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Details underlying the balance sheet caption "Net Unrealized Gain (Loss) on Securities Available-for-Sale," are as follows: December 31 (in millions) 1999 1998 --------------------------------------------------------------------------------------------- Fair value of securities available-for-sale $28,292.6 $30,775.7 Cost of securities available-for-sale 28,838.6 29,076.3 --------- --------- Unrealized gain (loss) (546.0) 1,699.4 Adjustments to deferred acquisition costs 257.3 (243.8) Amounts required to satisfy policyholder commitments (84.3) (646.2) Deferred income credits (taxes) (79.7) (261.0) --------- --------- Net unrealized gain (loss) on securities available-for-sale for continuing operations (452.7) 548.4 Change in fair value of derivatives designated as a hedge (classified as other investments) (13.0) 4.0 --------- --------- Net unrealized gain (loss) on securities available-for-sale $ (465.7) $ 552.4 Adjustments to deferred acquisition costs and amounts required to satisfy policyholder commitments are netted against the Deferred Acquisition Costs asset line and included within the Insurance Policy and Claim Reserves line on the balance sheet, respectively. |
Exhibits, Financial Statement Schedules and Reports on Form 8-K Item 14(a)(1) Financial Statements The following consolidated financial statements of Lincoln National Corporation are included in Item 8: Consolidated Balance Sheets - December 31, 1999 and 1998 Consolidated Statements of Income - Years ended December 31, 1999, 1998 and 1997 Consolidated Statements of Shareholders' Equity - Years ended December 31, 1999, 1998 and 1997 Consolidated Statements of Cash Flows - Years ended December 31, 1999, 1998 and 1997 Notes to Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors Item 14(a)(2) Financial Statement Schedules The following consolidated financial statement schedules of Lincoln National Corporation are included in Item 14(d): I - Summary of Investments - Other than Investments in Related Parties II - Condensed Financial Information of Registrant III - Supplementary Insurance Information IV - Reinsurance V - Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions, are inapplicable, or the required information is included in the consolidated financial statements, and therefore omitted. |
LINCOLN NATIONAL CORPORATION SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES December 31, 1999 (000s omitted) ------------------------------------------------------------------------------------------------------ Column A Column B Column C Column D ------------ ----------- ----------- ------------- Amount at Which Shown in the Type of Investment Cost Value Balance Sheet ------------------------ ----------- ----------- ------------- Fixed maturity securities available-for-sale: Bonds: United States government and government agencies and authorities $ 552,451 $ 538,281 $ 538,281 States, municipalities and political subdivisions 15,258 14,677 14,677 Asset/Mortgage-backed securities 4,474,556 4,403,950 4,403,950 Foreign governments 1,383,897 1,447,531 1,447,531 Public utilities 3,132,050 3,051,712 3,051,712 Convertibles and bonds with warrants attached 38,241 38,528 38,528 All other corporate bonds 18,589,882 18,029,219 18,029,219 Redeemable preferred stocks 170,722 164,715 164,715 ----------- ----------- ----------- Total 28,357,057 27,688,613 27,688,613 Equity securities available-for-sale: Common stocks: Public Utilities 7,951 13,865 13,865 Banks, trusts and insurance companies 24,382 22,812 22,812 Industrial, miscellaneous and all other 347,694 477,817 477,817 Nonredeemable preferred stocks 101,504 89,460 89,460 ----------- ----------- ----------- Total Equity Securities 481,531 603,954 603,954 Mortgage loans on real estate: 4,740,088 4,735,397 Real estate: Investment properties 246,290 246,290 Acquired in satisfaction of debt 9,912 9,912 Policy Loans 1,892,392 1,892,392 Other investments 401,826 401,826 ----------- ----------- Total Investments $36,129,096 $35,578,384 (1) Investments deemed to have declines in value that are other than temporary are written down or reserved for to reduce the carrying value to their estimated realizable value. |
LINCOLN NATIONAL CORPORATION SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT BALANCE SHEETS Lincoln National Corporation (Parent Company Only) December 31 (000's omitted) 1999 1998 ------------------------------------------------------------------------ Assets: Investments in subsidiaries * $4,585,327 $5,642,793 Investments 134,444 35,717 Investment in unconsolidated affiliate 25,824 18,811 Cash and invested cash ** 349,477 495,612 Property and equipment 2,928 4,437 Accrued investment income 1,020 1,774 Receivable from subsidiaries * 223,000 153,300 Dividends receivable from subsidiaries * 20,500 6,500 Loans to subsidiaries * 1,405,533 1,305,028 Goodwill 62,447 65,217 Federal income taxes recoverable 82,311 31,365 Other assets 77,732 80,079 ---------- ---------- Total Assets $6,970,543 $7,840,633 Liabilities and Shareholders' Equity Liabilities: Cash collateral on loan securities $ 186,447 $ 50,625 Dividends payable 56,157 55,074 Short-term debt 272,451 149,956 Long-term debt 711,939 711,671 Loans from subsidiaries * 1,318,867 1,291,714 Federal income taxes payable -- -- Accrued expenses and other liabilities 160,814 193,652 ---------- ---------- Total Liabilities 2,706,675 2,452,692 Shareholders' Equity Series A preferred stock 948 1,083 Common stock 1,007,099 994,472 Retained earnings 3,691,470 3,790,038 Foreign currency translation adjustment 30,049 49,979 Net unrealized gain (loss) on securities available-for-sale [including unrealized gain (loss) of subsidiaries and discontinued operations: 1999 - $(477,359); 1998 - $531,138] (465,698) 552,369 ---------- ---------- Total Shareholders' Equity 4,263,868 5,387,941 ---------- ---------- Total Liabilities and Shareholders' Equity $6,970,543 $7,840,633 * Eliminated in consolidation. |
LINCOLN NATIONAL CORPORATION SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued) STATEMENTS OF INCOME Lincoln National Corporation (Parent Company Only) Year Ended December 31 (000s omitted) 1999 1998 1997 ------------------------------------------------------------------------------------------------ Revenue: Dividends from subsidiaries* $584,226 $268,454 $250,725 Interest from subsidiaries* 80,395 44,068 22,807 Equity in earnings of unconsolidated affiliate 3,807 1,636 -- Net investment income 28,689 48,597 38,108 Realized gain (loss) on investments 13,311 1,001 (1,403) Gain on sale of subsidiaries and discontinued operations -- -- 1,192,226 Other 5,760 2,202 1,180 -------- -------- -------- Total Revenue 716,188 365,958 1,503,643 Expenses: Operating and administrative 15,090 41,922 36,540 Interest-subsidiaries* 23,820 32,251 25,703 Interest-other 117,941 106,059 85,512 -------- -------- -------- Total Expenses 156,851 180,232 147,755 -------- -------- -------- Income before Federal Income Tax Expense (Benefit), Equity in Income of Subsidiaries and Discontinued Operations, Less Dividends 559,337 185,726 1,355,888 Federal income tax expense (benefit) (16,899) (28,891) 389,791 -------- -------- -------- Income Before Equity in Income of Subsidiaries and Discontinued Operations, Less Dividends 576,236 214,617 966,097 Equity in income of subsidiaries and discontinued operations, less dividends (115,882) 295,158 (32,109) -------- -------- -------- Net Income $460,354 $509,775 $933,988 * Eliminated in consolidation. |
LINCOLN NATIONAL CORPORATION SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued) STATEMENTS OF CASH FLOWS Lincoln National Corporation (Parent Company Only) Year Ended December 31 (000s omitted) 1999 1998 1997 ------------------------------------------------------------------------------------------------ Cash Flows from Operating Activities: Net Income $460,354 $ 509,775 $ 933,988 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Equity in income of subsidiaries and discontinued operations less than (greater than) distributions* 103,060 (288,784) 18,950 Equity in undistributed earnings of unconsolidated affiliates (3,807) (1,636) -- Realized (gain) loss on investments 13,311 (1,001) 1,403 Gain on sale of subsidiaries/ discontinued operations -- -- (1,192,226) Tax on sale of discontinued operations -- -- 415,354 Other (3,381) (66,445) 26,038 -------- ---------- ---------- Net Adjustments 109,183 (357,866) (730,481) -------- ---------- ---------- Net Cash Provided by Operating Activities 569,537 151,909 203,507 Cash Flows from Investing Activities: Net sales (purchases) of investments (113,449) 188,938 4,157 Cash collateral on loaned securities 135,822 (73,063) (21,906) Decrease (increase) in investment in subsidiaries* (75,242) (159,458) (116,824) Sale of (investment in) unconsolidated affiliate (7,013) -- (68,959) Sale of discontinued operations -- (124,151) 822,500 Net (purchase) sale of property and equipment 1,620 (256) (1,417) Other (88,982) (36,831) (1,096) -------- ---------- ---------- Net Cash Provided by (Used in) Investing Activities (147,244) (204,821) 616,455 Cash Flows from Financing Activities: Decrease in long-term debt (includes payments and (transfer to short-term debt) -- (99,737) (86,338) Issuance of long-term debt 268 299,198 -- Net increase (decrease) in short-term debt 122,495 67,189 13,056 Increase in loans from subsidiaries* 27,153 251,283 454,311 Decrease (increase) in loans to subsidiaries* (100,505) (1,272,729) 414,669 Decrease (increase) in receivables from subsidiaries (69,700) 280,280 (23,000) Common stock issued for benefit plans 48,015 48,747 33,199 Retirement of common stock (377,719) (46,871) (327,585) Dividends paid to shareholders (218,435) (209,016) (201,927) -------- ---------- ---------- Net Cash Provided by (Used in) Financing Activities (568,428) (681,656) 276,385 -------- ---------- ---------- Net Increase (Decrease) in Cash (146,135) (734,568) 1,096,347 Cash and Invested Cash at beginning-of-year 495,612 1,230,180 133,833 -------- ---------- ---------- Cash and Invested Cash at End-of-Year $349,477 $ 495,612 $1,230,180 * Eliminated in consolidation. |
LINCOLN NATIONAL CORPORATION SCHEDULE IV - REINSURANCE Column A Column B Column C Column D Column E Column F ----------- ------------- ------------- ------------- ------------- ------------- Percentage Ceded Assumed of Amount Gross to Other from Other Assumed Description Amount Companies Companies Net Amount to Net ----------- ------------- ------------- ------------- ------------- ------------- (000s omitted) ------------------------------------------------------------------------- Year Ended December 31, 1999 Individual life insurance in force $221,300,000 $171,100,000 $295,300,000 $345,500,000 85.5% Premiums: Life insurance and annuities (1) $ 2,363,373 $ 458,798 $ 816,046 $ 2,720,621 30.0% Health insurance 167,489 162,202 693,212 698,499 99.2% ------------- ------------- ------------- ------------- Total $ 2,530,862 $ 621,000 $ 1,509,258 $ 3,419,120 Year Ended December 31, 1998 Individual life insurance in force $197,900,000 $108,100,000 $203,700,000 $293,500,000 69.4% Premiums: Life insurance and annuities (1) $ 2,182,847 $ 573,532 $ 650,807 $ 2,260,122 28.8% Health insurance 147,940 121,848 608,984 635,076 95.9% ------------- ------------- ------------- ------------- Total $ 2,330,787 $ 695,380 $ 1,259,791 $ 2,895,198 Year Ended December 31, 1997 Individual life insurance in force $125,800,000 $ 37,300,000 $124,000,000 $212,500,000 58.4% Premiums: Life insurance and annuities (1) $ 1,235,085 $ 196,929 $ 550,173 $ 1,588,329 34.6% Health insurance 161,693 118,083 528,949 572,559 92.4% ------------- ------------- ------------- ------------- Total $ 1,396,778 $ 315,012 $ 1,079,122 $ 2,160,888 (1) Includes insurance fees on universal life and other interest-sensitive products. |
LINCOLN NATIONAL CORPORATION SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS Column A Column B Column C Column D Column E ----------- ------------- ---------------------------- ------------- ------------- Additions Charged to Balance at Charged to Other Balance Beginning Costs Accounts- Deductions- at End Description of Period Expenses (1) Describe Describe (2) of Period ----------- ------------- ------------- ------------- ------------- ------------- (000s omitted) ------------------------------------------------------------------------- Year Ended December 31, 1999 Deducted from Asset Accounts: Reserve for Mortgage Loans on real estate $ 4,794 $ 807 $-- $ (910) $4,691 Reserve for Real Estate -- -- -- -- -- Included in Other Liabilities: Investment Guarantees 323 -- -- -- 323 Year Ended December 31, 1998 Deducted from Asset Accounts: Reserve for Mortgage Loans on real estate $5,019 $675 $-- $ (900) $4,794 Reserve for Real Estate 1,500 -- -- (1,500) -- Included in Other Liabilities: Investment Guarantees 790 -- -- (467) 323 Year Ended December 31, 1997 Deducted from Asset Accounts: Reserve for Mortgage Loans on real estate $12,385 $1,778 $-- $(9,144) $5,019 Reserve for Real Estate 3,000 -- -- (1,500) 1,500 Included in Other Liabilities: Investment Guarantees 1,775 -- -- (985) 790 (1) Excludes charges for the direct write-offs of assets. |
A reconciliation of the mortgage loan allowance for losses for these impaired mortgage loans is as follows: Year Ended December 31 (in millions) 1998 1997 1996 - ------------------------------------------------------------------------------- Balance at beginning-of-year............ $5.0 $12.4 $29.6 Provisions for losses................... .7 .8 3.1 Releases due to write-downs............. -- -- -- Releases due to sales................... (.9) (4.8) (19.9) Releases due to foreclosures............ -- (3.4) (.4) ---- ----- ----- Balance at end-of-year.............. $4.8 $ 5.0 $12.4 The average recorded investment in impaired mortgage loans and the interest income recognized on impaired mortgage loans were as follows: Year Ended December 31 (in millions) 1998 1997 1996 - -------------------------------------------------------------------------------- Average recorded investment in impaired loans..$33.4 $74.9 $139.6 Interest income recognized on impaired loans... 3.5 7.0 12.7 All interest income on impaired mortgage loans was recognized on the cash basis of income recognition. |
A reconciliation of the present value of business in-force for LNC's insurance subsidiaries included in other intangible assets is as follows: Future estimated amortization of the present value of business in-force net of interest on unamortized balance for LNC's insurance subsidiaries is as follows (in millions): 1999 - $112.2 2001 - $115.1 2003 - $ 109.7 2000 - 113.0 2002 - 112.4 Thereafter - 1,190.9 Details underlying the balance sheet caption, "Contractholder Funds," are as follows: December 31 (in millions) 1998 1997 - -------------------------------------------------------------------------------- Premium deposit funds.................................. $20,171.9 $19,803.0 Undistributed earnings on participating business....... 142.8 79.8 Other.................................................. 438.4 180.6 --------- --------- Total............................................... $20,753.1 $20,063.4 Details underlying the balance sheet captions related to total debt are as follows: The combined U.S. and U.K. commercial paper outstanding at December 31, 1998 and 1997, had a blended weighted average interest rate of approximately 6.67% and 7.03%, respectively. |
Exhibits, Financial Statement Schedules and Reports on Form 8-K Item 14(a)(1) Financial Statements The following consolidated financial statements of Lincoln National Corporation are included in Item 8: Consolidated Balance Sheets - December 31, 1998 and 1997 Consolidated Statements of Income - Years ended December 31, 1998, 1997 and Consolidated Statements of Shareholders' Equity - Years ended December 31, 1998, 1997 and 1996 Consolidated Statements of Cash Flows - Years ended December 31, 1998, 1997 and 1996 Notes to Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors Item 14(a)(2) Financial Statement Schedules The following consolidated financial statement schedules of Lincoln National Corporation are included in Item 14(d): I - Summary of Investments - Other than Investments in Related Parties II - Condensed Financial Information of Registrant III - Supplementary Insurance Information IV - Reinsurance V - Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions, are inapplicable, or the required information is included in the consolidated financial statements, and therefore omitted. |
LINCOLN NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS December 31 (000s omitted) 1997 1996 ASSETS Investments: Securities available-for-sale, at fair value: Fixed maturity (cost: 1997-$22,626,036; 1996-$23,205,273) .... $24,066,376 $24,096,669 Equity (cost: 1997-$517,156; 1996-$434,502) ......... 660,428 557,565 Mortgage loans on real estate ................... 3,288,112 3,240,686 Real estate ..................................... 575,956 655,024 Policy loans .................................... 763,148 734,773 Other investments ............................... 464,826 445,279 Total Investments ............................ 29,818,846 29,729,996 Investment in unconsolidated affiliates ........... 20,975 21,004 Cash and invested cash ............................ 3,794,706 1,144,766 Property and equipment ............................ 189,811 196,044 Deferred acquisition costs ........................ 1,623,845 1,689,716 Premiums and fees receivable ...................... 197,509 237,345 Accrued investment income ......................... 423,008 417,582 Assets held in separate accounts .................. 37,138,845 28,809,137 Amounts recoverable from reinsurers ............... 2,350,766 2,328,514 Goodwill .......................................... 457,729 351,707 Other intangible assets ........................... 613,909 708,446 Other assets ...................................... 544,759 596,420 Discontinued operations - investment assets ....... -- 4,314,968 Discontinued operations - other assets ............ -- 1,167,760 Total Assets .................................. $77,174,708 $71,713,405 See notes to the consolidated financial statements on pages 40 - 65. |
.$(487.8) $ (33.7) Significant components of LNC's net deferred tax asset (liability) for continuing operations are as follows: December 31 (in millions) 1997 1996 Deferred tax assets: Insurance and investment contract liabilities .......... $ 914.3 $ 752.7 Net operating loss ..................................... 66.3 90.0 Postretirement benefits other than pensions ............ 39.4 36.6 Other .................................................. 102.9 108.7 Total deferred tax assets ........................... 1,122.9 988.0 Valuation allowance for deferred tax assets ............ 43.5 -- Net deferred tax asset .............................. 1,079.4 988.0 Deferred tax liabilities: Deferred acquisition costs ............................. 271.2 367.0 Premiums and fees receivable ........................... 3.9 55.7 Investment asset related ............................... 27.9 43.9 Net unrealized gain on securities available-for-sale ... 520.0 337.2 Present value of business in-force ..................... 211.2 220.4 Other................................................... 101.2 146.0 Total deferred tax liabilities ....................... 1,135.4 1,170.2 Net deferred tax asset (liability) .................. $ (56.0) $ (182.2) LNC's Lincoln UK segment has incurred losses in its pension business which under U.K. tax law can only be utilized against its future pension business earnings. |
Exhibits, Financial Statement Schedules and Reports on Form 8-K Item 14(a)(1) Financial Statements The following consolidated financial statements of Lincoln National Corporation are included in Item 8: Consolidated Balance Sheets - December 31, 1997 and 1996 Consolidated Statements of Income - Years ended December 31, 1997, 1996 and 1995 Consolidated Statements of Shareholders' Equity - Years ended December 31,1997, 1996 and 1995 Consolidated Statements of Cash Flows - Years ended December 31, 1997, 1996 and 1995 Notes to Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors Item 14(a)(2) Financial Statement Schedules The following consolidated financial statement schedules of Lincoln National Corporation are included in Item 14(d): I - Summary of Investments - Other than Investments in Related Parties II - Condensed Financial Information of Registrant III - Supplementary Insurance Information IV - Reinsurance V - Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions, are inapplicable, or the required information is included in the consolidated financial statements, and therefore omitted. |
December 31 (in millions) 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 Liability for unpaid claims and claim expenses, net of reinsurance recoverable: $1,730 $2,020 $2,372 $2,669 $2,246 $2,502 $2,673 $2,585 $2,499 $2,406 $2,306 Liability re-estimated as of: (First column represents number of years later) 1 1,692 1,984 2,347 2,690 2,258 2,549 2,634 2,506 2,474 2,363 -- 2 1,753 1,990 2,382 2,718 2,303 2,571 2,607 2,553 2,483 3 1,790 2,026 2,403 2,767 2,384 2,563 2,686 2,611 4 1,833 2,054 2,443 2,847 2,403 2,673 2,772 5 1,863 2,104 2,538 2,869 2,522 2,774 6 1,910 2,199 2,551 2,986 2,624 7 2,003 2,210 2,604 3,067 8 2,012 2,311 2,670 9 2,113 2,363 10 2,151 Cumulative redundancy (deficiency) (421) (343) (298) (398) (378) (272) (99) (26) 16 43 -- Change in cumulative amount -- 78 45 (100) 20 106 173 73 42 27 (43) Cumulative amount of liability paid through: (First column represents number of years later) 1 571 649 750 1,430* 809 839 849 728 689 649 -- 2 935 1,012 1,650* 1,862 1,253 1,325 1,294 1,156 1,093 3 1,160 1,568* 1,875 2,088 1,542 1,596 1,581 1,434 4 1,508* 1,700 1,996 2,255 1,709 1,796 1,773 5 1,593 1,776 2,095 2,355 1,839 1,934 6 1,647 1,840 2,154 2,439 1,935 7 1,694 1,877 2,157 2,503 8 1,721 1,914 2,202 9 1,751 1,950 10 1,781 *Includes the release of reserves for National Reinsurance Corporation due to the sale of that company during April 1990. |
Selected Financial Data (Millions of dollars, except per share data) Year Ended December 31 1996 1995 1994 1993 1992 Total revenue ----------------- 6,721.3 6,633.3 6,179.9 7,392.8 7,267.7 Income before cumulative effect of accounting change(1) ------ 513.6 482.2 349.9 415.3 359.2 Net income(1) ----------------- 513.6 482.2 349.9 318.9 359.2 Per Share Information: Income before cumulative effect of accounting change(1) ------------------ $4.91 $4.63 $3.37 $4.06 $3.86 Net income(1) --------------- 4.91 4.63 3.37 3.12 3.86 Common stock dividend(1) ---- 1.87 1.75 1.66 1.55 1.475 December 31 1996 1995 1994 1993 1992 Assets(1) --------------------- 71,713.4 63,257.7 48,864.8 47,825.1 39,042.2 Long-term debt ---------------- 626.3 659.3 474.2 422.2 489.8 Minority interest-preferred securities of subsidiary companies(2) ----------------- 315.0 -- -- -- -- Shareholders' equity(1) ------- 4,470.0 4,378.1 3,042.1 4,072.3 2,826.9 Market value of common stock(1) -------------- $52.50 $53.75 $35.00 $43.50 $37.00 (1) Factors affecting the comparability of income before cumulative effect of accounting change and net income for the 1992-1996 period are shown below (see "Supplemental Data"). |
Review of Operations: Reinsurance Year Ended December 31 (in millions) 1996 1995 1994 1993 1992 Financial Results by Source Individual Markets --------------- $49.9 $43.4 $41.4 $34.6 $33.5 Group Markets -------------------- 19.0 25.2 21.6 19.5 15.4 Financial Reinsurance ------------ 16.4 10.2 14.7 20.5 16.3 Other ---------------------------- (.2) .7 (1.9) (1.7) .4 Income from Operations, excluding Disability Income --- 85.1 79.5 75.8 72.9 65.6 Disability Income(1) ------------- (11.1) (132.2) (9.2) (54.0) (7.3) Income from Operations(1) ------ 74.0 (52.7) 66.6 18.9 58.3 Realized Gain (Loss) on Investments(2) ------------------ 11.7 10.7 .5 (1.6) -- Net Income (Loss)(1)------------ $ 85.7 $(42.0) $67.1 $17.3 $58.3 Sales and In-Force Individual Life Sales (in billions) $ 26.6 $22.7 $19.9 $17.3 $14.0 December 31 (in billions) 1996 1995 1994 1993 1992 Individual and Group Life Insurance In-Force -------------- $160.9 $142.8 $125.6 $118.0 $113.6 (1) Income from operations and net income for 1995 and 1993 include the impact of a change in estimate of the reserve level needed for LNC's disability income business ($121.6 million and $32.8 million after-tax, respectively). |
Holding Company Cash Flow Year Ended December 31 (in millions) 1996 1995 1994 Dividends from subsidiaries: Lincoln Life ------------------------------------ $ 135.0 $ 310.0 $ 125.0 American States --------------------------------- 74.7 199.0 215.0 Other ------------------------------------------- 96.4 29.5 4.5 Net investment income ----------------------------- 4.3 2.9 1.2 Operating expenses -------------------------------- (44.6) (41.7) (33.7) Interest ------------------------------------------ (67.8) (57.3) (44.3) Net sales (purchases) of investments -------------- 91.2 16.6 (22.1) Increase (decrease) in cash collateral on loaned securities -------------------------------- (53.4) (4.5) 14.3 Additional investment in subsidiaries ------------- 217.8 (697.1) (2.7) (Investment in) sale of unconsolidated affiliates - (16.0) 194.0 (103.5) Net increase (decrease) in debt ------------------- (178.5) 217.1 15.9 Increase in receivables from subsidiaries --------- (36.0) (.3) (3.9) Increase (decrease) in loans from subsidiaries ---- 28.2 (42.4) 271.8 Decrease (increase) in loans to subsidiaries ------ (303.5) (107.0) (20.5) Federal income taxes received (paid) -------------- (143.8) (38.3) 65.6 Net tax receipts from (payments to) subsidiaries -- 122.3 61.5 (61.1) Dividends paid to shareholders -------------------- (191.2) (178.8) (172.2) Common stock issued for benefit plans ------------- (0.2) 24.1 30.0 Retirement of common stock ------------------------ (32.7) -- (18.4) Other --------------------------------------------- (35.2) 56.4 20.5 Cash and invested cash - December 31 -------------- $ 133.8 $ 466.8 $ 523.1 Other investments - December 31 ------------------- 227.2 20.3 28.7 Debt - December 31 -------------------------------- 1,251.9 1,402.1 1,227.5 The table above shows the cash flow activity for the holding company from 1994 through 1996. |
Financial Statements and Supplementary Data Operating Results by Quarter (in millions, except per share) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1996 Data Premiums and other considerations --- $1,008.5 $1,041.7 $1,095.2 $1,081.9 Net investment income --------------- 560.7 572.7 587.9 644.6 Realized gain on investments -------- 71.3 29.5 1.8 25.5 Net income -------------------------- 140.0 111.4 119.3 142.9 Net income per share ---------------- $1.34 $1.07 $1.14 $1.37 1995 Data Premiums and other considerations --- $ 909.6 $1,000.3 $1,032.7 $1,135.2 Net investment income --------------- 530.1 583.6 567.7 604.3 Realized gain on investments -------- 44.1 62.3 68.1 41.1 Gain on sale of affiliates/ operating property ----------------- -- -- -- 54.2 Net income(1) ----------------------- 134.8 117.9 154.3 75.2 Net income per share ---------------- $1.30 $1.13 $1.48 $ .72 (1) The fourth quarter of 1995 includes a change in estimate related to LNC's disability income business (see note 2 to the consolidated financial statements on page 45). |
LINCOLN NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS December 31 (000s omitted) 1996 1995 ASSETS Investments: Securities available-for-sale, at fair value: Fixed maturity (cost: 1996-$26,830,704; 1995-$23,935,527) - $27,906,440 $25,834,476 Equity (cost: 1996-$797,222; 1995-$936,124) ------- 992,702 1,164,844 Mortgage loans on real estate ---------------- 3,272,980 3,186,872 Real estate ---------------------------------- 655,024 775,912 Policy loans --------------------------------- 758,166 602,573 Other investments ---------------------------- 459,652 371,765 Total Investments -------------------------- 34,044,964 31,936,442 Investment in unconsolidated affiliates -------- 21,223 5,562 Cash and invested cash ------------------------- 1,231,724 1,572,855 Property and equipment ------------------------- 257,821 243,763 Deferred acquisition costs --------------------- 1,891,949 1,436,685 Premiums and fees receivable ------------------- 650,789 537,979 Accrued investment income ---------------------- 483,064 462,737 Assets held in separate accounts --------------- 28,809,137 22,769,068 Amounts recoverable from reinsurers ------------ 2,544,196 2,495,189 Goodwill --------------------------------------- 449,479 471,465 Other intangible assets ------------------------ 708,446 528,934 Other assets ----------------------------------- 620,613 797,054 Total Assets ----------------------------- $71,713,405 $63,257,733 See notes to the consolidated financial statements on pages 42 - 68. |
LINCOLN NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS -CONTINUED- December 31 (000s omitted) 1996 1995 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Policy liabilities and accruals: Future policy benefits, claims and claim expenses ------------------------- $13,331,098 $12,922,547 Unearned premiums --------------------------- 766,050 813,380 Total Policy Liabilities and Accruals ----- 14,097,148 13,735,927 Contractholder funds -------------------------- 21,176,963 18,784,508 Liabilities related to separate accounts ------ 28,809,137 22,769,068 Federal income taxes -------------------------- 33,736 128,426 Short-term debt ------------------------------- 188,960 426,848 Long-term debt -------------------------------- 626,311 659,303 Minority interest in consolidated subsidiaries --------------------------------- 223,628 -- Other liabilities ----------------------------- 1,772,566 2,375,531 66,928,449 58,879,611 Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trusts Holding Solely Junior Subordinated Deferrable Interest Debentures of Company ---- 315,000 -- Shareholders' Equity: Series A preferred stock (1996 liquidation value - $2,951) ------------ 1,212 1,335 Common stock ---------------------------------- 857,450 889,476 Retained earnings ----------------------------- 3,129,249 2,775,718 Foreign currency translation adjustment ------- 66,454 13,413 Net unrealized gain (loss) on securities available-for-sale ---------------- 415,591 698,180 Total Shareholders' Equity ---------------- 4,469,956 4,378,122 Total Liabilities and Shareholders' Equity --------------------- $71,713,405 $63,257,733 See notes to the consolidated financial statements on pages 42 - 68. |
LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31 (000s omitted) 1996 1995 1994 Revenue: Insurance premiums ------------------ $3,181,999 $3,253,833 $3,624,648 Insurance fees ---------------------- 628,181 523,237 449,643 Investment advisory fees ------------ 180,792 125,593 -- Net investment income --------------- 2,365,922 2,251,281 1,994,651 Equity in earnings of unconsolidated affiliates ---------- 1,428 12,361 14,652 Realized gain (loss) on investments - 128,052 215,623 (130,820) Gain on sale of affiliates/ operating property ----------------- -- 54,195 48,842 Other ------------------------------- 234,896 197,133 178,234 Total Revenue --------------------- 6,721,270 6,633,256 6,179,850 Benefits and Expenses: Benefits and settlement expenses ---- 3,921,278 4,113,143 4,195,243 Underwriting, acquisition, insurance and other expenses ------- 2,003,007 1,821,022 1,558,806 Interest and debt expense ----------- 84,720 72,516 49,520 Total Benefits and Expenses ------- 6,009,005 6,006,681 5,803,569 Income Before Federal Income Taxes and Minority Interest ------------ 712,265 626,575 376,281 Federal income taxes ------------------ 179,152 144,389 26,383 Income Before Minority Interest --- 533,113 482,186 349,898 Minority interest in consolidated subsidiaries ------------------------- 19,555 -- -- Net Income ------------------------ $ 513,558 $ 482,186 $ 349,898 Earnings Per Share: Net Income ---------------------------- $4.91 $4.63 $3.37 See notes to the consolidated financial statements on pages 42 - 68. |
LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Year Ended December 31 (000s omitted) 1996 1995 1994 Preferred Stock: Series A Preferred Stock: Balance at beginning-of-year ----------- $ 1,335 $ 1,420 $ 1,553 Conversion into common stock ----------- (123) (85) (133) Balance at End-of-Year --------------- 1,212 1,335 1,420 Series E and F Preferred Stock: Balance at beginning-of-year ----------- -- 309,913 309,913 Conversion into common stock ----------- -- (309,913) -- Balance at End-of-Year --------------- -- -- 309,913 Common Stock: Balance at beginning-of-year ------------ 889,476 555,382 543,659 Conversion of series A preferred stock -- 123 85 133 Conversion of series E and F preferred stock ------------------------ -- 309,913 -- Issued for benefit plans ---------------- 7,597 26,888 30,616 Shares forfeited under benefit plans ---- (4,771) (2,792) (631) Retirement of common stock -------------- (34,975) -- (18,395) Balance at End-of-Year --------------- 857,450 889,476 555,382 Retained Earnings: Balance at beginning-of-year ------------ 2,775,718 2,479,532 2,303,731 Net income ------------------------------ 513,558 482,186 349,898 Realized gain (loss) on sale of minority interest in subsidiary ----------------- 34,121 -- -- Dividends declared: Series A preferred stock -------------- (112) (123) (134) Series E and F preferred stock -------- -- (8,532) (17,065) Common stock -------------------------- (194,036) (177,345) (156,898) Balance at End-of-Year --------------- 3,129,249 2,775,718 2,479,532 Foreign Currency Translation Adjustment: Accumulated adjustment at beginning-of-year ---------------------- 13,413 6,890 (1,214) Change during the year ------------------ 53,041 6,523 8,104 Balance at End-of-Year --------------- 66,454 13,413 6,890 Net Unrealized Gain (Loss) on Securities Available-for-sale: Balance at beginning-of-year ----------- 698,180 (311,077) 914,679 Realized gain (loss) on sale of minority interest in subsidiary ------ (19,101) -- -- Change during the year ----------------- (263,488) 1,009,257 (1,225,756) Balance at End-of-Year --------------- 415,591 698,180 (311,077) Total Shareholders' Equity at End-of-Year ----------------------$4,469,956 $4,378,122 $3,042,060 See notes to the consolidated financial statements on pages 42 - 68. |
LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - continued Year Ended December 31 (Number of Shares) 1996 1995 1994 Preferred Stock: (10,000,000 shares authorized) Series A Preferred Stock: Balance at beginning-of-year -------- 40,646 43,218 47,289 Conversion into common stock -------- (3,761) (2,572) (4,071) Balance Issued and Outstanding at End-of-Year ------------------- 36,885 40,646 43,218 Series E and F Preferred Stock: Balance at beginning-of-year ------- -- 4,417,897 4,417,897 Conversion into common stock ------- -- (4,417,897) -- Balance Issued and Outstanding at End-of-Year ------------------ -- -- 4,417,897 Common Stock: (800,000,000 shares authorized) Balance at beginning-of-year ---------- 104,185,117 94,477,942 94,183,190 Conversion of series A preferred stock- 30,088 20,576 32,568 Conversion of series E and F preferred stock ---------------------- -- 8,835,794 -- Issued for benefit plans -------------- 250,072 905,361 778,587 Shares forfeited under benefit plans -- (112,120) (54,556) (16,403) Retirement of common stock ------------ (694,582) -- (500,000) Balance Issued and Outstanding at End-of-Year --------------------- 103,658,575 104,185,117 94,477,942 Common Stock (assuming conversion of series A, E and F preferred stock): End-of-Year -------------------------- 103,953,655 104,510,285 103,659,480 Average for the Year ----------------- 104,560,826 104,115,650 103,863,196 Dividends Per Share: Series A preferred stock -------------- $3.00 $3.00 $3.00 Series E preferred stock -------------- -- 1.89 3.79 Series F preferred stock -------------- -- 1.97 3.94 Common stock -------------------------- 1.87 1.75 1.66 See notes to the consolidated financial statements on pages 42 - 68. |
LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31 (000s omitted) 1996 1995 1994 Cash Flows from Operating Activities: Net income ------------------------------ $ 513,558 $ 482,186 $ 349,898 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Deferred acquisition costs ----------- 34,644 (44,990) (199,419) Premiums and fees receivable --------- (113,022) (15,087) (7,777) Accrued investment income ------------ (20,489) (41,268) (44,171) Policy liabilities and accruals ------ (51,556) 147,989 11,487 Contractholder funds ----------------- 1,281,535 1,631,192 1,674,888 Amounts recoverable from reinsurers -- (110,752) (435,776) (776,408) Federal income taxes ----------------- 31,335 268,338 (59,611) Equity in undistributed earnings of unconsolidated affiliates ----------- (1,428) (11,493) (12,408) Minority interest in consolidated subsidiaries ------------------------ 19,555 -- -- Provisions for depreciation ---------- 58,878 59,835 58,689 Amortization of goodwill and other intangible assets ------------------- 87,442 74,229 9,274 Realized (gain) loss on investments -- (128,052) (300,840) 212,201 (Gain) loss on sale of affiliates/ operating property ------------------ -- (54,195) (48,842) Other -------------------------------- (364,633) 160,180 14,365 Net Adjustments -------------------- 723,457 1,438,114 832,268 Net Cash Provided by Operating Activities ------------- 1,237,015 1,920,300 1,182,166 Cash Flows from Investing Activities: Securities available-for-sale: Purchases ----------------------------- (14,310,549)(15,327,959)(13,383,236) Sales --------------------------------- 13,324,606 14,253,858 10,352,938 Maturities ---------------------------- 1,048,306 1,051,471 1,106,687 Purchase of other investments ----------- (2,343,735) (1,770,790) (1,696,570) Sale or maturity of other investments --- 2,195,664 1,103,380 1,755,113 Sale of affiliates ---------------------- -- 186,900 417,367 Purchase of affiliates/business --------- (71,593) (736,966) -- Increase (decrease) in cash collateral on loaned securities ------------------- (97,257) (39,223) (149,597) Other ----------------------------------- (150,972) (148,029) 94,566 Net Cash Used in Investing Activities - (405,530) (1,427,358) (1,502,732) LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) Year Ended December 31 (000s omitted) 1996 1995 1994 Cash Flows from Financing Activities: Principal payments on long-term debt ---- (35,074) (14,182) (142,065) Issuance of long-term debt -------------- 2,082 197,785 199,482 Net increase (decrease) in short-term debt ------------------------ (237,888) 25,785 (59,698) Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trusts Holding Solely Junior Subordinated Deferrable Interest Debentures of Company 315,000 -- -- Universal life and investment contract deposits ---------------------- 1,172,673 2,142,043 2,429,113 Universal life and investment contract withdrawals ------------------- (2,380,187) (2,158,392) (1,613,780) Common stock issued for benefit plans --- (565) 24,096 29,985 Retirement of common stock -------------- (32,716) -- (18,395) Proceeds from sale of minority interest in subsidiary ----------------- 215,182 -- -- Dividends paid to shareholders ---------- (191,223) (178,805) (172,157) Net Cash Provided by (Used in) Financing Activities ----------------- (1,172,616) 38,330 652,485 Net Increase (Decrease) in Cash ------- (341,131) 531,272 331,919 Cash at Beginning-of-Year --------------- 1,572,855 1,041,583 709,664 Cash at End-of-Year ------------------- $1,231,724 $1,572,855 $1,041,583 See notes to the consolidated financial statements on pages 42 - 68. |
Investments The major categories of net investment income are as follows: Year Ended December 31 (in millions) 1996 1995 1994 Fixed maturity securities --------------------- $1,937.6 $1,853.6 $1,614.9 Equity securities ----------------------------- 35.5 30.3 29.9 Mortgage loans on real estate ----------------- 295.8 272.0 277.2 Real estate ----------------------------------- 125.4 117.9 104.4 Policy loans ---------------------------------- 42.1 37.9 34.0 Invested cash --------------------------------- 54.3 49.2 39.1 Other investments ----------------------------- 36.8 43.2 54.5 Investment revenue -------------------------- 2,527.5 2,404.1 2,154.0 Investment expense ---------------------------- 161.6 152.8 159.4 Net investment income ----------------------- $2,365.9 $2,251.3 $1,994.6 The realized gain (loss) on investments is as follows: Year Ended December 31 (in millions) 1996 1995 1994 Fixed maturity securities available-for-sale: Gross gain ----------------------------------- $ 219.5 $ 257.7 $ 87.8 Gross loss ----------------------------------- (214.1) (95.8) (331.2) Equity securities available-for-sale: Gross gain ----------------------------------- 206.9 160.6 92.6 Gross loss ----------------------------------- (54.2) (60.0) (80.8) Other investments ----------------------------- 40.3 61.9 19.6 Related restoration or amortization of deferred acquisition costs, provision for policyholder commitments and capital gains expenses ------- (70.3) (108.8) 81.2 Total -------------------------------------- $ 128.1 $ 215.6 $(130.8) Provisions (credits) for write-downs and net changes in allowances for loss, which are included in the realized gain (loss) on investments shown above, are as follows: Year Ended December 31 (in millions) 1996 1995 1994 Fixed maturity securities --------------------- $ 12.3 $ 19.9 $ 19.5 Equity securities ----------------------------- 4.9 3.7 8.7 Mortgage loans on real estate ----------------- 3.1 14.2 18.2 Real estate ----------------------------------- 4.6 (9.2) 14.9 Other long-term investments ------------------- (0.8) (4.6) 1.7 Guarantees ------------------------------------ 0.2 (2.6) 2.5 Total --------------------------------------- $ 24.3 $ 21.4 $ 65.5 The change in unrealized appreciation (depreciation) on investments in fixed maturity and equity securities is as follows: Year Ended December 31 (in millions) 1996 1995 1994 Fixed maturity securities available-for-sale - $ (823.3) $2,448.9 $(2,295.1) Equity securities available-for-sale --------- (33.2) 138.2 (93.3) Total -------------------------------------- $ (856.5) $2,587.1 $(2,388.4) The cost, gross unrealized gain and loss, and fair value of securities available-for-sale are as follows: Fair December 31 (in millions) Cost Gain Loss Value 1996: Corporate bonds -------------------- $15,934.2 $ 700.0 $ 95.9 $16,538.3 U.S. Government bonds -------------- 1,512.4 52.8 19.5 1,545.7 Foreign governments bonds ---------- 1,671.2 149.6 31.7 1,789.1 Mortgage-backed securities: Mortgage pass-through securities - 1,331.3 28.8 7.0 1,353.1 Collateralized mortgage obligations --------------------- 3,931.3 170.8 11.0 4,091.1 Other mortgage-backed securities - .8 .4 -- 1.2 State and municipal bonds ---------- 2,200.5 138.3 5.5 2,333.3 Redeemable preferred stocks -------- 249.0 7.6 2.0 254.6 Total fixed maturity securities -- 26,830.7 1,248.3 172.6 27,906.4 Equity securities ------------------ 797.2 240.2 44.7 992.7 Total ---------------------------- $27,627.9 $1,488.5 $ 217.3 $28,899.1 1995: Corporate bonds -------------------- $14,011.4 $1,262.3 $ 31.2 $15,242.5 U.S. Government bonds -------------- 1,033.1 115.0 .1 1,148.0 Foreign governments bonds ---------- 1,273.2 98.6 9.7 1,362.1 Mortgage-backed securities: Mortgage pass-through securities - 1,175.0 45.6 3.4 1,217.2 Collateralized mortgage obligations --------------------- 4,089.0 266.9 3.8 4,352.1 Other mortgage-backed securities - 2.7 .4 .1 3.0 State and municipal bonds ---------- 2,238.1 154.0 2.0 2,390.1 Redeemable preferred stocks -------- 113.0 7.0 .5 119.5 Total fixed maturity securities -- 23,935.5 1,949.8 50.8 25,834.5 Equity securities ------------------ 936.1 232.4 3.7 1,164.8 Total ---------------------------- $24,871.6 $2,182.2 $ 54.5 $26,999.3 Future maturities of fixed maturity securities available-for-sale are as follows: Fair December 31 (in millions) Cost Value Due in one year or less ------------------------------ $ 585.1 $ 588.1 Due after one year through five years ---------------- 5,450.7 5,611.2 Due after five years through ten years --------------- 6,933.6 7,167.2 Due after ten years ---------------------------------- 8,597.9 9,094.5 Subtotal ------------------------------------------- 21,567.3 22,461.0 Mortgage-backed securities --------------------------- 5,263.4 5,445.4 Total ---------------------------------------------- $26,830.7 $27,906.4 The foregoing data is based on stated maturities. |
At December 31, 1996, the current par, amortized cost and estimated fair value of investments in mortgage-backed securities summarized by interest rates of the underlying collateral are as follows: Current Fair December 31 (in millions) Par Cost Value Below 7% ------------------------------- $ 123.3 $ 117.4 $ 117.2 7% - 8% -------------------------------- 1,881.1 1,840.4 1,855.9 8% - 9% -------------------------------- 1,840.0 1,786.9 1,847.3 Above 9% ------------------------------- 1,573.3 1,518.7 1,625.0 Total -------------------------------- $5,417.7 $5,263.4 $5,445.4 The quality ratings of fixed maturity securities available-for-sale are as follows: December 31 1996 Treasuries and AAA ----------------------------------- 32.8% AA --------------------------------------------------- 10.0 A ---------------------------------------------------- 28.2 BBB -------------------------------------------------- 22.9 BB --------------------------------------------------- 2.7 Less than BB ----------------------------------------- 3.4 100.0% Mortgage loans on real estate are considered impaired when, based on current information and events, it is probable that LNC will be unable to collect all amounts due according to the contractual terms of the loan agreement. |
A reconciliation of this difference is as follows: Year Ended December 31 (in millions) 1996 1995 1994 Tax rate times pre-tax income ----------------- $249.3 $219.3 $131.7 Effect of: Tax-exempt investment income ------------------ (66.5) (70.0) (74.0) Loss (gain) on sale of affiliates/ operating property --------------------------- -- -- (17.1) Other items ----------------------------------- (3.6) ( 4.9) (14.2) Provision for income taxes ------------------ $179.2 $144.4 $ 26.4 Effective tax rate -------------------------- 25% 23% 7% The Federal income tax recoverable (liability) is as follows: December 31 (in millions) 1996 1995 Current ----------------------------------------------- $ 16.1 $ (7.2) Deferred ---------------------------------------------- (49.8) (121.2) Total ----------------------------------------------- $(33.7)$(128.4) Significant components of LNC's net deferred tax asset (liability) are as follows: December 31 (in millions) 1996 1995 Deferred tax assets: Policy liabilities and accruals and contractholder funds --------------------------------- $ 966.1 $1,032.2 Net operating loss ------------------------------------ 90.0 120.7 Loss on investments ----------------------------------- -- 16.3 Postretirement benefits other than pensions ----------- 62.2 56.6 Other ------------------------------------------------- 108.7 91.7 Total deferred tax assets --------------------------- 1,227.0 1,317.5 Deferred tax liabilities: Deferred acquisition costs ---------------------------- 431.4 415.0 Premiums and fees receivable -------------------------- 55.7 44.6 Gain on investments ----------------------------------- 35.1 -- Net unrealized gain on securities available-for-sale--- 425.4 717.0 Present value of business in-force -------------------- 220.4 148.7 Other ------------------------------------------------- 108.8 113.4 Total deferred tax liabilities ---------------------- 1,276.8 1,438.7 Net deferred tax asset (liability) ------------------ $ (49.8)$ (121.2) Cash paid for Federal income taxes in 1996, 1995 and 1994 was $143,800,000, $38,300,000 and $70,900,000, respectively. |
Supplemental Financial Data The balance sheet captions, "Real Estate" and "Property and Equipment," are shown net of allowances for depreciation and valuation allowances for operating property held-for-sale as follows: December 31 (in millions) 1996 1995 Real estate (allowances for depreciation) ----------- $ 44.1 $ 58.7 Property and equipment (allowances for depreciation)- 232.5 228.5 Property and equipment (valuation allowance) -------- 26.9 28.3 Details underlying the balance sheet caption, "Contractholder Funds," are as follows: December 31 (in millions) 1996 1995 Premium deposit funds ------------------------------- $20,894.7 $18,489.6 Undistributed earnings on participating business ---- 81.9 91.9 Other ----------------------------------------------- 200.4 203.0 Total --------------------------------------------- $21,177.0 $18,784.5 A reconciliation of the present value of business in-force for LNC's insurance subsidiaries included in other intangible assets is as follows: December 31 (in millions) 1996 1995 1994 Balance at beginning-of-year ----------------- $407.4 $ 38.0 $ 67.7 Acquisitions of insurance companies/business - 163.5 388.7 -- Divestitures of insurance companies ---------- -- -- (25.5) Interest accrued on unamortized balance ------ 37.9 30.7 3.6 Amortization of asset ------------------------ (47.6) (50.0) (7.8) Foreign Exchange Adjustment ------------------ 41.1 -- -- Balance at end-of-year --------------------- 602.4 407.4 38.0 Other intangible assets (non-insurance) ------ 106.0 121.5 4.8 Total other intangible assets at end-of-year ---------------------------- $708.4 $528.9 $ 42.8 Future estimated amortization of the present value of business in-force net of interest on unamortized balance for LNC's insurance subsidiaries is as follows (in millions): 1997 - $22.7 1999 - $24.2 2001 - $27.9 1998 - 24.4 2000 - 25.0 Thereafter - 478.2 A reconciliation of the beginning-of-year and end-of-year liability for property-casualty claims and claim expenses is as follows: December 31 (in millions) 1996 1995 1994 Total liability reported at beginning-of-year -- $2,595.3 $2,702.5 $2,810.1 Reinsurance recoverable ------------------------ 189.0 203.1 225.5 Liability for claims and claim expenses at beginning-of-year, net of reinsurance --- 2,406.3 2,499.4 2,584.6 Plus: Provision for claims and claim expenses arising in the current year, net of reinsurance ------- 1,245.6 1,234.0 1,340.6 Decrease in estimated claims and claim expenses arising in prior years, net of reinsurance ---- (43.2) (24.5) (78.2) Total incurred claims and claim expenses, net of reinsurance ------------------------- 1,202.4 1,209.5 1,262.4 Less: Claims and claim expense payments arising in the current year, net of reinsurance ------- 654.0 613.2 619.4 Payments for claims and claim expenses arising in prior years, net of reinsurance ---- 648.9 689.4 728.2 Total payments, net of reinsurance ---------- 1,302.9 1,302.6 1,347.6 Total liability for claims and claim expenses at end-of-year, net of reinsurance --------- 2,305.8 2,406.3 2,499.4 Reinsurance recoverable ------------------------ 179.8 189.0 203.1 Total liability reported at end-of-year ----- $2,485.6 $2,595.3 $2,702.5 The reconciliation shows a decrease of $43,200,000, $24,500,000, and $78,200,000 to the December 31, 1995, 1994 and 1993 liability for claims and claim expenses, respectively, arising in prior years. |
The status of the funded defined benefit pension plans and the amounts recognized on the balance sheets are as follows: December 31 (in millions) 1996 1995 Actuarial present value of benefit obligation: Vested benefits ---------------------------------------- $(399.2) $(369.7) Nonvested benefits ------------------------------------- (16.3) (20.8) Accumulated benefit obligation ----------------------- (415.5) (390.5) Effect of projected future compensation increases ------ (95.1) (99.4) Projected benefit obligation ------------------------- (510.6) (489.9) Plan assets at fair value ------------------------------ 486.8 449.6 Projected benefit obligations in excess of plan assets ------------------------------- (23.8) (40.3) Unrecognized net loss ---------------------------------- 21.7 43.2 Unrecognized prior service cost ------------------------ 2.7 3.0 Prepaid (accrued) pension cost included in other liabilities ----------------------------------- $ 0.6 $ 5.9 The status of the unfunded defined benefit pension plans and the amounts recognized on the balance sheets are as follows: December 31 (in millions) 1996 1995 Actuarial present value of benefit obligation: Vested benefits --------------------------------------- $(27.6) $(25.4) Nonvested benefits ------------------------------------ (3.1) (3.3) Accumulated benefit obligation ---------------------- (30.7) (28.7) Effect of projected future compensation increases ----- (6.9) (7.5) Projected benefit obligation ------------------------ (37.6) (36.2) Unrecognized transition obligation -------------------- .1 .2 Unrecognized net loss --------------------------------- 5.5 7.3 Unrecognized prior service cost ----------------------- .4 .4 Accrued pension cost included in other liabilities -- $(31.6) $(28.3) The determination of the projected benefit obligation for the defined benefit plans was based on the following assumptions: December 31 1996 1995 1994 Weighted-average discount rate ---------------------- 7.0% 7.0% 8.0% Rate of increase in compensation: Salary continuation plan ---------------------------- 5.5 6.0 6.5 All other plans ------------------------------------- 4.5 5.0 5.0 Expected long-term rate of return on plan assets ---- 9.0 9.0 9.0 The components of net pension cost for the defined benefit pension plans are as follows: Year Ended December 31 (in millions) 1996 1995 1994 Service cost-benefits earned during the year -------- $21.0 $17.0 $22.1 Interest cost on projected benefit obligation ------- 35.0 32.0 30.0 Actual return on plan assets ------------------------ (45.6) (82.4) 9.7 Net amortization (deferral) ------------------------- 7.7 52.4 (40.2) Net pension cost ---------------------------------- $18.1 $19.0 $21.6 Pension Plan - Non U.S. |
The status of the postretirement medical and life insurance benefit plans and the amount recognized on the balance sheet are as follows: December 31 (in millions) 1996 1995 Accumulated postretirement benefit obligation: Retirees -------------------------------------------- $ (73.8) $ (88.7) Fully eligible active plan participants ------------- (22.9) (24.2) Other active plan participants ---------------------- (40.1) (40.0) Accumulated postretirement benefit obligation ----- (136.8) (152.9) Unrecognized gain ----------------------------------- (25.9) (6.3) Accrued plan cost included in other liabilities --- $(162.7) $(159.2) The components of periodic postretirement benefit cost are as follows: Year Ended December 31 (in millions) 1996 1995 1994 Service cost ------------------------------------------- $ 3.9 $ 3.1 $ 4.3 Interest cost ------------------------------------------ 9.0 9.7 10.4 Amortized cost (credit) -------------------------------- (1.8) (2.0) .3 Net periodic postretirement benefit cost ------------- $11.1 $10.8 $15.0 The calculation of the accumulated postretirement benefit obligation assumes a weighted-average annual rate of increase in the per capita cost of covered benefits (i.e. |
Information with respect to the incentive plans involving stock options is as follows: Options Outstanding Weighted- Shares Average Available Exercise for Grant Shares Price Balance at January 1, 1994 1,332,618 2,441,852 $28.80 Additional authorized ---------- 7,650,000 Granted ------------------------ (442,100) 442,100 39.49 Exercised ---------------------- -- (122,963) 25.43 Expired ------------------------ (7,000) -- -- Forfeited ---------------------- 105,203 (88,800) 33.76 Restricted stock awarded ------- (215,707) Balance at December 31, 1994 - 8,423,014 2,672,189 30.56 Granted ------------------------ (510,150) 510,150 42.57 Exercised ---------------------- -- (313,612) 25.70 Expired ------------------------ (5,273) (275) 19.97 Forfeited ---------------------- 175,446 (36,172) 34.64 Restricted stock awarded ------- (335,126) Balance at December 31, 1995 - 7,747,911 2,832,280 33.21 Granted ------------------------ (636,500) 636,500 45.69 Exercised ---------------------- -- (273,967) 26.68 Expired ------------------------ (1,600) (1,000) 27.75 Forfeited ---------------------- 151,818 (38,650) 36.03 Restricted stock awarded ------- (55,538) Balance at December 31, 1996 - 7,206,091 3,155,163 36.29 Shares under options that were exercisable are as follows: December 31 1996 1995 1994 Options exercisable (number of shares) ----------- 1,833,269 1,647,872 1,615,839 Weighted-average exercise price (per share) ------------ $31.22 $28.56 $26.34 Information with respect to incentive plan stock options outstanding at December 31, 1996 is as follows: Options Outstanding Options Exercisable Weighted- Average Weighted- Number Weighted- Range of Number Out- Remaining Average Exercisable Average Exercise standing at Contractual Exercise at Exercise Prices Dec 31, 1996 Life (Years) Price Dec 31, 1996 Price $10-$20 51,690 .96 $19.25 51,690 $19.25 21- 30 1,080,811 3.64 25.91 1,080,811 25.91 31- 40 899,976 5.96 39.58 565,261 39.63 41- 50 1,095,236 8.78 44.22 135,257 43.04 51- 60 27,450 9.38 52.23 250 52.85 $10-$60 3,155,163 1,833,269 Restricted stock (non-vested stock) awarded from 1994 through 1996 was as follows: Year Ended December 31 1996 1995 1994 Restricted stock (number of shares) ------------ 55,538 335,126 215,707 Weighted-average price per share at time of grant -------------------------------------- $46.16 $41.09 $40.56 7. |
Outstanding derivatives with off-balance-sheet risks, shown in notional or contract amounts along with their carrying value and estimated fair values, are as follows: Assets (Liabilities) Notional or Carrying Fair Carrying Fair Contract Amounts Value Value Value Value December 31 (in millions) 1996 1995 1996 1996 1995 1995 Interest rate derivatives: Interest rate cap agreements -- $5,500.0 $5,110.0 $20.8 $8.2 $22.7 $ 5.3 Swaptions --------------------- 672.0 -- 10.6 10.6 -- -- Spread-lock agreements -------- -- 600.0 -- -- (.9) (.9) Financial futures ------------- 147.7 106.7 (2.4) (2.4) 5.1 5.1 Interest rate swaps ----------- -- 5.0 -- -- .2 .2 Total interest rate derivatives ---------------- 6,319.7 5,821.7 29.0 16.4 27.1 9.7 Equity indexed derivatives: Call options ------------------ 14.7 13.3 10.5 10.5 8.0 8.0 Foreign currency derivatives: Forward exchange forward contracts: Foreign subsidiary ----------- -- 398.8 -- -- (5.4) (5.4) Foreign investments ---------- 251.6 15.7 (.2) (.2) (.6) (.6) Foreign currency options ------ 50.2 99.2 (.3) (.3) 1.9 1.4 Foreign currency swaps -------- 15.0 15.0 (2.1) (2.1) .4 .4 Total foreign currency derivatives --------------- 316.8 528.7 (2.6) (2.6) (3.7) (4.2) Total derivatives ---------- $6,651.2 $6,363.7 $36.9 $24.3 $31.4 $13.5 A reconciliation and discussion of the notional or contract amounts for the significant programs using derivative agreements and contracts is as follows: Interest Rate Caps. |
The carrying values and estimated fair values of LNC's financial instruments are as follows: Carrying Fair Carrying Fair Value Value Value Value December 31 (in millions) 1996 1996 1995 1995 Assets (liabilities/minority interests): Fixed maturities securities -------- $27,906.4 $27,906.4 $25,834.5 $25,834.5 Equity securities ------------------ 992.7 992.7 1,164.8 1,164.8 Mortgage loans on real estate ------ 3,273.0 3,386.3 3,186.9 3,371.9 Policy loans ----------------------- 758.2 747.1 602.6 594.7 Other investments ------------------ 459.7 459.7 371.8 371.8 Cash and invested cash ------------- 1,231.7 1,231.7 1,572.9 1,572.9 Investment type insurance contracts: Deposit contracts and certain guaranteed interest contracts --- (18,710.5)(18,328.5)(15,620.2)(15,410.2) Remaining guaranteed interest and similar contracts ----------- (2,539.0) (2,508.7) (3,024.0) (3,125.1) Short-term debt -------------------- (189.0) (189.0) (426.8) (426.8) Long-term debt --------------------- (626.3) (622.7) (659.3) (713.4) Minority interest-preferred securities of subsidiary companies- (315.0) (315.7) -- -- Guarantees ------------------------- (1.8) -- (7.1) -- Derivatives ------------------------ 36.9 24.0 31.4 13.5 Investment commitments ------------- -- .3 -- .8 As of December 31, 1996 and 1995, the carrying value of the deposit contracts and certain guaranteed contracts is net of deferred acquisition costs of $176,000,000 and $336,000,000, respectively, excluding adjustments for deferred acquisition costs applicable to changes in fair value of securities. |
Financial data by segment for 1994 through 1996 is as follows: Year Ended December 31 (in millions) 1996 1995 1994 Revenue, excluding net investment income and realized gain (loss) on investments/ affiliates/operating property: Life Insurance and Annuities ----------- $1,124.2 $1,074.8 $1,133.4 Reinsurance ---------------------------- 1,279.2 1,181.9 1,070.9 Property-Casualty ---------------------- 1,617.2 1,688.7 1,710.6 Investment Management (Regular) -------- 210.7 142.8 -- Investment Management (at Cost --------- 61.6 42.8 -- Employee Life-Health Benefits ---------- -- -- 303.7 Other Operations (includes consolidating adjustments) ------------ (65.6) (18.8) 48.5 Total -------------------------------- $4,227.3 $4,112.2 $4,267.1 Net Investment Income: Life Insurance and Annuities ----------- $1,857.7 $1,859.5 $1,619.2 Reinsurance ---------------------------- 263.7 164.1 125.5 Property-Casualty ---------------------- 244.0 238.8 241.1 Investment Management ------------------ .9 .5 -- Employee Life-Health Benefits ---------- -- -- 10.8 Other Operations ----------------------- (.4) (11.6) (1.8) Total -------------------------------- $2,365.9 $2,251.3 $1,994.8 Realized gain (loss) on investments/ affiliates/operating property: Life Insurance and Annuities ----------- $ 66.4 $124.4 $(137.2) Reinsurance ---------------------------- 18.1 16.4 1.0 Property-Casualty ---------------------- 34.4 27.4 19.7 Investment Management ------------------ 8.1 6.6 -- Employee Life-Health Benefits ---------- -- -- .4 Other Operations ----------------------- 1.1 95.0 34.1 Total -------------------------------- $128.1 $269.8 $ (82.0) Income (loss) before income taxes and minority interest: Life Insurance and Annuities ----------- $470.3 $472.4 $106.7 Reinsurance ---------------------------- 131.1 (65.6) 102.9 Property-Casualty ---------------------- 187.6 190.4 177.2 Investment Management ------------------ 34.6 36.0 -- Employee Life-Health Benefits ---------- -- -- 22.9 Other Operations (includes interest expense) ------------------------------ (111.3) (6.6) (33.4) Total -------------------------------- $712.3 $626.6 $376.3 Income taxes (credits): Life Insurance and Annuities ----------- $138.8 $138.3 $12.6 Reinsurance ---------------------------- 45.4 (23.6) 35.9 Property-Casualty ---------------------- 23.9 24.1 5.6 Investment Management ------------------ 17.7 17.0 -- Employee Life-Health Benefits ---------- -- -- 8.5 Other Operations ----------------------- (46.6) (11.4) (36.2) Total -------------------------------- $179.2 $144.4 $26.4 Net income (loss): Life Insurance and Annuities ----------- $329.9 $334.1 $ 94.1 Reinsurance ---------------------------- 85.7 (42.0) 67.1 Property-Casualty ---------------------- 144.3 166.3 171.6 Investment Management ------------------ 16.9 19.0 -- Employee Life-Health Benefits ---------- -- -- 14.4 Other Operations (includes interest expense) ------------------------------ (63.2) 4.8 2.7 Total -------------------------------- $513.6 $482.2 $349.9 December 31 (in millions) 1996 1995 1994 Assets: Life Insurance and Annuities ----------- $61,002.4 $52,465.8 $40,758.4 Reinsurance ---------------------------- 5,196.1 5,220.3 2,653.5 Property-Casualty ---------------------- 4,901.4 5,126.0 4,966.6 Investment Management ------------------ 640.0 632.4 -- Other Operations ----------------------- (26.5) (186.8) 486.3 Total -------------------------------- $71,713.4 $63,257.7 $48,864.8 Liabilities: Life Insurance and Annuities ----------- $58,075.6 $49,485.4 $38,823.2 Reinsurance ---------------------------- 4,454.8 4,673.3 2,259.8 Property-Casualty ---------------------- 3,622.8 3,516.2 3,552.3 Investment Management ------------------ 106.6 59.4 -- Other Operations ----------------------- 668.6 1,145.3 1,187.4 Total -------------------------------- $66,928.4 $58,879.6 $45,822.7 Provisions for depreciation and capital additions were not material. |
Exhibits, Financial Statement Schedules and Reports on Form 8-K Item 14(a)(1) Financial Statements The following consolidated financial statements of Lincoln National Corpora- tion are included in Item 8: Consolidated Balance Sheets - December 31, 1996 and 1995 Consolidated Statements of Income - Years ended December 31, 1996, 1995 and Consolidated Statements of Shareholders' Equity - Years ended December 31, 1996, 1995 and 1994 Consolidated Statements of Cash Flows - Years ended December 31, 1996, 1995 and 1994 Notes to Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors Item 14(a)(2) Financial Statement Schedules The following consolidated financial statement schedules of Lincoln National Corporation are included in Item 14(d): I - Summary of Investments - Other than Investments in Related Parties II - Condensed Financial Information of Registrant III - Supplementary Insurance Information IV - Reinsurance V - Valuation and Qualifying Accounts VI - Supplementary Information Concerning Property-Casualty Insurance Operations All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions, are inapplicable, or the required information is included in the consolidated financial statements, and therefore omitted. |
LINCOLN NATIONAL CORPORATION SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES December 31, 1996 (000's omitted) Column A Column B Column C Column D Amount at Which Shown in the Type of Investment Cost Value Balance Sheet Fixed maturity securities available-for-sale: Bonds: United States Government and government agencies and authorities ------------- $ 1,512,342 $ 1,545,726 $ 1,545,726 States, municipalities and political subdivisions ------ 2,200,526 2,333,278 2,333,278 Mortgage-backed securities --- 5,263,362 5,445,431 5,445,431 Foreign governments ---------- 1,671,242 1,789,080 1,789,080 Public utilities ------------- 2,770,413 2,854,640 2,854,640 Convertibles and bonds with warrants attached ------ 215,264 229,399 229,399 All other corporate bonds ---- 12,948,547 13,454,236 13,454,236 Redeemable preferred stocks ---- 249 008 254,650 254,650 Total ----------------------- 26,830,704 27,906,440 27,906,440 Equity securities available-for-sale: Common stocks: Public utilities ------------- 18,460 22,045 22,045 Banks, trusts and insurance companies --------- 44,075 65,325 65,325 Industrial, miscellaneous and all other --------------- 489,630 642,084 642,084 Nonredeemable preferred stocks - 245,057 263,248 263,248 Total Equity Securities ----- 797,222 992,702 992,702 Mortgage loans on real estate ---- 3,285,365 3,272,980(A) Real estate: Investment properties ---------- 598,449 598,449 Acquired in satisfaction of debt ---------- 56,575 56,575 Policy loans --------------------- 758,166 758,166 Other investments ---------------- 459,652 459,652 Total Investments ----------- $32,786,133 $34,044,964 (A) Investments deemed to have declines in value that are other than temporary are written down or reserved for to reduce their carrying value to their estimated realizable value. |
LINCOLN NATIONAL CORPORATION SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT BALANCE SHEETS Lincoln National Corporation (Parent Company Only) December 31 (000's omitted) 1996 1995 Assets: Investments in subsidiaries* ------------------ $ 5,055,185 $ 5,086,708 Investments ----------------------------------- 227,234 20,344 Investment in unconsolidated affiliate -------- 16,041 -- Cash and invested cash ------------------------ 133,833 466,776 Property and equipment ------------------------ 10,543 11,464 Accrued investment income --------------------- 26,078 7,866 Receivable from subsidiaries* ----------------- 103,024 67,024 Dividends receivable from subsidiaries* ------- 285 -- Loans to subsidiaries* ------------------------ 446,968 143,462 Goodwill -------------------------------------- 5,747 338,346 Other intangible assets ----------------------- -- 76,052 Other assets ---------------------------------- 25,281 12,419 Total Assets -------------------------------- $ 6,050,219 $ 6,230,461 Liabilities and Shareholders' Equity Liabilities: Cash collateral on loaned securities ---------- $ 145,594 $ 199,000 Dividends payable ----------------------------- 50,651 47,726 Short-term debt ------------------------------- 69,711 248,744 Long-term debt -------------------------------- 596,052 595,490 Loans from subsidiaries* ---------------------- 586,120 557,896 Federal income taxes payable (recoverable) ---- (1,398) 69,328 Accrued expenses and other liabilities -------- 133,533 134,155 Total Liabilities --------------------------- 1,580,263 1,852,339 Shareholders' Equity Series A preferred stock ---------------------- 1,212 1,335 Common stock ---------------------------------- 857,450 889,476 Retained earnings ----------------------------- 3,129,249 2,775,718 Foreign currency translation adjustment ------- 66,454 13,413 Net unrealized gain (loss) on securities available-for-sale [including unrealized gain (loss) of subsidiaries: 1996 - $397,154 1995 - $687,904] ------------ 415,591 698,180 Total Shareholders' Equity ----------------- 4,469,956 4,378,122 Total Liabilities and Shareholders' Equity - $ 6,050,219 $ 6,230,461 *Eliminated in consolidation. |
LINCOLN NATIONAL CORPORATION SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued) STATEMENTS OF INCOME Lincoln National Corporation (Parent Company Only) Year Ended December 31 (000's omitted) 1996 1995 1994 Revenue: Dividends from subsidiaries* --------------- $601,701 $538,515 $309,460 Interest from subsidiaries* ---------------- 1,347 2,018 1,080 Equity in earnings of unconsolidated affiliate ------------------ 1,428 5,075 13,119 Net investment income ---------------------- 39,388 29,260 20,376 Realized gain (loss) on investments -------- (432) 30,189 (20,016) Gain on sale of affiliate/operating property to subsidiary* ------------------- -- 74,284 -- Other -------------------------------------- 1,127 1,292 1,373 Total Revenue ---------------------------- 644,559 680,633 325,392 Expenses: Operating and administrative --------------- 33,808 41,884 40,919 Interest-subsidiaries* --------------------- 23,529 32,864 23,815 Interest-other ----------------------------- 74,553 63,624 45,976 Total Expenses --------------------------- 131,890 138,372 110,710 Income before Federal Income Tax Expense (Benefit), Equity in Income of Subsidiaries, Less Dividends -------------- 512,669 542,261 214,682 Federal income tax expense (benefits) -------- (34,157) 37,780 (36,574) Income Before Equity in Income of Subsidiaries, Less Dividends -- 546,826 504,481 251,256 Equity in income of subsidiaries, less dividends ----------------------------------- (33,268) (22,295) 98,642 Net Income ------------------------------- $513,558 $482,186 $349,898 *Eliminated in consolidation. |
LINCOLN NATIONAL CORPORATION SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued) STATEMENTS OF CASH FLOWS Lincoln National Corporation (Parent Company Only) Year Ended December 31 (000's omitted) 1996 1995 1994 Cash Flows from Operating Activities: Net income ----------------------------------- $513,558 $482,186 $349,898 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Equity in income of subsidiaries less than (greater than) distributions* -- (262,268) 86,889 (63,642) Equity in undistributed earnings of unconsolidated affiliate ----------------- (1,428) (5,075) (13,119) Realized (gain) loss on investments ------- 432 (30,189) 20,016 Gain on sale of affiliate/ operating property ----------------------- -- (74,284) -- Other ------------------------------------- (81,276) 47,967 (32,757) Net Adjustments ------------------------- (344,540) 25,308 (89,502) Net Cash Provided by Operating Activities ------------------- 169,018 507,494 260,396 Cash Flows from Investing Activities: Net sales (purchases) of investments ------- 91,161 16,614 (22,106) Cash collateral on loaned securities ------- (53,406) (4,531) 14,275 Net investment in subsidiaries* ------------ 217,844 (697,106) (2,744) Sale of (investment in) unconsolidated affiliate --------------------------------- (16,041) 193,975 (103,470) Net (purchase) sale of property and equipment ----------------------------- (790) (3,158) (5,109) Other -------------------------------------- (26,883) 17,675 7,379 Net Cash Provided by (Used in) Investing Activities -------------------- 211,885 (476,531) (111,775) Cash Flows from Financing Activities: Principal payments on long-term debt ------- -- -- (100,717) Issuance of long-term debt ----------------- 561 197,785 200,000 Net increase (decrease) in short-term debt - (179,033) 19,300 (83,423) Increase (decrease) in loans from subsidiaries* ----------------------------- 28,224 (42,413) 271,841 Decrease (increase) in loans to subsidiaries* ----------------------------- (303,506) (106,982) (20,455) Increase in receivables from subsidiaries* - (36,000) (300) (3,889) Common stock issued for benefit plans ------ (153) 24,096 29,985 Retirement of common stock ----------------- (32,716) -- (18,395) Dividends paid to shareholders ------------- (191,223) (178,805) (172,157) Net Cash Provided by (Used in) Financing Activities -------------------- (713,846) (87,319) 102,790 Net Increase (Decrease) in Cash ---------- (332,943) (56,356) 251,411 Cash at beginning-of-year -------------------- 466,776 523,132 271,721 Cash at End-of-Year ---------------------- $133,833 $466,776 $523,132 *Eliminated in consolidation. |
Exhibits, Financial Statement Schedules and Reports on Form 8-K Item 14(a)(1) Financial Statements The following consolidated financial statements of Lincoln National Corpora- tion and subsidiaries are included in Item 8: Consolidated Balance Sheets - December 31, 1994 and 1993 Consolidated Statements of Income - Years ended December 31, 1994, 1993 and Consolidated Statements of Shareholders' Equity - Years ended December 31, 1994, 1993 and 1992 Consolidated Statements of Cash Flows - Years ended December 31, 1994, 1993 and 1992 Notes to Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors Item 14(a)(2) Financial Statement Schedules The following consolidated financial statement schedules of Lincoln National Corporation and subsidiaries are included in Item 14(d): I - Summary of Investments - Other than Investments in Related Parties II - Condensed Financial Information of Registrant III - Supplementary Insurance Information IV - Reinsurance V - Valuation and Qualifying Accounts VI - Supplementary Information Concerning Property-Casualty Insurance Operations All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions, are inapplicable, or the required information is included in the consolidated financial statements, and therefore have been omitted. |
Exhibits, Financial Statement Schedules and Reports on Form 8-K Item 14(a)(1) Financial Statements The following consolidated financial statements of Lincoln National Corpora- tion and subsidiaries are included in Item 8: Consolidated Balance Sheets - December 31, 1993 and 1992 Consolidated Statements of Income - Years ended December 31, 1993, 1992 and 1991 Consolidated Statements of Shareholders' Equity - Years ended December 31, 1993, 1992 and 1991 Consolidated Statements of Cash Flows - Years ended December 31, 1993, 1992 and 1991 Notes to Consolidated Financial Statements Report of Independent Auditors Item 14(a)(2) Financial Statement Schedules The following consolidated financial statement schedules of Lincoln National Corporation and subsidiaries are included in Item 14(d): I - Summary of Investments - Other than Investments in Related Parties III - Condensed Financial Information of Registrant V - Supplementary Insurance Information VI - Reinsurance VII - Guarantees of Securities of Other Issuers VIII - Valuation and Qualifying Accounts IX - Short-term Borrowings X - Supplementary Information Concerning Property-Casualty Insurance Operations All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions, are inapplicable, or the required information is included in the consolidated financial statements, and therefore have been omitted. |
In addition to the various factors included in the "Executive Level Overview," "Critical Accounting Policies and Estimates" and "Outlook for the Company" sections, our future performance may be affected by the levels of residential repair and remodel activity, and to a lesser extent, new home construction, our ability to maintain our strong brands and reputation and to develop innovative products, our ability to maintain our competitive position in our industries, our reliance on key customers, the length and severity of the ongoing COVID-19 pandemic, including its impact on domestic and international economic activity, consumer confidence, our production capabilities, our employees and our supply chain, the cost and availability of materials and the imposition of tariffs, our dependence on third-party suppliers, risks associated with our international operations and global strategies, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to successfully execute our acquisition strategy and integrate businesses that we have and may acquire, our ability to attract, develop and retain talented and diverse personnel, risks associated with our reliance on information systems and technology, and our ability to achieve the anticipated benefits from our investments in new technology. |
In addition to the various factors included in the "Executive Level Overview," "Critical Accounting Policies and Estimates" and "Outlook for the Company" sections, our future performance may be affected by the levels of residential repair and remodel activity and new home construction, our ability to maintain our strong brands and reputation and to develop innovative products, our ability to maintain our competitive position in our industries, our reliance on key customers, the cost and availability of materials and the imposition of tariffs, our dependence on third-party suppliers, risks associated with our international operations and global strategies, our ability to achieve the anticipated benefits of our strategic initiatives, including the pending divestiture of our Masco Cabinetry business, our ability to successfully execute our acquisition strategy and integrate businesses that we have and may acquire, our ability to attract, develop and retain talented personnel, risks associated with our reliance on information systems and technology, and our ability to achieve the anticipated benefits from our investments in new technology. |
In addition to the various factors included in the "Executive Level Overview," "Critical Accounting Policies and Estimates" and "Outlook for the Company" sections, our future performance may be affected by the levels of residential repair and remodel activity and new home construction, our ability to maintain our strong brands and reputation and to develop new products, our ability to maintain our competitive position in our industries, our reliance on key customers, the cost and availability of raw materials and increasing tariffs, our dependence on third-party suppliers, risks associated with international operations and global strategies, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to successfully execute our acquisition strategy and integrate businesses that we have and may acquire, our ability to attract, develop and retain talented personnel, risks associated with our reliance on information systems and technology, and our ability to achieve the anticipated benefits from our investments in new technology. |
In addition to the various factors included in the "Executive Level Overview," "Critical Accounting Policies and Estimates" and "Outlook for the Company" sections, our future performance may be affected by the levels of residential repair and remodel activity and new home construction, our ability to maintain our strong brands and reputation and to develop new products, our ability to maintain our competitive position in our industries, our reliance on key customers, the cost and availability of raw materials, our dependence on third-party suppliers, risks associated with international operations and global strategies, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to successfully execute our acquisition strategy and integrate businesses that we have and may acquire, our ability to attract, develop and retain talented personnel, our ability to achieve the anticipated benefits from our investments in new technology, risks associated with our reliance on information systems and technology, and our ability to sustain the improved results of our U.S. window business. |
SUPPLEMENTARY CASH FLOWS INFORMATION: Significant transactions not affecting cash were: in 1998, the issuance of $22 million of Company Common Stock in partial exchange for the assets of an acquired company; the acquisition of TriMas for cash and the assumption of liabilities of approximately $179 million; in 1997, the conversion of the Company's outstanding shares of Dividend Enhanced Convertible Preferred Stock for approximately ten million shares of Company Common Stock (see "Shareholders' Equity" note); the exchange of MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) approximately 9.9 million shares of the outstanding common stock of Emco Limited ("Emco") with a value of approximately $106 million, in addition to the cash payment of approximately $46 million, in payment of a promissory note due to Masco Corporation; and in 1996, in addition to cash received, approximately $25 million comprised of both common stock and warrants, as consideration from the sale of MascoTech Stamping Technologies, Inc.; in addition to the cash payment by the Company of $121 million, notes approximating $159 million were issued for the purchase of 18 million shares of the Company's Common Stock and warrants to purchase ten million shares of the Company's Common Stock (see "Shareholders' Equity" note). |
SUPPLEMENTARY CASH FLOWS INFORMATION: Significant transactions not affecting cash were: in 1997: the conversion of the Company's outstanding shares of Dividend Enhanced Convertible Preferred Stock on June 27, 1997 for approximately 10 million shares of Company Common Stock (see "Shareholders' Equity" note); the exchange of approximately 9.9 million shares of the outstanding common stock of Emco Limited ("Emco") with a value of approximately $106 million, in addition to the cash payment of approximately $46 million, in payment of a promissory note due to Masco Corporation; in 1996: in addition to cash received, approximately $25 million comprised of both common stock and warrants (with a portion of the common stock subsequently sold for approximately $14 million of cash), as consideration from the sale of MascoTech Stamping Technologies, Inc.; in addition to the cash payment by the Company of $121 million, notes approximating $159 million were issued for the purchase of 18 million shares of the Company's Common Stock and warrants to purchase 10 million shares of the Company's Common Stock (see "Shareholders' Equity" note); in 1995: in addition to cash received, approximately MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) $34 million comprised of both notes receivable due from, and a 29 percent equity interest in, the acquiring company, as consideration for a non-core business unit. |
SUPPLEMENTARY CASH FLOWS INFORMATION: Significant transactions not affecting cash were: in 1993: in addition to the payment by the Company of $87.5 million, the non-cash portion of the issuance of Company Preferred Stock and warrants in exchange for Company Common Stock, Company Preferred Stock and Masco Corporation's holdings of Emco Limited common stock and convertible debentures (see "Shareholders' Equity" note); conversion of $187 million of convertible debentures into Company Common Stock MASCOTECH, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (see "Shareholders' Equity" note); and conversion of the Company's TriMas Corporation ("TriMas") convertible preferred stock holdings into TriMas common stock (see "Equity and Other Investments in Affiliates" note); and in 1991: an exchange of certain operating assets (see "Dispositions of Other Operations" note); and the assumption of liabilities of $18 million in partial exchange for the acquisition of Creative Industries Group (see "Equity and Other Investments in Affiliates" note). |
Our international operations subject us to extensive domestic and foreign regulations and expose us to a variety of domestic and foreign political, economic and other risks, including: • changes in international trade and investment policies, including restrictions or taxes on the repatriation of dividends or other funds, new or higher tariffs, duties or customs (for example, on products imported from Mexico or China), new barriers to entry or domestic preference procurement requirements and changes to, or withdrawals from, free trade agreements; • changes in foreign or domestic government leadership; • changes in foreign or domestic laws or regulations impacting our overall business model or restricting our ability to manufacture, purchase or sell our products; • changes in domestic or foreign tax laws; • changes in foreign currency exchange rates and interest rates; • economic downturns in foreign countries or geographic regions where we have significant operations, such as China, Egypt, Malta and Mexico; • significant changes in conditions in the countries in which we operate with the effect of competition from new market entrants; • uncertainty related to the United Kingdom’s withdrawal from the European Union; • impact of compliance with U.S. and other foreign countries’ export controls and economic sanctions; • liabilities resulting from U.S. and foreign laws and regulations, including those related to the Foreign Corrupt Practices Act and certain other anti-corruption laws; • differing labor regulations and union relationships; • logistical and communications challenges; and • differing protections for our intellectual property. |
The amount of our outstanding indebtedness could have an adverse effect on our operations and liquidity, including by, among other things: (i) making it more difficult for us to pay or refinance our debts as they become due during adverse economic and industry conditions, because we may not have sufficient cash flows to make our scheduled debt payments; (ii) causing us to use a larger portion of our cash flows to fund interest and principal payments, thereby reducing the availability of cash to fund working capital, product development, capital expenditures and other business activities; (iii) making it more difficult for us to take advantage of significant business opportunities, such as acquisition opportunities or other strategic transactions, and to react to changes in market or industry conditions; and (iv) limiting our ability to borrow additional monies in the future to fund the activities and expenditures described above and for other general corporate purposes as and when needed, which could force us to suspend, delay or curtail business prospects, strategies or operations. |
Tsoumas (Principal Financial Officer) /s/ AMIT N. PATEL Chief Accounting Officer June 30, 2020 Amit N. Patel (Principal Accounting Officer) /s/ DAVID P. BLOM Director June 25, 2020 David P. Blom /s/ THERESE M. BOBEK Director June 25, 2020 Therese M. Bobek /s/ BRIAN J. CADWALLADER Director June 25, 2020 Brian J. Cadwallader /s/ BRUCE K. CROWTHER Director June 25, 2020 Bruce K. Crowther /s/ DARREN M. DAWSON Director June 25, 2020 Darren M. Dawson /s/ ISABELLE C. GOOSSEN Director June 25, 2020 Isabelle C. Goossen /s/ MARY A. LINDSEY Director June 25, 2020 Mary A. Lindsey /s/ ANGELO V. PANTALEO Director June 25, 2020 Angelo V. Pantaleo /s/ MARK D. SCHWABERO Director June 25, 2020 Mark D. Schwabero METHODE ELECTRONICS, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE Consolidated Financial Statements: Page Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets - May 2, 2020 and April 27, 2019 Consolidated Statements of Income - Years Ended May 2, 2020, April 27, 2019 and April 28, 2018 Consolidated Statements of Comprehensive Income - Years Ended May 2, 2020, April 27, 2019 and April 28, 2018 Consolidated Statements of Shareholders’ Equity - Years Ended May 2, 2020, April 27, 2019 and April 28, 2018 Consolidated Statements of Cash Flows - Years Ended May 2, 2020, April 27, 2019 and April 28, 2018 Notes to Consolidated Financial Statements Consolidated Financial Statement Schedule: Schedule II - Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are immaterial and, therefore, have been omitted. |
Our international operations subject us to extensive domestic and foreign regulations and expose us to a variety of domestic and foreign political, economic and other risks, including: • changes in international trade and investment policies, including restrictions or taxes on the repatriation of dividends or other funds, new or higher tariffs, duties or customs (for example, on products imported from Mexico or China), new barriers to entry or domestic preference procurement requirements and changes to, or withdrawals from, free trade agreements; • changes in foreign or domestic government leadership; • changes in foreign or domestic laws or regulations impacting our overall business model or restricting our ability to manufacture, purchase or sell our products; • changes in domestic or foreign tax laws; • changes in foreign currency exchange rates and interest rates; • economic downturns in foreign countries or geographic regions where we have significant operations, such as China, Egypt, Malta and Mexico; • significant changes in conditions in the countries in which we operate with the effect of competition from new market entrants and, in the United Kingdom, with passage of a referendum to discontinue membership in the European Union (“Brexit”); • impact of compliance with U.S. and other foreign countries’ export controls and economic sanctions; • liabilities resulting from U.S. and foreign laws and regulations, including those related to the Foreign Corrupt Practices Act and certain other anti-corruption laws; • differing labor regulations and union relationships; • logistical and communications challenges; and • differing protections for our intellectual property. |
The amount of our outstanding indebtedness could have an adverse effect on our operations and liquidity, including by, among other things: (i) making it more difficult for us to pay or refinance our debts as they become due during adverse economic and industry conditions, because we may not have sufficient cash flows to make our scheduled debt payments; (ii) causing us to use a larger portion of our cash flows to fund interest and principal payments, thereby reducing the availability of cash to fund working capital, product development, capital expenditures and other business activities; (iii) making it more difficult for us to take advantage of significant business opportunities, such as acquisition opportunities or other strategic transactions, and to react to changes in market or industry conditions; and (iv) limiting our ability to borrow additional monies in the future to fund the activities and expenditures described above and for other general corporate purposes as and when needed, which could force us to suspend, delay or curtail business prospects, strategies or operations. |
Our international operations subject us to extensive domestic and foreign regulations and expose us to a variety of domestic and foreign political, economic and other risks, including: changes in foreign or domestic government leadership; changes in foreign or domestic laws or regulations impacting our overall business model or restricting our ability to manufacture, purchase or sell our products; changes in domestic or foreign tax laws; changes in international trade and investment policies, including restrictions or taxes on the repatriation of dividends or other funds, new or higher tariffs, duties or customs (for example, on products imported from Mexico or China), new barriers to entry or domestic preference procurement requirements and changes to, or withdrawals from, free trade agreements; changes in foreign currency exchange rates and interest rates; economic downturns in foreign countries or geographic regions where we have significant operations, such as Mexico and China; significant changes in conditions in the countries in which we operate with the effect of competition from new market entrants and, in the United Kingdom, with passage of a referendum to discontinue membership in the European Union; impact of compliance with U.S. and other foreign countries’ export controls and economic sanctions; liabilities resulting from U.S. and foreign laws and regulations, including those related to the Foreign Corrupt Practices Act and certain other anti-corruption laws; differing labor regulations and union relationships; logistical and communications challenges; and differing protections for our intellectual property. |
Our international operations subject us to extensive domestic and foreign regulations and expose us to a variety of domestic and foreign political, economic and other risks, including: changes in foreign or domestic government leadership; changes in foreign or domestic laws or regulations impacting our overall business model or restricting our ability to manufacture, purchase or sell our products; changes in domestic or foreign tax laws; changes in international trade and investment policies, including restrictions or taxes on the repatriation of dividends or other funds, new or higher tariffs, duties or customs (for example, on products imported from Mexico or China), new barriers to entry or domestic preference procurement requirements and changes to, or withdrawals from, free trade agreements; changes in foreign currency exchange rates and interest rates; economic downturns in foreign countries or geographic regions where we have significant operations, such as Mexico and China; significant changes in conditions in the countries in which we operate with the effect of competition from new market entrants and, in the United Kingdom, with passage of a referendum to discontinue membership in the European Union; impact of compliance with U.S. and other foreign countries’ export controls and economic sanctions; liabilities resulting from U.S. and foreign laws and regulations, including those related to the Foreign Corrupt Practices Act and certain other anti-corruption laws; differing labor regulations and union relationships; logistical and communications challenges; and differing protections for our intellectual property. |
A number of factors may increase our effective tax rates, which could reduce our net income, including: • the jurisdictions in which profits are determined to be earned and taxed; • the resolution of issues arising from tax audits; • changes in the valuation of our deferred tax assets and liabilities, and in deferred tax valuation allowances; • adjustments to income taxes upon finalization of tax returns; • increases in expenses not deductible for tax purposes, including write-offs of acquired in-process research and development and impairments of goodwill and intangible assets; • changes in available tax credits; • changes in tax laws or interpretation, including changes in the U.S. to the taxation of non-U.S. income and expenses; • changes in U.S. generally accepted accounting principles; and • our decision to repatriate non-U.S. earnings for which we have not previously provided for U.S. taxes; • any significant decrease in our gross margins could adversely affect our business, financial condition and results of operations. |
Signature Title Date /s / WARREN L. BATTS Chairman of the Board July 1, 2010 Warren L. Batts /s/ DONALD W. DUDA Chief Executive Officer, President & Director July 1, 2010 Donald W. Duda (Principal Executive Officer) /s / DOUGLAS A. KOMAN HORNUNG Chief Financial Officer July 1, 2010 Douglas A. Koman /s / WALTER J. ASPATORE Director July 1, 2010 Walter J. Aspatore /s/ J. EDWARD COLGATE Director July 1, 2010 J. Edward Colgate /s/ DARREN M. DAWSON Director July 1, 2010 Darren M. Dawson /s / ISABELLE C. GOOSSEN Director July 1, 2010 Isabelle C. Goossen /s / CHRISTOPHER J. HORNUNG Director July 1, 2010 Christopher J. Hornung /s / LAWRENCE B. SKATOFF Director July 1, 2010 Lawrence B. Skatoff /s / PAUL G. SHELTON Director July 1, 2010 Paul G. Shelton METHODE ELECTRONICS, INC. AND SUBSIDIARIES FORM 10-K ITEM 15 (a) (1) and (2) (1) Financial Statements The following consolidated financial statements of Methode Electronics, Inc. and subsidiaries are included in Item 8: Report of Independent Registered Public Accounting Firm Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting Consolidated Balance Sheets - May 1, 2010 and May 2, 2009 Consolidated Statements of Operations - Years Ended May 1, 2010, May 2, 2009 and May 3, 2008 Consolidated Statements of Shareholders’ Equity - Years Ended May 1, 2010, May 2, 2009 and May 3, 2008 Consolidated Statements of Cash Flows - Years Ended May 1, 2010, May 2, 2009 and May 3, 2008 Notes to Consolidated Financial Statements (2) Financial Statement Schedule Schedule II - Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are immaterial and, therefore, have been omitted. |
Restricted Stock Award Agreement (Executive Award/Performance Based) under the 2004 Stock Plan (8) 10.9 Amendment to Credit Agreement dated as of January 31, 2006, among Methode Electronics, Inc., the Borrower, Bank of America, N.A., as Administrative Agent, and L/C Issuer, and The Other Lenders Party Thereto (9) 10.10* Change in Control Agreement dated September 1, 2006 between Methode Electronics, Inc. and Donald W. Duda (10) 10.11* Change in Control Agreement dated September 1, 2006 between Methode Electronics, Inc. and Douglas A. Koman (10) 10.12* Change in Control Agreement dated September 1, 2006 between Methode Electronics, Inc. and Thomas D. Reynolds (10) 10.13* Change in Control Agreement dated September 1, 2006 between Methode Electronics, Inc. and Paul E. Whybrow (10) 10.14* Change in Control Agreement dated September 14, 2006 between Methode Electronics, Inc. and Theodore P. Kill (11) 10.15* Change in Control Agreement dated September 14, 2006 between Methode Electronics, Inc. and Timothy R. Glandon (11) 10.16* First Amendment to Methode Electronics, Inc. 2000 Stock Plan effective as of December 14, 2006 (12) 10.17* Amended and Restated Restricted Stock Unit Award Agreement (Executive Award/Performance Based) effective as of June 18, 2004 between Methode Electronics, Inc. and Donald W. Duda (12) 10.18* Amended and Restated Restricted Stock Unit Award Agreement (Executive Award/Cliff Vesting) effective as of June 18, 2004 between Methode Electronics, Inc. and Donald W. Duda (12) 10.19 Waiver and Amendment dated as of February 28, 2007 among Methode Electronics, Inc., the Borrower, Bank of America, N.A., as Administrative Agent, and L/C Issuer, and The Other Lenders Party Thereto (13) 10.20* Amended Cash Bonus Agreement effective as of April 6, 2007 between Methode Electronics, Inc. and Donald W. Duda (14) 10.21* Amended and Restated Restricted Stock Unit Award Agreement (Executive Award/Performance Based) effective as of June 15, 2005 between Methode Electronics, Inc. and Donald W. Duda (14) 10.22* Amended and Restated Restricted Stock Unit Award Agreement (Executive Award/Performance Based) effective as of August 7, 2006 between Methode Electronics, Inc. and Donald W. Duda (14) 10.23* Methode Electronics, Inc. 2007 Stock Plan (15) 10.24* Methode Electronics, Inc. 2007 Cash Incentive Plan (15) 10.25* Form Performance Based RSA Award Agreement (15) 10.26* Form Annual Cash Bonus Award Agreement (15) 10.27* Form RSA Tandem Cash Award Agreement (15) 10.28* Form Director RSA Award Agreement (15) 10.29* Change in Control Agreement dated July 15, 2008 between Methode Electronics, Inc. and Ronald L. G. Tsoumas (17) 10.30 Asset and Share Purchase Agreement for Hetronic (18) 10.31 Fourth Amendment and Waiver to Credit Agreement, effective as of May 2, 2009, among the Company as the Borrower, Bank of America, N.A. |
Signature Title Date /s / WARREN L. BATTS Chairman of the Board July 2, 2009 Warren L. Batts /s/ DONALD W. DUDA Chief Executive Officer, President & Director July 2, 2009 Donald W. Duda (Principal Executive Officer) /s / DOUGLAS A. KOMAN Chief Financial Officer July 2, 2009 Douglas A. Koman /s / WALTER J. ASPATORE Director July 2, 2009 Walter J. Aspatore /s/ J. EDWARD COLGATE Director July 2, 2009 J. Edward Colgate /s/ DARREN M. DAWSON Director July 2, 2009 Darren M. Dawson /s / ISABELLE C. GOOSSEN Director July 2, 2009 Isabelle C. Goossen /s / CHRISTOPHER J. HORNUNG Director July 2, 2009 Christopher J. Hornung /s / LAWRENCE B. SKATOFF Director July 2, 2009 Lawrence B. Skatoff /s / PAUL G. SHELTON Director July 2, 2009 Paul G. Shelton METHODE ELECTRONICS, INC. AND SUBSIDIARIES FORM 10-K ITEM 15 (a) (1) and (2) (1) Financial Statements The following consolidated financial statements of Methode Electronics, Inc. and subsidiaries are included in Item 8: Report of Independent Registered Public Accounting Firm Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting Consolidated Balance Sheets - May 2, 2009 and May 3, 2008 Consolidated Statements of Operations - Years Ended May 2, 2009, May 3, 2008 and April 28, 2007 Consolidated Statements of Shareholders’ Equity - Years Ended May 2, 2009, May 3, 2008 and April 28, 2007 Consolidated Statements of Cash Flows - Years Ended May 2, 2009, May 3, 2008 and April 28, 2007 Notes to Consolidated Financial Statements (2) Financial Statement Schedule Schedule II - Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are immaterial and, therefore, have been omitted. |
Managerial Bonus and Matching Bonus Plan (also referred to as the Longevity Contingent Bonus Program) (3)* 10.3 Methode Electronics, Inc. Capital Accumulation Plan (3)* 10.4 Incentive Stock Award Plan for Non-Employee Directors (4)* 10.5 Methode Electronics, Inc. 401(k) Savings Plan (4)* 10.6 Methode Electronics, Inc. 401(k) Saving Trust (4)* 10.7 Methode Electronics, Inc. 1997 Stock Plan (5)* 10.8 Methode Electronics, Inc. 2000 Stock Plan (8)* 10.9 Form of Agreement between Kevin J. Hayes and Registrant (9)* 10.10 Form of Agreement between Horizon Farms, Inc. and Registrant (9) 10.11 Form of Agreement between William T. Jensen and Registrant (9)* 10.12 Form of Agreement between Donald W. Duda and Registrant (10)* 10.13 Form of Agreement between John R. Cannon and Registrant (10)* 10.14 Form of Agreement between Robert J. Kuehnau and Registrant (10)* 10.15 Form of Agreement between James F. McQuillen and Registrant (10)* 10.16 Form of Agreement between Douglas A. Koman and Registrant (12)* 10.17 Agreement dated August 19, 2002 by and among Methode Electronics, Inc.; Marital Trust No. |
Signature Title Date /s/ WILLIAM T. JENSEN William T. Jensen Chairman of the Board & Director (Principal Executive Officer) July 25, 2002 /s/ DONALD W. DUDA Donald W. Duda President & Director July 25, 2002 /s/ JAMES W. ASHLEY, JR. James W. Ashley, Jr. Secretary & Director July 25, 2002 /s/ JAMES W. MCGINLEY James W. McGinley Director July 25, 2002 /s/ ROBERT R. MCGINLEY Robert R. McGinley Director July 25, 2002 /s/ WARREN L. BATTS Warren L. Batts Director July 25, 2002 /s/ WILLIAM C. CROFT William C. Croft Director July 25, 2002 /s/ GEORGE C. WRIGHT George C. Wright Director July 25, 2002 /s/ DOUGLAS A. KOMAN Douglas A. Koman Vice President, Corporate Finance (Principal Financial Officer) July 25, 2002 /s/ ROBERT J. KUEHNAU Robert J. Kuehnau Vice President, Controller and Treasurer (Principal Accounting Officer) July 25, 2002 METHODE ELECTRONICS, INC. AND SUBSIDIARIES FORM 10-K ITEM 14 (a) (1) and (2) (1)Financial Statements The following consolidated financial statements of Methode Electronics, Inc. and subsidiaries are included in Item 8: Consolidated Balance Sheets-April 30, 2002 and 2001. |
Managerial Bonus and Matching Bonus Plan (also referred to as the Longevity Contingent Bonus Program)(3)* 10.3 Methode Electronics, Inc. Capital Accumulation Plan(3)* 10.4 Incentive Stock Award Plan for Non-Employee Directors(4)* 10.5 Methode Electronics, Inc. 401(k) Savings Plan(4)* 10.6 Methode Electronics, Inc. 401(k) Saving Trust(4)* 10.7 Methode Electronics, Inc. 1997 Stock Plan(5)* 10.8 Form of Master Separation Agreement between Stratos Lightwave, Inc. and Registrant(6) 10.9 Form of Initial Public Offering and Distribution Agreement between Stratos Lightwave, Inc. and Registrant(6) 10.10 Form of Tax Sharing Agreement between Stratos Lightwave, Inc. and Registrant(6) 10.11 Methode Electronics, Inc. 2000 Stock Plan(8)* 10.12 Form of Agreement between Kevin J. Hayes and Registrant(9)* 10.13 Form of Agreement between Horizon Farms, Inc. and Registrant(9) 10.14 Form of Agreement between William T. Jensen and Registrant(9)* 10.15 Form of Agreement between Donald W. Duda and Registrant(10)* 10.16 Form of Agreement between John R. Cannon and Registrant(10)* 10.17 Form of Agreement between Robert J. Kuehnau and Registrant(10)* 10.18 Form of Agreement between James F. McQuillen and Registrant(10)* Subsidiaries of the Registrant 23.1 Consent of Ernst & Young LLP (1)Previously filed with Registrant's Form S-3 Registration Statement No. |
Signature Title Date /s/ WILLIAM T. JENSEN ------------- William T. Jensen Chairman of the Board & Director (Principal Executive Officer) July 27, 2001 /s/ DONALD W. DUDA ------------- Donald W. Duda President & Director July 27, 2001 /s/ JOHN R. CANNON ------------- John R. Cannon Senior Executive Vice President & Director July 27, 2001 /s/ KEVIN J. HAYES ------------- Kevin J. Hayes Director July 27, 2001 /s/ JAMES W. ASHLEY, JR. ------------- James W. Ashley, Jr. Secretary & Director July 27, 2001 /s/ JAMES W. McGINLEY ------------- James W. McGinley Director July 27, 2001 /s/ ROBERT R. McGINLEY ------------- Robert R. McGinley Director July 27, 2001 /s/ MICHAEL G. ANDRE ------------- Michael G. Andre Director July 27, 2001 /s/ WILLIAM C. CROFT ------------- William C. Croft Director July 27, 2001 /s/ RAYMOND J. ROBERTS ------------- Raymond J. Roberts Director July 27, 2001 /s/ GEORGE C. WRIGHT ------------- George C. Wright Director July 27, 2001 /s/ DOUGLAS A. KOMAN ------------- Douglas A. Koman Vice President of Corporate Finance (Principal Financial Officer) July 27, 2001 /s/ ROBERT J. KUEHNAU ------------- Robert J. Kuehnau Vice President, Controller and Treasurer (Principal Accounting Officer) July 27, 2001 METHODE ELECTRONICS, INC. AND SUBSIDIARIES FORM 10-K ITEM 14 (a) (1) and (2) (1) Financial Statements The following consolidated financial statements of Methode Electronics, Inc. and subsidiaries are included in Item 8: Consolidated Balance Sheets - April 30, 2001 and 2000. |
Managerial Bonus and Matching Bonus Plan (also referred to as the Longevity Contingent Bonus Program) (4)* 10.8 Methode Electronics, Inc. Capital Accumulation Plan (4)* 10.9 Incentive Stock Award Plan for Non-Employee Directors (5)* 10.10 Methode Electronics, Inc. 401(k) Savings Plan (5)* 10.11 Methode Electronics, Inc. 401(k) Saving Trust (5)* 10.12 Methode Electronics, Inc. Electronic Controls Division Cash and Class A Common Stock Bonus Plan (6) 10.13 Methode Electronics, Inc. 1997 Stock Plan (7)* 10.14 Form of Master Separation Agreement between Stratos Lightwave, Inc. and Registrant (8) 10.15 Form of Initial Public Offering and Distribution Agreement between Stratos Lightwave, Inc. and Registrant (8) 10.16 Form of Tax Sharing Agreement between Stratos Lightwave, Inc. and Registrant (8) 10.17 Methode Electronics, Inc. 2000 Stock Plan (10)* 10.18 Form of Agreement between Kevin J. Hayes and Registrant* 10.19 Form of Agreement between Horizon Farms, Inc. and Registrant Subsidiaries of the Registrant 23.1 Consent of Ernst & Young LLP (1) Previously filed with Registrant’s Form S-3 Registration Statement No. |
These risks include the following: •unexpected changes in regulatory requirements; •changes in trade policy or tariff regulations; •changes in tax laws and regulations; •unintended consequences due to changes to the Company's legal structure; •additional valuation allowances on deferred tax assets due to an inability to generate sufficient profit in certain foreign jurisdictions; •intellectual property protection difficulties or intellectual property theft; •difficulty in collecting accounts receivable; •complications in complying with a variety of foreign laws and regulations, some of which may conflict with U.S. laws; •foreign privacy laws and regulations; •trade protection measures and price controls; •trade sanctions and embargoes; •nationalization and expropriation; •increased international instability or potential instability of foreign governments; •effectiveness of worldwide compliance with MSA's anti-bribery policy, the U.S. Foreign Corrupt Practices Act, and similar local laws; •difficulty in hiring and retaining qualified employees; •the ability to effectively negotiate with labor unions in foreign countries; •the need to take extra security precautions for our international operations; •costs and difficulties in managing culturally and geographically diverse international operations; •pandemics and similar disasters; and •risks associated with the United Kingdom's decision to exit the European Union, including disruptions to trade and free movement of goods, services and people to and from the United Kingdom; increased foreign exchange volatility with respect to the British pound; and additional legal and economic uncertainty. |
These risks include the following: • unexpected changes in regulatory requirements; • changes in trade policy or tariff regulations; • changes in tax laws and regulations; • unintended consequences due to changes to the Company's legal structure; • additional valuation allowances on deferred tax assets due to an inability to generate sufficient profit in certain foreign jurisdictions; • intellectual property protection difficulties or intellectual property theft; • difficulty in collecting accounts receivable; • complications in complying with a variety of foreign laws and regulations, some of which may conflict with U.S. laws; • foreign privacy laws and regulations; • trade protection measures and price controls; • trade sanctions and embargoes; • nationalization and expropriation; • increased international instability or potential instability of foreign governments; • effectiveness of worldwide compliance with MSA's anti-bribery policy, the U.S. Foreign Corrupt Practices Act, and similar local laws; • difficulty in hiring and retaining qualified employees; • the ability to effectively negotiate with labor unions in foreign countries; • the need to take extra security precautions for our international operations; • costs and difficulties in managing culturally and geographically diverse international operations; • pandemics and similar disasters; and • risks associated with the United Kingdom's decision to exit the European Union, including disruptions to trade and free movement of goods, services and people to and from the United Kingdom; increased foreign exchange volatility with respect to the British pound; and additional legal and economic uncertainty. |
These risks include the following: • unexpected changes in regulatory requirements; • changes in trade policy or tariff regulations; • changes in tax laws and regulations; • changes to the Company's legal structure could have unintended tax consequences; • inability to generate sufficient profit in certain foreign jurisdictions could lead to additional valuation allowances on deferred tax assets; • intellectual property protection difficulties; • difficulty in collecting accounts receivable; • complications in complying with a variety of foreign laws and regulations, some of which may conflict with U.S. laws; • foreign privacy laws and regulations; • trade protection measures and price controls; • trade sanctions and embargoes; • nationalization and expropriation; • increased international instability or potential instability of foreign governments; • effectiveness of worldwide compliance with MSA's anti-bribery policy, local laws and the U.S. Foreign Corrupt Practices Act; • difficulty in hiring and retaining qualified employees; • the ability to effectively negotiate with labor unions in foreign countries; • the need to take extra security precautions for our international operations; • costs and difficulties in managing culturally and geographically diverse international operations; and • risks associated with the United Kingdom's decision to exit the European Union, including disruptions to trade and free movement of goods, services and people to and from the United Kingdom; increased foreign exchange volatility with respect to the British pound; and additional legal and economic uncertainty. |
These risks include the following: • unexpected changes in regulatory requirements; • changes in trade policy or tariff regulations; • changes in tax laws and regulations; • changes to the Company's legal structure could have unintended tax consequences; • inability to generate sufficient profit in certain foreign jurisdictions could lead to additional valuation allowances on deferred tax assets; • intellectual property protection difficulties; • difficulty in collecting accounts receivable; • complications in complying with a variety of foreign laws and regulations, some of which may conflict with U.S. laws; • trade protection measures and price controls; • trade sanctions and embargoes; • nationalization and expropriation; • increased international instability or potential instability of foreign governments; • effectiveness of worldwide compliance with MSA's anti-bribery policy, local laws and the Foreign Corrupt Practices Act • difficulty in hiring and retaining qualified employees; • the ability to effectively negotiate with labor unions in foreign countries; • the need to take extra security precautions for our international operations; • costs and difficulties in managing culturally and geographically diverse international operations; and • risks associated with the United Kingdom's decision to exit the European Union, including disruptions to trade and free movement of goods, services and people to and from the United Kingdom; increased foreign exchange volatility with respect to the British pound; and additional legal and economic uncertainty. |
These risks include the following: • unexpected changes in regulatory requirements; • changes in trade policy or tariff regulations; • changes in tax laws and regulations; • changes to the company's legal structure could have unintended tax consequences; • inability to generate sufficient profit in certain foreign jurisdictions could lead to additional valuation allowances on deferred tax assets; • intellectual property protection difficulties; • difficulty in collecting accounts receivable; • complications in complying with a variety of foreign laws and regulations, some of which may conflict with U.S. laws; • trade protection measures and price controls; • trade sanctions and embargoes; • nationalization and expropriation; • increased international instability or potential instability of foreign governments; • effectiveness of worldwide compliance with MSA's anti-bribery policy, local laws and the Foreign Corrupt Practices Act • the ability to effectively negotiate with labor unions in foreign countries; • the need to take extra security precautions for our international operations; and • costs and difficulties in managing culturally and geographically diverse international operations. |
These risks include the following: • unexpected changes in regulatory requirements; • changes in trade policy or tariff regulations; • changes in tax laws and regulations; • changes to the company's legal structure could have unintended tax consequences; • inability to generate sufficient profit in certain foreign jurisdictions could lead to additional valuation allowances on deferred tax assets; • intellectual property protection difficulties; • difficulty in collecting accounts receivable; • complications in complying with a variety of foreign laws and regulations, some of which may conflict with U.S. laws; • trade protection measures and price controls; • trade sanctions and embargoes; • nationalization and expropriation; • increased international instability or potential instability of foreign governments; • effectiveness of worldwide compliance with MSA's anti-bribery policy, local laws and the Foreign Corrupt Practices Act • the ability to effectively negotiate with labor unions in foreign countries; • the need to take extra security precautions for our international operations; and • costs and difficulties in managing culturally and geographically diverse international operations. |
These risks include the following: • unexpected changes in regulatory requirements; • changes in trade policy or tariff regulations; • changes in tax laws and regulations; • changes to the company's legal structure could have unintended tax consequences; • intellectual property protection difficulties; • difficulty in collecting accounts receivable; • complications in complying with a variety of foreign laws and regulations, some of which may conflict with U.S. laws; • trade protection measures and price controls; • trade sanctions and embargoes; • nationalization and expropriation; • increased international instability or potential instability of foreign governments; • effectiveness of worldwide compliance with MSA's anti-bribery policy, local laws and the Foreign Corrupt Practices Act • the ability to effectively negotiate with labor unions in foreign countries; • the need to take extra security precautions for our international operations; and • costs and difficulties in managing culturally and geographically diverse international operations. |
Signature Title Date ----------------- --------- -------- /s/ John T. Ryan III Director; President, March 27, 1995 --------------------------- Chairman of the Board John T. Ryan III and Chief Executive Officer /s/ James E. Herald Vice President--Finance; March 27, 1995 --------------------------- Principal Financial and James E. Herald Accounting Officer /s/ Joseph L. Calihan Director March 27, 1995 --------------------------- Joseph L. Calihan /s/ Calvin A. Campbell, Jr. Director March 27, 1995 --------------------------- Calvin A. Campbell, Jr. /s/ G. Donald Gerlach Director March 27, 1995 --------------------------- G. Donald Gerlach /s/ Helen Lee Henderson Director March 27, 1995 --------------------------- Helen Lee Henderson /s/ John T. Ryan, Jr. Director March 27, 1995 --------------------------- John T. Ryan, Jr. /s/ Leo N. Short, Jr. Director March 27, 1995 --------------------------- Leo N. Short, Jr. Report of Independent Accountants on Financial Statement Schedule To the Board of Directors of Mine Safety Appliances Company Our audits of the consolidated financial statements referred to in our report dated February 17, 1995, appearing on page 13 of the 1994 Annual Report to Shareholders of Mine Safety Appliances Company (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K), also included an audit of the Financial Statement Schedule listed in Item 14(a) of this Form 10-K. |
In addition, we may incur additional costs and our management’s attention may be diverted because of unforeseen expenses, difficulties, complications, delays and other risks inherent in acquiring businesses, including the following: • We may have difficulty integrating the acquired businesses as planned, which may include integration of systems of internal controls over financial reporting and other financial and administrative functions; • We may have delays in realizing the benefits of our strategies for an acquired business; • The increasing demands on our operational systems and integration costs, including diversion of management’s time and attention, may be greater than anticipated; • We may not be able to retain key employees necessary to continue the operations of an acquired business; • Acquisition costs may be met with cash or through increased debt, increasing the risk that we will be unable to satisfy current and future financial obligations; and • Acquired companies may have unknown liabilities that could require us to spend significant amounts of additional capital. |
In addition, we may incur additional costs and our management’s attention may be diverted because of unforeseen expenses, difficulties, complications, delays and other risks inherent in acquiring businesses, including the following: • We may have difficulty integrating the acquired businesses as planned, which may include integration of systems of internal controls over financial reporting and other financial and administrative functions; • We may have delays in realizing the benefits of our strategies for an acquired business; • The increasing demands on our operational systems and integration costs, including diversion of management’s time and attention, may be greater than anticipated; • We may not be able to retain key employees necessary to continue the operations of an acquired business; • Acquisition costs may be met with cash or debt, increasing the risk that we will be unable to satisfy current financial obligations; and • Acquired companies may have unknown liabilities that could require us to spend significant amounts of additional capital. |
In addition, we may incur additional costs and our management’s attention may be diverted because of unforeseen expenses, difficulties, complications, delays and other risks inherent in acquiring businesses, including the following: • We may have difficulty integrating the acquired businesses as planned, which may include integration of systems of internal controls over financial reporting and other financial and administrative functions; • We may have delays in realizing the benefits of our strategies for an acquired business; • The increasing demands on our operational systems and integration costs, including diversion of management’s time and attention, may be greater than anticipated; • We may not be able to retain key employees necessary to continue the operations of an acquired business; • Acquisition costs may be met with cash or debt, increasing the risk that we will be unable to satisfy current financial obligations; and • Acquired companies may have unknown liabilities that could require us to spend significant amounts of additional capital. |
In addition, we may incur additional costs and our management’s attention may be diverted because of unforeseen expenses, difficulties, complications, delays and other risks inherent in acquiring businesses, including the following: • we may have difficulty integrating the acquired businesses as planned, which may include integration of systems of internal controls over financial reporting and other financial and administrative functions; • we may have delays in realizing the benefits of our strategies for an acquired business; • the increasing demands on our operational systems and integration costs, including diversion of management’s time and attention, may be greater than anticipated; • we may not be able to retain key employees necessary to continue the operations of an acquired business; • acquisition costs may be met with cash or debt, increasing the risk that we will be unable to satisfy current financial obligations; and • acquired companies may have unknown liabilities that could require us to spend significant amounts of additional capital. |
Applying these principles to our business, the Company emphasizes: · Industry-leading innovation of niche, high margin products; · Being the low-cost provider of certain commodity products where our brands excel; · Achieving leadership in key product areas through breadth of offering, consistent quality and superior customer service; · Operations excellence initiatives to reduce costs and improve productivity within our manufacturing and distribution footprint; · Leveraging brand equity and capabilities to grow business with existing customers and cultivate new ones, particularly in emerging growth markets where we can deliver the greatest value and achieve the best returns; · Investing in new technologies and processes to reinforce customer dedication and market strength across our key business segments; · Succession plans through our management teams at all levels in the Company, ensuring the right people are in the right positions to grow for organizational development; and · Selective acquisitions as opportunities arise to enhance our leadership in key markets and add to shareholder value. |
Applying these principles to our business, the Company emphasizes: • Industry-leading innovation of niche, high margin products; • Being the low-cost provider of certain commodity products where our brands excel; • Achieving leadership in key product areas through breadth of offering, consistent quality and superior customer service; • Operations excellence initiatives to reduce costs and improve productivity within our manufacturing and distribution footprint; • Leveraging brand equity and capabilities to grow business with existing customers and cultivate new ones, particularly in emerging growth markets where we can deliver the greatest value and achieve the best returns; • Investing in new technologies and processes to reinforce customer dedication and market strength across our key business segments; • Succession plans through our management teams at all levels in the Company, ensuring the right people are in the right positions to grow for organization development; and • Selective acquisitions as opportunities arise to enhance our leadership in key markets and add to shareholder value. |
The following table summarizes the key attributes of our business segments for the year ended December 31, 2014: Material Handling Segment Net Sales Key Product Areas Product Brands Key Capabilities & Services Representative Markets $432 • Plastic Reusable Containers & • Akro-Mils™ • Product Design • Agriculture 69% Pallets • Jamco Products • Prototyping • Automotive • Plastic Storage & • Buckhorn® • Product Testing • Commercial Organizational Products • Novel do Nordeste S.A. • Material Formulation • Food Processing • Plastic Carts • Myers do Brasil™ • Injection Molding • Food Distribution • Metal Carts • Ameri-Kart® • Structural Foam Molding • Healthcare • Wooden Dollies • Scepter • Metal Forming • Industrial • Custom Products • Stainless Steel Forming • Manufacturing • Wood Fabrication • Retail Distribution • Powder Coating • Wholesale Distribution • Material Regrind & Recycling • Consumer • Plastic Blow Molding • Recreational Vehicle • Plastic Rotational Molding • Marine • Thermoforming • Military • Infrared Welding • Food & Beverage • Custom Distribution Segment Net Sales Key Product Areas Product Brands Key Capabilities & Services Representative Markets $192 • Tire Valves & Accessories • Myers Tire Supply® • Broad Sales Coverage • Retail Tire Dealers 31% • Tire Changing & • Myers Tire Supply • Local Sales • Truck Tire Dealers Balancing Equipment • International™ • Four Strategically Placed • Auto Dealers • Lifts & Alignment Equipment • Patch Rubber Company® Distribution Centers • Commercial Auto & Truck • Service Equipment • Elrick • International Distribution Fleets • Hand Tools • Fleetline • Personalized Service • General Repair & Services • Tire Repair & Retread • MTS • National Accounts Facilities Equipment & Supplies • Product Training • Tire Retreaders • Brake, Transmission & Allied • Repair/Service Training • Tire Repair Service Equipment & Supplies • New Products/Services • Governmental Agencies • Highway Markings "Speed to Market" • Telecommunications • Industrial Rubber • Rubber Mixing • Industrial • General Shop Supplies • Rubber Compounding • Road Construction • Rubber Calendaring • Mining • Tiered Product Offerings Lawn and Garden (Discontinued Operations) Net Sales Key Product Areas Product Brands Key Capabilities & Services Representative Markets $188 • Plastic Horticultural Pots, • Dillen® • Product Design • Horticulture: Trays, Flats & Hanging Baskets • ITML™ • Prototyping -Growers • Decorative Resin Planters • Listo™ • Testing -Nurseries • Custom Products • Pro Cal™ • Material Formulation -Greenhouses • Planters' Pride® • Injection Molding -Retail Garden Centers • Akro-Mils Lawn & Garden • Thermoforming • Consumer: • Co-Extrusion Thermoforming -Retail Garden Centers • Custom Printing & Labeling -Retail Home Centers • Material Regrind & Recycling Segments Overview Material Handling Segment The Material Handling Segment is comprised of plastic reusable material handling containers, pallets and bins; metal shelving, cabinet and racking systems and plastic recreational vehicle tank and parts, marine tanks, portable fuel and water containers as well as ammunition containers. |
Applying these principles to our business, the Company emphasizes: • Industry-leading innovation of niche, high margin products; • Being the low-cost provider of certain commodity products where our brands excel; • Achieving leadership in key product areas through breadth of offering, consistent quality and superior customer service; • Operations excellence initiatives to reduce costs and improve productivity within our manufacturing and distribution footprint; • Leveraging brand equity and capabilities to grow business with existing customers and cultivate new ones, particularly in emerging growth markets where we can deliver the greatest value and achieve the best returns; • Investing in new technologies and processes to reinforce customer dedication and market strength across our key business segments; • Succession plans through our management teams at all levels in the Company, ensuring the right people are in the right positions to grow for organization development; and • Selective acquisitions as opportunities arise to enhance our leadership in key markets and add to shareholder value. |
Applying these principles to our business, the Company emphasizes: • Industry-leading innovation of niche, high margin products; • Being the low-cost provider of certain commodity products where our brands excel; • Achieving leadership in key product areas through breadth of offering, consistent quality and superior customer service; • Operations excellence initiatives to reduce costs and improve productivity within our manufacturing and distribution footprint; • Leveraging brand equity and capabilities to grow business with existing customers and cultivate new ones, particularly in emerging growth markets where we can deliver the greatest value and achieve the best returns; • Investing in new technologies and processes to reinforce customer dedication and market strength across our key business segments; • Succession plans through our management teams at all levels in the Company, ensuring the right people are in the right positions to grow for organization development; and • Selective acquisitions as opportunities arise to enhance our leadership in key markets and add to shareholder value. |
Applying these principles to our business, the Company emphasizes: • Industry-leading innovation of niche, high margin products; • Being the low-cost provider of certain commodity products where our brands excel; • Achieving leadership in key product areas through breadth of offering, consistent quality and superior customer service; • Operations excellence initiatives to reduce costs and improve productivity within the Company’s manufacturing and distribution footprint; • Leveraging brand equity and capabilities to grow business with existing customers and cultivate new ones, particularly in emerging growth markets where we can deliver the greatest value and achieve the best returns; • Investing in new technologies and processes to reinforce customer dedication and market strength across our key business segments; • Succession plans through our management teams at all levels in the Company, ensuring the right people are in the right positions to grow for organization development; and • Selective acquisitions as opportunities arise to enhance our leadership in key markets. |
The following table summarizes the key attributes of our business segments in continuing operations for the year ended December 31, 2011: Continuing Operations Material Handling Segment Lawn and Garden Segment Distribution Segment Engineered Products Segment Net Sales (in millions) $262 $217 $184 $116 % of Total Net Sales 35% 29% 24% 13% Key Product Areas • Plastic Reusable Containers & Pallets • Plastic Storage & Organization Products • Plastic Carts • Metal Carts • Wooden Dollies • Custom Products • Plastic Horticultural Pots, Trays, Flats & Hanging Baskets • Decorative Resin Planters • Custom Products • Tire Valves & Accessories • Tire Changing & Balancing Equipment • Lifts & Alignment Equipment • Service Equipment • Hand Tools • Tire Repair & Retread Equipment & Supplies • Brake, Transmission & Allied Service Equipment & Supplies • Rubber & Plastic Original Equipment Replacement Parts • Tire Repair & Retreading Products • Highway Markings • Industrial Rubber • Custom Rubber & Plastic Products Product Brands • Akro-Mils® • Buckhorn® • Myers do Brasil® • Dillen® • ITML® • Listo™ • Pro Cal® • Planters’ Pride® • Akro-Mils Lawn & Garden® • Myers Tire Supply® • Myers Tire Supply International® • Ameri-Kart™ • Patch Rubber™ • WEK® Key Capabilities & Services • Product Design • Prototyping • Product Testing • Material Formulation • Injection Molding • Structural Foam Molding • Metal Forming • Wood Fabrication • Powder Coating • Material Regrind & Recycling • Product Design • Prototyping • Testing • Material Formulation • Injection Molding • Thermoforming • Co-Extrusion Thermoforming • Custom Printing & Labeling • Material Regrind & Recycling • Broad Sales Coverage • Local Sales • Four strategically placed distribution centers • International Distribution • Personalized Service • National Accounts • Product Training • Repair/Service Training • New Products/Services “Speed to Market” • Rubber Mixing • Rubber Compounding • Rubber Calendering • Rubber Extrusion • Plastic Blow Molding • Plastic Rotational Molding • Thermoforming Representative Markets • Agriculture • Automotive • Commercial • Food Processing • Food Distribution • Healthcare • Industrial • Manufacturing • Retail Distribution • Consumer • Horticulture: - Growers - Nurseries - Greenhouses - Retail Garden Centers • Consumer - Retail Garden Centers - Retail Home Centers • Retail Tire Dealers • Truck Tire Dealers • Auto Dealers • Commercial Auto & Truck Fleets • General Repair & Services Facilities • Tire Retreaders • Governmental Agencies • Automotive OEM • Industrial • Mining • Recreational Marine • Recreational Vehicle • Road Construction • Sporting Goods • Tire Repair • Telecommunications Manufacturing Segments Overview Material Handling Segment The Material Handling Segment is comprised of plastic reusable material handling containers, pallets and bins, as well as metal shelving, cabinet and racking systems. |
Applying these principles to our business, the Company emphasizes: • Industry-leading innovation of niche, high margin products; • Being the low-cost provider of certain commodity products where our brands excel; • Achieving leadership in key product areas through breadth of offering, consistent quality and superior customer service; • Concentrating our efforts on niche markets where our capabilities create profit opportunities for our customers and ourselves; • Leveraging brand equity and capabilities to grow business with existing customers and cultivate new ones, particularly in emerging growth markets where we can deliver the greatest value and achieve the best returns; • Investing in new technologies and processes to reinforce customer satisfaction and market strength across our key business segments; • Succession plans through our management teams at all levels in the Company, ensuring the right people are in the right positions to grow; • Selective acquisitions as opportunities arise to enhance our leadership in key markets; • Potential divestiture of businesses with non-strategic products or markets, aligning our resources with the best avenues for long-term, profitable growth potential; and • Consolidation and rationalization initiatives to reduce costs and improve productivity within the Company’s manufacturing and distribution footprint. |
Applying these principles to our business, the Company emphasizes: • Industry-leading innovation of niche, high margin products; • Being the low-cost provider of certain commodity products where our brands excel; • Achieving leadership in key product areas through breadth of offering, consistent quality and superior customer service; • Concentrating our efforts on niche markets where our capabilities create profit opportunities for our customers and ourselves; • Leveraging brand equity and capabilities to grow business with existing customers and cultivate new ones, particularly in emerging growth markets where we can deliver the greatest value and achieve the best returns; • Investing in new technologies and processes to reinforce customer satisfaction and market strength across our key business segments; • Succession plans through our management teams at all levels in the Company, ensuring the right people are in the right positions to grow; • Selective acquisitions as opportunities arise to enhance our leadership in key markets; • Potential divestiture of businesses with non-strategic products or markets, aligning our resources with the best avenues for long-term, profitable growth potential; and • Consolidation and rationalization initiatives to reduce costs and improve productivity within the Company’s manufacturing and distribution footprint. |
In addition, we may incur additional costs and our management’s attention may be diverted because of unforeseen expenses, difficulties, complications, delays and other risks inherent in acquiring businesses, including the following: • we may have difficulty integrating the acquired businesses as planned, which may include integration of systems of internal controls over financial reporting and other financial and administrative functions; • acquisitions may divert management’s attention from our existing operations; • we may have difficulty in competing successfully for available acquisition candidates, completing future acquisitions or accurately estimating the financial effect of any businesses we acquire; • we may have delays in realizing the benefits of our strategies for an acquired business; • we may not be able to retain key employees necessary to continue the operations of an acquired business; • acquisition costs may be met with cash or debt, increasing the risk that we will be unable to satisfy current financial obligations; • we may acquire businesses that are less profitable or have lower profit margins than our historical profit margins; and • acquired companies may have unknown liabilities that could require us to spend significant amounts of additional capital. |
Applying these within our Strategic Business Evolution, the Company emphasizes: • Industry-leading innovation of niche, high margin products; • Being the low-cost provider of certain commodity products where our brands excel; • Achieving leadership in key product areas through breadth of offering, consistent quality and superior customer service; • Concentrating our efforts on niche markets where our capabilities create profit opportunities for our customers and ourselves; • Leveraging brand equity and capabilities to grow business with existing customers and cultivate new ones, particularly in emerging growth markets where we can deliver the greatest value and achieve the best returns; • Investing in new technologies and processes to reinforce customer satisfaction and market strength across our key business segments; • Succession plans through our management teams at all levels in the Company, ensuring the right people are in the right positions to grow; • Selective acquisitions as opportunities arise to enhance our leadership in key markets; • Potential divestiture of businesses with non-strategic products or markets, aligning our resources with the best avenues for long-term, profitable growth potential; and • Consolidation and rationalization initiatives to reduce costs and improve productivity within the Company’s manufacturing and distribution footprint. |
In addition, we may incur additional costs and our management’s attention may be diverted because of unforeseen expenses, difficulties, complications, delays and other risks inherent in acquiring businesses, including the following: • we may have difficulty integrating the acquired businesses as planned, which may include integration of systems of internal controls over financial reporting and other financial and administrative functions; • acquisitions may divert management’s attention from our existing operations; • we may have difficulty in competing successfully for available acquisition candidates, completing future acquisitions or accurately estimating the financial effect of any businesses we acquire; • we may have delays in realizing the benefits of our strategies for an acquired business; • we may not be able to retain key employees necessary to continue the operations of an acquired business; • acquisition costs may be met with cash or debt, increasing the risk that we will be unable to satisfy current financial obligations; • we may acquire businesses that are less profitable or have lower profit margins than our historical profit margins; and • acquired companies may have unknown liabilities that could require us to spend significant amounts of additional capital. |
Applying these within our Strategic Business Evolution, the Company emphasizes: • Industry-leading innovation of niche, high margin products; • Being the low-cost provider of certain commodity products where our brands excel; • Achieving leadership in key product areas through breadth of offering, consistent quality and superior customer service; • Concentrating our efforts on niche markets where our capabilities create profit opportunities for our customers and ourselves; • Leveraging brand equity and capabilities to grow business with existing customers and cultivate new ones, particularly in emerging growth markets where we can deliver the greatest value and achieve the best returns; • Investing in new technologies and processes to reinforce customer satisfaction and market strength across our key business segments; • Succession plans through our management teams at all levels in the Company, ensuring the right people are in the right positions to grow; • Selective acquisitions as opportunities arise to enhance our leadership in key markets; • Potential divestiture of businesses with non-strategic products or markets, aligning our resources with the best avenues for long-term, profitable growth potential; and • Consolidation and rationalization initiatives to reduce costs and improve productivity within the Company’s manufacturing and distribution footprint. |
In addition, we may incur additional costs and our management’s attention may be diverted because of unforeseen expenses, difficulties, complications, delays and other risks inherent in acquiring businesses, including the following: • we may have difficulty integrating the acquired businesses as planned, which may include integration of systems of internal controls over financial reporting and other financial and administrative functions; • acquisitions may divert management’s attention from our existing operations; • we may have difficulty in competing successfully for available acquisition candidates, completing future acquisitions or accurately estimating the financial effect of any businesses we acquire; • we may have delays in realizing the benefits of our strategies for an acquired business; • we may not be able to retain key employees necessary to continue the operations of an acquired business; • acquisition costs may be met with cash or debt, increasing the risk that we will be unable to satisfy current financial obligations; • we may acquire businesses that are less profitable or have lower profit margins than our historical profit margins; and • acquired companies may have unknown liabilities that could require us to spend significant amounts of additional capital. |
Applying these within our Strategic Business Evolution, the Company emphasizes: • Industry-leading innovation of niche, value added products; • Being the low-cost provider of certain commodity products where our brands excel; • Achieving leadership in key product areas through breadth of offering, consistent quality, and superior customer service; • Concentrating our efforts on niche markets where our capabilities create profit opportunities for our customers and ourselves; • Leveraging brand equity and capabilities to grow business with existing customers and cultivate new ones, particularly in emerging growth markets where we can deliver the greatest value and achieve the best returns; • Investing in new technologies and processes to reinforce customer satisfaction and market strength across our key business segments; • Succession plans through our management teams at all levels in the Company, ensuring the right people are in the right positions to grow; • Selective acquisitions as opportunities arise to enhance our leadership in key markets; • Potential divestiture of businesses with non-strategic products or markets, aligning our resources with the best avenues for long-term, profitable growth potential; and • Consolidation and rationalization initiatives to reduce costs and improve productivity within the Company’s manufacturing and distribution footprint. |
Applying these within our Strategic Business Evolution, we emphasize: • Being the leading innovator of niche, high margin products; • Being the low-cost producer of certain commodity products where our brands excel; • Achieving leadership in key product areas through breadth of offering, consistent quality, and superior customer service; • Concentrating our efforts on niche markets where our capabilities create profit opportunities for our customers and ourselves; • Leveraging brand equity and capabilities to grow business with existing customers and cultivate new ones, particularly in emerging growth markets where we can deliver the greatest value and achieve the best returns; • Investing in new technologies and processes to reinforce market strength in key business groups; • Succession plans through our management teams at all levels of the Company, ensuring the right people are in the right positions to grow; • Selective acquisitions as opportunities arise to enhance our leadership in key markets; • Potential divestiture of businesses with non-strategic products or markets, aligning our resources with the best avenues for long-term, profitable growth potential; and • Consolidation and rationalization initiatives to reduce costs and improve productivity within the Company’s manufacturing and distribution footprint. |
Key Manufactured Product Areas • Plastic Reusable Material Handling Containers and Pallets • Plastic Storage and Organization Products • Plastic and Metal Material Handling Carts • Plastic Horticultural Pots, Trays and Hanging Baskets • Decorative Resin Flower Planters • Plastic Storage Tanks • Rubber and Plastic Original Equipment and Replacement Parts • Tire Repair and Retreading Products • Custom Plastic and Rubber Products Product Brands • Akro-Mils • Allibert-Buckhorn • Ameri-Kart • Buckhorn • Buckhorn Rubber • Dillen • Listo • Michigan Rubber • Patch Rubber • Pro Cal • raaco • WEK Manufacturing Capabilities • Product Design and Engineering • Prototyping and Testing • Materials Formulation • Plastic and Rubber Injection Molding • Structural Foam Molding • Rotational Molding • Vacuum Forming • Winding Extrusion • Blow Molding • Compression and Transfer Molding • Rubber Compounding, Calendering and Extrusion • Rubber-to-Metal Bonding • Rubber-to-Plastic Bonding • Metal Forming • Powder Coating Representative Markets • Agriculture • Automotive • Commercial • Consumer • Food Processing and Distribution • General Manufacturing/ Industrial • Healthcare • Horticulture • Off-Road Construction/ Agriculture Vehicle • Recreational Marine • Recreational Vehicle • Road Construction • Tire Repair/ Retread • Telecommunications • Transportation/ Heavy Truck • Waste Collection • Water Piping/ Water Control Material Handling - North America & Europe Segments Overview Myers Industries’ largest product area is plastic reusable material handling containers and pallets for markets such as automotive, appliance, general manufacturing, distribution, agriculture, retail, and food processing. |
KEY MANUFACTURED PRODUCT AREAS - Plastic Reusable Material Handling Containers and Pallets - Plastic Storage and Organization Products - Plastic and Metal Material Handling Carts - Plastic Horticultural Pots, Trays and Hanging Baskets - Decorative Resin Flower Planters - Plastic Storage Tanks - Rubber and Plastic Original Equipment and Replacement Parts - Tire Repair and Retreading Products - Custom Plastic and Rubber Products PRODUCT BRANDS - Akro-Mils - Allibert-Buckhorn - Ameri-Kart - Buckhorn - Buckhorn Rubber - Dillen - Listo - Michigan Rubber - Patch Rubber - Pro Cal - raaco - WEK MANUFACTURING CAPABILITIES - Product Design and Engineering - Prototyping and Testing - Materials Formulation - Plastic and Rubber Injection Molding - Structural Foam Molding - Rotational Molding - Vacuum Forming - Winding Extrusion - Blow Molding - Compression and Transfer Molding - Rubber Compounding, Calendering and Extrusion - Rubber-to-Metal Bonding - Rubber-to-Plastic Bonding - Metal Forming - Powder Coating REPRESENTATIVE MARKETS - Agriculture - Automotive - Commercial - Consumer - Food Processing and Distribution - General Manufacturing/Industrial - Healthcare - Horticulture - Off-Road Construction/Agriculture Vehicle - Recreational Marine - Recreational Vehicle - Road Construction - Tire Repair/Retread - Telecommunications - Transportation/Heavy Truck - Waste Collection - Water Piping/Water Control Material Handling -- North America & Europe Segments Overview Myers Industries' largest product area is plastic reusable material handling containers and pallets for markets such as automotive, appliance, general manufacturing, distribution, agriculture, retail, and food processing. |
Key Manufactured Product Areas • Reusable Plastic Material Handling Containers • Plastic Planters • Plastic Storage & Organization Products • Plastic Storage Tanks • Plastic and Metal Material Handling Carts • Rubber OEM & Replacement Parts • Tire Repair & Retreading Products • Custom Rubber Sheet Stock • Reflective Highway Marking Products Product Brands • Buckhorn • Akro-Mils • Allibert Équipement • Ameri-Kart • Buckhorn Rubber • Dillen • Listo • Patch Rubber • raaco Manufacturing Capabilities • Plastic & Rubber Injection Molding • Compression Molding • Winding Extrusion • Vacuum Forming • Rotational Molding • Rubber Compounding, Calendering & Extrusion • Rubber-to-Metal Bonding • Blow Molding • Metal Forming Representative Markets • Agriculture • Automotive • Chemical • Construction • Consumer • Food Processing & Distribution • General Industrial • Healthcare • Horticulture • Marine/ Watercraft • Recreational Vehicle • Telecommunications • Tire Repair & Retread • Transportation • Waste Collection • Water Control Our largest product line is reusable plastic material handling containers. |
Key Manufactured Product Areas • Reusable Plastic Material Handling Containers • Plastic Planters • Plastic Storage & Organization Products • Plastic Storage Tanks • Plastic and Metal Material Handling Carts • Rubber OEM & Replacement Parts • Tire Repair & Retreading Products • Custom Rubber Sheet Stock • Reflective Highway Marking Products Product Brands • Buckhorn • Akro-Mils • Allibert Équipement • Ameri-Kart • Buckhorn Rubber • Dillen • Listo • Patch Rubber • raaco Manufacturing Capabilities • Plastic & Rubber Injection Molding • Compression Molding • Winding Extrusion • Vacuum Forming • Rotational Molding • Rubber Compounding, Calendering & Extrusion • Rubber-to-Metal Bonding • Blow Molding • Metal Forming Representative Markets • Agriculture • Automotive • Chemical • Construction • Consumer • Food Processing & Distribution • General Industrial • Healthcare • Horticulture • Marine/ Watercraft • Recreational Vehicle • Telecommunications • Tire Repair & Retread • Transportation • Waste Collection • Water Control Our largest product line is reusable plastic material handling containers. |
Key Manufactured Product Areas • Reusable Plastic Material Handling Containers • Plastic Planters • Plastic Storage & Organization Products • Plastic Storage Tanks • Plastic and Metal Material Handling Carts • Rubber OEM & Replacement Parts • Tire Repair & Retreading Products • Custom Rubber Sheet Stock • Reflective Highway Marking Products Product Brands • Buckhorn • Akro-Mils • Allibert Équipement • Ameri-Kart • Buckhorn Rubber • Dillen • Listo • Patch Rubber • raaco Manufacturing Capabilities • Plastic & Rubber Injection Molding • Compression Molding • Winding Extrusion • Vacuum Forming • Rotational Molding • Rubber Compounding & Calendering • Rubber-to-Metal Bonding Representative Markets • Agriculture • Automotive • Chemical • Construction • Consumer • Food Processing & Distribution • General Industrial • Healthcare • Horticulture • Marine/ Watercraft • Recreational Vehicle • Telecommunications • Tire Repair & Retread • Transportation • Waste Collection • Water Control Our largest product line is reusable plastic material handling containers. |
KEY MANUFACTURED PRODUCT AREAS " Reusable Plastic Material Handling Containers " Plastic Planters " Plastic Storage & Organization Products " Plastic Storage Tanks " Plastic and Metal Material Handling Carts " Rubber OEM & Replacement Parts " Tire Repair & Retreading Products " Custom Rubber Sheet Stock " Reflective Highway Marking Products PRODUCT BRANDS " Buckhorn " Akro-Mils " Allibert Equipement " Ameri-Kart " Buckhorn Rubber " Dillen " Listo " Patch Rubber " raaco MANUFACTURING CAPABILITIES " Plastic & Rubber Injection Molding " Compression Molding " Winding Extrusion " Vacuum Forming " Rotational Molding " Rubber Compounding & Calendering " Rubber-to-Metal Bonding REPRESENTATIVE MARKETS " Agriculture " Automotive " Chemical " Construction " Consumer " Food Processing & Distribution " General Industrial " Healthcare " Horticulture " Marine/Watercraft " Recreational Vehicle " Telecommunications " Tire Repair & Retread " Transportation " Waste Collection " Water Control Our largest product line is reusable plastic material handling containers. |
The ability of our digital businesses to grow and succeed over the long term depends on various factors, among other things: - significantly increasing our online traffic and attracting and retaining a base of frequent visitors to our Web sites, which may be adversely affected by search engines (including Google, the primary search engine directing traffic to the Web sites of the About Group and many of our other sites) changing the algorithms responsible for directing search queries to Web pages; - attracting advertisers to our Web sites, which depends partly on our ability to generate online traffic and partly on the rate at which users click through on advertisements, which may be adversely affected by the development of new technologies to block the display of our advertisements; - maintaining or increasing the advertising rates of the inventory on our Web sites amid significant increases in inventory in the marketplace, which may depend on the market position of our brands and the market position and growth of advertising networks and exchange-based advertising marketplaces; - exploiting new and existing technologies to distinguish our products and services from those of our competitors and developing new content, products and services, which may move in unanticipated directions due to the development of competitive alternatives, rapid technological change, regulatory changes and shifting market preferences; - investing funds and resources in online opportunities, in which some of our existing competitors and possible additional entrants may have greater operational, financial and other resources than we do or may be better positioned to compete for certain opportunities; - maintaining and forming strategic relationships to attract more consumers, which depend on the efforts of our partners, fellow investors and licensees that may be beyond our control; and - attracting and retaining talent for critical positions. |
Subsets and Splits