-----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, WcM2CU5QkPVaH4fA79oLhdVHWd6kmgm5UK4cJt/gUEnYZeab2YFwEAJ/LKStkgMu ot3zvUYf3XD/PcBlkH6nvA== 0000814585-98-000003.txt : 19980629 0000814585-98-000003.hdr.sgml : 19980629 ACCESSION NUMBER: 0000814585-98-000003 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980626 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MBIA INC CENTRAL INDEX KEY: 0000814585 STANDARD INDUSTRIAL CLASSIFICATION: SURETY INSURANCE [6351] IRS NUMBER: 061185706 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-09583 FILM NUMBER: 98655334 BUSINESS ADDRESS: STREET 1: 113 KING ST CITY: ARMONK STATE: NY ZIP: 10504 BUSINESS PHONE: 9142734545 MAIL ADDRESS: STREET 1: 113 KING ST CITY: ARMONK STATE: NY ZIP: 10504 11-K 1 Y/E 1997 11-K (PROFIT) 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, 1997 or ( ) TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from __________ to __________ Commission File No. 1-9583 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: MBIA INC. EMPLOYEES PROFIT SHARING AND 401 (K) SALARY DEFERRAL PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: MBIA Inc. 113 King Street Armonk, N. Y. 10504 MBIA INC. EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 MBIA INC. EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN FINANCIAL STATEMENTS INDEX Pages ----- Report of Independent Accountants 2 Financial Statements: Statements of Net Assets Available for Plan Benefits as of December 31, 1997 and 1996 3 Statements of Changes in Net Assets Available for Plan Benefits for the years ended December 31, 1997 and 1996 4 Notes to Financial Statements 5-10 Signatures 11 1 REPORT OF INDEPENDENT ACCOUNTANTS --------------------------------- TO THE PLAN ADMINISTRATOR OF MBIA INC. EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN: We have audited the accompanying statements of net assets available for plan benefits of the MBIA Inc. Employees Profit Sharing and 401(K) Salary Deferral Plan as of December 31, 1997 and 1996 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 administrator. 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 MBIA Inc. Employees Profit Sharing and 401(K) Salary Deferral Plan as of December 31, 1997 and 1996, and the changes in net assets available for plan benefits for the years then ended in conformity with generally accepted accounting principles. /s/ COOPERS & LYBRAND L. L. P. - ------------------------------- New York, New York June 25, 1998. 2 MBIA INC. EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31 December 31 1997 1996 ----------- ----------- Allocated share of MBIA Inc. Master Trust net assets, at fair value (cost $43,195,589 and $35,216,408, respectively) $52,291,469 $41,184,879 Employer contribution receivable 596 1,356 ----------- ----------- Net assets available for plan benefits $52,292,065 $41,186,235 =========== =========== The accompanying notes are an integral part of the financial statements. 3 MBIA INC. EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS Years ended December 31 ---------------------------- 1997 1996 ------------- ------------ Contributions: Employees' salary deferral $2,325,452 $2,192,690 Employer 1,369,955 1,300,350 Interest and dividends 1,859,999 1,710,442 Net appreciation in fair value of investments 9,410,506 6,165,234 Benefit distributions (3,860,082) (2,781,760) ----------- ----------- Net increase 11,105,830 8,586,956 Net assets available for plan benefits, beginning of year 41,186,235 32,599,279 ----------- ----------- Net assets available for plan benefits, end of year $52,292,065 $41,186,235 =========== =========== The accompanying notes are an integral part of the financial statements. 4 MBIA INC. EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN NOTES TO FINANCIAL STATEMENTS 1. PLAN DESCRIPTION - ---------------------- The MBIA Inc. Employees Profit Sharing and 401(K) Salary Deferral Plan (the "Plan") is a defined contribution plan for employees of MBIA Inc. and Subsidiaries (the "Company"). Effective April 1, 1987, a 401(K) deferral feature was implemented enabling eligible participants to defer up to 10% of their total eligible compensation. Matching contributions are made by the Company at the rate of 100% of the participant's contribution up to a maximum of 5% of the participant's eligible compensation. Participants may request loans from their accounts in accordance with established guidelines. The assets of both the Plan and the MBIA Inc. Employees Pension Plan are managed by Fidelity Management Trust Company ("Fidelity"), the investment advisor, master trustee and custodian. The participants of the Plan have the option to direct the investment of their contribution share into one or more of ten Fidelity funds and the Employer Stock Fund. Vesting in employer contributions begins after three years of service and full vesting is achieved after five years of service. Participants are fully vested in their salary deferred contributions at all times. Upon reaching the normal retirement date, death or becoming disabled, a participant becomes fully vested in the Company's contributions. Nonvested benefits remaining after termination of employment serve to reduce future Company contributions. A participant is entitled to the benefit that can be provided by the contributions and income thereon, including net realized and unrealized investment gains and losses of each participant's account. Upon retirement, disability, death or termination, a participant or beneficiary can elect to receive a lump-sum distribution, installment distributions or purchase a joint and survivor annuity contract or single life annuity contract. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Participants should refer to the Summary Plan Description and Plan Document for specific information regarding Plan provisions. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ---------------------------------------------- The financial statements have been prepared on the basis of generally accepted accounting principles (GAAP). The preparation of financial statements in conformity with GAAP 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 5 MBIA INC. EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN NOTES TO FINANCIAL STATEMENTS (Continued) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds, and other investment securities. Investment securities are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants' account balances and the amounts reported in the Statements of Net Assets Available for Plan Benefits. Significant accounting policies are as follows: INVESTMENTS The Plan's assets are invested in the MBIA Inc. Master Trust (the "Master Trust") together with the assets of the MBIA Inc. Employees Pension Plan. The Plan's share of investments and income from investment activities in the Master Trust is determined based on the Plan's underlying contribution to the investment classification which is, in turn, based on the investment fund elections of the participants. Investments in the Fidelity funds and the Company's common stock are valued at their current fair values based on last reported sales prices on the last business day of the year. Participant loans are stated at cost plus accrued income, which approximates fair value. Gain or loss on sale of investments is based on specifically identified cost. Interest income from investments is recorded as earned on the accrual basis. Dividend income is recorded on the ex-dividend date. The Plan's net appreciation (depreciation) in the fair value of its investments consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. CONTRIBUTIONS Contributions from eligible participants and matching Company contributions are recorded in the month the related payroll deductions are made. PARTICIPANT ACCOUNTS Each participant has an account which is credited with the Company's contribution, employees' contribution and the income (loss) from the investment activities of the participant's account. 6 MBIA INC. EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN NOTES TO FINANCIAL STATEMENTS (Continued) ADMINISTRATIVE EXPENSES Administrative expenses are paid directly by the Company rather than out of Plan assets. Employee loan fees are paid out of the participants' accounts. 3. PLAN TERMINATION - -------------------- The Company has not expressed any intent to discontinue its contributions or terminate the Plan. However, it reserves the right to temporarily suspend contributions to or amend or terminate the Plan. Upon termination of the Plan, the accounts of all participants shall become fully vested, and the net assets of the Plan shall be distributed among the participants and beneficiaries of the Plan in proportion to their respective account balances. 4. INVESTMENTS - --------------- As of December 31, 1997 and 1996, the financial position of the Master Trust on a cash basis (excluding the ending accrual for employer contributions) and the Plan's percentage interest in each asset category were as follows: December 31, 1997 ----------------------------------- Total Master Trust ------------------------ Plan's Fair % Cost Value Interest ---------- ----------- -------- Investments at fair value as determined by quoted market price: Employer Stock Fund $18,130,563 $23,925,357 100.00% Fidelity Puritan Fund 1,730,534 1,886,880 42.33 Fidelity Magellan Fund 4,288,915 4,909,785 43.58 Fidelity Growth Company Fund 4,970,304 5,139,987 40.71 Fidelity Growth and Income Portfolio 28,530,042 34,636,906 43.12 Fidelity Intermediate Bond Fund 1,384,879 1,397,680 47.62 Fidelity Value Fund 711,218 659,402 45.81 Fidelity Overseas Fund 2,053,397 2,080,248 45.72 Fidelity Blue Chip Growth Fund 4,432,161 5,153,599 47.03 Fidelity Spartan U. S. Equity Index Fund 266,771 273,519 53.28 Managed Income Portfolio 6,542,686 6,542,686 42.18 ----------- ----------- ------ 73,041,470 86,606,049 59.05 Investments at estimated fair value: Participant loans 1,387,014 1,387,014 83.08 ----------- ----------- Total invested assets available for benefits of participating plans $74,428,484 $87,993,063 59.43% =========== =========== December 31, 1996 ----------------------------------- Total Master Trust ------------------------- Plan's Fair % Cost Value Interest ----------- ----------- -------- Investments at fair value as determined by quoted market price: Employer Stock Fund $13,510,043 $18,044,834 100.00% Fidelity Puritan Fund 1,605,846 1,630,058 41.62 Fidelity Magellan Fund 4,124,095 4,005,103 43.40 Fidelity Growth Company Fund 3,661,046 4,007,194 40.43 Fidelity Growth and Income Portfolio 23,515,287 26,433,859 42.86 Fidelity Intermediate Bond Fund 1,425,115 1,387,505 50.07 Fidelity Value Fund 262,517 254,745 43.03 Fidelity Overseas Fund 1,398,480 1,456,140 47.67 Fidelity Blue Chip Growth Fund 3,722,493 3,956,884 47.74 Fidelity Spartan U. S. Equity Index Fund --- --- --- Managed Income Portfolio 7,875,966 7,875,966 41.71 ----------- ----------- 61,100,888 69,052,288 58.05 Investments at estimated fair value: Participant loans 1,341,044 1,341,044 82.23 ----------- ----------- Total invested assets available for benefits of participating plans $62,441,932 $70,393,332 58.51% =========== =========== For the years ended December 31, 1997 and 1996, net appreciation in the fair value of investments (determined by quoted market price) of the Master Trust (including investments bought and sold, as well as held during the year) was as shown on the following page: 7 MBIA INC. EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN NOTES TO FINANCIAL STATEMENTS (Continued) Years ended December 31 ----------------------- 1997 1996 ----------- ----------- Fidelity funds $ 8,652,156 $3,669,950 Employer Stock Fund 5,725,073 4,603,368 ----------- ---------- $14,377,229 $8,273,318 =========== ========== For the years ended December 31, 1997 and 1996, investment income consisting of dividends and interest in the Master Trust was $3,867,311 and $3,628,608, respectively. 5. NET ASSETS AND CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS BY FUND - ---------------------------------------------------------------------------- As of December 31, 1997 and 1996, the net assets available for Plan benefits of the individual investment funds were as follows: As of December 31 ------------------------- 1997 1996 ----------- ----------- Employer Stock Fund* $23,925,953 $18,046,190 Fidelity Puritan Fund 798,693 678,400 Fidelity Magellan Fund 2,139,745 1,738,253 Fidelity Growth Company Fund 2,092,411 1,620,017 Fidelity Growth and Income Portfolio* 14,935,204 11,328,480 Fidelity Intermediate Bond Fund 665,509 694,760 Fidelity Value Fund 302,042 109,626 Fidelity Overseas Fund 951,087 694,148 Fidelity Blue Chip Growth Fund 2,423,578 1,888,877 Fidelity Spartan U. S. Equity Index Fund 145,723 --- Managed Income Portfolio* 2,759,805 3,284,807 Participant Loans 1,152,315 1,102,677 ----------- ----------- $52,292,065 $41,186,235 =========== =========== *Each of these investments represents 5% or more of the Plan's net assets at December 31, 1997 and 1996. The participant loans are included in the allocated share of MBIA Inc. Master Trust net assets on the Statements of Net Assets Available for Plan Benefits. For the years ended December 31, 1997 and 1996, the changes in net assets available for Plan benefits of the individual investment funds were as shown on the following page: 8 MBIA INC. EMPLOYEES PROFIT SHARING and 401 (K) SALARY DEFERRAL PLAN NOTES TO FINANCIAL STATEMENTS (Continued)
Year ended December 31, 1997 ----------------------------------------------------------------------- Employer Growth Growth Stock Puritan Magellan Company and Income Intermediate Fund Fund Fund Fund Fund Bond Fund ---------- -------- --------- --------- ----------- ------------ Contributions: Employees' salary deferral $ 143,601 $ 82,487 $341,012 $294,275 $ 730,337 $ 62,225 Employer 1,369,955 --- --- --- --- --- Interest and dividends 272,982 56,621 132,549 208,886 673,643 35,913 Net appreciation (depreciation) in fair value of investments 5,725,073 76,819 312,489 114,956 2,769,237 4,904 Benefit distributions (1,669,139) (163,238) (141,890) (48,796) (935,175) (198,425) Transfers from (to) other funds 37,291 67,604 (242,668) (96,927) 368,682 66,132 ---------- -------- -------- -------- ---------- -------- Net increase in net assets available for Plan benefits $5,879,763 $120,293 $401,492 $472,394 $3,606,724 $(29,251) ========== ======== ======== ======== ========== ======== Year ended December 31, 1997 (Con't) ----------------------------------------------------------------------------------- Blue Chip Spartan Managed Value Overseas Growth U. S. Equity Income Participant Fund Fund Fund Index Fund Portfolio Loans Total ---------- -------- -------- ------------ --------- ----------- ---------- Contributions: Employees' salary deferral $ 58,006 $135,695 $259,548 $ 10,970 $ 207,296 $ --- $ 2,325,452 Employer --- --- --- --- --- --- 1,369,955 Interest and dividends 39,485 45,294 117,067 966 173,429 103,164 1,859,999 Net appreciation (depreciation) in fair value of investments (9,510) 31,611 381,584 3,343 --- --- 9,410,506 Benefit distributions (19,910) (3,299) (167,840) --- (413,147) (99,223) (3,860,082) Transfers from (to) other funds 124,345 47,638 (55,658) 130,444 (492,580) 45,697 --- -------- -------- -------- --------- --------- --------- ----------- Net increase in net assets available for Plan benefits $192,416 $256,939 $534,701 $145,723 $(525,002) $ 49,638 $11,105,830 ======== ======== ======== ======== ========= ========= ===========
Year ended December 31, 1996 ----------------------------------------------------------------------- Employer Growth Growth Stock Puritan Magellan Company and Income Intermediate Fund Fund Fund Fund Fund Bond Fund ---------- -------- --------- --------- --------- ------------ Contributions: Employees' salary deferral $ 77,374 $ 80,154 $288,597 $268,116 $ 755,966 $72,425 Employer 1,305,218 --- --- --- --- --- Interest and dividends 246,104 80,017 272,215 68,061 554,757 44,032 Net appreciation (depreciation) in fair value of investments 4,603,368 13,575 (95,677) 141,511 1,379,550 (20,335) Benefit distributions (847,017) (79,943) (134,446) (68,033) (1.349,954) (1,832) Transfers (to) from other funds (107,641) (30,545) (263,877) (21,627) (55,659) (34,557) ---------- -------- -------- -------- ---------- ------- Net increase in net assets available for Plan benefits $5,277,406 $ 63,258 $ 66,812 $388,028 $1,304,660 $59,733 ========== ======== ======== ======== ========== ======= Year ended December 31, 1996 (Con't) ----------------------------------------------------------------------------------- Blue Chip Spartan Managed Value Overseas Growth U. S. Equity Income Participant Fund Fund Fund Index Fund Portfolio Loans Total ---------- -------- -------- ---------- --------- ---------- ---------- Contributions: Employees' salary deferral $ 22,050 $118,002 $247,654 $ --- $242,352 $ --- $2,192,690 Employer --- --- --- --- (4,868) --- 1,300,350 Interest and dividends 11,505 41,693 127,634 --- 172,588 91,836 1,710,442 Net appreciation (depreciation) in fair value of investments (2,852) 31,864 114,230 --- --- --- 6,165,234 Benefit distributions (921) (35,837) (86,932) --- (168,508) (8,337) (2,781,760) Transfers (to) from other funds 79,844 71,246 (20,593) --- 259,945 123,464 --- ---------- -------- -------- ---------- --------- ------- ---------- Net increase in net assets available for Plan benefits $109,626 $226,968 $381,993 $ --- $501,509 $206,963 $8,586,956 ======== ======== ======== ========= ======== ======== ==========
9 MBIA INC. EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN NOTES TO FINANCIAL STATEMENTS (Continued) 6. TAX STATUS - -------------- The Internal Revenue Service has advised that the Plan constitutes a qualified plan under Section 401 (a) of the Internal Revenue Code and is therefore exempt from federal income taxes under provisions of Section 501 (a). The Plan obtained its latest determination letter on July 12, 1995 in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan's tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, they believe that the Plan was qualified and the related Trust was tax-exempt as of the financial statement date. 7. SUBSEQUENT EVENT - -------------------- On February 17, 1998, MBIA Inc. and CapMAC Holdings Inc. (CapMAC) consummated a merger. Effective the date of the merger, the account balances in the CapMAC 401(K) Plan were transferred to the MBIA Inc. Employees Profit Sharing and 401(K) Salary Deferral Plan. 10 SIGNATURES ----------- Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. MBIA INC. EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN Date: June 25, 1998 /s/ KEVIN D. SILVA --------------------------- Kevin D. Silva Senior Vice President Plan Administrator Date: June 25, 1998 /s/ LOUIS G. LENZI ---------------------------- Louis G. Lenzi General Counsel 11 EX-23 2 CONSENT OF COOPERS & LYBRAND L. L. P. EXHIBIT 23 ---------- CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statements of MBIA Inc. on Form S-8 (Nos.33-22441 and 33-46062) of our report dated June 25, 1998, on our audits of the financial statements of MBIA Inc. Employees Profit Sharing and 401(K) Salary Deferral Plan as of December 31, 1997 and 1996 and for each of the two years in the period ended December 31, 1997, which report is incorporated by reference in this 1997 Annual Report of Form 11-K. We also consent to the reference to our firm under the caption "Experts" included in the Prospectuses. /s/ COOPERS & LYBRAND L. L. P. - ------------------------------ New York, New York June 26, 1998 -----END PRIVACY-ENHANCED MESSAGE-----