-----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, BhZ133r6Gu4xV6rFObzjl2QnfR0hqhUTzUz5UbCmVwF3sDLkhEvlKsUMQ+4F91s3 1NIeulpiZ2LUJLe+4scMZw== 0000950131-97-004142.txt : 19970627 0000950131-97-004142.hdr.sgml : 19970627 ACCESSION NUMBER: 0000950131-97-004142 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970626 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HORACE MANN EDUCATORS CORP /DE/ CENTRAL INDEX KEY: 0000850141 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 370911756 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10890 FILM NUMBER: 97629930 BUSINESS ADDRESS: STREET 1: 1 HORACE MANN PLZ CITY: SPRINGFIELD STATE: IL ZIP: 62715-0001 BUSINESS PHONE: 2177892500 MAIL ADDRESS: STREET 1: 1 HORACE MANN PLZ CITY: SPRINGFIELD STATE: IL ZIP: 62715-0001 FORMER COMPANY: FORMER CONFORMED NAME: HORACE MANN EDUCATORS CORP DATE OF NAME CHANGE: 19920108 11-K 1 FORM 11-K 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 (Mark One): [X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996. OR [_] TRANSITION REPORT PURSUANT TO SECTION 15 [d] OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from __________ to _________ Commission file number 1-10890 --------------- HORACE MANN SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN (Full title of the Plan) HORACE MANN EDUCATORS CORPORATION 1 Horace Mann Plaza, Springfield, Illinois 62715 Registrant's telephone number, including area code: (217) 789 - 2500 (Name, Address and Telephone Number of Issuer) 1 REQUIRED INFORMATION Financial Statements: Item 4. In lieu of the requirements of Items 1-3, audited financial statements and schedules prepared in accordance with the requirements of ERISA for the Plan's fiscal years ended December 31, 1996 and 1995 are presented on pages 3 through 16. 2 Financial Statements and Supplemental Schedules Horace Mann Supplemental Retirement and Savings Plan Years ended December 31, 1996 and 1995 with Report of Independent Auditors 3 Horace Mann Supplemental Retirement and Savings Plan Financial Statements and Supplemental Schedules Years ended December 31, 1996 and 1995 Contents
Report of Independent Auditors................................................ 1 Audited Financial Statements Statements of Net Assets Available for Benefits............................... 2 Statements of Changes in Net Assets Available for Benefits.................... 3 Notes to Financial Statements................................................. 4 Supplemental Schedules Assets Held for Investment................................................... 10 Reportable Transactions (all other required schedules are not applicable).... 11
4 Report of Independent Auditors Pension Committee and The Board of Directors Horace Mann Educators Corporation We have audited the accompanying statements of net assets available for benefits of Horace Mann Supplemental Retirement and Savings Plan ("Plan") as of December 31, 1996 and 1995 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, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1996 and 1995, and the changes in its net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment 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 fund information in the statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the changes in net assets available for benefits of each fund. The supplemental schedules and fund information 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. April 3, 1997 /s/ ERNST & YOUNG LLP 5 Horace Mann Supplemental Retirement and Savings Plan Statements of Net Assets Available for Benefits
December 31 1996 1995 ------------------------ Assets Group annuity contract with Horace Mann Life Insurance Company, at contract value $38,666,126 $38,700,668 Separate account with Horace Mann Life Insurance Company, at market value: Horace Mann Growth Fund (cost $18,849,476 20,950,425 13,437,556 in 1996, $12,469,629 in 1995) Horace Mann Balanced Fund (cost $11,815,332 13,065,409 10,202,604 in 1996, cost $9,368,362 in 1995) Horace Mann Income Fund (cost $491,996 481,674 400,245 in 1996, $398,925 in 1995) Horace Mann Short-Term Investment Fund (cost $56,464 55,327 45,669 in 1996, $47,176 in 1995) Horace Mann Educators Corporation Common Stock, at market value (cost $2,291,974 in 1996, $2,345,168 in 1995) 3,721,647 3,116,090 ----------- ----------- Total assets 76,940,608 65,902,832 Liabilities Withdrawals payable to participants 463,070 462,857 ----------- ----------- Net assets available for benefits $76,477,538 $65,439,975
See accompanying notes to financial statements. 6 HORACE MANN SUPPLEMENTAL RETIREMENT & SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS December 31, 1996 and 1995
Total Fixed Fund Growth Fund ------------------------------------------------------------------------------------ 1996 1995 1996 1995 1996 1995 ------------------------------------------------------------------------------------ Additions Investment Income: Net realized and unrealized appreciation (depreciation) of investments $ 2,638,306 $ 4,423,734 $ - $ - $ 1,273,395 $ 2,022,104 Interest 2,696,366 2,708,304 2,696,255 2,707,909 Dividends 4,126,417 1,872,428 - - 2,615,589 1,079,706 ------------------------------------------------------------------------------------ 9,461,089 9,004,466 2,696,255 2,707,909 3,888,984 3,101,810 Contributions: Employer 1,816,466 1,627,035 543,806 614,887 730,335 533,929 Participants 4,301,452 3,820,153 1,265,304 1,430,233 1,752,509 1,265,376 ------------------------------------------------------------------------------------ Total additions 15,579,007 14,451,654 4,505,365 4,753,029 6,371,828 4,901,115 Deductions Withdrawals by participants (4,541,444) (4,143,319) (2,794,816) (3,014,026) (957,513) (516,971) Interfund transfers - - (1,570,864) 87,043 2,032,914 283,181 ------------------------------------------------------------------------------------ Net increase 11,037,563 10,308,335 139,685 1,826,046 7,447,229 4,667,325 Net assets available for benefits Beginning of year 65,439,975 55,131,640 38,304,640 36,478,594 13,398,672 8,731,347 ------------------------------------------------------------------------------------ End of year $76,477,538 $65,439,975 $38,444,325 $38,304,640 $20,845,901 $13,398,672 ====================================================================================
Short-Term Balanced Fund Income Fund Investment Fund ------------------------------------------------------------------------------------ 1996 1995 1996 1995 1996 1995 ------------------------------------------------------------------------------------ Additions Investment Income: Net realized and unrealized appreciation (depreciation) of investments $ 560,022 $ 1,317,516 $(10,709) $ 21,813 $ 738 $ (108) Interest Dividends 1,440,092 728,181 28,025 22,560 2,402 2,565 ----------------------------------------------------------------------------------- 2,000,114 2,045,697 17,316 44,373 3,140 2,457 Contributions: Employer 391,510 325,423 18,524 15,341 6,532 5,655 Participants 926,778 764,576 44,004 34,468 16,064 13,771 ----------------------------------------------------------------------------------- Total additions 3,318,402 3,135,696 79,844 94,182 25,736 21,883 Deductions Withdrawals by participants (602,860) (490,797) (20,950) (35,790) (1,441) (4,687) Interfund transfers 53,938 72,692 19,154 62,365 (14,594) (12,689) ----------------------------------------------------------------------------------- Net increase 2,769,480 2,717,591 78,048 120,757 9,701 4,507 Net assets available for benefits Beginning of year 10,182,693 7,465,102 399,363 278,606 45,625 41,118 ----------------------------------------------------------------------------------- End of year $12,952,173 $10,182,693 $477,411 $399,363 $ 55,326 $ 45,625 ===================================================================================
HMEC Common Stock Fund ------------------------- 1996 1995 ------------------------- Additions Investment Income: Net realized and unrealized appreciation (depreciation) of investments $ 814,860 $1,062,409 Interest 111 395 Dividends 40,309 39,416 ------------------------ 855,280 1,102,220 Contributions: Employer 125,759 131,800 Participants 296,793 311,729 ------------------------ Total additions 1,277,832 1,545,749 Deductions Withdrawals by participants (163,864) (81,048) Interfund transfers (520,548) (492,592) ------------------------ Net increase 593,420 972,109 Net assets available for benefits Beginning of year 3,108,982 2,136,873 ------------------------ End of year $3,702,402 $3,108,982 ========================
See accompanying notes to financial statements. Horace Mann Supplemental Retirement and Savings Plan Notes to Financial Statements December 31, 1996 1. General Plan Information Description of the Plan The Horace Mann Supplemental Retirement and Savings Plan ("the Plan") is sponsored by Horace Mann Service Corporation ("HMSC") which is a wholly owned subsidiary of Horace Mann Educators Corporation ("HMEC"; HMSC and HMEC collectively referred to as "the Company"). The following brief description of the Plan is provided for general information purposes. Readers should refer to the actual Plan Document or the employee Summary Plan Description entitled Your Horace Mann Benefits Program for additional information. The Plan is a voluntary defined contribution plan covering all employees of the Company. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Contributions and Vesting Participating employees may contribute up to 10% of eligible compensation, including salary, overtime, commissions and certain incentive bonuses on a before-tax basis to one or more of six available investment funds. The Company contributes an amount equal to 50% of the first 6% of eligible compensation contributed by participating employees. Employer contributions and earnings thereon are 20% vested for each year of service, with full vesting occurring after 5 years of service. In addition, employer contributions generally become fully vested in the event of disability or death. Forfeitures of nonvested employer contributions serve to reduce future Company matching contributions. Participant contributions and earnings thereon are fully vested at all times. Effective January 1, 1994, in accordance with the Omnibus Budget Reconciliation Act of 1993, eligible compensation for purposes of contributions has been limited to $150,000 and highly compensated employees are limited to 5% participant contributions and 2.5% Company matching contributions. 8 1. General Plan Information (continued) Participant Accounts and Benefits Each participant's account is credited with the participant's contribution, the Company's matching contribution and an allocation of Plan investment earnings. The benefit to which a given participant is entitled is the benefit that can be provided from that participant's vested account. A participant subaccount is maintained in each of the investment funds in which a participant chooses to invest. There were 1,982 and 1,844 participants at December 31, 1996 and 1995, respectively. At December 31, 1996 and 1995, the number of participant subaccounts in the respective investment funds were as follows:
1996 1995 --------------- Fixed Fund 1,408 1,485 Growth Fund 1,487 1,214 Balanced Fund 1,075 977 Income Fund 159 168 Short-Term Investment Fund 56 67 HMEC Common Stock Fund 558 515
Transfers and Withdrawals Participants may transfer all or a portion of their account balance between the various investment funds on a monthly basis. Participant's withdrawals (as allowed under the Plan) are permitted on a monthly basis. Termination Although it has not expressed any intent to do so, the Company has the right to terminate the Plan at any time, subject to the provisions of ERISA. In the event of Plan termination, participants become fully vested. 9 2. Investments Trust Agreement All plan assets are held in trust by American National Bank and Trust Company of Chicago, pursuant to a trust agreement. The assets of the Plan are deposited in three participant-directed investments: a group annuity contract with Horace Mann Life Insurance Company ("HMLIC", a subsidiary of HMEC), one of four divisions of a separate account of HMLIC or an HMEC Common Stock Fund. Group Annuity Contract Plan participants may invest in a fixed interest rate guaranteed value group annuity contract with HMLIC ("Fixed Fund"). Plan assets invested in this contract are guaranteed by HMLIC and, as a result, are presented in the financial statements at contract value. Contract value represents contributions made under the contract, plus interest at the contract rate, less withdrawals by participants. The market value of the group annuity contract is approximately equal to contract value. The actual credited interest rate on the group annuity contract for the years ended December 31, 1996 and 1995 was as follows:
1996 1995 ------------- Actual credited interest rate 7.25% 7.40%
The minimum guaranteed annual interest rate per the group annuity contract is 4.5%. The actual credited rate may be reset by HMLIC with 30 days advance notice, but is generally changed once at the beginning of each Plan year. Beginning January 1, 1997, the actual crediting rate was continued at 7.25%. Separate Account A separate account has been established by HMLIC for the purpose of separately investing Plan assets in one or more of four corresponding mutual funds ("Growth Fund", "Balanced Fund", "Income Fund", and "Short-Term Investment Fund", collectively "the Horace Mann Funds"). The investment in the separate account is stated at market value. The investments of the underlying mutual funds are primarily common stocks, U.S. Government and corporate bonds and short-term commercial paper. The common stocks and bonds are presented at market value, 10 2. Investments (continued) based on quoted market prices, and the short-term commercial paper is presented at cost, which approximates market value. The units owned by the Plan through its investment in the separate account and unit values of each of the Horace Mann Funds at December 31, 1996 and 1995 were as follows:
1996 1995 Division Units Owned Unit Value Units Owned Unit Value ================================================================================ Growth Fund 881,752 $23.76 620,386 $21.66 Balanced Fund 689,831 18.94 566,811 18.00 Income Fund 37,957 12.69 30,717 13.03 Short-Term Investment Fund 5,516 10.03 4,567 10.00
Total average annualized returns for each of the Horace Mann Funds were as follows:
One Year Period ended December 31, 1996 ------------------------------------------------------------ 1996 1995 5 Years 10 years ------------------------------------------------------------ Growth Fund 25.28% 33.67% 16.98% 14.92% Balanced Fund 18.27 27.12 13.20 12.07 Income Fund 3.50 14.93 6.13 7.47 Short-Term Investment Fund 5.02 5.25 3.97 5.44
11 2. Investments (continued) The composition of the underlying investments in each the Horace Mann Funds at December 31, 1996 and 1995 was as follows:
1996 1995 ----------------- Horace Mann Growth Fund: Common and preferred stock 96% 97% Cash and short-term investments 4 3 Horace Mann Balanced Fund: Common and preferred stock 69% 65% U.S. and foreign government and agency obligations 23 25 Corporate bonds/notes 7 7 Cash and short-term investments 1 3 Horace Mann Income Fund: U.S. and foreign government and agency obligations 68% 70% Corporate bonds/notes 30 26 Cash and short-term investments 2 4 Horace Mann Short-Term Investment Fund: U.S. and foreign government and agency obligations 99% 100% Cash and short-term investments 1 ---
12 HMEC Common Stock Fund The Plan's HMEC Common Stock Fund at December 31, 1996 and 1995 consisted of a pooled investment in 92,177 shares and 99,715 shares, respectively, of HMEC common stock, which is traded on the New York Stock Exchange under the symbol HMN. This investment is presented in the financial statements at market value of $40.38 and $31.25 per share, respectively. Total average annualized returns for investments in the HMEC Common Stock Fund were as follows: 1 Year --------------- Since inception 1996 1995 (November 1991) ------------------------------- 30.9% 49.2% 18.4% 3. Administrative Expenses The Company pays all administrative costs for the operation of the Plan and related trust, which consist primarily of trustee, audit and legal fees. The investment results of the separate account are net of investment and operating expenses charged by Horace Mann Funds. Minimal brokerage and commission fees for the purchase of HMEC common stock are paid directly by the Trustee from the HMEC Common Stock Fund. 4. Income Tax Status The Plan has received a determination from the Internal Revenue Service that the Plan has met the provisions of the Internal Revenue Code ("the Code") as being exempt from federal income tax. The Plan is organized in accordance with section 401(k) of the Code. Participants are not subject to federal income tax on amounts contributed to the Plan, or on earnings attributable to such contributions, until such time as these amounts are either distributed to or withdrawn by the participants. 13 Supplemental Schedules 14 Horace Mann Supplemental Retirement and Savings Plan Assets Held for Investment December 31, 1996
Number of Shares Contract or or Units Name Cost Market Value - --------------------------------------------------------------------------------------- N/A HMLIC Group Annuity Contract $38,666,126 $38,666,126 881,752 Horace Mann Growth Fund 18,849,476 20,950,425 689,831 Horace Mann Balanced Fund 11,815,332 13,065,409 37,957 Horace Mann Income Fund 491,996 481,674 5,516 Horace Mann Short-Term Investment Fund 56,464 55,327 92,177 Horace Mann Educators Corporation Common Stock 2,291,974 3,721,647 --------------------------------- $72,171,368 $76,940,608 =================================
15 Horace Mann Supplemental Retirement and Savings Plan Reportable Transactions Year Ended December 31, 1996
Purchase Selling Number of Cost of Identity of Party Involved Description of Asset Price Price Transactions Asset Net Gain - ------------------------------------------------------------------------------------------------------------------------------------ Fixed Fund Group Annuity Contract(1) $4,652,088 - 44 $4,652,088 - Horace Mann Life Insurance - $4,686,630 21 4,686,630 - Company (HMLIC) Growth Fund Horace Mann Growth Fund(1) 7,238,264 - 48 7,238,264 - HMLIC Separate Account - 998,790 16 858,417 $140,373 Balanced Fund Horace Mann Balanced Fund(1) 3,307,405 - 40 3,307,405 - HMLIC Separate Account - 1,004,622 17 860,435 144,187 Income Fund Horace Mann Income Fund(1) 143,868 - 31 143,868 - HMLIC Separate Account - 51,730 19 50,797 933 Short-Term Investment Fund Horace Mann Short-Term Investment Fund(1) 37,456 - 26 37,456 - HMLIC Separate Account - 28,536 17 28,168 368 HMEC Common Stock Fund Horace Mann Educators Corp. Common Stock(1) 390,558 - 15 390,558 - - 599,861 9 443,752 156,109
(1) Party-in-interest investment which is not a prohibited investment under ERISA rules and regulations. 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Pension Plan Committee of the Horace Mann Supplemental Retirement and Savings Plan has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Date 26 June 1997 HORACE MANN SUPPLEMENTAL RETIREMENT ----------------- AND SAVINGS PLAN --------------------------- Kathryn E. Karr Plan Administrator Secretary Employee Benefits Administration 17 EXHIBITS 23. Consent of Independent Auditors 18 EX-23.1 2 CONSENT OF ERNST & YOUNG Exhibit 23 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS -------------------------------------------------- We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-45152) pertaining to the Horace Mann Supplemental Retirement and Savings Plan and in the related Prospectus of our report date April 3, 1997, with respect to the financial statements and supplemental schedules of the Horace Mann Supplemental Retirement and Savings Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1996. Chicago, Illinois June 24, 1997 -----END PRIVACY-ENHANCED MESSAGE-----