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, 2001
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 12
Page 1 of 13 pages
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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, 2001 and
2000
Statement of Changes in Net Assets Available for Benefits for the Year
Ended September 30, 2001
Notes to the Financial Statements
Supplemental Schedules:
Schedule H Item 4i - Schedule of Assets as of September 30, 2001
Schedule H Item 4j - Schedule of Reportable Transactions as of September
30, 2001
Index to Exhibits
Exhibit 1 - Consent of Independent Auditors
2
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 15, 2002 Chief Financial Officer and Treasurer
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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, 2001 and 2000, and the related statement of changes in net
assets available for benefits for the year ended September 30, 2001. 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, 2001 and 2000, and the changes in net assets available for
benefits for the year ended September 30, 2001, 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.
DELOITTE & TOUCHE LLP
May 3, 2002
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PICO HOLDINGS, INC. EMPLOYEES 401(k)
RETIREMENT PLAN AND TRUST
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
SEPTEMBER 30, 2001 AND 2000
--------------------------------------------------------------------------------
ASSETS 2001 2000
INVESTMENTS:
Mutual funds $5,875,227 $5,953,517
Common stock 646,614 665,569
Cash 1,826 467
Participant loans 22,946
---------- ----------
Total investments 6,523,667 6,642,499
RECEIVABLES:
Employer's matching contributions 10,267 20,238
Participants' contributions 10,463 20,472
Employer profit sharing contributions 461,911 466,034
Investment fund transfer 242,902
---------- ----------
Total receivables 482,641 749,646
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $7,006,308 $7,392,145
========== ==========
See notes to financial statements.
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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, 2001
--------------------------------------------------------------------------------
ADDITIONS:
Additions to net assets attributed to:
Interest and dividends $ 113,840
Contributions:
Employer 819,116
Participant 375,225
Rollovers 66,667
-----------
Total additions 1,374,848
DEDUCTIONS:
Net depreciation in fair value of investments (1,398,886)
Deductions from net assets attributed to benefits paid to participants (361,799)
-----------
Total deductions (1,760,685)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 7,392,145
-----------
End of year $ 7,006,308
===========
See notes to financial statements
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PICO HOLDINGS, INC. EMPLOYEES 401(k)
RETIREMENT PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2001 and 2000
--------------------------------------------------------------------------------
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 $170,000 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 as
applicable, and allocations of (a) the Plan Sponsor's discretionary profit
sharing contributions and (b) Plan earnings, and debited for withdrawals
as applicable. 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.
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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. No loans were outstanding at September 30, 2001.
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, 2001 and 2000 were
$82,389 and $61,595, 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.
TAX STATUS - The Internal Revenue Service has determined and informed the
Plan Sponsor by a letter dated December 7, 1994, that the Plan and related
trust are designed in accordance with applicable sections of the Internal
Revenue Code (IRC). Although the Plan has been amended since receiving the
determination letter, the Plan administrator and the Plan's tax counsel
believe that the Plan is designed and is currently being operated in
compliance with the applicable requirements of the IRC.
RECLASSIFICATIONS - Certain amounts in the 2000 financial statements have
been reclassified to conform with the 2001 presentation.
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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 fund 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 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 utilizes various investment
instruments. Investment securities, in general, are exposed to various
risks, such as interest rate, credit and overall market volatility. 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
benefits.
3. INVESTMENTS
The Plan's investments which exceeded 5% of net assets available for
benefits as of September 30 consisted of the following:
2001 2000
Smith Barney Money Market Government Portfolio $1,827,049 $1,797,729
American Century Ultra Fund 711,112 877,492
Neuberger Focus Trust Fund 489,807 662,668
PICO Stock 646,614 651,362
Dreyfus Founders Discovery Fund 351,388 566,382
Strong Government Securities 635,752 517,538
Royce Premier Fund 400,290
Scudder International Fund 443,836
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.
The Plan Sponsor pays all administrative expenses of the Plan.
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PICO HOLDINGS, INC. EMPLOYEES 401(k)
RETIREMENT PLAN AND TRUST
SCHEDULE H ITEM 4i - SUPPLEMENTAL SCHEDULE OF ASSETS
AS OF SEPTEMBER 30, 2001
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NUMBER FAIR
OF MARKET
DESCRIPTION SHARES COST VALUE
INVESTMENTS - MUTUAL FUNDS:
ABN AMRO Montag & Caldwell Growth - N Share 4,497 $ 134,431 $ 98,572
American Century Ultra Fund 29,096 1,164,902 711,112
Citi S&P 500 Index Funds 14,396 194,380 153,033
Dreyfus Emerging Markets 9,636 110,658 90,197
Dreyfus Founders Discovery 15,251 630,466 351,388
Dreyfus Premier Core Value 7,405 222,718 190,693
Gabelli Growth Fund 6,792 284,333 164,639
Gabelli Global Growth Fund 1,821 36,524 25,263
INVESCO Health Sciences 3,767 188,303 180,011
Loomis Sayles Bond Fund 944 10,729 9,811
Mercury HW International Value 741 18,454 14,653
Neuberger Berman Focus Trust 22,603 732,585 489,807
Pilgrim GNMA Income Fund 8,696 72,073 76,869
Royce Premier Fund 44,133 456,923 400,290
Scudder International Fund 9,412 508,405 332,991
Smith Barney Money Market - Government Portfolio 1,827,049 1,827,049 1,827,049
Strong Government Securities 57,534 594,957 635,752
Credit Suisse Warburg Pincus 12,472 122,077 123,097
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Total Mutual Funds 7,309,967 5,875,227
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PICO STOCK 58,783 704,415 646,614
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TOTAL $8,014,382 $6,521,841
========== ==========
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PICO HOLDINGS, INC. EMPLOYEES 401(k)
RETIREMENT PLAN AND TRUST
SCHEDULE H ITEM 4j - SCHEDULE OF REPORTABLE TRANSACTIONS
SEPTEMBER 30, 2001
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PURCHASES/ PROCEEDS COST OF NET GAIN
TRANSFERS OF SALES ASSETS (LOSS)
IN SERIES (including individual transactions):
Smith Barney Money Market - Government Portfolio $ 608,046 $ 608,046 $ -
Smith Barney Money Market - Government Portfolio $ 578,726 578,726 -
INDIVIDUAL:
There were no individual transactions which exceeded 5% of Net Assets
Available for Benefits.
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PICO HOLDINGS, INC.
EMPLOYEES 401(k) RETIREMENT PLAN & TRUST
ANNUAL REPORT ON FORM 11-K
For plan year ended September 30, 2001
INDEX TO THE EXHIBITS
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Exhibit Number Description
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1 Consent of Deloitte & Touche LLP, Independent Auditors
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