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 The following exhibits are filed herewith: Exhibit 1: Financial Statements and Schedules as of December 31, 2003 and 2002 together with auditor's report. Exhibit 2: Consent of Gifford , Hillegass & Ingwersen, L.L.P.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report for the Atlantic American Corporation
401(k) Retirement Savings Plan (the "Plan") on Form 11-K for the period ended
December 31, 2003 as filed with the Securities and Exchange Commission on the
date hereof (the "Report"), I, John G. Sample Jr., on behalf of Atlantic
American Corporation, as Senior Vice President & CFO, certify, pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the net assets available for the benefits and changes in net assets
available for benefits of the Plan.
/s/ John G. Sample Jr.
John G. Sample Jr.
Senior Vice President & CFO for Atlantic American Corporation
(Date)
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS
AND
SUPPLEMENTAL SCHEDULE
For the Years Ended December 31, 2003 and 2002
with
Report of Independent Auditors
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT PLAN
TABLE OF CONTENTS
December 31, 2003
- --------------------------------------------------------------------------------
Independent Auditors' Report...................................................1
Statements of Net Assets Available for Benefits................................2
Statement of Changes in Net Assets Available for Benefits......................3
Notes to Financial Statements..................................................4
Supplemental Schedule:
Schedule H, Line 4i: Schedule of Assets Held for Investment Purposes....11
INDEPENDENT AUDITORS' REPORT
To the Plan Administrator and Plan Participants of Atlantic American
Corporation 401(k) Retirement Savings Plan:
We have audited the accompanying statements of net assets available for
benefits of the Atlantic American Corporation 401(k) Retirement Savings
Plan as of December 31, 2003 and 2002, and the related statement of changes
in net assets available for benefits for the year ended December 31, 2003.
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 audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (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, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audit provides 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
Atlantic American Corporation 401(k) Retirement Savings Plan as of December
31, 2003 and 2002, and the changes in net assets available for benefits for
the year ended December 31, 2003, in conformity with accounting principles
generally accepted in the United States.
Our audit of the Plan's financial statements as of and for the year ended
December 31, 2003 was performed for the purpose of forming an opinion on
the basic financial statements taken as a whole. The supplemental schedule
listed in the index is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is
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 schedule is the
responsibility of the Plan's management. The supplemental information has
been subjected to the auditing procedures applied in the audit 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.
GIFFORD, HILLEGASS & INGWERSEN, L.L.P.
May 7, 2004
Atlanta, Georgia
1
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
For the Years Ended December 31, 2003 and 2002
- --------------------------------------------------------------------------------
2003 2002
------------------ ------------------
Investments, at fair value $ 8,525,004 $ 5,789,100
Cash - 18,424
Employee Contributions Receivable 25,063 -
Employer Contributions Receivable - 108,093
------------------ ------------------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $ 8,550,067 $ 5,915,617
================== ==================
The accompanying notes are an integral part of these
financial statements.
2
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Year Ended December 31, 2003
- --------------------------------------------------------------------------------
Additions to Net Assets
Contributions:
Participants $ 696,551
Company 256,167
Rollover 67,494
-----------------
TOTAL CONTRIBUTIONS 1,020,212
Interest and dividend income 130,487
Net appreciation in fair market value of investments 1,626,840
-----------------
TOTAL ADDITIONS TO NET ASSETS 2,777,539
Deductions from Net Assets
Benefit payments to participants (143,089)
-----------------
TOTAL DEDUCTIONS (143,089)
-----------------
NET INCREASE 2,634,450
Net Assets Available for Benefits at Beginning of Year 5,915,617
-----------------
Net Assets Available for Benefits at End of Year $ 8,550,067
=================
The accompanying notes are an integral part of these
financial statements.
3
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003
- --------------------------------------------------------------------------------
NOTE 1--DESCRIPTION OF THE PLAN
The following description of the Atlantic American Corporation 401(k) Retirement
Savings Plan (the "Plan") provides only general information. Participating
members ("Participants") should refer to the Plan document for a more complete
description of the Plan's provisions. Information with regard to eligibility,
contributions, distributions, vesting, withdrawals, restoration, loans, fund
redistribution, and definitions of all terms are contained in that document.
General: The Plan is a defined contribution plan available to all U.S. employees
of Atlantic American Corporation (the "Company"). All employees of the Company,
except collective bargaining employees, nonresident aliens, and leased employees
are eligible to participate on the first day of the upcoming quarter in which
the individual became an employee of the Company. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), as
amended.
Plan Administration: AMVESCAP National Trust Company (the "Trustee") is the
Trustee of the Plan and has custodial responsibility for the Plan's assets,
except for company stock that is held by State Street Bank and Trust Company,
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 25%
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. A participant may change his or her
deferral percentage at any time. Participants may also contribute amounts
representing distributions from other qualified benefit plans. These
contributions are classified as rollover contributions in the statement of
changes in net assets available for plan benefits for the year ended December
31, 2003. The Company provides a matching contribution equal to a certain
percentage of the participant's contributions. For the year ended December 31,
2003, the Company's matching contribution equaled 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 contributions into
another investment fund only after the participant is fully vested in the
Company matching contributions. The Company may also elect to make additional
matching and profit sharing contributions.
Vesting: Participants are always fully vested in their own contributions. Each
participant becomes vested in the company contributions based on years of
continuous service. The vesting percentage for company contributions are as
follows:
4
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003
- --------------------------------------------------------------------------------
NOTE 1--DESCRIPTION OF THE PLAN--Continued
Years of service:
Less than one 0%
One 20%
Two 40%
Three 60%
Four 80%
Five 100%
In addition, participants become fully vested upon retirement, death, or
disability.
Benefits: Upon termination of service due to death, disability, retirement, or
separation from service, a participant or his or her beneficiary may elect to
receive an amount equal to the value of the participant's vested interest in his
or her account. The form of payment, selected by the participant or his or 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 individual retirement account.
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 investment income
(loss). Allocations of income (loss) are based on the proportion that each
participant's account balance bears to the total of all participant account
balances and their investment elections.
Investment Options: Participants may direct their contributions and any related
earnings into several investment options in 1% increments. Participants may
change their investment elections at any time. The participants in the Plan can
invest in any of the following investment options:
Atlantic American Corporation Common Stock - Funds are invested in common stock
of the Company.
INVESCO Cash Reserves Fund - Mutual fund that is a blend of commercial paper and
government agency obligations. Effective January 1, 2003, the Cash Reserves Fund
was replaced by the INVESCO Stable Value Fund.
5
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003
- --------------------------------------------------------------------------------
NOTE 1--DESCRIPTION OF THE PLAN--Continued
INVESCO Core Equity Fund - Mutual fund that invests in dividend-paying common
and preferred stocks of large U.S. companies and in convertible bonds, debt
issues, and preferred stocks.
INVESCO Core Fixed Income Fund - Mutual fund that seeks current income, with a
secondary objective of capital appreciation.
INVESCO Select Income Fund - Mutual fund that invests primarily in bonds and
marketable debt securities of established companies.
Fidelity Puritan - Mutual fund that seeks income consistent with preservation of
capital and invests in a securities such as common stocks, preferred stocks, and
bonds.
INVESCO Balanced Fund - Mutual fund that invests in common stocks and in fixed
income securities, including preferred stocks, convertible securities, and
bonds.
INVESCO Dynamics Fund - Mutual fund that invests in common stocks of mid-sized
companies in addition to preferred stocks, convertible securities, and bonds.
INVESCO Small Company Growth Fund - Mutual fund that invests in
small-capitalization companies in the developing stage.
IRT 500 Index Fund - Funds are invested in a collective trust that seeks to
provide total returns that closely replicate those of the Standard and Poor's
500 composite index.
AIM Basic Value Fund - Mutual fund that invests in under-valued securities,
investment-grade nonconvertible debt securities, U.S. government securities,
high-quality money market instruments, and foreign securities.
Janus Twenty Fund - Mutual fund that invests primarily in common stocks selected
for long-term growth potential.
Janus Advisor Worldwide Fund - Mutual fund that invests primarily in common
stocks of companies of any size located throughout the world.
6
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003
- --------------------------------------------------------------------------------
NOTE 1--DESCRIPTION OF THE PLAN--Continued
INVESCO Structured Small Cap Fund - Collective trust with goal of long-term
capital appreciation.
AIM Capital Development - Mutual fund that seeks long-term capital
appreciation by investing primarily in securities of small and medium sized
companies.
American Century Ultra - Mutual fund that may only purchase securities of
companies that have operated continuously for three or more years.
INVESCO Total Return Fund - Invests in a combination of equity securities
of companies with a history of paying regular dividends and in debt
securities that are investment grade at the time of purchase.
AIM Income Fund - Invests primarily in investment-grade corporate debt,
convertibles, and U.S. government debt and may also invest in
dividend-paying stocks.
Janus Mid Cap Value Fund - Invests in equity securities of mid-sized
companies and in high-yield bonds.
INVESCO Stable Value Trust Fund - Funds are invested in a collective trust
that invests in various high quality fixed income investments that will
provide stable account values.
Investment securities, in general, are exposed to various risks, including
interest rate, credit, and overall market volatility risks. Due to the level of
risk associated with certain investment securities, it is reasonably possible
that changes in the values of investment securities will occur in the near term
and that such changes could materially affect the amounts reported in the
statements of net assets available for plan benefits.
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 their vested
account 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.
7
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003
- --------------------------------------------------------------------------------
NOTE 1-DESCRIPTION OF THE PLAN-Continued
Administrative Expenses: The Company pays all administrative expenses of the
Plan, including trustee fees. Fees resulting from individual participant
transactions, such as loan origination and benefit payments, are paid by the
participant.
NOTE 2-ACCOUNTING POLICIES
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
accounting principles generally accepted in the United States 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: All investments are stated at fair value. Securities
traded on national securities exchanges are valued at the closing price on a
daily basis. Investments traded in over-the-counter markets and listed
securities for which no sale was reported on that date are valued at the last
reported bid price. Purchases and sales of securities and mutual funds are
reflected on a trade-date basis.
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
market value of investments.
8
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003
- --------------------------------------------------------------------------------
NOTE 3--INVESTMENTS
The fair market values of individual investments that represent 5% or more of
the Plan's net assets as of December 31, 2003 are as follows:
2002
-----------
Atlantic American Corporation common stock $ 1,406,767
INVESCO Core Equity Fund 936,349
INVESCO Dynamics Fund 1,336,071
INVESCO Total Return Fund 640,810
INVESCO Stable Value Fund 1,296,078
IRT 500 Index Fund 442,634
Janus Twenty Fund 463,709
Fidelity Puritan 595,774
Net appreciation in fair market value of investments by major investment type
for the year ended December 31, 2003 is as follows:
Common stock - Atlantic American Corporation $ 601,116
Mutual funds 1,025,724
-----------
$ 1,626,840
NOTE 4--NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets as of December 31, 2003 and the significant
components of the change in net assets for the year then ended relating to the
Company's common stock (nonparticipant-directed investments) is as follows:
2003
-----------
Net Assets:
Common Stock - Atlantic American Corporation $ 460,935
===========
Changes in Net Assets:
Contributions - employer $ 157,618
Net depreciation in fair value of common stock 191,186)
Benefits paid to partially vested former
employees and forfeitures (58,906)
Transfers to participant-directed investments (10,536)
-----------
$ 279,362
===========
9
ATLANTIC AMERICAN CORPORATION
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2003
- --------------------------------------------------------------------------------
NOTE 5-TAX STATUS
The Internal Revenue Service has determined and informed the Sponsor by letter
dated June 3, 2003, that the Plan and related trust are designed in accordance
with applicable sections of the Internal Revenue Code ("IRC").
NOTE 6-PLAN 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.
NOTE 7-RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for plan benefits per
the financial statements to the Form 5500 as follows for the year 2003:
SUPPLEMENTAL INFORMATION
ATLANTIC AMERICAN CORPORATION 401(k) RETIREMENT SAVINGS PLAN SCHEDULE H, LINE 4i--SCHEDULE OF ASSETS (HELD AT END OF YEAR) December 31, 2003 - --------------------------------------------------------------------------------
EXHIBIT INDEX
Exhibit Number Title
- -------------- -----
2 Consent of Independent Accountants
CONSENT OF PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated May 7, 2004, 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, 2003, into the Plan's previously filed
Registration Statement No. 333-89891.
GIFFORD, HILLEGASS & INGWERSEN, L.L.P.
Atlanta, Georgia
June 28, 2004