-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QkRNrbZwF7fWKAMmLEjoQk2i2ZoNuvg4oY3AsUNPPIxEXmTvxLOunUWjUTE/SBD0 jC/NySnj5GfFQyWj5Ru47w== 0000059558-97-000062.txt : 19970627 0000059558-97-000062.hdr.sgml : 19970627 ACCESSION NUMBER: 0000059558-97-000062 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970626 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LINCOLN NATIONAL CORP CENTRAL INDEX KEY: 0000059558 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 351140070 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06028 FILM NUMBER: 97630598 BUSINESS ADDRESS: STREET 1: 200 E BERRY ST STREET 2: PO BOX 1110 CITY: FORT WAYNE STATE: IN ZIP: 46802 BUSINESS PHONE: 2194552000 11-K 1 COVER PAGE SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 11-K ANNUAL REPORT Pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year ended December 31, 1996 LINCOLN NATIONAL CORPORATION EMPLOYEES' SAVINGS AND PROFIT-SHARING PLAN (Full Title of Plan) [Current Reg. No. 33-52667] LINCOLN NATIONAL CORPORATION 200 East Berry Street Fort Wayne, Indiana 46802 (Name of Issuer and Principal Executive Office) FORM 11-K Lincoln National Corporation Employees' Savings and Profit-Sharing Plan TABLE OF CONTENTS Facing Sheet Financial Statements Signature Exhibit 23--Consent of Ernst & Young LLP, Independent Auditors Financial Statements and Schedules Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Years ended December 31, 1996 and 1995 with Report of Independent Auditors Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Financial Statements and Schedules Years ended December 31, 1996 and 1995 Contents Report of Independent Auditors Audited Financial Statements Statements of Net Assets Available for Plan Benefits Statements of Changes in Net Assets Available for Plan Benefits Notes to Financial Statements Schedules Schedule of Assets Held for Investment Purposes Schedule of Reportable Transactions Report of Independent Auditors Lincoln National Corporation Benefits Investment Committee Lincoln National Corporation We have audited the accompanying statements of net assets available for plan benefits of the Lincoln National Corporation Employees' Savings and Profit- Sharing Plan as of December 31, 1996 and 1995, and the related statements of changes in net assets available for plan benefits for the years then ended. 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 generally accepted auditing standards. 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 of the Plan at December 31, 1996 and 1995, and the changes in its net assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1996, and reportable transactions for the year then ended, are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the financial statements. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. Ernst & Young LLP Fort Wayne, Indiana June 2, 1997 Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Statements of Net Assets Available for Plan Benefits December 31 1996 1995 Assets Investments: Common stock--Lincoln National Corporation $109,451,501 $191,353,118 Segregated investment accounts--The Lincoln National Life Insurance Company Separate Accounts 72,586,832 95,253,320 Unallocated insurance contracts--The Lincoln National Life Insurance Company 30,194,850 76,276,541 Participant loans 8,740,008 15,852,291 Total investments 220,973,191 378,735,270 Cash and invested cash 198,023 3,918,059 Accrued interest receivable 23,986 30,578 Other receivables 1,319,840 0 Contributions receivable from Employer Companies 8,849,872 12,004,120 Total assets 231,364,912 394,688,027 Liability--miscellaneous payables 857,802 1,147,957 Net assets available for plan benefits $230,507,110 $393,540,070 See accompanying notes. Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Statements of Changes in Net Assets Available for Plan Benefits Year ended December 31 1996 1995 Additions: Net realized and unrealized appreciation (depreciation) in fair value of investments $ (3,017,943) $ 85,420,076 Investment income: Dividends--Lincoln National Corporation 5,933,463 5,969,559 Interest: The Lincoln National Life Insurance Company 1,894,621 6,493,723 Other 1,093,843 1,203,060 Total investment income 8,921,927 13,666,342 Contributions: Employees 18,237,161 19,897,636 Participating employers (net of forfeitures: 1996 $15,008; 1995 $16,376) 10,713,394 14,167,259 Total contributions 28,950,555 34,064,895 Total additions 34,854,539 133,151,313 Deductions: Distributions to participants (21,915,376) (20,363,921) Transfer to American States Financial Corporation Employees' Savings and Profit-Sharing Plan (175,764,524) 0 Administrative expenses (207,599) (217,696) Total deductions (197,887,499) (20,581,617) Net increase (decrease) in net assets available for plan benefits (163,032,960) 112,569,696 Net assets available for plan benefits at beginning of the year 393,540,070 280,970,374 Net assets available for plan benefits at end of the year $230,507,110 $393,540,070 See accompanying notes. Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Notes to Financial Statements 1. Significant Accounting Policies Investments The investment in Lincoln National Corporation ("LNC") common stock is valued at the last reported sales price per the national securities exchange on the last business day of the year. The fair value of the participation units owned by Lincoln National Corporation Employees' Savings and Profit-Sharing Plan ("Plan") in segregated investment accounts is based on quoted redemption value on the last business day of the year. The unallocated insurance contracts are valued at contract value as estimated by The Lincoln National Life Insurance Company ("Lincoln Life"). Contract value represents net contributions made plus interest at the contract rate. Participant loans are valued at cost which approximates fair value. Use of Estimates Preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liability at the date of the financial statements and the related amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. Description of the Plan The Plan is a contributory, defined contribution plan which covers eligible employees of LNC and certain of its subsidiaries ("Employer Companies"). Any person 21 years of age or older who is an employee of the Employer Companies is eligible to enroll in the Plan on the next Plan entry date if the person has been employed by LNC and any of its subsidiaries for at least one year. A participant may make pretax contributions at a rate of at least 1%, but not more than 15% of compensation, up to a maximum annual amount as determined and adjusted annually by the Internal Revenue Service ("IRS"). The participants are fully vested in their contributions and direct the Plan to invest their contributions in any combination of the investment options as described in Note 4. Participants can direct employer contributions, but only after the contributions have been in the Plan for two full plan years following the year for which they were contributed. The Employer Companies contribute to the Plan an amount equal to a participant's contributions, not to exceed 6%, multiplied by a percentage, ranging from 25% to 150%, which varies according to LNC's return on equity in relation to pre-identified peer companies. The Employer Companies' contributions are invested in the LNC Common Stock Fund. The Employer Companies contributions vest based upon years of service as defined in the Plan document as follows: Years of Service Percent Vested 1 0% 2 50% 3 or more 100% The Employer Companies have the right in accordance with the Plan to discontinue contributions at any time and terminate participation in the Plan. In the event of termination of the Plan, all amounts allocated to participants' accounts shall become vested. The Plan allows loans to participants in amounts up to 50% of the vested account value to a maximum of $50,000 but not more than the total value of the participant's account excluding employer contributions that have not been in the Plan for two full years, less the highest outstanding loan balance in the previous twelve-month period. Upon termination of service due to death, disability or retirement, 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 over a five year period. For termination of service due to other reasons, a participant may receive the value of the vested interest in his or her account as a lump-sum distribution. Each participant's account is credited with the participant's contribution and the Employer Companies' matching contribution and allocations of Plan earnings, and charged with an allocation of administrative expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Forfeited nonvested amounts are used to reduce future Employer Companies' contributions. 3. Investments Individual investments greater than 5% of Net Assets Available for Benefits at December 31, 1996 and 1995 are as follows: December 31, 1996 Shares/ Market Par Value Value Common stock--Lincoln National Corporation 2,084,790 $109,451,501 Segregated investment accounts: Core Equity Fund 2,039,150.637 16,888,478 Medium Capitalization Equity Fund 2,082,404.287 18,876,487 Large Capitalization Equity Fund 2,154,330.425 12,377,768 Unallocated insurance contracts $30,194,850 $ 30,194,850 December 31, 1995 Shares/ Market Par Value Value Common stock--Lincoln National Corporation 3,560,058 $191,353,118 Segregated investment accounts: Core Equity Fund 1,264,092.105 22,920,130 Medium Capitalization Equity Fund 3,112,599.024 23,772,967 Large Capitalization Equity Fund 2,708,547.495 12,969,067 Unallocated insurance contracts $76,276,541 $ 76,276,541 The unallocated insurance contracts earned an average interest rate of approximately 6.8% and 6.7% in 1996 and 1995, respectively. The credited interest rates for new contributions at December 31, 1996 and 1995 were 7.0% and 6.3%, respectively. The rate on new contributions is guaranteed through the succeeding three calendar year quarters. The credited interest rates for the remaining contract value balance at December 31, 1996 and 1995 were 6.8% and 6.9%, respectively, and were determined based upon the performance of Lincoln Life's general account. The credited interest rates change at least quarterly. The minimum guaranteed rate is 4.5% for the first 5 contract years, 4.0% for years 6-10 and 3.5% following year 10. The guarantee is based on Lincoln Life's ability to meet its financial obligations out of its general assets. Restrictions may apply to the aggregate movement of funds to other investment options. The fair value of the unallocated insurance contracts approximates contract value. Participants are allocated interest on the unallocated insurance contracts based on the average rate earned on all Plan investments in unallocated insurance contracts. Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Notes to Financial Statements (continued)
4. Investment Options The detail of net assets available for plan benefits by investment option is as follows: December 31, 1996 Investment Options Total 1 2 3 4 Assets Investments: Common stock $109,451,501 $109,451,501 Segregated investment accounts 72,586,832 $3,732,897 $16,888,478 Unallocated insurance contracts 30,194,850 $30,194,850 Participant loans 8,740,008 Total investments 220,973,191 109,451,501 3,732,897 30,194,850 16,888,478 Cash and invested cash 198,023 1,083,337 (6,823) (300,713) (7,320) Accrued interest receivable 23,986 Other receivables 1,319,840 9,868 484,841 43,212 Contributions receivable from Employer Companies 8,849,872 8,849,872 Total assets 231,364,912 119,384,710 3,735,942 30,378,978 16,924,370 Liability--miscellaneous payables 857,802 786,713 Net assets available for plan benefits $230,507,110 $118,597,997 $3,735,942 $30,378,978 $16,924,370
December 31, 1996 Investment Options 5 6 7 8 9 Assets Investments: Common stock Segregated investment accounts $ 18,876,487 $ 3,915,270 $4,652,521 $12,377,768 $ 1,708,663 Unallocated insurance contracts Participant loans Total investments 18,876,487 3,915,270 4,652,521 12,377,768 1,708,663 Cash and invested cash (158,135) (36,717) (44,806) (175,836) (21,012) Accrued interest receivable Other receivables 211,106 79,637 50,622 205,013 23,495 Contributions receivable from Employer Companies Total assets 18,929,458 3,958,190 4,658,337 12,406,945 1,711,146 Liability--miscellaneous payables Net assets available for plan benefits $ 18,929,458 $ 3,958,190 $4,658,337 $12,406,945 $ 1,711,146
December 31, 1996 Investment Options 10 11 12 13 Loans Assets Investments: Common stock Segregated investment accounts $989,778 $2,526,822 $2,521,725 $4,396,423 Unallocated insurance contracts Participant loans $8,740,008 Total investments 989,778 2,526,822 2,521,725 4,396,423 8,740,008 Cash and invested cash (24,569) (20,832) (80,832) (78,808) 71,089 Accrued interest receivable 23,986 Other receivables 24,778 21,656 82,447 83,165 Contributions receivable from Employer Companies Total assets 989,987 2,527,646 2,523,340 4,400,780 8,835,083 Liability--miscellaneous payables 71,089 Net assets available for plan benefits $989,987 $2,527,646 $2,523,340 $4,400,780 $8,763,994
December 31, 1995 Investment Options Total 1 2 3 4 Assets Investments: Common stock $191,353,118 $191,353,118 Segregated investment accounts 95,253,320 $8,624,705 $22,920,130 Unallocated insurance contracts 76,276,541 $76,276,541 Participant loans 15,852,291 Total investments 378,735,270 191,353,118 8,624,705 76,276,541 22,920,130 Cash and invested cash 3,918,059 2,516,096 1,401,963 Accrued interest receivable 30,578 Other receivables 0 Contributions receivable from Employer Companies 12,004,120 12,004,120 Total assets 394,688,027 205,873,334 8,624,705 77,678,504 22,920,130 Liability--miscellaneous payables 1,147,957 578,264 569,693 Net assets available for plan benefits $393,540,070 $205,295,070 $8,624,705 $77,108,811 $22,920,130
December 31, 1995 Investment Options 5 6 7 8 9 Assets Investments: Common stock Segregated investment accounts $23,772,967 $8,902,420 $7,702,430 $12,969,067 $1,734,231 Unallocated insurance contracts Participant loans Total investments 23,772,967 8,902,420 7,702,430 12,969,067 1,734,231 Cash and invested cash Accrued interest receivable Other receivables Contributions receivable from Employer Companies Total assets 23,772,967 8,902,420 7,702,430 12,969,067 1,734,231 Liability--miscellaneous payables Net assets available for plan benefits $23,772,967 $8,902,420 $7,702,430 $12,969,067 $1,734,231
December 31, 1995 Investment Options 10 11 12 13 Loans Assets Investments: Common stock Segregated investment accounts $770,346 $2,029,374 $1,858,664 $3,968,986 Unallocated insurance contracts Participant loans $15,852,291 Total investments 770,346 2,029,374 1,858,664 3,968,986 15,852,291 Cash and invested cash Accrued interest receivable 30,578 Other receivables Contributions receivable from Employer Companies Total assets 770,346 2,029,374 1,858,664 3,968,986 15,882,869 Liability--miscellaneous payables Net assets available for plan benefits $770,346 $2,029,374 $1,858,664 $3,968,986 $15,882,869
The detail of the changes in net assets available for plan benefits by investment option is as follows: Year ended December 31, 1996 Investment Options Total 1 2 3 4 Additions: Net realized and unrealized appreciation (depreciation) in fair value of investments $ (3,017,943) $(15,041,531) $ 143,367 $ 3,768,123 Investment income: Dividends 5,933,463 5,933,463 Interest 2,988,464 $ 1,894,621 Total investment income 8,921,927 5,933,463 1,894,621 Contributions: Employees 18,237,161 3,860,254 422,316 3,160,217 2,043,734 Participating employers (net of forfeitures) 10,713,394 10,713,394 Total contributions 28,950,555 14,573,648 422,316 3,160,217 2,043,734 Total additions 34,854,539 5,465,580 565,683 5,054,838 5,811,857 Deductions: Distributions to participants (21,915,376) (9,613,257) (477,478) (5,663,295) (1,434,977) Transfer to American States Financial Corporation Employees' Savings and Profit-Sharing Plan (175,764,524) (76,082,981) (4,592,411) (47,006,178) (11,818,472) Administrative expenses (207,599) (191,420) (823) (6,744) (1,940) Net transfers (6,274,995) (383,734) 891,546 1,447,772 Total deductions (197,887,499) (92,162,653) (5,454,446) (51,784,671) (11,807,617) Net increase (decrease) in net assets available for plan benefits (163,032,960) (86,697,073) (4,888,763) (46,729,833) (5,995,760) Net assets available for plan benefits at beginning of the year 393,540,070 205,295,070 8,624,705 77,108,811 22,920,130 Net assets available for plan benefits at end of the year $230,507,110 $118,597,997 $3,735,942 $30,378,978 $16,924,370
Year ended December 31, 1996 Investment Options 5 6 7 8 9 Additions: Net realized and unrealized appreciation (depreciation) in fair value of investments $ 4,316,435 $ 304,350 $ 5,661 $ 2,374,239 $ 175,374 Investment income: Dividends Interest Total investment income Contributions: Employees 2,450,567 296,439 759,809 1,816,085 698,051 Participating employers (net of forfeitures) Total contributions 2,450,567 296,439 759,809 1,816,085 698,051 Total additions 6,767,002 600,789 765,470 4,190,324 873,425 Deductions: Distributions to participants (1,370,504) (347,190) (556,164) (844,182) (281,324) Transfer to American States Financial Corporation Employees' Savings and Profit-Sharing Plan (11,272,913) (4,703,573) (2,976,419) (4,699,957) (1,480,296) Administrative expenses (2,094) (921) (741) (1,386) (253) Net transfers 1,035,000 (493,335) (276,239) 793,079 865,363 Total deductions (11,610,511) (5,545,019) (3,809,563) (4,752,446) (896,510) Net increase (decrease) in net assets available for plan benefits (4,843,509) (4,944,230) (3,044,093) (562,122) (23,085) Net assets available for plan benefits at beginning of the year 23,772,967 8,902,420 7,702,430 12,969,067 1,734,231 Net assets available for plan benefits at end of the year $18,929,458 $3,958,190 $4,658,337 $12,406,945 $1,711,146
Year ended December 31, 1996 Investment Options 10 11 12 13 Loans Additions: Net realized and unrealized appreciation (depreciation) in fair value of investments $ 88,081 $ 165,356 $ 301,715 $ 380,887 Investment income: Dividends Interest $ 1,093,843 Total investment income 1,093,843 Contributions: Employees 274,330 618,570 602,804 1,035,379 198,606 Participating employers (net of forfeitures) Total contributions 274,330 618,570 602,804 1,035,379 198,606 Total additions 362,411 783,926 904,519 1,416,266 1,292,449 Deductions: Distributions to participants (38,304) (133,929) (223,044) (368,132) (563,596) Transfer to American States Financial Corporation Employees' Savings and Profit-Sharing Plan (409,847) (882,793) (950,784) (1,543,572) (7,344,328) Administrative expenses (124) (315) (264) (574) Net transfers 305,505 731,383 934,249 927,806 (503,400) Total deductions (142,770) (285,654) (239,843) (984,472) (8,411,324) Net increase (decrease) in net assets available for plan benefits 219,641 498,272 664,676 431,794 (7,118,875) Net assets available for plan benefits at beginning of the year 770,346 2,029,374 1,858,664 3,968,986 15,882,869 Net assets available for plan benefits at end of the year $989,987 $2,527,646 $2,523,340 $4,400,780 $ 8,763,994
Year ended December 31, 1995 Investment Options Total 1 2 3 4 Additions: Net realized and unrealized appreciation in fair value of investments $ 85,420,076 $ 67,988,471 $1,073,220 $ 5,905,550 Investment income: Dividends 5,969,559 5,969,559 Interest 7,696,783 $ 6,493,723 Investment income 13,666,342 5,969,559 6,493,723 Contributions: Employees 19,897,636 5,304,242 615,540 4,382,570 1,870,696 Participating employers (net of forfeitures) 14,167,259 14,167,259 Total contributions 34,064,895 19,471,501 615,540 4,382,570 1,870,696 Total additions 133,151,313 93,429,531 1,688,760 10,876,293 7,776,246 Deductions: Distributions to participants (20,363,921) (8,699,052) (569,094) (6,562,834) (1,033,475) Administrative expenses (217,696) (199,511) (1,055) (8,872) (2,202) Net transfers (10,215,054) (627,068) 2,723,555 462,160 Total deductions (20,581,617) (19,113,617) (1,197,217) (3,848,151) (573,517) Net increase (decrease) in net assets available for plan benefits 112,569,696 74,315,914 491,543 7,028,142 7,202,729 Net assets available for plan benefits at beginning of the year 280,970,374 130,979,156 8,133,162 70,080,669 15,717,401 Net assets available for plan benefits at end of the year $393,540,070 $205,295,070 $8,624,705 $77,108,811 $22,920,130
Year ended December 31, 1995 Investment Options 5 6 7 8 9 Additions: Net realized and unrealized appreciation in fair value of investments $ 5,037,349 $ 433,404 $1,174,621 $ 2,717,975 $ 226,389 Investment income: Dividends Interest Total investment income Contributions: Employees 2,384,637 509,372 784,575 1,693,786 457,925 Participating employers (net of forfeitures) Total contributions 2,384,637 509,372 784,575 1,693,786 457,925 Total additions 7,421,986 942,776 1,959,196 4,411,761 684,314 Deductions: Distributions to participants (538,697) (1,101,485) (283,377) (893,780) (72,358) Administrative expenses (2,292) (903) (779) (1,339) (115) Net transfers 783,458 2,053,683 362,043 202,635 542,517 Total deductions 242,469 951,295 77,887 (692,484) 470,044 Net increase (decrease) in net assets available for plan benefits 7,664,455 1,894,071 2,037,083 3,719,277 1,154,358 Net assets available for plan benefits at beginning of the year 16,108,512 7,008,349 5,665,347 9,249,790 579,873 Net assets available for plan benefits at end of the year $23,772,967 $8,902,420 $7,702,430 $12,969,067 $1,734,231
Year ended December 31, 1995 Investment Options 10 11 12 13 Loans Additions: Net realized and unrealized appreciation in fair value of investments $ 65,341 $ 129,576 $ 315,646 $ 352,534 Investment income: Dividends Interest $ 1,203,060 Total investment income 1,203,060 Contributions: Employees 167,759 442,232 352,295 932,007 Participating employers (net of forfeitures) Total contributions 167,759 442,232 352,295 932,007 Total additions 233,100 571,808 667,941 1,284,541 1,203,060 Deductions: Distributions to participants (14,593) (25,432) (12,063) (74,208) (483,473) Administrative expenses (42) (144) (117) (325) Net transfers 364,156 694,825 584,215 855,443 1,213,432 Total deductions 349,521 669,249 572,035 780,910 729,959 Net increase (decrease) in net assets available for plan benefits 582,621 1,241,057 1,239,976 2,065,451 1,933,019 Net assets available for plan benefits at beginning of the year 187,725 788,317 618,688 1,903,535 13,949,850 Net assets available for plan benefits at end of the year $770,346 $2,029,374 $1,858,664 $3,968,986 $15,882,869
Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 4. Investment Options (continued) Information with respect to investment options is as follows: Option Description of Investment Option 1 LNC Common Stock Fund, which invests in shares of Lincoln National Corporation's common stock; 2 Government Bond Fund, which directly or indirectly invests primarily in fixed income securities issued by the United States Government; 3 Guaranteed Fund, which invests primarily in contracts which guarantee a rate of return and principal; 4 Core Equity Fund, which directly or indirectly invests primarily in the common stock of established companies; 5 Medium Capitalization Equity Fund, which directly or indirectly invests primarily in the stock of new, rapid growth companies; 6 Short-Term Fund, which directly or indirectly invests primarily in notes of government agencies and private corporations; 7 Government/Corporate Bond Fund, which directly or indirectly invests primarily in corporate and U.S. government bonds and mortgage-backed securities; 8 Large Capitalization Equity Fund, which directly or indirectly invests primarily in high-risk common stocks which have the potential for a significant appreciation in value; 9 Balanced Fund, which directly or indirectly invests in three different asset classes: stocks, bonds and money market instruments, which provides growth through the stock portion and reduced risk through the bond and money market portion; 10 High Yield Bond Fund, which directly or indirectly invests primarily in below-investment-grade bonds, providing higher rates of return to compensate higher risk; 11 Small Capitalization Equity Fund, which directly or indirectly invests primarily in the stock of new, rapid growth companies; 12 Value Equity Fund, which invests primarily in large capitalization stocks of undervalued companies that are industry leaders; 13 International Equity Fund, which directly or indirectly invests primarily in stocks of non-United States companies; At December 31, 1996, the net assets in the LNC Common Stock Fund not subject to participant direction was $20,051,267. Investment options 2 through 13 are provided by a group annuity contract issued by Lincoln Life. Interest charged on new loans to participants is established monthly based upon prevailing rates for similar loans. Loans are repaid over 1, 3, 5, 10, 15 or 20 year periods depending on the purpose of the loan or when a participant withdraws from the Plan. 5. Income Tax Status On February 9, 1995, the IRS ruled that the Plan qualifies as defined by Section 401(a) of the Internal Revenue Code ("IRC") and, therefore, is not subject to tax based on the present income tax laws. Further, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan's administrator is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. 6. Transactions With Parties-In-Interest The Plan has investments in common stock of LNC, and in segregated investment accounts and unallocated insurance contracts with Lincoln Life of $109,451,501, $72,586,832 and $30,194,850, respectively, at December 31, 1996 (47.5%, 31.5% and 13.1% of net assets, respectively). LNC and Lincoln Life operate predominately in the insurance and financial services industries. Lincoln Life also provides certain administrative services at no charge to the Plan. Trustee fees and additional expenses incurred solely for the LNC Stock Fund are charged directly to the LNC Stock Fund. Audit fees are charged to earnings of all investment funds based upon the market value of the respective funds applicable to each investment option. These transactions are exempt. 7. Transfer of Assets Effective May 28, 1996, LNC's principal subsidiary within its Property-Casualty segment, American States Financial Corporation, closed an initial public offering of 17% of its common stock. As a result, the subsidiary formed the American States Financial Corporation Employees' Savings and Profit-Sharing Plan ("American States Plan") effective June 24, 1996. Assets transferred from the Plan to the American States Plan attributed to employees of American States Financial Corporation were $175,764,524 as of the effective date. 8. Reconciliation of Financial Statements to Form 5500 The following is a reconciliation of net assets available for plan benefits per the financial statements to Form 5500: 1996 1995 Net assets available for plan benefits per the financial statements $230,507,110 $393,540,070 Amounts allocated to withdrawing participants (687,332) (1,273,955) Net assets available for plan benefits per Form 5500 $229,819,778 $392,266,115 The following is a reconciliation of distributions to participants per the financial statements to Form 5500: 1996 1995 Distributions to participants per the financial statements $ 21,915,376 $ 20,363,921 Add amounts allocated to withdrawing participants at end of the year 687,332 1,273,955 Deduct amounts allocated to withdrawing participants at beginning of the year (1,273,955) (1,089,639) Distributions to participants per Form 5500 $ 21,328,753 $ 20,548,237 Amounts allocated to withdrawing participants are recorded on Form 5500 for distributions that have been processed and approved for payment prior to year end but have not yet been paid.
Schedules Item 27a Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Schedule of Assets Held for Investment Purposes December 31, 1996 (c) Description of Investment (b) Including Maturity (e) Identity of Issuer, Borrower, Date, Rate of Interest, (d) Current Lessor or Similar Party Par or Maturity Value Cost Value Common stock-- Lincoln National Corporation* 2,084,790 shares $ 79,023,984 $109,451,501 Segregated investment accounts--The Lincoln National Life Insurance Company Separate Accounts*: Government Bond Fund 2,479,697.460 participation units 2,862,613 3,732,897 Core Equity Fund 2,039,150.637 participation units 9,911,879 16,888,478 Medium Capitalization Equity Fund 2,082,404.287 participation units 11,584,770 18,876,487 Short-Term Fund 1,419,564.724 participation units 3,359,224 3,915,270 Government/Corporate Bond Fund 948,419.273 participation units 3,511,478 4,652,521 Large Capitalization Equity Fund 2,154,330.425 participation units 8,585,512 12,377,768 Balanced Fund 387,588.405 participation units 1,507,530 1,708,663 High Yield Bond Fund 475,030.360 participation units 884,803 989,778 Small Capitalization Equity Fund 776,653.839 participation units 2,363,038 2,526,822 Value Equity Fund 1,583,854.688 participation units 2,097,979 2,521,725 International Equity Fund 876,718.122 participation units 3,980,367 4,396,423 Total segregated investment accounts 50,649,193 72,586,832 Unallocated insurance contracts-- The Lincoln National Life Insurance Company* 30,194,850 30,194,850 Participant loans Various loans at interest rates varying from 5.01% to 12.00% due from 1997 to 2016. 8,740,008 8,740,008 $168,608,035 $220,973,191 *Indicates party-in-interest to the Plan.
Item 27d Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Schedule of Reportable Transactions Year ended December 31, 1996 (h) Current Value (i) (a) (c) (d) (g) of Assets on Net Identity of (b) Purchase Selling Cost of Transaction Gain Party Involved Description of Assets Price Price Assets Date (Loss ) Category (iii) Series of transactions in excess of 5 percent of plan assets. Norwest Bank Lincoln National Corporation shares of common stock: Purchases $40,843,048 $ 0 $40,843,048 $40,843,048 $ 0 Sales 0 31,570,726 23,912,722 31,570,726 7,658,004 Transfer (1) 0 0 60,899,047 76,082,981 0 The Lincoln National Unallocated insurance contracts-- Life Insurance Company The Lincoln National Life Insurance Company: Purchases 9,112,754 0 9,112,754 9,112,754 0 Sales 0 8,188,267 8,188,267 8,188,267 0 Transfer (1) 0 0 47,006,178 47,006,178 0
Note: Columns (e) and (f), and categories (i), (ii) and (iv) are not applicable. (1) Amount relates to the transfer of assets to the American States Financial Corporation Employees' Savings and Profit-Sharing Plan. SIGNATURE THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934, the Members of the Lincoln National Corporation Benefits Investment Committee have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. LINCOLN NATIONAL CORPORATION EMPLOYEES' SAVINGS AND PROFIT-SHARING PLAN /S/ H. THOMAS MCMEEKIN Date: 6/24/97 ____________________________________ H. Thomas McMeekin, Chairman Lincoln National Corporation Benefits Investment Committee EX-23 2 CONSENT LETTER OF ERNST & YOUNG LLP EXHIBIT 23 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-52667) pertaining to the Lincoln National Corporation Employees' Savings and Profit-Sharing Plan of our report dated June 2, 1997 with respect to the financial statements and schedules of the Lincoln National Corporation Employees' Savings and Profit-Sharing Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1996. /S/ ERNST & YOUNG LLP Fort Wayne, Indiana June 25, 1997 -----END PRIVACY-ENHANCED MESSAGE-----