rapidly growing
companies, traded essentially on national exchanges and
over-the-counter.
7
Forfeitures
Amounts forfeited from nonvested accounts are used to reduce future employer
contributions.
Termination
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and terminate
the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become fully vested in their accounts as of
the termination date.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
Basis of Accounting
The accompanying financial statements have been prepared using the accrual
basis of accounting.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of 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.
Valuation of Investments
Cash equivalents are stated at cost, which approximates market value.
Marketable securities are stated at fair value. Purchases and sales of
securities are reflected on a trade-date basis.
Administrative Expenses
The Company pays all administrative expenses of the Plan, including trustee
fees.
8
3. INVESTMENTS
The fair market values of individual investments that represent 5% or more
of the Plan's net assets as of December 31, 1996 and 1995 are as follows:
1996:
Atlantic American Corporation common stock $485,302
INVESCO Total Return Fund 539,575
INVESCO Intermediate Government Bond Fund 299,669
INVESCO Industrial Income Fund 415,985
INVESCO Cash Reserve Fund 426,508
INVESCO Dynamics Fund 644,193
1995:
Atlantic American Corporation common stock 306,626
INVESCO Total Return Fund 493,790
INVESCO Intermediate Government Bond Fund 330,226
INVESCO Industrial Income Fund 332,442
INVESCO Cash Reserves Fund 605,051
INVESCO Dynamics Fund 444,160
4. TAX STATUS
The Internal Revenue Service issued a determination letter dated May 21,
1996 stating that the Plan was in accordance with applicable plan
requirements as of that date. The Plan has been amended since receiving the
determination letter. However, the plan administrator believes that the Plan
is currently designed and is being operated in compliance with the
applicable requirements of the Code. Therefore, the plan administrator
believes that the Plan was qualified and the related trust was tax-exempt as
of the financial statement date.
5. PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum equal to the lesser of $50,000 or 50% of the vested value of their
account balance. Participants may elect to have their loans disbursed from
specific investment funds. Loan terms ranged from six months to five years
or within a reasonable time if used for the purchase of a primary residence.
The loans are secured by the vested value of the participants account
balance and bear interest at the prime rate of interest on the date of the
loan, plus 1%. Principal and interest are paid ratably through payroll
deductions of not less than $10 per pay period, or in a single lump sum.
6. SUBSEQUENT EVENT
The third amendment to the Plan reflecting recent changes in federal law
was adopted on May 6, 1997 and was effective January 1, 1997. The plan
administrator believes that this amendment will have no effect on the
Plan's tax-exempt status.
9
SCHEDULE I
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
ITEM 27a--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
Current
Units Cost Value
-------- ---------- ----------
MONEY MARKET FUND:
* INVESCO Cash Reserves Fund 426,508 $ 426,508 $ 426,508
MUTUAL FUNDS:
* INVESCO Total Return Fund 22,205 454,138 539,575
* INVESCO Intermediate Government Bond
Fund 24,051 296,546 299,669
* INVESCO Industrial Income Fund 30,905 373,894 415,985
* INVESCO Dynamics Fund 49,976 611,082 644,193
COMMON STOCK:
* Atlantic American Corporation 158,440 407,706 485,302
* PARTICIPANT LOANS (9.25%) 1,240 1,240 1,240
------- ---------- ----------
Total 713,325 $2,571,114 $2,812,472
======= ========== ==========
*Indicates a party in interest.
The accompanying notes are an integral part of this schedule.
10
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
ITEM 27d--SCHEDULE OF REPORTABLE TRANSACTIONS (a)
FOR THE YEAR ENDED DECEMBER 31, 1996
Including Rate of Interest Purchase Selling Net
Identity of Party Involved and Maturity in Case of Loans Price Cost Price Gain
- -------------------------- ----------------------------- ---------- -------- --------- -------
INVESCO TRUST COMPANY Cash Reserve Fund:
48 purchases $ 33,697 $ 0 $ 0 $ 0
36 sales 0 212,240 212,240 0
INVESCO TRUST COMPANY Dynamics Fund:
32 purchases 204,751 0 0 0
13 sales 0 22,293 24,048 1,755
INVESCO TRUST COMPANY Atlantic American Corporation:
31 purchases 113,816 0 0 0
12 sales 0 25,402 31,348 5,946
INVESCO TRUST COMPANY Industrial Income Fund:
29 purchases 116,229 0 0 0
19 sales 0 46,627 51,448 4,821
INVESCO TRUST COMPANY Total Return Fund:
27 purchases 81,898 0 0 0
16 sales 0 69,089 76,875 7,786
(a) Represents transactions or a series of transactions in excess of
5% of the fair value of plan assets at the beginning of the year.
The accompanying notes are an integral part of this schedule.
11
EXHIBIT 99.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated May 16, 1997, included in this Annual Report of
The Atlantic American Corporation 401(k) Retirement Savings Plan on Form ii-K
for the year ended December 31, 1996, into the Plan's previously filed
Registration Statement No. 33-90890.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
June 30, 1997
