-----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, Rva+pxh5aRoyex3olgzp6c68gbLGwYtK46Q/762I+27eUwCdjUYVqkQiPX55aM8X tqm+pjlnAETO+2W6CRtasA== /in/edgar/work/20000627/0000719241-00-000018/0000719241-00-000018.txt : 20000920 0000719241-00-000018.hdr.sgml : 20000920 ACCESSION NUMBER: 0000719241-00-000018 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000627 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSECO INC CENTRAL INDEX KEY: 0000719241 STANDARD INDUSTRIAL CLASSIFICATION: [6321 ] IRS NUMBER: 351468632 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-09250 FILM NUMBER: 661200 BUSINESS ADDRESS: STREET 1: 11825 N PENNSYLVANIA ST CITY: CARMEL STATE: IN ZIP: 46032 BUSINESS PHONE: 3178176100 MAIL ADDRESS: STREET 1: 11825 N PENNSYLVANIA ST CITY: CARMEL STATE: IN ZIP: 46032 FORMER COMPANY: FORMER CONFORMED NAME: SECURITY NATIONAL OF INDIANA CORP DATE OF NAME CHANGE: 19840207 11-K 1 0001.txt CONSECOSAVE FORM 11-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 11-K [ x ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED December 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO _____________ Commission file number: 1-9250 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: ConsecoSave Plan B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive offices: Conseco, Inc. 11825 North Pennsylvania Street Carmel, Indiana 46032 CONSECOSAVE PLAN INDEX a) Financial Statements Report of Independent Accountants.................................................................... 3 Statement of Net Assets Available for Plan Benefits - December 31, 1999 and 1998..................... 4 Statement of Changes in Net Assets Available for Plan Benefits for the year ended December 31, 1999............................................................. 5 Notes to Financial Statements........................................................................ 6 Supplemental Schedules............................................................................... 13 b) Exhibit 23 Consent of Independent Accountants 2
REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Plan Trustees ConsecoSave Plan In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the ConsecoSave Plan (the "Plan") at December 31, 1999 and 1998, and the changes in net assets available for benefits for the year ended December 31, 1999 in conformity with accounting principles generally accepted in the United States. 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 of these statements in accordance with auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. 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 purposes as of December 31, 1999 and reportable transactions for the year ended December 31, 1999 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. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ PricewaterhouseCoopers LLP ------------------------------ PricewaterhouseCoopers LLP June 16, 2000 3 CONSECOSAVE PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31, 1999 and 1998
1999 1998 ------------ ------------ Assets: Investments at fair value $205,204,104 $155,779,016 Employer contribution receivable 5,049,538 3,118,942 ------------ ------------ Total assets 210,253,642 158,897,958 Liabilities: Excess contribution refunds due to participants 556,833 -- ------------ ------------ Net assets available for plan benefits $209,696,809 $158,897,958 ============ ============ The accompanying notes are an integral part of these financial statements.
4 CONSECOSAVE PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the year ended December 31, 1999 Investment income: Interest and dividends $ 19,030,922 Net depreciation in the fair value of investments (186,594) ------------ Net investment income 18,844,328 ------------ Contributions: Employee contributions 15,595,347 Employer contributions 5,049,538 Assets transferred into the Plan (Note 1) 26,631,923 ------------ Total contributions 47,276,808 ------------ Deductions: Benefits paid 15,322,285 ------------ Net increase in net assets available for plan benefits 50,798,851 Net assets available for plan benefits, beginning of year 158,897,958 ------------ Net assets available for plan benefits, end of year $209,696,809 ============ The accompanying notes are an integral part of these financial statements.
5 CONSECOSAVE PLAN NOTES TO FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies The accompanying financial statements of the ConsecoSave Plan (the "Plan") have been prepared in accordance with generally accepted accounting principles which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results may differ from these estimates. During 1999, assets with a fair value of $26,631,923 were transferred to the Plan. Such assets primarily consist of the assets of the 401(k) plans of certain subsidiaries previously acquired by Conseco, Inc. ("Conseco"). During 1999, these plans were merged with the Plan. In September 1999, the Accounting Standards Executive Committee issued Statement of Position 99-3, "Accounting for and Reporting of Certain Defined Contribution Benefit Plan Investments and Other Disclosure Matters" ("SOP 99-3"). SOP 99-3 simplifies the disclosure for certain investments and is effective for plan years ending after December 15, 1999. The Plan adopted SOP 99-3 during the Plan year ended December 31, 1999. Accordingly, information previously required to be disclosed about participant-directed fund investment programs is not presented in the Plan's 1999 financial statements and prior period amounts have been reclassified to conform with the current year presentation. Investments The Plan provides the following investment options for voluntary employee contributions: (i) the following funds offered by Conseco Fund Group, which is managed by Conseco Capital Management, Inc., a wholly owned subsidiary of Conseco - Conseco Balanced Fund, Conseco 20 Fund, Conseco Convertible Securities Fund, Conseco High Yield Fund, Conseco Equity Fund and Conseco Fixed Income Fund; (ii) Conseco Stock Portfolio; (iii) Government Securities Portfolio; (iv) Interest Income Portfolio; (v) Money Market Portfolio; and (vi) the Standard and Poor's 500 Index ("S & P 500") Portfolio. Employer contributions are invested solely in the common stock of Conseco. The Plan's investments, except for the Conseco Stock portfolio which is held by the Trustees of the Plan, are maintained under a group annuity contract in a separate account of Bankers National Life Insurance Company, an indirect wholly owned subsidiary of Conseco. On June 21, 1999, the Government Securities Portfolio was removed as an investment option. On June 21, 1999, the Conseco 20, Conseco Convertible Securities and Conseco High Yield Funds were added to the Plan. The Conseco Balanced Fund invests in debt securities, equity securities, and money market instruments. The Conseco 20 Fund generally invests at least 65 percent of its assets in common stocks of companies that the advisor believes have above-average growth prospects. The fund is non-diversified and will generally concentrate its investments in a core position of approximately 20 to 30 common stocks. The Conseco Convertible Securities Fund generally invests at least 65 percent of the fund's assets in convertible securities. These are often lower grade investment quality than other types of investments. At any given time over 50% of the fund's assets may be invested in below investment grade securities. The Conseco High Yield Fund seeks to provide a high level of current income with a secondary objective of capital appreciation. The fund generally invests at least 65 percent of the fund's assets in below investment grade securities. 6 CONSECOSAVE PLAN NOTES TO FINANCIAL STATEMENTS - (Continued) 1. Summary of Significant Accounting Policies (Continued) Investments (continued) The Conseco Equity Fund invests primarily in equity securities and other securities having the investment characteristics of common stocks. The Conseco Fixed Income Fund invests primarily in investment-grade debt securities. The above funds are valued using the net asset value at the end of each New York Stock Exchange business day. The Conseco Stock Portfolio only invests in the common stock of Conseco except for cash which remains in the fund to meet the fund's liquidity needs. The Conseco common stock is valued at its closing market price on the New York Stock Exchange. The Government Securities Portfolio invested in securities issued by the U.S. Government or an agency or instrumentality of the U.S. Government, including mortgage-backed securities and direct obligations issued by the U.S. Treasury, such as Treasury Bills, certificates of indebtedness, notes and bonds. On June 21, 1999, the Government Securities Portfolio was removed as an investment option. The Interest Income Portfolio consists of guaranteed interest contracts. The guaranteed interest contracts are carried at the accumulated contract values, which are cost adjusted for interest credited (at a blended rate of 5.42 percent and 5.48 percent for years ended December 31, 1999 and 1998, respectively). Such carrying values approximate fair values. As of December 31, 1999, the contract, interest rate, and expiration date are as follows: Conseco Variable Insurance Company, an indirect wholly owned subsidiary of Conseco - 6.00% December 31, 2000 Principal Mutual Life Insurance Company - 5.75% December 31, 2000 The Money Market Portfolio invests in money market instruments maturing within one year, with an average maturity of 120 days or less. Such investments are carried at amortized cost which approximates fair value. The S & P 500 Portfolio invests in a Standard and Poor's Depository Receipt, which is a trust that is traded on the American Stock Exchange (Ticker Symbol SPY) and is intended to track the price performance and dividend yield of the S & P 500 Index. The S & P 500 Portfolio is valued using the net asset value at the end of each New York Stock Exchange business day. The Plan presents in the Statement of Changes in Net Assets Available for Plan Benefits the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains (losses) and the unrealized appreciation (depreciation) on those investments. 7 CONSECOSAVE PLAN NOTES TO FINANCIAL STATEMENTS - (Continued) 1. Summary of Significant Accounting Policies (Continued) Administrative Expenses Operating expenses and maintenance fees incurred during the years ended December 31, 1999 and 1998, were paid by Conseco Services, LLC ("CSL"), the Plan sponsor and a wholly owned subsidiary of Conseco, on behalf of the Plan. Future payment of such expenses by CSL is at its discretion. Income Taxes Under Sections 401(a) and 501(a), respectively, of the Internal Revenue Code (the "IRC"), the Plan is qualified and the ConsecoSave Trust, a trust established under the Plan, is tax-exempt. The Plan has been amended since receiving its last determination letter. However, the Plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC. 2. Plan Description The Plan is a defined contribution plan pursuant to Section 401(k) of the IRC. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Established on April 1, 1989, and amended and restated on January 1, 1993, October 1, 1995, January 1, 1997, and November 15, 1999, the Plan includes all employees of CSL as determined pursuant to the Plan of CSL and any participating employer (unless otherwise excluded pursuant to the Plan). Participation is voluntary. Employees previously were eligible to become a participant on the first day of the second month immediately following: (1) the employee's date of hire or on the first day of any month thereafter if such employee's customary employment is for at least 1,000 hours of service per year; or (2) if the employee's customary employment is less than 1,000 hours of service per year, the last day of either the employee's initial six-month period of employment or any subsequent six-month period during which the employee completes 500 hours of service. Effective November 15, 1999, the Plan was amended and every employee is eligible to become a participant on the first day of the fourth month immediately following the employee's date of hire. Employee contributions to the Plan are made through periodic payroll deductions in increments of 1.0 percent of the participant's annual earnings, not to exceed the lesser of 15.0 percent of the participant's annual earnings or the maximum amount specified by federal tax law ($10,000 for pre-tax contributions for 1999). Participants can make pre-tax and/or after-tax contributions. Participants designate the portfolios in which their contributions are invested. 8 CONSECOSAVE PLAN NOTES TO FINANCIAL STATEMENTS - (Continued) 2. Plan Description (continued) The employer matches 50.0 percent of each participant's pre-tax contributions up to a maximum of 4.0 percent of the participant's annual earnings. In 1999, the employer matched an additional 25.0 percent of each participant's pre-tax contributions up to a maximum of 4.0 percent of each participant's annual earnings for achieving certain corporate return on equity goals. Additional amounts may be contributed by the employer at the discretion of its Board of Directors. All employer contributions are made to the Conseco Stock Portfolio, which invests solely in Conseco common stock. Such contributions are made no later than the due date for filing Conseco's federal income tax return, including extensions. ERISA and the IRC provide that qualified plans, such as the Plan, cannot discriminate in favor of highly compensated individuals. Certain highly compensated individuals may be required to receive refunds of any contributions in excess of the IRC Sections 401(k)(3) and 401(m) limits and all earnings attributable to such contributions. Amounts in excess of the limits discussed above are presented in the statement of net assets available for plan benefits as "Excess contribution refunds due to participants" and were refunded within 2-1/2 months of the Plan's year end. Participants are immediately vested in their voluntary contributions plus actual earnings thereon. Participants have a gradual vesting schedule based upon length of service and are fully vested in Conseco's contributions after six years of service. The non-vested interests of withdrawn participants are used to reduce Conseco's future contributions. Benefits under the Plan are paid in cash in a lump sum, in quarterly or annual installment payments, whole shares of Conseco common stock, or a combination thereof. A participant may make withdrawals after reaching age 55 or 59 1/2, and under certain circumstances are allowed to make hardship withdrawals and after-tax deposit account withdrawals. Participants are permitted to transfer account balances between portfolios, except the Conseco Stock Portfolio, at any time in 1.0 percent increments. Transfers involving participant-directed contributions to the Conseco Stock Portfolio may only be made during a 10-business day period each quarter, beginning on the 3rd business day following the quarterly earnings release. Participants may obtain loans up to 50.0 percent of the vested portion of their account balances, excluding employer contributions, to a maximum loan of $50,000. Only one loan may be outstanding at a time. Repayment of both principal and interest is made to the participant's account via payroll deduction or a lump sum. As of December 31, 1999, the participant loans had interest rates ranging from 6.0 percent to 10.5 percent, and maturity dates ranging from January 2000 to October 2017. The Plan is administered by CSL who establishes the rules and procedures necessary for the Plan's operations. Although it has not expressed any intent to do so, CSL has the right to terminate the Plan. In the event the Plan is terminated, each participant's account shall be nonforfeitable with respect to both the participant's and employer's contributions and the net assets shall be set aside for payment to the participants. Distribution shall be made by the Trustee in a lump sum or in substantially equal installments during a period not exceeding one year following such termination. The foregoing description of the Plan provides only limited information. Participants should refer to the Summary Plan Description for a more complete description of the Plan's provisions. 9 CONSECOSAVE PLAN NOTES TO FINANCIAL STATEMENTS - (Continued) 3. Investments Investments that represent 5 percent or more of the Plan's net assets available for plan benefits as of December 31, 1999 and 1998, are summarized as follows:
1999 1998 ---- ---- Conseco Equity Fund $79,488,321 $49,634,063 S&P 500 Portfolio 32,996,184 18,367,828 Conseco Stock Portfolio (a) 27,642,899 43,552,107 Money Market Portfolio 19,843,681 10,072,484 Interest Income Portfolio 16,437,853 16,517,909 Fixed Income Fund (b) 9,223,310 - --------------- (a) Includes both participant-directed and nonparticipant-directed investments. (b) Represented less than 5 percent of net assets available for plan benefits at December 31, 1999.
During 1999, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) as follows: Various investment portfolios, primarily mutual funds of the Conseco Fund Group $ 20,811,526 Conseco Stock Portfolio (20,998,120) ------------ $ (186,594) ============
10 CONSECOSAVE PLAN NOTES TO FINANCIAL STATEMENTS - (Continued) 4. Conseco Stock Portfolio The Conseco Stock Portfolio includes both participant-directed and nonparticipant-directed investments. Changes in net assets relating to this portfolio for the year ended December 31, 1999, are as follows: Investment Income: Interest and dividends $ 1,058,168 Net depreciation in fair value of investments (20,998,120) ------------ Net investment loss (19,939,952) ------------ Contributions: Employee contributions 4,098,749 Employer contributions 5,049,538 Assets transferred into the Plan 759,325 ------------ Total contributions 9,907,612 ------------ Deductions: Benefits paid 3,858,979 ------------ Net employee transfers to participant- directed investments (167,855) ------------ Net decrease in net assets available for plan benefits (14,059,174) Net assets available for plan benefits, beginning of year 46,671,049 ------------ Net assets available for plan benefits, end of year $ 32,611,875 ============
11 CONSECOSAVE PLAN NOTES TO FINANCIAL STATEMENTS - (Continued) 5. Subsequent Events (Unaudited) The NAL Financial Group 401(k) Benefit Plan and the Conseco Finance Corp. 401(k) Plan merged into the Plan effective January 1, 2000. The assets of these plans totaled $53,427,232 and were transferred into the Plan in early 2000. On March 31, 2000, Conseco announced that it plans to explore the sale of Conseco Finance Corp. 12
CONSECOSAVE PLAN SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES As of December 31, 1999 (a) (b) (c) (d) (e) Identity of Issuer, Borrower, Description Current Lessor or Similar Party of Investment Cost Value - ------------------------------------------------------------------------------------------------------------------------------------ Conseco Fund Group 593,420 shares of Conseco Balanced Fund $ 7,157,890 $ 8,064,574 Conseco Fund Group 201,571 shares of Conseco 20 Fund 3,289,632 4,130,190 Conseco Fund Group 64,001 shares of Conseco Convertible Securities Fund 826,627 956,176 Conseco Fund Group 31,099 shares of Conseco High Yield Fund 310,654 311,923 Conseco Fund Group 4,826,249 shares of Conseco Equity Fund 58,058,224 79,488,321 Conseco Fund Group 1,047,850 shares of Conseco Fixed Income Fund 10,451,634 10,101,270 Conseco, Inc. 1,512,288 shares of Conseco, Inc. Common Stock 38,784,873 27,270,892 Conseco Variable Insurance Guaranteed interest contract, interest rate-6.0%, Company maturity date-December 31, 2000 15,966,491 15,966,491 Principal Mutual Life Insurance Guaranteed interest contract, interest rate-5.75%, maturity Company date-December 31, 2000 471,362 471,362 Lehman Brothers Commercial paper 500,000 500,000 Lehman Brothers Commercial paper 500,000 500,000 Lehman Brothers Commercial paper 500,000 500,000 Lehman Brothers Commercial paper 550,000 550,000 Merrill Lynch Commercial paper 797,083 797,083 Bank of America Commercial paper 698,396 698,396 Merrill Lynch Commercial paper 696,902 696,902 Goldman Sachs - MMK Commercial paper 747,742 747,742 Goldman Sachs - MMK Commercial paper 697,190 697,190 Merrill Lynch Commercial paper 596,412 596,412 JP Morgan Certificate of deposit 749,985 749,985 Merrill Lynch Commercial paper 794,551 794,551 Goldman Sachs - MMK Commercial paper 794,130 794,130 Merrill Lynch Commercial paper 498,347 498,347 Merrill Lynch Commercial paper 746,529 746,529 Goldman Sachs - MMK Commercial paper 747,758 747,758 Fifth Third Bank Commercial paper 250,000 250,000 Lehman Brothers Commercial paper 497,647 497,647 Merrill Lynch Commercial paper 598,215 598,215 Merrill Lynch Commercial paper 746,648 746,648 Goldman Sachs - MMK Commercial paper 792,595 792,595 Goldman Sachs - MMK Commercial paper 497,833 497,833 Goldman Sachs - MMK Commercial paper 696,690 696,690 Goldman Sachs - MMK Commercial paper 697,918 697,918 Chase Securities Inc. Commercial paper 796,400 796,400 JP Morgan Certificate of deposit 750,030 750,030 Merrill Lynch Commercial paper 573,109 573,109 Lehman Brothers Commercial paper 500,000 500,000 Morgan Stanley & Co. Commercial paper 793,416 793,416 AIM Liquid Assets Portfolio - Commercial paper, time deposits, repurchase agreements 1,349,686 1,349,686 Bank of New York Collective Short-Term Interest Fund 372,006 372,006 Bank of New York Cash 38,260 38,260 SPDR Trust, Series I 223,205 shares of Standard & Poor's 500 Index Portfolio 24,200,971 32,646,394 Participant loans Interest rates from 6.0% to 10.5%, maturity dates from January 2000 to October 2017 - 5,231,033 ------------ ------------ Total Assets Held for Investment Purposes $180,083,836 $205,204,104 ============ ============
13 CONSECOSAVE PLAN SCHEDULE H, LINE 4j - SCHEDULE OF REPORTABLE TRANSACTIONS for the year ended December 31, 1999
Current Value of Identity Description Number Cost Asset on of Party of of Purchase Selling of Transaction Net Involved Transactions Transactions Price Price Asset Date Gain - --------------------------------------------------------------------------------- ----------------------------------------- Conseco Common Purchases 158 $ 8,719,827 $ - $ - $ 8,719,827 $ - Stock Portfolio Sales 100 - 4,612,732 1,686,657 4,612,732 2,926,075 Conseco Equity Purchases 221 27,153,513 - - 27,153,513 - Fund Sales 205 - 12,268,604 9,913,300 12,268,604 2,355,304 S&P 500 Purchases 10 11,184,642 - - 11,184,642 - Portfolio Sales 4 - 1,222,935 608,759 1,222,935 614,176
14 CONSECOSAVE PLAN SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees of the Plan have duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. CONSECOSAVE PLAN Dated: June 27, 2000 By: /s/ James S. Adams --------------------------- James S. Adams, Trustee 15 EX-23 2 0002.txt EX-23 EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of Conseco, Inc. on Form S-8 (File Nos. 33-57931, 33-58710 and 333-83607) of our report dated June 16, 2000, on our audits of the financial statements and supplemental schedules of the ConsecoSave Plan as of December 31, 1999 and 1998, and for the year ended December 31, 1999, which report is included in this Annual Report on Form 11-K. /s/ PricewaterhouseCoopers LLP ------------------------------ PricewaterhouseCoopers LLP Indianapolis, Indiana June 16, 2000 -----END PRIVACY-ENHANCED MESSAGE-----