-----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, UVfLEdQHUahxdcAGeW10l6hwgHsqQLauXFuScWjF6HUNtRZHGz6GPwLppd+cn5WG Ns/0gtB3o+XjON21LBXj2Q== 0000950137-01-502138.txt : 20010629 0000950137-01-502138.hdr.sgml : 20010629 ACCESSION NUMBER: 0000950137-01-502138 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010628 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: SEC FILE NUMBER: 001-06028 FILM NUMBER: 1670521 BUSINESS ADDRESS: STREET 1: 1500 MARKET STREET STE 3900 STREET 2: CENTRE SQUARE WEST TOWER CITY: PHILADELPHIA STATE: PA ZIP: 19102 BUSINESS PHONE: 2194552000 MAIL ADDRESS: STREET 1: 1500 MARKET STREET STE 3900 STREET 2: CENTRE SQUARE TOWER CITY: PHILADELPHIA STATE: PA ZIP: 19102*2706 11-K 1 c63442e11-k.txt ANNUAL REPORT 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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, 2000 THE LINCOLN NATIONAL CORPORATION EMPLOYEES' SAVINGS AND PROFIT-SHARING PLAN (Full title of the Plan) [Current Registration Number 33-52667] Lincoln National Corporation Centre Square West 1500 Market Street, Suite 3900 Philadelphia, PA 19102 (Name of Issuer and principal executive office) 2 Form 11-K The Lincoln National Corporation Employees' Savings and Profit-Sharing Plan TABLE OF CONTENTS Facing Sheet Financial Statements 3-15 Signature 16 Exhibit 23 Consent of Ernst & Young LLP, Independent Auditors 3 Financial Statements and Schedules LINCOLN NATIONAL CORPORATION EMPLOYEES' SAVINGS AND PROFIT-SHARING PLAN Years ended December 31, 2000 and 1999 with Report of Independent Auditors 4 Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Financial Statements and Schedules Years ended December 31, 2000 and 1999 CONTENTS Report of Independent Auditors................................................ 1 Audited Financial Statements Statements of Net Assets Available for Plan Benefits ......................... 2 Statements of Changes in Net Assets Available for Plan Benefits............... 3 Notes to Financial Statements ................................................ 4 Schedules Schedule of Assets (Held At End of Year)...................................... 9 Schedule of Reportable Transactions ..........................................10 5 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, 2000 and 1999, 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 auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. 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, 2000 and 1999, and the changes in its net assets available for plan benefits for the years then ended, in conformity with accounting principles generally accepted in the United States. 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 at end of year) as of December 31, 2000, and reportable transactions for the year then ended, are presented for purpose of additional analysis and are not a required part of the 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. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in our audits 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. /s/ Ernst & Young LLP Philadelphia, Pennsylvania May 18, 2001 1 6 Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Statements of Net Assets Available for Plan Benefits
DECEMBER 31 2000 1999 ---- ---- ASSETS Investments $ 440,991,079 $ 404,656,085 Cash and invested cash (deficit) (638,540) (500,653) Accrued interest receivable 99,652 28,560 Contributions receivable from participating employers 21,367,069 7,787,671 ------------- ------------- Net assets available for plan benefits $ 461,819,260 $ 411,971,663 ============= =============
See accompanying notes. 2 7 Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Statements of Changes in Net Assets Available for Plan Benefits
YEAR ENDED DECEMBER 31 2000 1999 ---- ---- ADDITIONS Net realized and unrealized appreciation in fair value of investments $ 24,408,453 $ 32,754,997 Investment income: Cash dividends -- Lincoln National Corporation 4,878,633 4,363,540 Interest: The Lincoln National Life Insurance Company 2,875,447 2,164,269 Other 1,133,593 1,436,071 ------------- ------------- Total investment income 8,887,673 7,963,880 ------------- ------------- Contributions: Participants 21,581,799 19,673,240 Participating employers (net of forfeitures: 2000--$40,569; 1999--$43,871) 24,421,480 10,635,203 ------------- ------------- Total contributions 46,003,279 30,308,443 ------------- ------------- Total additions 79,299,405 71,027,320 DEDUCTIONS Distributions to participants (29,268,663) (29,831,400) Administrative expenses (183,145) (235,676) ------------- ------------- Total deductions (29,451,808) (30,067,076) ------------- ------------- Net increase in net assets available for plan benefits 49,847,597 40,960,244 Net assets available for plan benefits at beginning of the year 411,971,663 371,011,419 ------------- ------------- Net assets available for plan benefits at end of the year $ 461,819,260 $ 411,971,663 ============= =============
3 See accompanying notes. 8 Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Notes to Financial Statements December 31, 2000 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 Wells Fargo Bank Short-Term Investment Fund is valued at cost which approximates fair value. The fair value of participation units in pooled separate accounts is based on quoted redemption value on the last business day of the year. The investment 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. These contracts are fully benefit responsive. Participant loans are valued at their outstanding balances which approximate fair value. The cost of investments sold, distributed or forfeited is determined using the specific identification method. Investment purchases and sales are accounted for on a trade date basis. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 2. DESCRIPTION OF THE PLAN The Employees' Savings and Profit Sharing Plan ("Plan") is a contributory, defined contribution plan which covers substantially all employees of LNC and certain of its subsidiaries ("Employer") who meet certain eligibility requirements as defined by the Plan. A participant may make pretax contributions at a rate of at least 1%, but not more than 15% of compensation (not more than 8% for higher compensated employees), 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 offered under the Plan. Participants can direct employer contributions, but only after the contributions have been in the Plan for two full years following the date the last contribution for the plan year was contributed. 4 9 Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 2. DESCRIPTION OF THE PLAN (CONTINUED) Employer contributions to the Plan are based on an amount equal to a participant's contributions, not to exceed 6% of eligible earnings, multiplied by a percentage, ranging from 25% to 150%, which is based on LNC's increase in operating income. The Employer match on eligible participants' contributions during their first year of employment is limited to a maximum of 25%. In 1998, The Board of Directors of Lincoln Life approved a provision that provided an additional match up to 50% for the 2000 Plan year based on LNC achieving a certain level of earnings over the three-year period from 1998 through 2000. For the 2000 Plan year, the Employer contribution to the Plan matched 200% of participant contributions up to 6% of eligible earnings. Employer contributions are invested in the LNC Common Stock Fund. Participants' contributions are fully vested. Employer 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 has the right in accordance with the Plan to discontinue contributions at any time and terminate 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. A participant may have a maximum of two loans outstanding at any one time. Interest charged on new loans to participants is established monthly based upon the prime rate plus 1%. Loans may be repaid over any period selected by the participant up to a maximum repayment period of five years except that the maximum repayment period may be 20 years for the purchase of a principal residence. Upon termination of service due to disability, retirement or death, a participant or beneficiary, in case of the participant's death, may elect to receive either a lump-sum amount equal to the entire value of the participant's account, or up to five annual installments. 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 contributions, matching contributions from the Employer and allocations of Plan earnings, and is charged with an allocation of administrative expenses. Allocations are based on participant 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 non-vested amounts are used to reduce future Employer contributions. 5 10 Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 3. INVESTMENTS Individual investments greater than 5% of net assets available for plan benefits at December 31, 2000 and 1999 are as follows:
DECEMBER 31, 2000 DECEMBER 31, 1999 ----------------- ----------------- NUMBER OF NUMBER OF SHARES, UNITS FAIR SHARES, UNITS FAIR OR PAR VALUE VALUE OR PAR VALUE VALUE ------------ ----- ------------ ----- Common stock -- Lincoln National Corporation 4,001,519 $189,321,868 * 4,066,259 $162,650,360* Pooled separate accounts -- Lincoln Life: Core Equity Fund 2,273,512.771 31,970,509 2,588,567.288 40,546,950 Medium Capitalization Equity Fund 2,130,732.632 37,330,238 2,133,425.023 38,203,460 Large Capitalization Equity Fund 2,737,463.338 32,322,365 2,809,872.823 36,516,733 Investment contracts -- Lincoln Life $ 43,507,028 43,507,208 $ 40,006,271 40,006,271 * Nonparticipant-directed.
The investment contracts earned an average interest rate of approximately 6.26% and 6.22% in 2000 and 1999, respectively. The credited interest rates for new contributions, which approximate the current market rate, were 6.75% and 6.50% at December 31, 2000 and 1999, respectively. The rate on new contributions is guaranteed through the succeeding three calendar year quarters. The credited interest rate for the remaining contract value balance at December 31, 2000 and 1999 was 6.25% and was 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 five contract years, 4.00% for years 6-10 and 3.50% 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 investment contracts approximates contract value. Participants are allocated interest on the investment contracts based on the average rate earned on all Plan investments in the investment contracts. During 2000 and 1999 the Plan's investments (including investments bought, sold as well as held during the year) appreciated (depreciated) in fair value as follows: 2000 1999 ---- ---- Fair value as determined by quoted market price: Common stock $ 35,200,676 $ (2,710,256) Pooled separate accounts (10,792,223) 35,465,253 ------------ ------------ Total $ 24,408,453 $ 32,754,997 ============ ============ 6 11 Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 4. NONPARTICIPANT-DIRECTED INVESTMENTS Information about the net assets and the significant components of the changes in net assets relating to the nonparticipant-directed investments is as follows: DECEMBER 31 2000 1999 ---- ---- ASSETS Common stock -- Lincoln National Corporation $189,321,868 $162,650,360 Wells Fargo Bank Short-Term Investment Fund 6,166,156 4,813,397 ------------ ------------ Total $195,488,024 $167,463,757 ============ ============ YEAR ENDED DECEMBER 31 2000 1999 ---- ---- CHANGE IN NET ASSETS Net realized and unrealized appreciation (depreciation) in fair value of investments $ 35,200,676 $ (2,710,256) Investment income: Cash dividends 4,878,633 4,363,540 Interest 313,066 285,574 ------------ ------------ Total investment income 5,191,699 4,649,114 Contributions: Participants 3,126,669 3,532,342 Participating employers (net of forfeitures) 24,429,438 10,635,203 ------------ ------------ Total contributions 27,556,107 14,167,545 Distributions to participants (9,511,268) (11,026,299) Administrative expenses (92,924) (131,246) Net transfers to participant-directed investments (16,717,694) (10,998,837) ------------ ------------ Total $ 41,626,596 $ (6,049,979) ============ ============ 5. INCOME TAX STATUS The IRS ruled on June 20, 1997 that the Plan qualifies under Section 401(a) of the Internal Revenue Code ("IRC") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan's administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 7 12 Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 6. TRANSACTIONS WITH PARTIES-IN-INTEREST The Plan has investments in common stock of LNC, and in pooled separate accounts and investment contracts with Lincoln Life of $189,321,868, $188,930,924 and $43,507,028, respectively, at December 31, 2000 (41%; 40.9% and 9.4% of net assets, respectively). LNC and Lincoln Life operate predominately in the insurance and financial services industries. LNC and Lincoln Life also provide 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. 8 13 SCHEDULES 14 Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Plan Number: 005 EIN: 35-1140070 Schedule H, Line 4i -- Schedule of Assets (Held At End of Year) December 31, 2000
(b) (c) (d) (e) DESCRIPTION OF INVESTMENT INCLUDING MATURITY IDENTITY OF ISSUE, BORROWER DATE, RATE OF INTEREST, CURRENT LESSOR OR SIMILAR PARTY PAR OR MATURITY VALUE COST VALUE *Common Stock Fund: Lincoln National Corporation common stock 4,001,519 shares $ 88,263,147 $189,321,868 Wells Fargo Bank Short-Term Investment Fund 6,166,156 par value 6,166,156 6,166,156 ------------ ------------ 94,429,303 195,488,024
*Pooled separate accounts -- The Lincoln National Life Insurance Company: Government Bond Fund 2,484,382.343 participation units** 4,796,272 Core Equity Fund 2,273,512.771 participation units** 31,970,509 Medium Capitalization Equity Fund 2,130,732.632 participation units** 37,330,238 Short-Term Fund 3,391,952.115 participation units** 11,604,655 Government/Corporate Bond Fund 1,248,754.812 participation units** 7,914,993 Large Capitalization Equity Fund 2,737,463.338 participation units** 32,322,765 Balanced Fund 1,201,184.044 participation units** 8,271,041 High Yield Bond Fund 1,120,670.715 participation units** 2,894,062 Small Capitalization Equity Fund 2,417,877.928 participation units** 18,471,054 Value Equity Fund 3,088,970.051 participation units** 6,926,191 International Equity Fund 1,379,595.198 participation units** 8,550,627 Conservative Balanced Fund 84,179.182 participation units** 143,136 Aggressive Balanced Fund 217,813.401 participation units** 462,327 Delaware Growth and Income Fund 95,601.560 participation units** 162,615 Deutsche VIT Equity 500 Index Fund 2,584,973.821 participation units** 2,707,975 VIP II Contrafund 1,313,614.882 participation units** 1,406,645 Janus Fund 2,643,516.253 participation units** 5,329,807 Mid-Cap Value Fund 371,446.082 participation units** 378,915 Social Awareness Fund 243,780.664 participation units** 249,389 T Rowe Price International Equity Fund 1,090,554.021 participation units** 1,430,832 Global Growth Fund 2,243,609.446 participation units** 2,720,762 Delaware Global Bond Fund 185,469.374 participation units** 211,268 Mid-Cap Growth Fund 1,624,549.002 participation units** 2,204,429 Deutsche VIT Small Cap Index Fund 419,827.331 participation units** 470,417 ------------ 188,930,924 *Investment contracts -- The Lincoln National Life Insurance Company (Guaranteed Fund) 6.25% Interest Rate 43,507,028 Participant loans Various loans at interest rates varying from 8.75% to 10.5% due from 2001 to 2020 13,065,103 ------------ $440,991,079 ============
* Indicates party-in-interest to the plan. ** Indicates a participant-directed fund. The cost disclosure is not applicable. 9 15 Lincoln National Corporation Employees' Savings and Profit-Sharing Plan Plan Number: 005 EIN: 35-1140070 Schedule H, Line 4j -- Schedule of Reportable Transactions Year ended December 31, 2000
(a) (b) (c) (d) (g) (h) (i) CURRENT VALUE OF ASSETS ON NET IDENTITY OF DESCRIPTION PURCHASE SELLING COST OF TRANSACTION GAIN PARTY INVOLVED OF ASSETS PRICE PRICE ASSETS DATE (LOSS) - -------------- ----------- ----------- ------- -------- ------------- ------ Category (iii)---Series of transactions in excess of 5 percent of plan assets. Wells Fargo Bank Wells Fargo Bank Short-Term Investment Fund: Purchases $52,748,898 $52,748,898 $52,748,898 Sales $51,396,139 51,396,139 51,396,139 $ -- Wells Fargo Bank Lincoln National Corporation shares of common stock: Purchases 15,634,114 15,634,114 15,634,114 Sales 20,153,358 9,348,805 20,153,358 10,804,553 Note: Columns (e) and (f), and categories (i), (ii) and (iv) are not applicable.
10 16 SIGNATURE THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrator of the Plan has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. June 27, 2001 By /s/ George E. Davis ------------------- George E. Davis Administrator 18 EX-23 2 c63442ex23.txt CONSENT 1 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 May 18, 2001, with respect to the financial statements of Lincoln National Corporation Employees' Savings and Profit-Sharing Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2000. /s/Ernst & Young LLP Philadelphia, Pennsylvania June 25, 2001 -----END PRIVACY-ENHANCED MESSAGE-----