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
For the fiscal year ended December 31, 1999
OR
TRANSACTION 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 pursusant to the plan and the
address of its principal executive office:
Atlantic American Corporation
4370 Peachtree Road, N.E.
Atlanta, GA 30319
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) Reitrement Savings Plan
---------------------------------------
(Name of Plan)
/s/
Date: June 28, 2000 -----------------------------------------
------------- Edward L. Rand, Jr.
Vice President & CFO
ATLANTIC AMERICAN CORPORATION
401 (K) RETIREMENT SAVINGS PLAN
The following exhibits are filed herewith:
Exhibit 1: Financial Statements and Schedules as of December 31, 1999
and 1998 together with auditor's report.
Exhibit 2: Consent of Arthur Andersen LLP
Atlantic American Corporation
401(k) Retirement Savings Plan
Financial Statements and Schedule
December 31, 1999 and 1998
Table of contents
Report of Independent Public Accountants
Financial Statements
Statements of Net Assets Available for Plan Benefits--December 31, 1999 and 1998
Statement of Changes in Net Assets Available for Plan Benefits for the
Year Ended December 31, 1999
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
SCHEDULE SUPPORTING FINANCIAL STATEMENTS
Schedule I: Schedule H, Line 4i--Schedule of Assets Held for Investment
Purposes--December 31, 1999
Report of Independent Public Accountants
To Atlantic American Corporation 401(k)
Retirement Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Atlantic American Corporation 401(k) Retirement Savings Plan as
of December 31, 1999 and 1998 and the related statement of changes in net assets
available for plan benefits for the year ended December 31, 1999. These
financial statements and the schedule referred to below are the responsibility
of the Plan's administrator. Our responsibility is to express an opinion on
these financial statements and the schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 as of December
31, 1999 and 1998 and the changes in net assets available for plan benefits for
the year ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes is presented for purposes of additional analysis and is
not a required part of the basic financial statements but is 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 schedule has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
Atlanta, Georgia
June 22, 2000
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1999 AND 1998
1999 1998
Investments $5,018,532 $4,593,559
Contributions receivable 0 45,365
----------- --------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $5,018,532 $4,638,924
============ =========
The accompanying notes are an integral part of these statements.
ATLANTIC AMERICAN CORORATION
401(k) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1999
ADDITIONS:
Participant contributions $ 369,253
Employer contributions 130,072
-------
Total contributions 499,325
Net appreciation in fair market value of investments 90,672
Interest and dividend income 281,661
-------
Total additions 871,658
DEDUCTIONS:
Benefit payments to participants 492,050
-------
NET INCREASE 379,608
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 4,638,924
---------
End of year $5,018,532
===============
The accompanying notes are an integral part of this statement.
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 1999 AND 1998
1. Plan Description
The following description of the Atlantic American Corporation 401(k)
Retirement Savings Plan (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 plan established by Atlantic American
Corporation (the "Company") for the benefit of eligible employees of the
Company. All employees of the Company are eligible to participate on the
first day of the upcoming quarter, as defined by the Plan, in which the
individual became an employee. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"), as amended.
Effective January 1, 1999, the Company adopted Statement of Position ("SOP")
99-3, "Accounting for and Reporting of Certain Defined Contribution Plan
Investments and Other Disclosure Matters." SOP 99-3 establishes new
disclosure requirements for defined contribution plans.
Plan Administration
INVESCO Trust Company (the "Trustee") is the Trustee of the Plan and has
custodial responsibility for the Plan's assets including the authority and
power to, among other things, invest the principal and income of the Plan's
assets.
Contributions
Participants may elect to contribute in 1% increments up to 16% of their
annual compensation, as defined by the Plan, subject to certain limitations
under the Internal Revenue Code (the "Code") into any of the investment
funds offered by the Plan. The Company provides a matching contribution
equal to 50% of the first 6% of each participant's contribution. All company
matching contributions are in company 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.
-2-
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 vesting percentage for employer contributions is as follows:
Vesting
Percentage
------------
Years of Service:
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 or his/her beneficiary 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 or his/her beneficiary, is either a
lump-sum distribution, an annuity to be paid in monthly installments over a
fixed number 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 of income 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, all of which are INVESCO
mutual funds except for the company common stock:
o Atlantic American Corporation Stock--Funds are invested in common stock of
the Company.
-3-
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 Equity 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 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 Dynamics Fund--Funds are invested with rapidly growing companies,
traded essentially on national exchanges and over the counter.
Forfeitures
Amounts forfeited from nonvested accounts are used to reduce future employer
contributions.
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 accumulated employee
contribution balance. Participants may elect to have their loans disbursed
from specific investment funds. Loan terms range 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.
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 to 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.
-4-
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 additions and
deductions 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 and mutual funds are reflected on a trade-date basis.
Administrative Expenses
The Company pays all administrative expenses of the Plan, including trustee
fees.
Net Appreciation (Depreciation)
Net realized gains (losses) and unrealized appreciation (depreciation) are
recorded in the accompanying statement of changes in net assets available
for plan benefits as net appreciation in fair value of investments.
3. Investments
The fair market values of individual investments that represent 5% or more
of the Plan's net assets as of December 31, 1999 and 1998 are as follows:
1999 1998
Atlantic American Corporation common stock $ 577,946 $1,047,686
INVESCO Cash Reserves Fund 336,387 327,560
INVESCO Equity Income Fund 1,011,639 798,964
INVESCO Intermediate Government Bond Fund 292,036 292,433
INVESCO Total Return Fund 854,857 972,297
INVESCO Dynamics Fund 1,920,200 1,126,568
Net appreciation in fair value of investments by major investment type for
the year ended December 31, 1999 is as follows:
Common stock $(572,799)
Mutual funds 663,471
---------
$ 90,672
==========
-5-
4. Nonparticipant-Directed Investments
Information about the net assets as of December 31, 1999 and 1998 and the
significant components of the change in net assets for the year ended
December 31, 1999 relating to the Company's common stock
(nonparticipant-directed investments) is as follows:
1999 1998
------- -------
Net assets:
Common stock $ 42,542 $91,122
======= =======
Changes in net assets:
Contributions $ 33,065
Net depreciation (29,840)
Benefits paid to participants (800)
Transfers to participant-directed
investments (51,005)
-------
$(48,580)
=========
5. 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 and the plan administrator believes that the Plan is
currently designed and 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 December
31, 1999 and 1998.
SCHEDULE I
ATLANTIC AMERICAN CORPORATION
401(K) RETIREMENT SAVINGS PLAN
SCHEDULE H LINE 4i--SCHEDULE
OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1999
Current
Identity of Issuer Description of Investment Cost Value
* INVESCO FUNDS GROUP Money market fund:
INVESCO Cash Reserves Fund, 336,387 shares (a) $ 336,387
Mutual funds:
INVESCO Equity Income Fund, 66,337 shares (a) 1,011,639
INVESCO Intermediate Government Bond Fund,
43,718 shares (a) 292,036
INVESCO Total Return Fund, 29,519 shares (a) 854,857
INVESCO Dynamics Fund, 74,254 shares (a) 1,920,200
* ATLANTIC AMERICAN CORPORATION Atlantic American Corporation common stock:
Participant-directed, 223,644 shares (a) 535,404
Nonparticipant-directed, 17,770 shares $57,531 42,542
Participant loans with varying maturities and
* VARIOUS PLAN PARTICIPANTS interest rates ranging from 8.75% to 9.5% (a) 25,467
-----------
Total $5,018,532
===========
*Indicates a party in interest.
(a) Participant-directed.
The accompanying notes are an integral part of this schedule.
EXHIBIT 99.2
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated June 22, 2000, included in this Annual Report of
the Atlantic American Corporation 401(k) Retirement Savings Plan on Form 11-K
for the year ended December 31, 1999, into the Plan's previously filed
Registration Statement No. 333-89891.
/s/
-------------------------
ARTHUR ANDERSEN
Atlanta, GA
June 26, 2000