2018 Q1 Form 10-Q Financial Statement

#000092262118000025 Filed on April 26, 2018

View on sec.gov

Income Statement

Concept 2018 Q1 2017 Q1
Revenue $572.2M $399.3M
YoY Change 43.29% 6.56%
Cost Of Revenue $494.6M
YoY Change
Gross Profit $77.60M
YoY Change
Gross Profit Margin 13.56%
Selling, General & Admin $59.70M
YoY Change 12.01%
% of Gross Profit
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization
YoY Change
% of Gross Profit
Operating Expenses $494.6M $332.4M
YoY Change 48.81% 8.24%
Operating Profit $77.57M $66.94M
YoY Change 15.88% -1.07%
Interest Expense $553.0K $166.0K
YoY Change 233.13% -94.28%
% of Operating Profit 0.71% 0.25%
Other Income/Expense, Net $44.00K -$409.0K
YoY Change -110.76%
Pretax Income $83.22M $72.95M
YoY Change 14.07% 3.89%
Income Tax $17.46M $25.08M
% Of Pretax Income 20.98% 34.38%
Net Earnings $65.76M $47.88M
YoY Change 37.35% 4.32%
Net Earnings / Revenue 11.49% 11.99%
Basic Earnings Per Share
Diluted Earnings Per Share $1.127M $818.8K
COMMON SHARES
Basic Shares Outstanding
Diluted Shares Outstanding

Balance Sheet

Concept 2018 Q1 2017 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $216.2M $188.0M
YoY Change 15.0% 15.34%
Cash & Equivalents $119.6M $110.4M
Short-Term Investments $96.57M $77.00M
Other Short-Term Assets $43.00M $39.00M
YoY Change 10.26% 5.41%
Inventory
Prepaid Expenses
Receivables $422.0M $399.0M
Other Receivables $39.00M $0.00
Total Short-Term Assets $720.7M $625.7M
YoY Change 15.19% 12.14%
LONG-TERM ASSETS
Property, Plant & Equipment $88.00M $69.00M
YoY Change 27.54% 16.95%
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments $44.11M $54.46M
YoY Change -18.99% -34.32%
Other Assets $45.30M $21.22M
YoY Change 113.44% 8.03%
Total Long-Term Assets $852.7M $864.3M
YoY Change -1.34% 10.43%
TOTAL ASSETS
Total Short-Term Assets $720.7M $625.7M
Total Long-Term Assets $852.7M $864.3M
Total Assets $1.573B $1.490B
YoY Change 5.6% 11.14%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $96.00M $82.00M
YoY Change 17.07% 3.8%
Accrued Expenses $30.00M $33.00M
YoY Change -9.09% 3.13%
Deferred Revenue $31.95M
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $447.6M $404.2M
YoY Change 10.74% 8.73%
LONG-TERM LIABILITIES
Long-Term Debt $74.73M $24.75M
YoY Change 201.89%
Other Long-Term Liabilities $1.029M $2.972M
YoY Change -65.38% 98.13%
Total Long-Term Liabilities $75.76M $27.73M
YoY Change 173.24% 1748.33%
TOTAL LIABILITIES
Total Short-Term Liabilities $447.6M $404.2M
Total Long-Term Liabilities $75.76M $27.73M
Total Liabilities $733.3M $660.2M
YoY Change 11.08% 18.79%
SHAREHOLDERS EQUITY
Retained Earnings $2.103B $2.077B
YoY Change 1.21% 3.56%
Common Stock $16.46M $16.29M
YoY Change 1.04% -0.12%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $840.2M $829.9M
YoY Change
Total Liabilities & Shareholders Equity $1.573B $1.490B
YoY Change 5.6% 11.14%

Cashflow Statement

Concept 2018 Q1 2017 Q1
OPERATING ACTIVITIES
Net Income $65.76M $47.88M
YoY Change 37.35% 4.32%
Depreciation, Depletion And Amortization
YoY Change
Cash From Operating Activities -$40.23M -$35.12M
YoY Change 14.54% 61.11%
INVESTING ACTIVITIES
Capital Expenditures -$8.700M -$3.600M
YoY Change 141.67% 2.86%
Acquisitions
YoY Change
Other Investing Activities -$8.000M -$3.500M
YoY Change 128.57% -80.98%
Cash From Investing Activities -$16.74M -$7.081M
YoY Change 136.39% -67.52%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -$39.13M -$36.45M
YoY Change 7.34% 7.21%
NET CHANGE
Cash From Operating Activities -$40.23M -$35.12M
Cash From Investing Activities -$16.74M -$7.081M
Cash From Financing Activities -$39.13M -$36.45M
Net Change In Cash -$96.09M -$78.65M
YoY Change 22.17% 1.36%
FREE CASH FLOW
Cash From Operating Activities -$40.23M -$35.12M
Capital Expenditures -$8.700M -$3.600M
Free Cash Flow -$31.53M -$31.52M
YoY Change 0.03% 72.25%

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CY2017Q1 us-gaap Net Cash Provided By Used In Investing Activities
NetCashProvidedByUsedInInvestingActivities
-7081000 USD
CY2018Q1 us-gaap Net Cash Provided By Used In Investing Activities
NetCashProvidedByUsedInInvestingActivities
-16739000 USD
CY2017Q1 us-gaap Net Cash Provided By Used In Operating Activities
NetCashProvidedByUsedInOperatingActivities
-35122000 USD
CY2018Q1 us-gaap Net Cash Provided By Used In Operating Activities
NetCashProvidedByUsedInOperatingActivities
-40230000 USD
CY2017Q1 us-gaap Net Income Loss
NetIncomeLoss
47876000 USD
CY2018Q1 us-gaap Net Income Loss
NetIncomeLoss
65758000 USD
CY2017Q1 us-gaap Net Investment Income
NetInvestmentIncome
5981000 USD
CY2018Q1 us-gaap Net Investment Income
NetInvestmentIncome
6820000 USD
CY2017Q4 us-gaap Notes Receivable Related Parties Current
NotesReceivableRelatedPartiesCurrent
25000000 USD
CY2018Q1 us-gaap Notes Receivable Related Parties Current
NotesReceivableRelatedPartiesCurrent
25000000 USD
CY2017Q1 us-gaap Operating Expenses
OperatingExpenses
332376000 USD
CY2018Q1 us-gaap Operating Expenses
OperatingExpenses
494593000 USD
CY2017Q1 us-gaap Operating Income Loss
OperatingIncomeLoss
66940000 USD
CY2018Q1 us-gaap Operating Income Loss
OperatingIncomeLoss
77567000 USD
CY2017Q4 us-gaap Other Assets Noncurrent
OtherAssetsNoncurrent
28793000 USD
CY2018Q1 us-gaap Other Assets Noncurrent
OtherAssetsNoncurrent
45300000 USD
CY2018Q1 us-gaap Other Commitment
OtherCommitment
14300000 USD
CY2018Q1 us-gaap Other Commitments Description
OtherCommitmentsDescription
Contractual commitments to invest in limited partnership investments, consisting of private equity securities, mezzanine debt securities, and real estate activities.
CY2017Q1 us-gaap Other Comprehensive Income Availableforsale Securities Adjustment Net Of Tax Portion Attributable To Parent
OtherComprehensiveIncomeAvailableforsaleSecuritiesAdjustmentNetOfTaxPortionAttributableToParent
1521000 USD
CY2018Q1 us-gaap Other Comprehensive Income Availableforsale Securities Adjustment Net Of Tax Portion Attributable To Parent
OtherComprehensiveIncomeAvailableforsaleSecuritiesAdjustmentNetOfTaxPortionAttributableToParent
-5427000 USD
CY2017Q4 us-gaap Other Liabilities Noncurrent
OtherLiabilitiesNoncurrent
1476000 USD
CY2018Q1 us-gaap Other Liabilities Noncurrent
OtherLiabilitiesNoncurrent
1029000 USD
CY2017Q1 us-gaap Other Nonoperating Income Expense
OtherNonoperatingIncomeExpense
-409000 USD
CY2018Q1 us-gaap Other Nonoperating Income Expense
OtherNonoperatingIncomeExpense
44000 USD
CY2017Q4 us-gaap Other Postretirement Defined Benefit Plan Liabilities Noncurrent
OtherPostretirementDefinedBenefitPlanLiabilitiesNoncurrent
423000 USD
CY2018Q1 us-gaap Other Postretirement Defined Benefit Plan Liabilities Noncurrent
OtherPostretirementDefinedBenefitPlanLiabilitiesNoncurrent
313000 USD
CY2017Q1 us-gaap Other Than Temporary Impairment Losses Investments Portion In Other Comprehensive Income Loss Before Tax Including Portion Attributable To Noncontrolling Interest Availableforsale Securities
OtherThanTemporaryImpairmentLossesInvestmentsPortionInOtherComprehensiveIncomeLossBeforeTaxIncludingPortionAttributableToNoncontrollingInterestAvailableforsaleSecurities
0 USD
CY2018Q1 us-gaap Other Than Temporary Impairment Losses Investments Portion In Other Comprehensive Income Loss Before Tax Including Portion Attributable To Noncontrolling Interest Availableforsale Securities
OtherThanTemporaryImpairmentLossesInvestmentsPortionInOtherComprehensiveIncomeLossBeforeTaxIncludingPortionAttributableToNoncontrollingInterestAvailableforsaleSecurities
0 USD
CY2017Q1 us-gaap Payments For Commissions
PaymentsForCommissions
182652000 USD
CY2018Q1 us-gaap Payments For Commissions
PaymentsForCommissions
192803000 USD
CY2017Q1 us-gaap Payments For Other Operating Activities
PaymentsForOtherOperatingActivities
61000000 USD
CY2018Q1 us-gaap Payments For Other Operating Activities
PaymentsForOtherOperatingActivities
59033000 USD
CY2017Q1 us-gaap Payments For Proceeds From Loans Receivable
PaymentsForProceedsFromLoansReceivable
1387000 USD
CY2018Q1 us-gaap Payments For Proceeds From Loans Receivable
PaymentsForProceedsFromLoansReceivable
17874000 USD
CY2017Q1 us-gaap Payments For Proceeds From Productive Assets
PaymentsForProceedsFromProductiveAssets
3551000 USD
CY2018Q1 us-gaap Payments For Proceeds From Productive Assets
PaymentsForProceedsFromProductiveAssets
8691000 USD
CY2017Q1 us-gaap Payments Of Dividends Common Stock
PaymentsOfDividendsCommonStock
36441000 USD
CY2018Q1 us-gaap Payments Of Dividends Common Stock
PaymentsOfDividendsCommonStock
39116000 USD
CY2017Q1 us-gaap Payments To Acquire Available For Sale Securities
PaymentsToAcquireAvailableForSaleSecurities
65521000 USD
CY2018Q1 us-gaap Payments To Acquire Available For Sale Securities Debt
PaymentsToAcquireAvailableForSaleSecuritiesDebt
77263000 USD
CY2017Q1 us-gaap Payments To Acquire Limited Partnership Interests
PaymentsToAcquireLimitedPartnershipInterests
111000 USD
CY2018Q1 us-gaap Payments To Acquire Limited Partnership Interests
PaymentsToAcquireLimitedPartnershipInterests
31000 USD
CY2017Q1 us-gaap Payments To Employees
PaymentsToEmployees
47442000 USD
CY2018Q1 us-gaap Payments To Employees
PaymentsToEmployees
54668000 USD
CY2017Q4 us-gaap Prepaid Expense And Other Assets Current
PrepaidExpenseAndOtherAssetsCurrent
34890000 USD
CY2018Q1 us-gaap Prepaid Expense And Other Assets Current
PrepaidExpenseAndOtherAssetsCurrent
43061000 USD
CY2017Q1 us-gaap Proceeds From Fees Received
ProceedsFromFeesReceived
7258000 USD
CY2018Q1 us-gaap Proceeds From Fees Received
ProceedsFromFeesReceived
7145000 USD
CY2017Q1 us-gaap Proceeds From Interest And Dividends Received
ProceedsFromInterestAndDividendsReceived
7553000 USD
CY2018Q1 us-gaap Proceeds From Interest And Dividends Received
ProceedsFromInterestAndDividendsReceived
8951000 USD
CY2017Q1 us-gaap Proceeds From Limited Partnership Investments
ProceedsFromLimitedPartnershipInvestments
3396000 USD
CY2018Q1 us-gaap Proceeds From Limited Partnership Investments
ProceedsFromLimitedPartnershipInvestments
910000 USD
CY2017Q1 us-gaap Proceeds From Maturities Prepayments And Calls Of Available For Sale Securities
ProceedsFromMaturitiesPrepaymentsAndCallsOfAvailableForSaleSecurities
43460000 USD
CY2018Q1 us-gaap Proceeds From Maturities Prepayments And Calls Of Available For Sale Securities
ProceedsFromMaturitiesPrepaymentsAndCallsOfAvailableForSaleSecurities
28473000 USD
CY2017Q1 us-gaap Proceeds From Repayments Of Secured Debt
ProceedsFromRepaymentsOfSecuredDebt
-10000 USD
CY2018Q1 us-gaap Proceeds From Repayments Of Secured Debt
ProceedsFromRepaymentsOfSecuredDebt
-9000 USD
CY2017Q1 us-gaap Proceeds From Sale Of Available For Sale Securities
ProceedsFromSaleOfAvailableForSaleSecurities
16633000 USD
CY2018Q1 us-gaap Proceeds From Sale Of Available For Sale Securities Debt
ProceedsFromSaleOfAvailableForSaleSecuritiesDebt
57717000 USD
CY2017Q4 us-gaap Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
2140853000 USD
CY2018Q1 us-gaap Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
2129100000 USD
CY2018Q1 us-gaap Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
2102527000 USD
CY2018Q1 us-gaap Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Period
RevenueRemainingPerformanceObligationExpectedTimingOfSatisfactionPeriod
P4Y0M0D
CY2017Q1 us-gaap Revenues
Revenues
399316000 USD
CY2018Q1 us-gaap Revenues
Revenues
572160000 USD
CY2017Q4 us-gaap Stockholders Equity
StockholdersEquity
857344000 USD
CY2018Q1 us-gaap Stockholders Equity
StockholdersEquity
840155000 USD
CY2017Q4 us-gaap Stockholders Equity Before Treasury Stock
StockholdersEquityBeforeTreasuryStock
2003434000 USD
CY2018Q1 us-gaap Stockholders Equity Before Treasury Stock
StockholdersEquityBeforeTreasuryStock
1986245000 USD
CY2017Q4 us-gaap Treasury Stock Common Shares
TreasuryStockCommonShares
22110132 shares
CY2018Q1 us-gaap Treasury Stock Common Shares
TreasuryStockCommonShares
22110132 shares
CY2017Q4 us-gaap Treasury Stock Common Value
TreasuryStockCommonValue
1155668000 USD
CY2018Q1 us-gaap Treasury Stock Common Value
TreasuryStockCommonValue
1157331000 USD
CY2018Q1 us-gaap Nature Of Operations
NatureOfOperations
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Note 1.&#160; Nature of Operations</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Erie Indemnity Company ("Indemnity", "we", "us", "our") is a publicly held Pennsylvania business corporation that has since its incorporation in 1925 served as the attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange ("Exchange").&#160; The Exchange, which also commenced business in 1925, is a Pennsylvania-domiciled reciprocal insurer that writes property and casualty insurance. We function solely as the management company and all insurance operations are performed by the Exchange.</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Our primary function as attorney-in-fact is to perform policy issuance and renewal services on behalf of the subscribers at the Exchange. We also act as attorney-in-fact on behalf of the Exchange with respect to all claims handling and investment management services, as well as the service provider for all claims handling, life insurance, and investment management services for its insurance subsidiaries, collectively referred to as "administrative services". Acting as attorney-in-fact in these </font><font style="font-family:inherit;font-size:10pt;">two</font><font style="font-family:inherit;font-size:10pt;"> capacities is done in accordance with a subscriber's agreement (a limited power of attorney) executed individually by each subscriber (policyholder), which appoints us as their common attorney-in-fact to transact certain business on their behalf.&#160; Pursuant to the subscriber's agreement for acting as attorney-in-fact in these </font><font style="font-family:inherit;font-size:10pt;">two</font><font style="font-family:inherit;font-size:10pt;"> capacities,&#160;we earn a management fee calculated as a percentage of the direct and assumed premiums written by the Exchange.</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The policy issuance and renewal services we provide to the Exchange are related to the sales, underwriting and issuance of policies. The sales related services we provide include agent compensation and certain sales and advertising support services. Agent compensation includes scheduled commissions to agents based upon premiums written as well as additional commissions and bonuses to agents, which are earned by achieving targeted measures. The underwriting services we provide include underwriting and policy processing. The remaining services we provide include customer service and administrative support. We also provide information technology services that support all the functions listed above. Included in these expenses are allocations of costs for departments that support these policy issuance and renewal functions.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">By virtue of its legal structure as a reciprocal insurer, the Exchange does not have any employees or officers. Therefore, it enters into contractual relationships by and through an attorney-in-fact. Indemnity serves as the attorney-in-fact on behalf of the Exchange with respect to its administrative services. The Exchange's insurance subsidiaries also utilize Indemnity for these services in accordance with the service agreements between each of the subsidiaries and Indemnity. Claims handling services include costs incurred in the claims process, including the adjustment, investigation, defense, recording and payment functions. Life insurance management services include costs incurred in the management and processing of life insurance business. Investment management services are related to investment trading activity, accounting and all other functions attributable to the investment of funds. Included in these expenses are allocations of costs for departments that support these administrative functions. The amounts incurred for these services are reimbursed to Indemnity at cost in accordance with the subscriber's agreement and the service agreements. State insurance regulations require that intercompany service agreements and any material amendments be approved in advance by the state insurance department. </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Our results of operations are tied to the growth and financial condition of the Exchange. If any events occurred that impaired the Exchange&#8217;s ability to grow or sustain its financial condition, including but not limited to reduced financial strength ratings, disruption in the independent agency relationships, significant catastrophe losses, or products not meeting customer demands, the Exchange could find it more difficult to retain its existing business and attract new business. A decline in the business of the Exchange almost certainly would have as a consequence a decline in the total premiums paid and a correspondingly adverse effect on the amount of the management fees we receive. We also have an exposure to a concentration of credit risk related to the unsecured receivables due from the Exchange for its management fee. See Note 12, "Concentrations of Credit Risk".</font></div></div>
CY2018Q1 us-gaap Prior Period Reclassification Adjustment Description
PriorPeriodReclassificationAdjustmentDescription
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;text-decoration:underline;">Reclassifications</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Certain amounts previously reported in the 2017 financial statements have been reclassified for comparative purposes to conform to the current period&#8217;s presentation.&#160; Such reclassifications resulted from new accounting guidance and only affected the Statements of Operations. &#160;Most notably, "Commissions", "Salaries and employee benefits", and "All other operating expenses" have been combined within "Cost of operations - policy issuance and renewal services" in the Statements of Operations (See Note 3, "Revenue").&#160; These reclassifications had no effect on previously reported net income.</font></div></div>
CY2018Q1 us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;text-decoration:underline;">Use of estimates</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities 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.&#160; Actual results could differ from those estimates.</font></div></div>

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