Item 1. BUSINESS
INTRODUCTION
Argonaut Group, Inc. ("Argonaut Group") is a holding company whose subsidiaries are primarily engaged in the selling, underwriting, and servicing of workers compensation and other lines of property-casualty insurance. Workers compensation accounted for 86% of premiums in 1994. See "Item 6. Selected Financial Data" for certain financial information regarding industry segments in which the Company operates. Argonaut Group was incorporated in Delaware and was a wholly-owned subsidiary of Teledyne, Inc. ("Teledyne") until 1986, when Teledyne distributed to its shareholders all of the outstanding shares of common stock of Argonaut Group. Argonaut Group's executive offices are located at 1800 Avenue of the Stars, Suite 1175, Los Angeles, California 90067, telephone 310.553.0561. The term "the Company" refers to Argonaut Group and all its subsidiaries.
Argonaut Insurance Company ("Argonaut Insurance"), Argonaut Group's larger insurance subsidiary, was established in California in 1948. Workers compensation is the primary line of insurance written by Argonaut Insurance and its subsidiaries: Argonaut-Midwest Insurance Company, Argonaut-Northwest Insurance Company, Argonaut-Southwest Insurance Company, and Georgia Insurance Company. Argonaut Insurance and these subsidiaries also write complementary lines of commercial insurance for their clients, primarily consisting of general and automobile liability.
Great Central Insurance Company ("Great Central") is Argonaut Group's other principal insurance subsidiary. Established in Illinois in 1948, Great Central specializes in providing commercial multiple peril insurance for certain classes of insureds. Argonaut Insurance is Great Central's immediate parent.
AGI Properties, Inc. ("AGI Properties"), a non-insurance company, owns and leases certain real properties. AGI Properties was incorporated in California in 1970. Argonaut Insurance is AGI Properties' immediate parent.
PRODUCTS
The Company has two primary product lines: workers compensation insurance and other property-casualty insurance. Incorporated herein by reference is the information appearing as "Note 9 - Business Segments" in the Notes to the Consolidated Financial Statements of the Annual Report. See Exhibit Index.
WORKERS COMPENSATION
Workers compensation insurance is a statutory system which provides for compensation of a policyholder's employees and their dependents for injuries (other than self-inflicted wounds) arising out of or suffered in the course of the employee's
employment, even though the injuries may have resulted from the negligence or wrongful conduct of the employee himself or any other person. Workers compensation insurance is sold primarily by Argonaut Insurance. Premiums for this line of business were $240.2 million, $280.0 million, and $289.6 million, in 1994, 1993, and 1992, respectively.
OTHER PROPERTY-CASUALTY INSURANCE
This product includes general and automobile liability, commercial multiple- peril, and various other insurance coverages.
Argonaut Insurance offers general and automobile liability and other insurance to commercial clients in conjunction with workers compensation insurance. Liability insurance compensates third parties for damages resulting from the actions of the insured.
Commercial multiple-peril insurance, Great Central's primary product, is a composite product designed for the small-to-medium sized business which needs basic insurance coverage and simple insurance administration. Commercial multiple-peril policies generally cover property, plant, inventory, general liability, and associated coverages. Premiums for these product lines were $39.5 million, $35.4 million, and $38.8 million, in 1994, 1993, and 1992, respectively.
CEDED REINSURANCE
The Company's policy regarding reinsurance is based upon the capitalization of the subsidiaries. The goal is to limit the exposure to surplus from losses resulting from catastrophes and large or unusually hazardous risks.
As is the case with direct premiums written, premium revenue on reinsurance contracts is recognized ratably over the period to which the premium relates.
Argonaut Insurance's limit of retention on its primary reinsurance treaty is $2 million. Great Central's limit of retention on its primary reinsurance treaty is $300,000.
Incorporated herein by reference is the information appearing as "Note 3 - Reinsurance" in the Notes to the Consolidated Financial Statements of the Annual Report. See Exhibit Index.
COMPETITION
The property-casualty insurance industry is characterized by a large number of competing companies and modest market shares by industry participants. According to A.M. Best, a leading insurance industry rating and analysis firm, there are about 2,300 property-casualty insurance companies operating in the United States, with the 200 largest companies writing about 80% of the industry's premiums.
The Company's principal competitors cannot be easily classified. The Company's
principal lines of business are written by numerous insurance companies. Competition for any one account may come from a very large national firm or a smaller regional company selling either directly or through agents and brokers. For the Company's principal line of business, workers compensation, additional competition comes from state workers compensation funds.
REGULATION
On November 8, 1988, California voters passed an initiative known as Proposition 103. The Proposition, in part, provides for a roll-back of rates for certain lines of business (excluding workers compensation) to 20% below rate levels of November 8, 1987. The new California Insurance Commissioner has requested that the Company meet with the Insurance Department to resolve what liability, if any, it has under Proposition 103. While we have agreed to do so, management believes that the Company is in compliance with such roll-back requirements, and that any potential contingent liability would be immaterial. Therefore, there is no provision in the accompanying financial statements for any liability or loss related to Proposition 103.
Beginning in 1994, the Company's insurance subsidiaries are subject to the Risk- Based Capital (RBC) for Insurers Model Act. The RBC calculation takes into account: (1) asset risk, (2) credit risk, (3) underwriting risk, and (4) all other relevant risks. The RBC for Insurers Model Act provides for four levels of regulatory authority: (1) Company Action Level Event, (2) Regulatory Action Level Event, (3) Authorized Control Level Event, and (4) Mandatory Control Level Event. These four levels of authority provide for ever increasing regulatory remedies for companies that fail to comply with the RBC for Insurers Model Act.
As of December 31, 1994, preliminary calculations show that the Company's insurance subsidiaries RBC coverage far exceeds the minimum required.
The Company's insurance subsidiaries are members of the statutorily created insolvency guarantee associations in all states where they are authorized to transact business. These associations were formed for the purpose of paying claims of insolvent companies. The Company is assessed its pro rata share of such claims based upon its premium writings, subject to a maximum annual assessment per line of insurance. Such costs can generally be recovered through surcharges on future premiums. The Company does not believe that assessments on current insolvencies will have a material effect on its financial condition or results of operations.
The Company has no policyholder dividend restrictions.
Under the provisions of the California Insurance Code, there is a maximum amount of shareholder dividends which can be paid without prior approval of the Insurance Commissioner. Under these provisions, as of December 31, 1994, Argonaut Insurance could pay to Argonaut Group a maximum dividend of $57.6 million without the Insurance Commissioner's approval.
MARKETING
Argonaut Insurance and Great Central Insurance operate in substantially different markets.
Argonaut Insurance is licensed to write insurance in 50 states and the District of Columbia. Its products are distributed primarily through agents and brokers. Argonaut Insurance's target markets are companies whose workers compensation needs will result in annual premiums of between $250,000 and $5 million and classes of insurance which require specialized knowledge to (a) underwrite prudently and (b) control losses through cooperative efforts to enhance the safety of the workplace. These classes include (a) contractors, (b) wholesalers, retailers, light manufacturers and service firms, and (c) clients who use self-insurance plans to meet some or all of their insurance needs.
Argonaut Insurance's primary line of business, workers compensation insurance, accounts for 91% of its premiums (81% of total consolidated premiums). These policies are written on a retrospectively rated basis. Argonaut Insurance's risk regarding inadequate price levels is mitigated to a certain extent as the insured will have to pay additional premiums (or will be refunded premiums) based upon their actual loss experience.
Great Central is authorized to operate in 33 states and considers itself to be a specialty company with a defined target market. Great Central's dominant product is commercial multiple-peril. Great Central's policies are marketed through agents.
Neither Argonaut Insurance nor Great Central market any of their policies through managing general agents.
RUN OFF LINES
Incorporated herein by reference is the information appearing as "Note 12 - Run Off Lines" in the Notes to the Consolidated Financial Statements of the Annual Report. See Exhibit Index.
Loss ratios for the run off line of business are not meaningful as there are no premiums associated with this line of business.
INVESTMENTS
The Company's investment portfolio continues to emphasize high quality fixed income investments. As a percentage of the total investment portfolio, U.S. Treasury securities continue to comprise the majority of the Company's holdings. Obligations of states and political subdivisions have decreased from 1993 as a result of maturities and sales. The proceeds from these maturities and sales were re-invested in high quality non-redemptive preferred stocks. Corporate securities continue to decrease as a result of maturities.
The Company's investment policy is to invest only in investment-grade securities. We do not invest in high-yield or so called "junk bonds". We have no derivatives, speculative real estate, or mortgage obligations.
Incorporated herein by reference is the information appearing as "Note 2 - Investments" and "Note 7 - Net Investment Income" in the Notes to the Consolidated Financial Statements of the Annual Report. See Exhibit Index.
RESERVES FOR LOSSES AND LOSS ADJUSTMENT EXPENSES
Incorporated herein by reference is the information appearing as "Note 4 - Reserves for Losses and Loss Adjustment Expenses" in the Notes to the Consolidated Financial Statements of the Annual Report. See Exhibit Index.
Reserves for environmental claims were $23.4 million and $32.8 million at December 31, 1994 and 1993, respectively.
The following tables indicate the manner in which reserves for losses and loss adjustment expenses at the end of a particular year change as time passes. The first table presented is net of the effects of reinsurance. The second table presented includes only amounts related to direct insurance. Reserves for losses and loss adjustment expenses and cumulative paid amounts on direct insurance are not available prior to 1989; therefore, the second table reflects only the past 6 years development.
The first line shows the reserves as originally reported at the end of the stated year. The second section shows the cumulative amounts paid as of the end of successive years related to those reserves. The third section shows the original recorded reserves as of the end of successive years adjusted to reflect facts and circumstances later discovered. The last line, cumulative deficiency or redundancy, compares the adjusted reserves to the reserves as originally established and shows that the reserves as originally recorded were either inadequate or excessive to cover the estimated cost of claims as of December 31, 1994.
Conditions and trends that have affected the development of these reserves in the past will not necessarily recur in the future. It would not be appropriate to use this cumulative history in the projection of future performance.
CAPITAL ADEQUACY
Several measures of capital adequacy are common in the property-casualty industry. The two most often used are (a) premium-to-surplus (which measures pressures on capital from inadequate pricing) and, (b) reserves-to-surplus (which measures pressure on capital from inadequate loss and loss adjustment expense reserves).
The following table shows the consolidated premium-to-surplus and reserves-to- surplus ratios of the Company's insurance subsidiaries (on a statutory basis).
Year Ended December 31, ------------------------------ 1994 1993 1992 ----- ----- ----- Ratio of: Premium-to-surplus 0.4 0.5 0.5 ==== ==== ====
Reserves-to-surplus 1.6 1.9 2.3 ==== ==== ====
The Company believes that its 1994 capital ratios are satisfactory.
RATINGS
The Company's insurance subsidiaries are rated annually by A.M. Best. A.M. Best is generally considered to be the leading insurance rating agency, and its ratings are used by insurance buyers, agents and brokers, and other insurance companies as an indicator of financial strength and security, and are not intended to reflect the quality of the rated company for investment purposes. Argonaut Insurance and its pooled subsidiaries were awarded an "A+" (Superior) rating in 1994 and 1993. An "A+" rating is the second highest rating A.M. Best awards. Great Central is rated separately and was awarded an "A-" (Excellent) rating in both 1994 and 1993. "A-" is the fourth highest of A.M. Best's ratings.
During 1994, Standard & Poor's assigned its "AA+" rating to the claims-paying ability of Argonaut Insurance and its pooled subsidiaries.
EMPLOYEES
At December 31, 1994, the Company employed 631 full-time employees. Of this total, Argonaut Insurance employed 523 people (389 professional managerial and 134 clerical/operational). Great Central employed 94 people (56 professional managerial and 38 clerical/operational). Argonaut Group employed 14 people (11 professional managerial and 3 clerical/operational). The Company is not a party to any collective bargaining agreements.
Item 2.
Item 2. PROPERTIES
Argonaut Insurance's headquarters are located in a facility which consists of an office building on approximately two acres of land in Menlo Park, California. Great Central's headquarters are located in a facility in Peoria, Illinois. Argonaut Insurance and Great Central own the buildings in which their headquarters are located. In addition, the Company has entered into short term leases in conjunction with its operations at various locations throughout the country. The Company believes that its properties are adequate for its present needs.
Item 3
Item 3 LEGAL PROCEEDINGS
The insurance subsidiaries of Argonaut Insurance are parties to various legal proceedings which are considered routine and incidental to their business and are not material to the Company's financial condition or results of operations.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of Argonaut Group's security holders during the last quarter of its fiscal year ended December 31, 1994.
Part II
Item 5.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The Company's common stock is traded in the over-the-counter market and is included in the NASDAQ National Market System. The closing price on February 28, 1995 was $30.750 per share. The information on high and low common stock prices set forth under the caption "Common Stock Market Prices" in the Annual Report to Shareholders of Argonaut Group for the fiscal year ended December 31, 1994, is incorporated herein by reference. See Exhibit Index.
HOLDERS OF COMMON STOCK
The number of holders of record of the Company's Common Stock as of February 28, 1995 was 10,291.
DIVIDENDS
The information set forth under the caption "Management's Discussion and Analysis of Results of Operations and Financial Condition - Liquidity and Capital Resources" in the Annual Report to Shareholders of Argonaut Group for the fiscal year ended December 31, 1994 and in "Note 6 - Shareholders' Equity" in the Notes to the Consolidated Financial Statements of the Annual Report, is incorporated herein by reference. See Exhibit Index.
Item 6.
Item 6. SELECTED FINANCIAL DATA
The information set forth under the caption "Selected Financial Data" in the Annual Report to Shareholders of Argonaut Group for the fiscal year ended December 31, 1994, is incorporated herein by reference. See Exhibit Index.
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information set forth under the caption "Management's Discussion and Analysis of Results of Operations and Financial Condition" in the Annual Report to Shareholders of Argonaut Group for the fiscal year ended December 31, 1994, is incorporated herein by reference. See Exhibit Index.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Report of Independent Public Accountants and consolidated financial statements and related notes of Argonaut Group, Inc. and subsidiaries listed on the index to financial statements set forth in Item 14(a)1 of this Form 10-K Report are incorporated herein by reference to the Annual Report to Shareholders of Argonaut Group for the fiscal year ended December 31, 1994.
The Company does not identify each asset with any one line of business and any such allocation would be arbitrary.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Part III
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference is the information appearing under the captions "Election of Directors", "Executive Officers", and "Security Ownership of Principal Shareholders and Management" in the registrant's Proxy Statement to be filed with the Securities and Exchange Commission relating to the registrant's Annual Meeting of Shareholders to be held on April 25, 1995.
Item 11.
Item 11. EXECUTIVE COMPENSATION
Incorporated herein by reference is the information appearing under the captions "Compensation of Executive Officers", "Indemnity Agreements", "Pension Plan", and "Compensation of Directors" in the registrant's Proxy Statement to be filed with the Securities and Exchange Commission relating to the registrant's Annual Meeting of Shareholders to be held on April 25, 1995.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference is the information appearing under the caption "Security Ownership of Principal Shareholders and Management" in the registrant's Proxy Statement to be filed with the Securities and Exchange Commission relating to the registrant's Annual Meeting of Shareholders to be held on April 25, 1995.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference is the information appearing under the caption "Compensation and Stock Option Committee Interlocks and Insider Participation" in the registrant's Proxy Statement to be filed with the Securities and Exchange Commission relating to the registrant's Annual Meeting of Shareholders to be held on April 25, 1995.
Part IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, and REPORTS ON FORM 8-K
(a)1. Financial Statements
Selected Financial Data
Report of Independent Public Accountants
Consolidated Balance Sheets - December 31, 1994 and 1993
Consolidated Statements of Income For the Years Ended December 31, 1994, 1993, and 1992
Consolidated Statements of Shareholders' Equity For the Years Ended December 31, 1994, 1993, and 1992
Consolidated Statements of Cash Flows For the Year Ended December 31, 1994, 1993, and 1992
Notes to Consolidated Financial Statements
Quarterly Financial Data (Unaudited)
Common Stock Market Prices (Unaudited)
Management's Discussion and Analysis of Results of Operations and Financial Condition
(a)2. Financial Statement Schedules
Report of Independent Public Accountants on Schedules
Schedule I - Condensed Financial Information of Registrant December 31, 1994 and 1993
Schedule V - Supplementary Insurance Information December 31, 1994, 1993, and 1992
All other schedules and notes specified under Regulation S-X are omitted because they are either not applicable, not required, or the information called for therein appears in response to the items of Form 10-K or in the financial statements or notes thereto.
(a)3. Exhibits
The following exhibits are numbered in accordance with Item 601 of Regulation S- K and, except as noted, are filed herewith.
2. Information Statement of Registrant (incorporated by reference to the Exhibit 2 to the Registrant's Form 10 Registration Statement dated September 3, 1986, filed with the Securities and Exchange Commission on September 4, 1986).
3.1 Certificate of Incorporation of Registrant (incorporated by reference to the Exhibit 3.1 to the Registrant's Form 10 Registration Statement dated September 3, 1986, filed with the Securities and Exchange Commission on September 4, 1986).
3.2 Bylaws of the Registrant (incorporated by reference to the Exhibit 3.2 to the Registrant's Form 10 Registration Statement dated September 3, 1986, filed with the Securities and Exchange Commission on September 4, 1986).
10.1 Argonaut Group, Inc. 1986 Stock Option Plan (incorporated by reference to the Exhibit 10.1 to the Registrant's Form 10 Registration Statement dated September 3, 1986, filed with the Securities and Exchange Commission on September 4, 1986).
10.2 Argonaut Group, Inc. Retirement Plan (incorporated by reference to the Exhibit 10.2 to the Registrant's Form 10 Registration Statement dated September 3, 1986, filed with the Securities and Exchange Commission on September 4, 1986).
10.3 Tax Agreement by and among Registrant and its subsidiaries and Teledyne, Inc. (incorporated by reference to the Exhibit 10.3 to the Registrant's Form 10 Registration Statement dated September 3, 1986, filed with the Securities and Exchange Commission on September 4, 1986).
10.4 1986 Stock Option Plan, as amended (incorporated by reference to the Exhibit 4.3 to the Registrant's Registration Statement on Form S-8 filed with the Securities and Exchange Commission on February 13, 1987).
10.5 401(k) Retirement Savings Plan (incorporated by reference to the Exhibit 10.4 to the Registrant's Form 10-K filed with the Securities and Exchange Commission on February 28, 1989).
10.6 Employee Stock Investment Plan (incorporated by reference to the Exhibit 4.3 to the Registrant's Registration Statement on Form S-8 filed with the Securities and Exchange Commission on October 10, 1989).
13. The following materials are excerpted from the Annual Report to Shareholders of Argonaut Group, Inc. for the fiscal year ended December 31, 1994:
a) Selected Financial Data b) Financial Statements c) Common Stock Market Prices d) Management's Discussion and Analysis of Results of Operations and Financial Condition
21. Subsidiaries of Registrant (incorporated by reference to the Exhibit 21 to the Registrant's Form 10 Registration Statement dated September 3, 1986, filed with the Securities and Exchange Commission on September 4, 1986).
23. Consent of Independent Public Accountants
27. Financial Data Schedule for December 31, 1994 Form 10-K
28P. Combined Statutory Schedule P of Argonaut Insurance Company and Great Central Insurance Company
(b) Reports on Form 8-K
There were no Reports filed on Form 8-K for the quarter ended December 31, 1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ARGONAUT GROUP, INC.
By /s/ Charles E. Rinsch -------------------------- Charles E. Rinsch President
Date: March 17, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date - --------- ----- ----
/s/ Charles E. Rinsch President, Chief Executive March 17, 1995 - ---------------------- Officer, and Director Charles E. Rinsch
/s/ James B Halliday Vice President, Secretary, March 17, 1995 - ---------------------- and Treasurer (principal James B Halliday financial and accounting officer)
/s/ George A. Roberts Director March 17, 1995 - ---------------------- George A. Roberts
/s/ Henry E. Singleton Director March 17, 1995 - ---------------------- Henry E. Singleton
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To the Shareholders of Argonaut Group, Inc.
We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in Argonaut Group, Inc.'s annual report to shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated January 5, 1995. Our audit was made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The schedules listed in Part IV, Item 14(a)(2) are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic consolidated financial statements. These schedules have been subjected to the auditing procedures applied in our audit of the basic consolidated financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
San Francisco, California January 5, 1995
ARGONAUT GROUP, INC. SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT ($ in millions)
BALANCE SHEET December 31, 1994 1993 ------ ------ Assets Short-term investments $ - $ 9.8 Cash & cash equivalents 0.6 4.7 Investment in subsidiary 609.0 556.0 Cost in excess of net assets purchased 46.6 49.4 Deferred Federal income taxes receivable 87.6 105.6 Due from/to subsidiaries (10.5) 3.7 Other assets 10.5 2.5 ------ ------ $743.8 $731.7 ====== ======
Liabilities & Shareholders' Equity Income taxes payable (receivable) $ (1.8) $ (3.2) Other liabilities - 5.3 Shareholders' equity 745.6 729.6 ------ ------ $743.8 $731.7 ====== ======
STATEMENT OF OPERATIONS For The Year Ended December 31, 1994 1993 1992 ------ ------ ------ Revenues $ 3.2 $ 3.1 $ 3.2
Expenses: Amortization of cost in excess of net assets 2.8 2.8 2.8 Other expenses 4.1 7.7 3.2 ------ ------ ------ Loss before tax and undistributed earnings (3.7) (7.4) (2.8) Provision for income taxes 14.8 (0.8) 5.7 ------ ------ ------ Net loss before equity in earnings of subsidiary (18.5) (6.6) (8.5) Equity in earnings of subsidiary 95.2 95.7 94.8 ------ ------ ------ Income before cumulative effect of change in accounting for income taxes 76.7 89.1 86.3 Cumulative effect of change in accounting for income taxes - - 61.8 ------ ------ ------ Net Income $ 76.7 $ 89.1 $148.1 ====== ====== ======
ARGONAUT GROUP, INC. SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT ($ in millions)
STATEMENT OF CASH FLOWS For The Year Ended December 31, 1994 1993 1992 ------ ------ ------ Cash flows from operating activities: Net income $ 76.7 $ 89.1 $148.1 Adjustments to reconcile net income to net cash provided by operations: Cumulative effect of change in accounting for income taxes - - (61.8) Amortization 2.8 2.8 2.8 Earnings in subsidiary (95.2) (95.7) (94.8) Dividend from subsidiary 31.6 31.5 31.5 Decrease in deferred Federal income taxes receivable 18.0 7.7 5.7 Decrease (increase) in due from/ to subsidiaries 14.2 (2.5) (0.2) Decrease in income taxes payable 1.4 (8.1) (0.8) Other, net (13.1) 6.9 (0.2) ------ ------ ------ 36.4 31.7 30.3 ------ ------ ------ Cash flows from investing activities: Decrease (increase) in short-term investments 9.8 (9.8) - ------ ------ ------ 9.8 (9.8) - ------ ------ ------ Cash flows from financing activities: Repurchase of common stock (21.9) - (24.5) Payment of cash dividend (28.7) (24.6) (20.8) Exercise of stock options 0.3 1.1 0.5 ------ ------ ------ (50.3) (23.5) (44.8) ------ ------ ------ Increase (decrease) in cash & cash equivalents (4.1) (1.6) (14.5) Cash & cash equivalents, beginning of period 4.7 6.3 20.8 ------ ------ ------ Cash & cash equivalents, end of period $ 0.6 $ 4.7 $ 6.3 ====== ====== ======