-----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, FeLxw8OdXjBCMrd9BHAKmqBZUhhC/ey9moqbQBQ0keqjaIDRN/IFUVIieadKCUKM nhKO/gg8XbrSaCqVAb5V7Q== 0000086312-98-000017.txt : 19980630 0000086312-98-000017.hdr.sgml : 19980630 ACCESSION NUMBER: 0000086312-98-000017 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980629 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ST PAUL COMPANIES INC /MN/ CENTRAL INDEX KEY: 0000086312 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 410518860 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-10898 FILM NUMBER: 98656195 BUSINESS ADDRESS: STREET 1: 385 WASHINGTON ST CITY: SAINT PAUL STATE: MN ZIP: 55102 BUSINESS PHONE: 6123107911 FORMER COMPANY: FORMER CONFORMED NAME: SAINT PAUL COMPANIES INC DATE OF NAME CHANGE: 19900730 11-K 1 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 (Fee Required) or Transition Report Pursuant to Section 15(d) of --- the Securities Exchange Act of 1934(no fee required) for the transition period from to . --------- ---------- For the fiscal year ended December 31, 1997 Commission file number 0-3021 ------------------------------ THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN THE ST. PAUL COMPANIES, INC. 385 WASHINGTON STREET ST. PAUL MINNESOTA 55102 (Full title of the Plan and address of the Plan) ------------------------------ THE ST. PAUL COMPANIES, INC. 385 WASHINGTON STREET ST. PAUL, MINNESOTA 55102 (Name and address of principal executive offices of the issuer of the securities) ------------------------------- REQUIRED INFORMATION -------------------- The St. Paul Companies, Inc. Savings Plus Plan (the "Plan") is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and for purposes of satisfying the requirements of Form 11-K has included for filing herewith the Plan financial statements and schedules prepared in accordance with the financial reporting requirements of ERISA. Financial Statements and Schedules Page - ---------------------------------- ---- Independent Auditors' Report . . . . . . . . . . . 3 Statements of Net Assets Available for Plan Benefits . . . . . . . . . . . . . . . . 4 Statements of Changes in Net Assets Available for Plan Benefits With Fund Information 5-6 Notes to Financial Statements . . . . . . . . . . . 7-21 Item 27a-Schedule of Assets Held for Investment Purposes 22 Item 27d-Schedule of Reportable Transactions . . . . 23 INDEPENDENT AUDITORS' REPORT ---------------------------- The Plan Administrative Committee and Plan Participants The St. Paul Companies, Inc. Savings Plus Plan: We have audited the accompanying statements of net assets available for plan benefits of The St. Paul Companies, Inc. Savings Plus Plan (the Plan) as of December 31, 1997 and 1996, and the related statements of changes in net assets available for plan benefits with fund information 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 St. Paul Companies, Inc. Savings Plus Plan as of December 31, 1997 and 1996, and the changes in the net assets available for plan 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 basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes 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 fund information in the statement of changes in net assets available for plan benefits is presented for purposes of additional analysis rather than to present the changes in net assets available for plan benefits of each fund. The supplemental schedules and fund information 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/ KPMG PEAT MARWICK LLP --------------------- KPMG PEAT MARWICK LLP Minneapolis, Minnesota June 12, 1998 THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Statements of Net Assets Available for Plan Benefits December 31, 1997 and 1996 1997 1996 ------------ ------------ Assets: Investments: Common stock of The St.Paul Companies, Inc. $ 77,304,516 $ 58,068,532 Fidelity U.S. Bond Index Fund 76,124,483 - Fidelity U.S. Equity Index Pool 85,299,219 - Fidelity Diversified International Fund 10,260,486 - Interest Income contracts - 25,430,965 Fidelity Intermediate Bond Fund - 77,342,203 Vanguard Wellesley Income Fund - 44,220,420 Vanguard Institutional Index Fund - 59,021,057 Twentieth Century Ultra Fund - 66,938,124 Fidelity International Growth Fund - 7,749,917 Vanguard Money Market Reserves Fund - 10,368,734 Participant loans 21,241,171 21,195,009 Short-term investments 6,477,158 1,976,568 ------------ ------------ Total investments 276,707,033 372,311,529 Receivables: Open investment transactions 161,780,334 - Accrued dividends 442,967 435,252 Company contributions - 986,800 ------------ ------------ Total assets 438,930,334 373,733,581 ------------ ------------ Liabilities: Cash overdraft 6,443,772 1,508,896 Forfeitures and other 136,239 11,770 ------------ ------------ Total liabilities 6,580,011 1,520,666 ------------ ------------ Net assets available for plan benefits $432,350,323 $372,212,915 ============ ============ See accompanying notes to financial statements. THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Statements of Changes in Net Assets Available for Plan Benefits With Fund Information Year Ended December 31, 1997
Company Stock Income Balanced Diversified Aggressive Fund Fund Fund Fund Fund ------------- -------- -------- ----------- ---------- Contributions: Participating companies (salary conversion) $3,446,092 $3,731,233 $3,220,369 $5,160,674 $6,873,660 Investment income: Interest - 1,083,695 - - - Dividends 1,807,480 5,066,967 5,938,398 1,939,735 16,927,772 Net appreciation (depreciation) in fair value of investments 23,125,595 793,607 2,971,959 18,842,153 (1,148,067) ---------- ---------- ---------- ---------- ---------- Total investment income 24,933,075 6,944,269 8,910,357 20,781,888 15,779,705 Transfers from other plans 848,573 440,443 860,977 1,981,618 1,435,805 ---------- ---------- ---------- ---------- ---------- Total additions 29,227,740 11,115,945 12,991,703 27,924,180 24,089,170 ---------- ---------- ---------- ---------- ---------- Retirement and termination distribution benefits and withdrawals: Paid to participants in cash 7,389,952 13,931,963 5,659,897 7,115,187 8,409,268 Common stock distributed, at market value 254,196 - - - - Forfeitures and other - - - - - ---------- ---------- ---------- ---------- ---------- Total deductions 7,644,148 13,931,963 5,659,897 7,115,187 8,409,268 ---------- ---------- ---------- ---------- ---------- Net increase prior to interfund transfers 21,583,592 (2,816,018) 7,331,806 20,808,993 15,679,902 Interfund transfers (2,347,608) (10,340,112) 1,525,995 5,469,169 (142,359) ---------- ---------- ---------- ---------- ---------- Net increase (decrease) 19,235,984 (13,156,130) 8,857,801 26,278,162 15,537,543 Net assets available for plan benefits: Beginning of year 58,068,532 102,773,168 44,220,420 59,021,057 66,938,124 ---------- ---------- ---------- ---------- ---------- End of year $77,304,516 $89,617,038 $53,078,221 $85,299,219 $82,475,667 ========== ========== ========== ========== ==========
International Stable Participant Other Fund Fund Loans Unallocated Total ------------- ---------- ----------- ----------- ------ Contributions: Participating companies (salary converson) $1,218,142 $872,878 - 26 $24,523,074 Investment income: Interest - 746,369 1,719,233 191,040 3,740,337 Dividends 612,588 - - - 32,292,940 Net appreciation (depreciation) in fair value of investments (6,545) - - - 44,578,702 ---------- ---------- ---------- ----------- ---------- Total investment income 606,043 746,369 1,719,233 191,040 80,611,979 Transfers from other plans 519,976 547,076 - - 6,634,468 ---------- ---------- ---------- ----------- ---------- Total additions 2,344,161 2,166,323 1,719,233 191,066 111,769,521 ---------- ---------- ---------- ----------- ----------- Retirement and termination distribution benefits and withdrawals: Paid to participants in cash 1,083,893 4,607,790 2,949,291 - 51,147,241 Common stock distributed, at market value - - - - 254,196 Forfeitures and other - - - 230,676 230,676 ---------- ---------- ---------- ---------- ---------- Total deductions 1,083,893 4,607,790 2,949,291 230,676 51,632,113 ---------- ---------- ---------- ---------- ---------- Net increase prior to interfund transfers 1,260,268 (2,441,467) (1,230,058) (39,610) 60,137,408 Interfund transfers 1,250,301 4,806,624 1,276,220 (1,498,230) - ---------- ---------- ---------- ---------- ---------- Net increase (decrease) 2,510,569 2,365,157 46,162 (1,537,840) 60,137,408 Net assets available for plan benefits: Beginning of year 7,749,917 10,368,734 21,195,009 1,877,954 372,212,915 ---------- ---------- ---------- ---------- ----------- End of year $10,260,486 $12,733,891 $21,241,171 $ 340,114 $432,350,323 ========== ========== ========== ========== =========== See accompanying notes to financial statements.
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Statements of Changes in Net Assets Available for Plan Benefits With Fund Information Year Ended December 31, 1996
Company Stock Income Balanced Diversified Aggressive Fund Fund Fund Fund Fund ------------- --------- -------- ----------- ---------- Contributions: Participating companies (salary conversion) $3,682,138 $4,365,274 $3,352,522 $3,970,045 $6,549,957 Company supplemental match - - - - - ---------- ---------- ---------- ---------- ---------- Total contributions 3,682,138 4,365,274 3,352,522 3,970,045 6,549,957 ---------- ---------- ---------- ---------- ---------- Investment income: Interest - 2,481,408 - - - Dividends 1,745,190 4,180,174 3,509,228 2,090,951 3,763,205 Net appreciation (depreciation) in fair value of investments 3,164,745 (1,844,029) 229,013 8,215,019 4,046,528 ---------- ---------- ---------- ---------- ---------- Total investment income 4,909,935 4,817,553 3,738,241 10,305,970 7,809,733 Transfers from other plans 1,227,476 1,012,771 1,787,004 2,280,651 2,781,391 ---------- ---------- ---------- ---------- ---------- Total additions 9,819,549 10,195,598 8,877,767 16,556,666 17,141,081 ---------- ---------- ---------- ---------- ---------- Retirement and termination distribution benefits and withdrawals: Paid to participants in cash 2,838,812 8,341,575 1,978,185 2,714,935 3,299,578 Common stock distributed, at market value 54,514 - - - - Forfeitures and other - - - - - ---------- ---------- ---------- ---------- ---------- Total deductions 2,893,326 8,341,575 1,978,185 2,714,935 3,299,578 ---------- ---------- ---------- ---------- ---------- Net increase prior to interfund transfers 6,926,223 1,854,023 6,899,582 13,841,731 13,841,503 Interfund transfers (1,597,645) (7,861,315) (227,313) 3,471,832 (356,986) ---------- ---------- ---------- ---------- ---------- Net increase (decrease) 5,328,578 (6,007,292) 6,672,269 17,313,563 13,484,517 Net assets available for plan benefits: Beginning of year 52,739,954 108,780,460 37,548,151 41,707,494 53,453,607 ---------- ----------- ---------- ---------- ---------- End of year $58,068,532 $102,773,168 $44,220,420 $59,021,057 $66,938,124 ========== =========== ========== ========== ==========
International Stable Participant Other Fund Fund Loans Unallocated Total ------------- ---------- ----------- ------------ ------ Contributions: Participating companies (salary conversion) $902,875 $524,525 $ - $ - $23,347,336 Company supplemental match - - - 986,643 986,643 ---------- ---------- ---------- ---------- ---------- Total contributions 902,875 524,525 - 986,643 24,333,979 ---------- ---------- ---------- ---------- ---------- Investment income: Interest - 330,782 1,628,547 156,336 4,597,073 Dividends 244,188 - - - 15,532,936 Net appreciation (depreciation) in fair value of investments 496,031 - - - 14,307,307 ---------- ---------- ---------- ---------- ---------- Total investment income 740,219 330,782 1,628,547 156,336 34,437,316 Transfers from other plans 650,067 770,528 - - 10,509,888 ---------- ---------- ---------- ---------- ---------- Total additions 2,293,161 1,625,835 1,628,547 1,142,979 69,281,183 ---------- ---------- ---------- ---------- ---------- Retirement and termination distribution benefits and withdrawals: Paid to participants in cash 273,163 1,521,885 1,021,577 - 21,989,710 Common stock distributed, at market value - - - - 54,514 Forfeitures and other - - - 124,502 124,502 ---------- ---------- ---------- ---------- ---------- Total deductions 273,163 1,521,885 1,021,577 124,502 22,168,726 ---------- ---------- ---------- ---------- ---------- Net increase prior to interfund transfers 2,019,998 103,950 606,970 1,018,477 47,112,457 Interfund transfers 1,544,662 5,723,928 1,280,920 (1,978,083) - ---------- ---------- ---------- ---------- ---------- Net increase (decrease) 3,564,660 5,827,878 1,887,890 (959,606) 47,112,457 Net assets available for plan benefits: Beginning of year 4,185,257 4,540,856 19,307,119 2,837,560 325,100,458 ---------- ---------- ---------- ---------- ----------- End of year $7,749,917 $10,368,734 $21,195,009 $1,877,954 $372,212,915 ========== ========== ========== ========== =========== See accompanying notes to financial statements.
THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Notes to Financial Statements Note 1 Description of the Plan General Provisions ------------------ The St. Paul Companies, Inc. Savings Plus Plan (the Plan) is a defined contribution plan which provides retirement and other benefits to eligible employees of participating companies. The St. Paul Companies, Inc. (the Company) and its subsidiaries, St. Paul Fire and Marine Insurance Company and St. Paul Reinsurance Management Corporation currently participate in the Plan. Minet Re North America, Inc., The Swett & Crawford Group, Inc., Minet Settlement Services, Inc. and Minet, Inc. each withdrew from the Plan effective May 16, 1997 pursuant to the sale of Minet Holdings, Inc. and its subsidiaries by the Company. Until mid-1996, the Company as Plan Administrator, exercised all fiduciary responsibility with respect to the administration of the Plan and managed and controlled the Plan assets. In mid-1996, the Company appointed the Administrative Committee as the Plan administrator and the Benefit Plans Investment Committee to which the Company has delegated authority over the management and control of the assets of the Plan (including the designation of investment funds). State Street Bank and Trust Company was the trustee for the trust maintained in connection with the Plan until Jan. 1, 1998 when Fidelity Management Trust Company was appointed trustee. The following brief description of the Plan is provided for general information purposes. Participants should refer to the Plan document and the employee benefits program manual for more complete information. Participation, Vesting and Forfeitures -------------------------------------- All employees of participating companies, as defined by the Plan, are eligible to participate on the Jan. 1 or July 1 following their employment date. Participants are 100% vested in their contributions and related earnings. Participants become vested in Company contributions at the rate of 20% after two years of service, increasing 20% per year of additional service and are 100% vested after six years of service. Nonvested Company contributions are forfeited by terminating participants. Forfeitures can be used to restore accounts, pay Plan administrative expenses or offset Company contributions or salary conversion contributions. Upon termination of the Plan or change in control of the Company, participant account balances would vest in full. THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Notes to Financial Statements, continued Note 1 Description of the Plan (continued) Contributions ------------- Participants elect to have their employer make salary conversion (pretax) contributions to the Plan on their behalf under Section 401(k) of the Internal Revenue Code. Salary conversion contributions are currently limited to 10% of employees' annual base salary. Participating companies made matching contributions of 50 cents for every dollar of participant salary conversion contributions up to 6% of their base salary until June 30, 1990. Beginning July 1, 1990 the matching contributions to the Plan were replaced with contributions to The St. Paul Companies, Inc. Savings Plus Preferred Stock Ownership Plan of 60 cents for every dollar of participant salary conversion contributions up to 6% of salary. Employees who did not participate in the Company's stock ownership plan were eligible for a Company supplemental match contribution of $1.00 for every dollar of salary conversion contributions up to 6% of salary. The supplemental match contribution was made to the Plan annually after Dec. 31, for those participants employed on that date. Beginning Jan. 1, 1997 all eligible employees participated in the Company's stock ownership plan, and supplemental match contributions were discontinued. Investment Funds ---------------- The Plan currently calls for the maintenance of seven separate investment funds as described below: Company Stock Fund ------------------ The Company Stock Fund is to be invested in shares of common stock of The St.Paul Companies, Inc., up to a maximum of 10% of the Company's outstanding common stock. THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Notes to Financial Statements, continued Note 1 Description of the Plan (continued) Investment Funds (continued) ---------------------------- Income Fund ----------- The Income Fund is to be invested in an investment fund which invests in fixed income securities to earn a high level of current income while minimizing risk of principal. In 1994, the Plan administrator directed that new monies invested in the Income Fund and proceeds from maturing contracts of this fund be invested in the Fidelity Intermediate Bond Fund, a mutual fund which invests in investment-grade fixed income obligations of three- to ten-year maturities, managed by Fidelity Management and Research, Inc. On Dec. 31, 1997 the investment in the Fidelity Intermediate Bond Fund was sold and reinvested in the Fidelity U.S. Bond Index Fund. Prior to 1994, the Income Fund invested in interest income contracts issued by banks or insurance companies. The Plan administrator selected interest income contracts offered by various companies for the Income Fund as listed in Note 5. On Dec. 31, 1997 the final interest income contract matured and proceeds were invested in the Fidelity U.S. Bond Index Fund on Jan. 2, 1998. Balanced Fund ------------- The Balanced Fund is to be invested in an investment fund which invests in common stock, corporate and government fixed income securities and cash equivalents. Until Dec. 31, 1997, the Benefit Plans Investment Committee had selected the Vanguard Wellesley Income Fund, a mutual fund which is a member of The Vanguard Group of Investment Companies, as the underlying investment for the Balanced Fund. On Dec. 31, 1997 the investment in Vanguard Wellesley Income Fund was sold and reinvested in the Fidelity Puritan Fund on Jan. 2, 1998. THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Notes to Financial Statements, continued Note 1 Description of the Plan (continued) Investment Funds (continued) ---------------------------- Diversified Fund ---------------- The Diversified Fund is to be invested in an investment fund which invests primarily in common stocks and attempts to match the investment performance of the Standard & Poor's 500 Composite Stock Index. Effective June 30, 1996, the Benefit Plans Investment Committee selected the Vanguard Institutional Index Fund, a common stock mutual fund of the Vanguard Group of Investment Companies, as the underlying investment for the Diversified Fund. On Dec. 31, 1997 the investment in the Vanguard Institutional Index Fund was sold and reinvested in the Fidelity U.S. Equity Index Pool. The Plan administrator had selected the Mellon Stock Fund, a stock trust managed by Mellon Capital Management Corporation, a subsidiary of Mellon Bank, as the underlying investment for the Diversified Fund prior to June 30, 1996. Aggressive Fund --------------- The Aggressive Fund is to be invested in an investment fund which invests in common stocks of companies that commonly are considered emerging or high growth corporations. Until Dec. 31, 1997, the Benefit Plans Investment Committee had selected the Twentieth Century Ultra Fund, a common stock mutual fund of Twentieth Century Investors, Inc. as the underlying investment for the Aggressive Fund. On Dec. 31, 1997 the investment in Twentieth Century Ultra Fund was sold and reinvested in the Fidelity Blue Chip Growth Fund on Jan. 2, 1998. International Fund ------------------ The International Fund is to be invested in an investment fund which invests in common stocks and fixed income securities of foreign companies. Until Dec. 31, 1997, the Benefit Plans Investment Committee had selected the Fidelity International Growth Fund, an international mutual fund managed by Fidelity Management and Research, Inc. as the underlying investment for the International Fund. On Dec. 31, 1997 the investment in Fidelity International Growth Fund was sold and reinvested in the Fidelity Diversified International Fund. THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Notes to Financial Statements, continued Note 1 Description of the Plan (continued) Investment Funds (continued) ---------------------------- Stable Fund ----------- The Stable Fund is to be invested in an investment fund which invests in money market instruments with one year or less maturities. Until Dec. 31, 1997, the Benefit Plans Investment Committee had selected the Vanguard Money Market Reserves Fund, a money market mutual fund which is a member of The Vanguard Group of Investment Companies, as the underlying investment for the Stable Fund. On Dec. 31, 1997 the investment in Vanguard Money Market Reserves Fund was sold and reinvested in the Fidelity Retirement Money Market Portfolio on Jan. 2, 1998. Allocation ---------- Participants may elect to have their participating Company salary conversion and Company supplemental match contributions invested in these funds in 1% multiples as they choose and may also transfer their balances daily within these funds. Investment Income ----------------- Investment income is allocated daily to participant accounts on the basis of each participant's respective share of the assets of each applicable fund. Distributions ------------- Distribution of benefits from the Plan is made upon retirement, permanent total disability, death or employment termination. Distributions from the Company Stock Fund may be made either in shares of common stock of The St. Paul Companies, Inc., cash or any combination thereof at the discretion of the participant. Distributions are based on a participant's share of the market value of the assets in the applicable funds when the distribution occurs. Participants are permitted withdrawals from their share of Company match and salary conversion contributions for financial hardship reasons, as defined by the Plan. THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Notes to Financial Statements, continued Note 1 Description of the Plan (continued) Participant Loans ----------------- Participants may request to receive as a loan from the Plan up to 50% of their vested account balance subject to a minimum of $500 and a maximum of $50,000. Loans are made at current prime interest rate plus 1/2% and must be repaid by payroll deduction over a maximum period of five years. Tax Status ---------- The Internal Revenue Service has issued a determination letter stating that the Plan qualifies under Section 401(a) of the Internal Revenue Code and that the trust created thereunder is exempt from federal income taxes under Section 501(a) of the Internal Revenue Code. Since the receipt of the determination letter, certain Plan amendments have been made. It is the opinion of the Company that the Plan continues to qualify under Section 401(a) of the Internal Revenue Code. Company match contributions invested in the Plan and salary conversion contributions invested in the Plan for participants by their employers are not taxed to the participant until received as a distribution from the Plan. Any appreciation of shares of common stock of The St. Paul Companies, Inc. distributed to a participant is not taxed until the participant disposes of such shares. Under certain circumstances a distribution may be subject to excise taxes of 10% in addition to normal income tax. Plan loans to participants are generally not considered taxable income. Taxes on rollover transfers are deferred until the rollover amounts are received as a distribution from the Plan. Plan Termination ---------------- Although the Company expects to continue the Plan indefinitely, it has reserved the right to terminate the Plan at any time. Upon such termination, the Plan administrator would direct the Plan trustee to distribute participant account balances. Upon termination of the Plan or change in control of the Company, participant account balances would vest in full. THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Notes to Financial Statements, continued Note 2 Significant Accounting Policies The accompanying Plan financial statements are presented on the accrual basis of accounting. 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 and deductions during the reported period. Actual results could differ from those estimates. The investment in common stock of The St. Paul Companies, Inc. and in shares or units of investment funds are carried at market value, based on published market quotations. Realized gains or losses on sales of these investments and the change in unrealized appreciation or depreciation in market value of these investments are presented in total in the statements of changes in net assets available for plan benefits with fund information. The average cost method is used to determine cost of shares sold or distributed. Purchases and sales of investments are recorded on a trade date basis. The investment in interest income contracts is carried at the contract value of contributions made plus interest at the contract rate less withdrawals for benefits paid. Participant loans are carried at unpaid principal amounts plus accrued interest. Money market fund and short-term investments are carried at cost plus accrued interest, which approximates market value. A portion of the administration expenses of the Plan is paid by the Company and is not reflected in the accompanying financial statements. Plan administrative expenses paid by the Plan are paid out of forfeitures and interest from the controlled disbursement account maintained by State Street Bank and Trust Company and are shown as forfeitures and other in the accompanying statements of changes in net assets available for plan benefits with fund information. Plan forfeitures are used to restore accounts, pay administrative expenses, offset company matching contributions or salary conversion contributions. Certain amounts in the 1996 financial statements have been reclassified to conform to the 1997 presentation. THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Notes to Financial Statements, continued Note 3 Investment in Common Stock of The St. Paul Companies, Inc. Information regarding the Plan's investment in common stock of The St. Paul Companies, Inc. follows: December 31, ---------------------------- 1997 1996 ----------- ----------- Number of shares owned 1,884,040 1,981,016 Percent of total shares outstanding 1% 1% Market value per share $ 41.03 $ 29.31 Average cost per share 16.53 14.06 Total cost of shares owned $31,139,709 $27,862,612 Unrealized appreciation 46,164,807 30,205,920 ----------- ----------- Total market value of shares owned $77,304,516 $58,068,532 =========== =========== Dividend income for the year $ 1,807,480 $ 1,745,190 =========== =========== The number of shares owned, market value per share and average cost per share for both periods reflect the May 1998 2-for-1 stock split. Note 4 Investment in Fidelity U.S. Bond Index Fund and Fidelity Intermediate Bond Fund Information regarding the Plan's investment in shares of the Fidelity U.S. Bond Index Fund follows: December 31, -------------------------- 1997 1996 ----------- ----------- Number of shares owned 7,055,096 - Market value per share $ 10.79 - Average cost per share 10.79 - Total cost of shares owned $76,124,483 - Unrealized appreciation - - ----------- ----------- Total market value of shares owned $76,124,483 - =========== =========== Dividend income for the year $ - - =========== =========== THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Notes to Financial Statements, Continued Note 4 Investment in Fidelity U.S. Bond Index Fund and Fidelity Intermediate Bond Fund (continued) Information regarding the Plan's investment in shares of the Fidelity Intermediate Bond Fund follows: December 31, -------------------------- 1997 1996 ----------- --------- Number of shares owned - 7,672,838 Market value per share - $ 10.08 Average cost per share - 10.12 Total cost of shares owned - $77,638,705 Unrealized (depreciation) - (296,502) ----------- ----------- Total market value of shares owned - $77,342,203 =========== =========== Dividend income for the year $ 5,066,967 $ 4,180,174 =========== =========== On Dec. 31, 1997 the investment in the Fidelity Intermediate Bond Fund was sold and reinvested in the Fidelity U.S. Bond Index Fund. THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Notes to Financial Statements, Continued Note 5 Investment in Interest Income Contracts Information regarding the carrying value of the Plan's investment in interest income contracts follows. The average annual yield on the interest income contracts was 5.71% in 1997 and 6.02% in 1996: December 31, ------------------------- Company Contract Terms 1997 1996 ---------------- ------------------ ----------- ----------- John Hancock -Deposit of first Life Insurance half 1993 cash flow and 50% of first half 1993 contract payments -5.74% annual interest rate -Repayment on June 30, 1997 - $12,668,427 Provident Life -Deposit second and Accident half 1993 cash Insurance flow and contract payments -5.72% annual interest rate -Repayment on Dec. 31, 1997 - 12,762,538 ----------- ----------- Total carrying value - $25,430,965 =========== =========== Interest income for the year $ 1,083,695 $ 2,481,408 =========== =========== The estimated fair value of the interest income contracts was based on current interest rates available on fixed income securities in the market that had terms similar to the Plan's interest income contracts. Information regarding the estimated fair value of each interest income contract follows: Contract Company December 31, 1996 ----------------------- ----------------- John Hancock Life Insurance $12,680,335 Provident Life and Accident Insurance 12,754,242 ----------- Total estimated fair value $25,434,577 =========== THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Notes to Financial Statements, continued Note 6 Investment in Vanguard Wellesley Income Fund Information regarding the Plan's investment in shares of the Vanguard Wellesley Income Fund follows: December 31, --------------------------- 1997 1996 ----------- ----------- Number of shares owned - 2,156,042 Market value per share - $ 20.51 Average cost per share - 18.43 Total cost of shares owned - $39,730,675 Unrealized appreciation - 4,489,745 ----------- ----------- Total market value of shares owned - $44,220,420 =========== =========== Dividend income for the year $ 5,938,398 $ 3,509,228 =========== =========== On Dec. 31, 1997 the investment in the Vanguard Wellesley Income Fund was sold and reinvested in the Fidelity Puritan Fund on Jan. 2, 1998. Note 7 Investment in Fidelity U.S. Equity Index Pool and Vanguard Institutional Index Fund Information regarding the Plan's investment in units of the Fidelity U.S. Equity Index Pool follows: December 31, -------------------------- 1997 1996 ----------- ----------- Number of units owned 3,152,225 - Market value per unit $ 27.06 - Average cost per unit 27.06 - Total cost of units owned $85,299,219 - Unrealized appreciation - ----------- ----------- Total Market value of units owned $85,299,219 - =========== =========== Dividend income for the year $ - - =========== =========== THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Notes to Financial Statements, continued Note 7 Investment in Fidelity U.S. Equity Index Pool and Vanguard Institutional Index Fund (continued) Information regarding the Plan's investment in shares of the Vanguard Institutional Index Fund follows: December 31, -------------------------- 1997 1996 ----------- ----------- Number of shares owned - 857,117 Market value per share - $ 68.86 Average cost per share - 63.21 Total cost of shares owned - $54,175,093 Unrealized appreciation - 4,845,964 ----------- ----------- Total Market value of shares owned - $59,021,057 =========== =========== Dividend income for the year $ 1,939,735 $ 1,510,086 =========== =========== The Mellon Stock Fund had 1996 dividend income of $580,865. Effective June 30, 1996, the investment in the Mellon Stock Fund was sold and reinvested in the Vanguard Institutional Index Fund. On Dec. 31, 1997 the investment in the Vanguard Institutional Index Fund was sold and reinvested in the Fidelity U.S. Equity Index Pool. Note 8 Investment in Twentieth Century Ultra Fund Information regarding the Plan's investment in shares of the Twentieth Century Ultra Fund follows: December 31, --------------------------- 1997 1996 ----------- ----------- Number of shares owned - 2,382,988 Market value per share - $ 28.09 Average cost per share - 21.78 Total cost of shares owned - $51,900,311 Unrealized appreciation - 15,037,813 ----------- ----------- Total market value of shares owned - $66,938,124 =========== =========== Dividend income for the year $16,927,772 $ 3,763,205 =========== =========== On Dec. 31, 1997 the investment in the Twentieth Century Ultra Fund was sold and reinvested in the Fidelity Blue Chip Growth Fund on Jan. 2, 1998. THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Notes to Financial Statements, continued Note 9 Investment in Fidelity Diversified International Fund and Fidelity International Growth Fund Information regarding the Plan's investment in shares of the Fidelity Diversified International Fund follows: December 31, --------------------------- 1997 1996 ---------- ---------- Number of shares owned 636,112 - Market value per share $ 16.13 - Average cost per share 16.13 - Total cost of shares owned $10,260,486 - Unrealized appreciation - - ---------- ---------- Total market value of shares owned $10,260,486 - ========== ========== Dividend income for the year $ - - ========== ========== Information regarding the Plan's investment in shares of the Fidelity International Growth Fund follows: December 31, --------------------------- 1997 1996 ---------- ---------- Number of shares owned - 396,415 Market value per share - $ 19.55 Average cost per share - 18.10 Total cost of shares owned - $7,174,779 Unrealized appreciation - 575,138 ---------- ---------- Total market value of shares owned - $7,749,917 ========== ========== Dividend income for the year $ 612,588 $ 244,188 ========== ========== On Dec. 31, 1997 the investment in Fidelity International Growth Fund was sold and reinvested in the Fidelity Diversified International Fund. THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Notes to Financial Statements, continued Note 10 Open investment transactions Information regarding the Plan's open investment transactions for investments sold on Dec. 31, 1997 and reinvested in Fidelity Funds on Jan. 2, 1998 follows: Market Value Plan investment funds December 31, 1997 ------------------------------- ----------------- Income Fund $ 13,492,555 Balanced Fund 53,078,221 Aggressive Fund 82,475,667 Stable Fund 12,733,891 ------------ Total open investment transactions $161,780,334 ============ Note 11 Net appreciation (depreciation) in fair value of investments The Plan's net appreciation (depreciation) in fair value of investments owned, purchased or sold during the years indicated are summarized by investment as follows: Investment 1997 1996 ----------------------------- ------------ ------------- Common stock of The St. Paul Companies, Inc. $ 23,125,595 $ 3,164,745 Fidelity Intermediate Bond Fund 793,607 (1,844,029) Vanguard Wellesley Income Fund 2,971,959 229,013 Vanguard Institutional Index Fund 18,842,153 4,927,342 Mellon Stock Fund - 3,287,677 Twentieth Century Ultra Fund (1,148,067) 4,046,528 Fidelity International Growth Fund (6,545) 496,031 ------------ ------------ Total $44,578,702 $14,307,307 ============ ============ THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Notes to Financial Statements, continued Note 12 Transfers from Other Plans The Plan allows for rollover transfers to be made to the Plan by employees of participating companies. These rollover transfers are lump-sum distributions from other tax-qualified plans of previous employers which participants elect to have invested in the Plan within sixty days of receipt. The Plan also allows for annual diversification transfers to be made to the Plan by certain participants of The St. Paul Companies, Inc. Employee Stock Ownership Plan (ESOP). These diversification transfers are cash amounts which ESOP participants elect to have invested in the Plan rather than receive as diversification distributions. The following is a summary of these transfers to the Plan in 1997 and 1996: 1997 1996 ---------- ---------- Rollover transfers $6,150,759 $10,119,577 ESOP diversification transfers 483,709 390,311 ---------- ----------- Total transfers from other plans $6,634,468 $10,509,888 ========== =========== Note 13 Party-in-Interest Transactions Transactions resulting in Plan assets being transferred to or used by a related party are prohibited under the Pension Reform Act (the Act) unless a specific exemption applied. Fidelity Management Trust Company (Fidelity) and State Street Bank and Trust Company (State Street), are a party-in-interest as defined by the Act as a result of being trustee of the Plan. Fidelity and State Street are investing Plan assets in their short-term investment fund. The Plan also engages in transactions involving the acquisition or disposition of common stock and the short-term pool of The St. Paul Companies, Inc., a party-in-interest with respect to the Plan. These transactions are covered by an exemption from the "prohibited transactions" provisions of ERISA and the Internal Revenue Code. THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Schedule 1 Item 27a-Schedule of Assets Held for Investment Purposes Investments at End of Plan Year December 31, 1997 Description of Current Identity of Issue Investment Cost Value** - -------------------------- ------------------- ---------- ----------- *The St. Paul Companies, Common stock, no Inc. par value, 1,884,040 shares $31,139,709 $77,304,516 Fidelity U.S. Bond Index 7,055,096 mutual Fund fund shares 76,124,483 76,124,483 Fidelity U.S. Equity Index Pool 3,152,225 pool units 85,299,219 85,299,219 Fidelity Diversified 636,112 mutual fund International Fund shares 10,260,486 10,260,486 Participant loans 6.50% to 9.50%, maximum 5 years 21,241,171 21,241,171 Short-term investments: *St. Paul Short-Term 5.70%, due on 34,293 34,293 Pool demand *State Street Bank & Trust Fund 5.86%, due on 6,414,218 6,414,218 demand Fidelity Institutional Cash Portfolio 5.67%, due on 28,647 28,647 demand ---------- ----------- 6,477,158 6,477,158 ---------- ----------- Total investments $230,542,226 $276,707,033 =========== =========== *Party-in-interest **For ERISA reporting purposes current value is equal to market value, except for participant loans, which are equal to unpaid principal plus accrued interest. See accompanying independent auditors' report. THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN Schedule 2 Item 27d-Schedule of Reportable Transactions* Year Ended December 31, 1997 Current Identity of Party Value of Involved/ the Asset Description of Purchase Selling Cost of on Trans- Net Gain Asset Price Price the Asset** action date or (Loss) - ------------------ --------- --------- --------- ---------- -------- Fidelity U.S. Bond Index Fund/Mutual Fund Shares: Purchases $76,124,483 $ - $76,124,483 $76,124,483 $ - Fidelity Intermediate Bond Fund/ Mutual Fund Shares: Purchases 25,048,275 25,048,275 25,048,275 - Withdrawals 103,257,367 102,006,017 103,257,367 1,251,350 Fidelity U.S. Equity Index Pool/ Pool Units: Purchases 85,299,219 85,299,219 85,299,219 - Vanguard Wellesley Income Fund/ Mutual Fund Shares: Withdrawals 60,844,440 57,872,409 60,844,440 2,972,031 Vanguard Institutional Index Fund/ Mutual Fund Shares: Withdrawals 94,108,061 75,265,908 94,108,061 18,842,153 Twentieth Century Ultra Fund/ Mutual Fund Shares: Purchases 29,288,382 29,288,382 29,288,382 - Withdrawals 95,073,346 96,221,413 95,073,346 (1,148,067) *No expense incurred with transactions **For ERISA reporting purposes cost is equal to the market value as of the beginning of the year, plus current year purchases. For assets purchased and sold during the year the cost is equal to the purchase price. See accompanying independent auditors' report. SIGNATURE ---------- The Plan. 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 hereunto duly authorized. June 29, 1998 THE ST. PAUL COMPANIES, INC. SAVINGS PLUS PLAN (The Plan) By /s/John P. Clifford Jr. ------------------------ John P. Clifford Jr. Human Resources Benefits and Compensation Officer, Member of the Administrative Committee for The St. Paul Companies, Inc. Savings Plus Plan -----END PRIVACY-ENHANCED MESSAGE-----