-----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, OQDZNw8Tpl2Wy+c0yn7HkP0brUHlOWi8abdf375L7qDEmpSFW3Vhm2aI8BL2FdZf mLksELyy1qlfOSKOyXlSDg== 0000066025-99-000010.txt : 19990630 0000066025-99-000010.hdr.sgml : 19990630 ACCESSION NUMBER: 0000066025-99-000010 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MIDLAND CO CENTRAL INDEX KEY: 0000066025 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 310742526 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-06026 FILM NUMBER: 99655339 BUSINESS ADDRESS: STREET 1: 7000 MIDLAND BLVD STREET 2: P O BOX 125 CITY: AMELIA STATE: OH ZIP: 45102-2607 BUSINESS PHONE: 5139437100 MAIL ADDRESS: STREET 2: P O BOX 1256 CITY: CINCINNATI STATE: OH ZIP: 45201 11-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K (Mark one) [x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]. For the Fiscal Year Ended December 31, 1998. [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]. For the transition period from _____ to _____. MIDLAND-GUARDIAN CO. SALARIED EMPLOYEES 401(K) SAVINGS PLAN (Full title of the Plan) THE MIDLAND COPMANY 7000 Midland Boulevard Amelia, Ohio 45102-2607 (Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office) Registrant's telephone number including area code (513) 943-7100 Required information: (a) Financial statements filed as a part of this report: Independent Auditors' Report Statement of Net Assets Available for Plan Benefits December 31, 1998 and 1997 Statements of Changes in Net Assets Available for Plan Benefits for the Years Ended December 31, 1998 and 1997 Notes to Financial Statements - December 31, 1998 Supplemental Schedules: Form 5500, Item 27(a) Schedule of Assets Held for Investment - December 31, 1998 Form 5500, Item 27(d) Schedule of Reportable Transactions for the Year Ended December 31, 1998 Signatures The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Investment Committee of the Plan has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. MIDLAND-GUARDIAN CO. SALARIED EMPLOYEES 401(K) SAVINGS PLAN (Name of Plan) s/John I. Von Lehman Executive Vice President, Chief Financial Officer and Secretary of The Midland Company For the Midland-Guardian Co. Salaried Employees 401(k) Savings Plan Dated: June 29, 1999 INDEPDENDENT AUDITORS' REPORT Midland-Guardian Co. Salaried Employees' 401(k) Savings Plan: We have audited the accompanying statements of net assets available for benefits of Midland-Guardian Co. Salaried Employees' 401(k) Savings Plan as of December 31, 1998 and 1997 and the related statements of changes in net assets available for 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, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1998 and 1997, and the changes in net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment and reportable transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information by fund in the statements of changes in net assets available for benefits is presented for the purpose of additional analysis rather than to present the changes in net assets available for benefits of the individual funds. The supplemental schedules and supplemental information by fund are the responsibility of the Plan's management. Such supplemental schedules and supplemental information by fund have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. June 25, 1999 s/Deloitte & Touche, LLP Cincinnati, Ohio MIDLAND-GUARDIAN CO. SALARIED EMPLOYEES' 401(K) SAVINGS PLAN --------------------------------------- STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1998 AND 1997 ASSETS 1998 1997 INVESTMENTS - At market value: --------------- --------------- Prism Money Market Fund $ 4,152,262 $ 4,673,113 (Cost - 1998, $3,629,911; 1997, $4,223,824) Victory Intermediate Income Fund 1,784,359 1,638,573 (Cost - 1998, $1,733,526; 1997, $1,610,780) Victory Balanced Fund 3,327,038 2,410,650 (Cost - 1998, $2,877,495; 1997, $2,123,414) Victory Value Fund 9,571,252 7,465,061 (Cost - 1998, $7,432,993; 1997, $5,579,848) Victory Special Growth Fund 1,210,630 1,378,692 (Cost - 1998, $1,260,197; 1997, $1,320,761) The Midland Company Common Stock 1,138,869 410,823 (Cost - 1998, $1,008,768; 1997, $ 289,256) LOANS TO PARTICIPANTS 324,644 343,964 --------------- --------------- Total investments and loans to participants 21,509,054 18,320,876 CASH (Midland Stock Fund) 69 11,529 CONTRIBUTIONS RECEIVABLE (Special Growth Fund) 2,508 - INVESTMENT INCOME RECEIVABLE (Midland Stock Fund) - 1,111 --------------- --------------- NET ASSETS AVAILABLE FOR BENEFITS $ 21,511,631 $ 18,333,516 =============== =============== See notes to financial statements. MIDLAND-GUARDIAN CO. SALARIED EMPLOYEES' 401(K) SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1998 SUPPLEMENTAL INFORMATION BY FUND TOTAL ----------------------------------------------------------------------------------- MONEY INTERMEDIATE SPECIAL LOAN MIDLAND MARKET INCOME BALANCED VALUE GROWTH FUND STOCK ----------------------------------------------------------------------------------- INCOME: Contributions from Midland-Guardian Co. $ (34,715) $ 29,027 $ 100,747 $ 164,811 $ 72,342 $ 26,768 $ 358,980 Contributions from Employees 251,774 78,098 316,219 580,736 212,887 73,531 1,513,245 Dividend and Interest Income 438 95,203 260,056 1,486,921 280 $ 25,624 4,122 1,872,644 Net Appreciation (Depreciation) in Market Value of Investments 211,578 32,052 212,329 496,933 (124,854) 8,639 836,677 Rollovers 1,143 73,034 52,070 54,482 54,827 30,083 265,639 Other 13,272 13,272 ----------------------------------------------------------------------------------------------- Total 430,218 307,414 941,421 2,783,883 215,482 25,624 156,415 4,860,457 BENEFIT PAYMENTS (634,356) (102,438) (228,901) (504,762) (147,925) - (23,324) (1,641,706) OTHER DEDUCTIONS - - - - - (40,636) - (40,636) TRANSFER BETWEEN FUNDS - NET (316,713) (59,190) 203,868 (172,930) (233,111) (4,308) 582,384 - ----------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS (520,851) 145,786 916,388 2,106,191 (165,554) (19,320) 715,475 3,178,115 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of Year 4,673,113 1,638,573 2,410,650 7,465,061 1,378,692 343,964 423,463 18,333,516 ----------------------------------------------------------------------------------------------- End of year $4,152,262 $1,784,359 $3,327,038 $9,571,252 $1,213,138 $ 324,644 $1,138,938 $21,511,631 =============================================================================================== See notes to financial statements.
MIDLAND-GUARDIAN CO. SALARIED EMPLOYEES' 401(K) SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1997 SUPPLEMENTAL INFORMATION BY FUND TOTAL ----------------------------------------------------------------------------------- MONEY INTERMEDIATE SPECIAL LOAN MIDLAND MARKET INCOME BALANCED VALUE GROWTH FUND STOCK ----------------------------------------------------------------------------------- INCOME: Contributions from Midland-Guardian Co. $ 114,817 $ 35,236 $ 89,921 $ 165,822 $ 73,195 $ 12,551 $ 491,542 Contributions from Employees 299,323 92,913 263,928 490,486 207,970 35,340 1,389,960 Divedend and Interest Income 86,442 179,081 637,534 157,806 $ 26,342 3,503 1,090,708 Net Appreciation (Depreciation) in Market Value of Investments 251,213 15,114 158,794 887,030 (68,796) 126,828 1,370,183 Rollovers 24,095 919 23,892 48,581 25,098 20,200 142,785 Other 83 83 ----------------------------------------------------------------------------------------------- Total 689,448 230,624 715,616 2,229,453 395,273 26,342 198,505 4,485,261 BENEFIT PAYMENTS (310,918) (30,204) (58,295) (288,229) (87,645) - (6,394) (781,685) OTHER DEDUCTIONS - - - - - (8,546) - (8,546) TRANSFER BETWEEN FUNDS - NET (479,946) 79,362 237,258 169,729 (99,732) 13,542 79,787 - ----------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS (101,416) 279,782 894,579 2,110,953 207,896 31,338 271,898 3,695,030 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of Year 4,774,529 1,358,791 1,516,071 5,354,108 1,170,796 312,626 151,565 14,638,486 ----------------------------------------------------------------------------------------------- End of year $4,673,113 $1,638,573 $2,410,650 $7,465,061 $1,378,692 $ 343,964 $ 423,463 $18,333,516 =============================================================================================== See notes to financial statements.
MIDLAND-GUARDIAN CO. SALARIED EMPLOYEES' 401(K) SAVINGS PLAN --------------------------------------- NOTES TO FINANCIAL STATEMENTS 1. Significant Accounting Policies Basis of Accounting The accompanying financial statements conform to generally accepted accounting principles and with the applicable accounting requirements of the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 ("ERISA"). Expenses of the Plan Certain expenses of the Plan are paid by the Plan sponsor, Midland-Guardian Co. (the "Company"). Investments The Plan's investments in mutual funds are stated at fair value, based on market quoations provided by the trustee, and The Midland Company stock is valued at its quoted market price. Participant notes receivable are valued at cost which approximates fair value. Method of Funding The Company's annual contribution to the Plan consists of matching 50 percent of the basic contributions made by Plan Participants. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management 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 additions to and deductions from net assets available for benefits during the reporting period. Actual results could differ from those estimates. Reclassifications Certain 1997 amounts have been reclassified to conform with 1998 presentation. 2. Description of the Plan Full-time salaried employees of Midland-Guardian Co. with greater than one year of service are eligible to participate in the Plan. An employee may authorize (matched) contributions between two percent and six percent of base salary through payroll deductions. Supplemental (unmatched) contributions ranging from one to ten percent of the base salary are also permitted above the basic contribution. The Company matches 50 percent of an employee's basic contribution. Employees vest in the Company contributions 30 percent after three years of service, 40 percent after four years, increasing 20 percent each year thereafter through 7 years of service. Forfeitures are used to reduce future Company contributions. Upon enrollment in the Plan, a participant may direct employee contributions in 5 percent increments in any of six investment options. The investment options (funds and fund investment information from fund publications) are as follows: a) Prism Money Market Fund - Funds are invested primarily in a diversified portfolio of high-grade money market instruments. b) Victory Intermediate Income Fund - Funds are invested in investment- grade debt securities issued by corporations, obligations of the U.S. Government and its agencies or instrumentalities, and preferred stocks. c) Victory Balanced Fund - Funds are invested in common stock, securities convertible into common stock, preferred stock, corporate debt securities and U.S. Government securities. d) Victory Value Fund - Funds are invested primarily in a diversified group of common stocks with an emphasis on companies with above average total return potential. e) Victory Special Growth Fund - Funds are invested primarily in equity securities of small to medium sized companies with market values of up to $5 billion that are believed to have superior prospects for long- term earnings growth and price appreciation. f) Midland Stock Fund - Funds are invested in common stock of The Midland Company. Participants may change their investment options monthly. The contributions are invested in pooled accounts maintained by the Plan's trustee. Individual accounts are maintained for each participant. Income from investments and the change in the market value of the investments are allocated to the participants' accounts based on the percentage that each account balance bears to the total pool balance. The Plan allows participants to borrow funds from their vested account balance subject to certain restrictions. Loans are repayable in one to five years unless the loan is related to the purchase of the participant's primary residence, in which case the term may be up to thirty years. The interest rate applicable to Plan loans is established at 1% over Firstar Corporation's prime rate (8.75% at December 31, 1998). Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. The Company expects to continue the Plan indefinitely, but reserves the right to terminate it by duly adopted written resolution of the Board of Directors of the Company. In the event of termination, the value of each participant's interest will become fully vested and Plan assets will be allocated to provide benefits to participants as set forth in the Plan, or as otherwise required by law. 3. Investments Investments representing more than five percent of net assets available for benefits are as follows: Market Cost Value 1998 ---- ----- ---- Key Trust Investment Management: Prism Money Market Fund $3,629,911 $4,152,262 Victory Intermediate Income Fund 1,733,526 1,784,359 Victory Balanced Fund 2,877,495 3,327,038 Victory Value Fund 7,432,993 9,571,252 Victory Special Growth Fund 1,260,197 1,210,630 The Midland Company Common Stock 1,008,768 1,138,869 1997 ---- Key Trust Investment Management: Prism Money Market Fund $4,223,824 $4,673,113 Victory Intermediate Income Fund 1,610,780 1,638,573 Victory Balanced Fund 2,123,414 2,410,650 Victory Value Fund 5,579,848 7,465,061 Victory Special Growth Fund 1,320,761 1,378,692 4. Tax Status The Plan has received a letter of determination from the Internal Revenue Service which indicates that the Plan as designed at the date of the letter is in compliance with the applicable requirements of the Internal Revenue Code. The Plan Administrator believes that the Plan has been operated in compliance with the applicable requirements of the Internal Revenue Code and that it is qualified and the related trust is tax exempt. SUPPLEMENTAL SCHEDULE FORM 5500, ITEM 27(a) - ASSETS HELD FOR INVESTMENT MIDLAND-GUARDIAN CO. SALARIED EMPLOYEES' 401(K) SAVINGS PLAN DECEMBER 31, 1998 ------------------------------------- MARKET UNITS COST VALUE ------------------------------------- Key Trust Investment Management: Prism Money Market Fund 346,686 $ 3,629,911 $ 4,152,262 Victory Intermediate Income Fund 182,450 1,733,526 1,784,359 Victory Balanced Fund 226,634 2,877,495 3,327,038 Victory Value Fund 549,457 7,432,993 9,571,252 Victory Special Growth Fund 99,151 1,260,197 1,210,630 The Midland Company Common Stock 47,207 1,008,768 1,138,869 --------------------------- Total before Participant Loans $ 17,942,890 21,184,410 ============== Participant Loans (interest rates: 6% to 10%) N/A 324,644 ------------- TOTAL INVESTMENTS $ 21,509,054 ============= SUPPLEMENTAL SCHEDULE FORM 5500, ITEM 27(d) - REPORTABLE TRANSACTIONS MIDLAND-GUARDIAN CO. SALARIED EMPLOYEES' 401(K) SAVINGS PLAN FOR THE YEAR ENDED DECEMBER 31, 1998 - ------------------------------------------------------------------------------------------------------------------------ IDENTITY NET OF PARTY DESCRIPTION PURCHASE SELLING COST OF GAIN OR INVOLVED OF ASSET PRICE PRICE ASSET (LOSS) - ------------------------------------------------------------------------------------------------------------------------ SERIES OF TRANSACTIONS - ---------------------- Key Trust Company of Ohio, N.A. Prism Money Market Fund An Affiliate of KeyCorp (59 Purchases) $ 551,323 (82 Sales) $1,283,755 $1,145,237 $138,518 Key Trust Company of Ohio, N.A. Victory Value Fund An Affiliate of KeyCorp (90 Purchases) 2,523,172 (82 Sales) 913,621 669,734 243,887 Key Trust Company of Ohio, N.A. Victory Balanced Fund An Affiliate of KeyCorp (90 Purchases) 1,060,786 (68 Sales) 354,512 304,489 50,023 INDIVIDUAL TRANSACTION - ---------------------- Key Trust Company of Ohio, N.A. Victory Value Fund An Affiliate of KeyCorp Purchased 89,674 shares/units 1,435,675 Note - Reportable transactions are as defined in Section 2520.103-6 of the Department of Labor's Rules and Regulations.
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