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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2000
THE LINCOLN NATIONAL CORPORATION
EMPLOYEES' SAVINGS AND PROFIT-SHARING PLAN
(Full title of the Plan)
[Current Registration Number 33-52667]
Lincoln National Corporation
Centre Square West
1500 Market Street, Suite 3900
Philadelphia, PA 19102
(Name of Issuer and principal executive office)
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Form 11-K
The Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
TABLE OF CONTENTS
Facing Sheet
Financial Statements 3-15
Signature 16
Exhibit 23 Consent of Ernst & Young LLP, Independent Auditors
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Financial Statements and Schedules
LINCOLN NATIONAL CORPORATION
EMPLOYEES' SAVINGS AND PROFIT-SHARING PLAN
Years ended December 31, 2000 and 1999 with Report of Independent Auditors
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Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Financial Statements
and Schedules
Years ended December 31, 2000 and 1999
CONTENTS
Report of Independent Auditors................................................ 1
Audited Financial Statements
Statements of Net Assets Available for Plan Benefits ......................... 2
Statements of Changes in Net Assets Available for Plan Benefits............... 3
Notes to Financial Statements ................................................ 4
Schedules
Schedule of Assets (Held At End of Year)...................................... 9
Schedule of Reportable Transactions ..........................................10
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Report of Independent Auditors
Lincoln National Corporation Benefits Investment Committee
Lincoln National Corporation
We have audited the accompanying statements of net assets available for plan
benefits of the Lincoln National Corporation Employees' Savings and
Profit-Sharing Plan as of December 31, 2000 and 1999, and the related statements
of changes in net assets available for plan benefits for the years then ended.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan at
December 31, 2000 and 1999, and the changes in its net assets available for plan
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
(held at end of year) as of December 31, 2000, and reportable transactions for
the year then ended, are presented for purpose of additional analysis and are
not a required part of the financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, are fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
May 18, 2001
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Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Statements of Net Assets Available for Plan Benefits
DECEMBER 31
2000 1999
---- ----
ASSETS
Investments $ 440,991,079 $ 404,656,085
Cash and invested cash (deficit) (638,540) (500,653)
Accrued interest receivable 99,652 28,560
Contributions receivable from participating employers 21,367,069 7,787,671
------------- -------------
Net assets available for plan benefits $ 461,819,260 $ 411,971,663
============= =============
See accompanying notes.
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Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Statements of Changes in Net Assets Available for Plan Benefits
YEAR ENDED DECEMBER 31
2000 1999
---- ----
ADDITIONS
Net realized and unrealized appreciation
in fair value of investments $ 24,408,453 $ 32,754,997
Investment income:
Cash dividends -- Lincoln National Corporation 4,878,633 4,363,540
Interest:
The Lincoln National Life Insurance Company 2,875,447 2,164,269
Other 1,133,593 1,436,071
------------- -------------
Total investment income 8,887,673 7,963,880
------------- -------------
Contributions:
Participants 21,581,799 19,673,240
Participating employers (net of
forfeitures: 2000--$40,569; 1999--$43,871) 24,421,480 10,635,203
------------- -------------
Total contributions 46,003,279 30,308,443
------------- -------------
Total additions 79,299,405 71,027,320
DEDUCTIONS
Distributions to participants (29,268,663) (29,831,400)
Administrative expenses (183,145) (235,676)
------------- -------------
Total deductions (29,451,808) (30,067,076)
------------- -------------
Net increase in net assets available for plan benefits 49,847,597 40,960,244
Net assets available for plan benefits at beginning of the year 411,971,663 371,011,419
------------- -------------
Net assets available for plan benefits at end of the year $ 461,819,260 $ 411,971,663
============= =============
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See accompanying notes.
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Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Notes to Financial Statements
December 31, 2000
1. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
The investment in Lincoln National Corporation ("LNC") common stock is valued at
the last reported sales price per the national securities exchange on the last
business day of the year.
The Wells Fargo Bank Short-Term Investment Fund is valued at cost which
approximates fair value.
The fair value of participation units in pooled separate accounts is based on
quoted redemption value on the last business day of the year.
The investment contracts are valued at contract value as estimated by The
Lincoln National Life Insurance Company ("Lincoln Life"). Contract value
represents net contributions made plus interest at the contract rate. These
contracts are fully benefit responsive.
Participant loans are valued at their outstanding balances which approximate
fair value.
The cost of investments sold, distributed or forfeited is determined using the
specific identification method. Investment purchases and sales are accounted for
on a trade date basis.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
2. DESCRIPTION OF THE PLAN
The Employees' Savings and Profit Sharing Plan ("Plan") is a contributory,
defined contribution plan which covers substantially all employees of LNC and
certain of its subsidiaries ("Employer") who meet certain eligibility
requirements as defined by the Plan. A participant may make pretax contributions
at a rate of at least 1%, but not more than 15% of compensation (not more than
8% for higher compensated employees), up to a maximum annual amount as
determined and adjusted annually by the Internal Revenue Service ("IRS").
The participants are fully vested in their contributions and direct the Plan to
invest their contributions in any combination of the investment options offered
under the Plan. Participants can direct employer contributions, but only after
the contributions have been in the Plan for two full years following the date
the last contribution for the plan year was contributed.
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Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
Employer contributions to the Plan are based on an amount equal to a
participant's contributions, not to exceed 6% of eligible earnings, multiplied
by a percentage, ranging from 25% to 150%, which is based on LNC's increase in
operating income. The Employer match on eligible participants' contributions
during their first year of employment is limited to a maximum of 25%. In 1998,
The Board of Directors of Lincoln Life approved a provision that provided an
additional match up to 50% for the 2000 Plan year based on LNC achieving a
certain level of earnings over the three-year period from 1998 through 2000. For
the 2000 Plan year, the Employer contribution to the Plan matched 200% of
participant contributions up to 6% of eligible earnings.
Employer contributions are invested in the LNC Common Stock Fund. Participants'
contributions are fully vested. Employer contributions vest based upon years of
service as defined in the Plan document as follows:
YEARS OF SERVICE PERCENT VESTED
1 0%
2 50%
3 or more 100%
The Employer has the right in accordance with the Plan to discontinue
contributions at any time and terminate the Plan. In the event of termination of
the Plan, all amounts allocated to participants' accounts shall become vested.
The Plan allows loans to participants in amounts up to 50% of the vested account
value to a maximum of $50,000 but not more than the total value of the
participant's account excluding Employer contributions that have not been in the
Plan for two full years, less the highest outstanding loan balance in the
previous twelve-month period. A participant may have a maximum of two loans
outstanding at any one time. Interest charged on new loans to participants is
established monthly based upon the prime rate plus 1%. Loans may be repaid over
any period selected by the participant up to a maximum repayment period of five
years except that the maximum repayment period may be 20 years for the purchase
of a principal residence.
Upon termination of service due to disability, retirement or death, a
participant or beneficiary, in case of the participant's death, may elect to
receive either a lump-sum amount equal to the entire value of the participant's
account, or up to five annual installments. For termination of service due to
other reasons, a participant may receive the value of the vested interest in his
or her account as a lump-sum distribution.
Each participant's account is credited with the participant's contributions,
matching contributions from the Employer and allocations of Plan earnings, and
is charged with an allocation of administrative expenses. Allocations are based
on participant account balances, as defined. The benefit to which a participant
is entitled is the benefit that can be provided from the participant's vested
account. Forfeited non-vested amounts are used to reduce future Employer
contributions.
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Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
3. INVESTMENTS
Individual investments greater than 5% of net assets available for plan benefits
at December 31, 2000 and 1999 are as follows:
DECEMBER 31, 2000 DECEMBER 31, 1999
----------------- -----------------
NUMBER OF NUMBER OF
SHARES, UNITS FAIR SHARES, UNITS FAIR
OR PAR VALUE VALUE OR PAR VALUE VALUE
------------ ----- ------------ -----
Common stock -- Lincoln
National Corporation 4,001,519 $189,321,868 * 4,066,259 $162,650,360*
Pooled separate accounts -- Lincoln Life:
Core Equity Fund 2,273,512.771 31,970,509 2,588,567.288 40,546,950
Medium Capitalization Equity Fund 2,130,732.632 37,330,238 2,133,425.023 38,203,460
Large Capitalization Equity Fund 2,737,463.338 32,322,365 2,809,872.823 36,516,733
Investment contracts -- Lincoln Life $ 43,507,028 43,507,208 $ 40,006,271 40,006,271
* Nonparticipant-directed.
The investment contracts earned an average interest rate of approximately 6.26%
and 6.22% in 2000 and 1999, respectively. The credited interest rates for new
contributions, which approximate the current market rate, were 6.75% and 6.50%
at December 31, 2000 and 1999, respectively. The rate on new contributions is
guaranteed through the succeeding three calendar year quarters. The credited
interest rate for the remaining contract value balance at December 31, 2000 and
1999 was 6.25% and was determined based upon the performance of Lincoln Life's
general account. The credited interest rates change at least quarterly. The
minimum guaranteed rate is 4.5% for the first five contract years, 4.00% for
years 6-10 and 3.50% following year 10. The guarantee is based on Lincoln Life's
ability to meet its financial obligations out of its general assets.
Restrictions may apply to the aggregate movement of funds to other investment
options. The fair value of the investment contracts approximates contract value.
Participants are allocated interest on the investment contracts based on the
average rate earned on all Plan investments in the investment contracts.
During 2000 and 1999 the Plan's investments (including investments bought, sold
as well as held during the year) appreciated (depreciated) in fair value as
follows:
2000 1999
---- ----
Fair value as determined by quoted market price:
Common stock $ 35,200,676 $ (2,710,256)
Pooled separate accounts (10,792,223) 35,465,253
------------ ------------
Total $ 24,408,453 $ 32,754,997
============ ============
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Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the changes
in net assets relating to the nonparticipant-directed investments is as follows:
DECEMBER 31
2000 1999
---- ----
ASSETS
Common stock -- Lincoln National Corporation $189,321,868 $162,650,360
Wells Fargo Bank Short-Term Investment Fund 6,166,156 4,813,397
------------ ------------
Total $195,488,024 $167,463,757
============ ============
YEAR ENDED DECEMBER 31
2000 1999
---- ----
CHANGE IN NET ASSETS
Net realized and unrealized
appreciation (depreciation)
in fair value of investments $ 35,200,676 $ (2,710,256)
Investment income:
Cash dividends 4,878,633 4,363,540
Interest 313,066 285,574
------------ ------------
Total investment income 5,191,699 4,649,114
Contributions:
Participants 3,126,669 3,532,342
Participating employers (net of forfeitures) 24,429,438 10,635,203
------------ ------------
Total contributions 27,556,107 14,167,545
Distributions to participants (9,511,268) (11,026,299)
Administrative expenses (92,924) (131,246)
Net transfers to participant-directed investments (16,717,694) (10,998,837)
------------ ------------
Total $ 41,626,596 $ (6,049,979)
============ ============
5. INCOME TAX STATUS
The IRS ruled on June 20, 1997 that the Plan qualifies under Section 401(a) of
the Internal Revenue Code ("IRC") and, therefore, the related trust is exempt
from taxation. Once qualified, the Plan is required to operate in conformity
with the IRC to maintain its qualification. The Plan's administrator believes
the Plan is being operated in compliance with the applicable requirements of the
IRC and, therefore, believes that the Plan is qualified and the related trust is
tax exempt.
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Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
6. TRANSACTIONS WITH PARTIES-IN-INTEREST
The Plan has investments in common stock of LNC, and in pooled separate accounts
and investment contracts with Lincoln Life of $189,321,868, $188,930,924 and
$43,507,028, respectively, at December 31, 2000 (41%; 40.9% and 9.4% of net
assets, respectively). LNC and Lincoln Life operate predominately in the
insurance and financial services industries.
LNC and Lincoln Life also provide certain administrative services at no charge
to the Plan. Trustee fees and additional expenses incurred solely for the LNC
Stock Fund are charged directly to the LNC Stock Fund. Audit fees are charged to
earnings of all investment funds based upon the market value of the respective
funds applicable to each investment option. These transactions are exempt.
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SCHEDULES
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Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Plan Number: 005
EIN: 35-1140070
Schedule H, Line 4i -- Schedule of Assets (Held At End of Year)
December 31, 2000
(b) (c) (d) (e)
DESCRIPTION OF INVESTMENT
INCLUDING MATURITY
IDENTITY OF ISSUE, BORROWER DATE, RATE OF INTEREST, CURRENT
LESSOR OR SIMILAR PARTY PAR OR MATURITY VALUE COST VALUE
*Common Stock Fund:
Lincoln National Corporation common stock 4,001,519 shares $ 88,263,147 $189,321,868
Wells Fargo Bank Short-Term Investment Fund 6,166,156 par value 6,166,156 6,166,156
------------ ------------
94,429,303 195,488,024
*Pooled separate accounts -- The Lincoln National Life Insurance Company:
Government Bond Fund 2,484,382.343 participation units** 4,796,272
Core Equity Fund 2,273,512.771 participation units** 31,970,509
Medium Capitalization Equity Fund 2,130,732.632 participation units** 37,330,238
Short-Term Fund 3,391,952.115 participation units** 11,604,655
Government/Corporate Bond Fund 1,248,754.812 participation units** 7,914,993
Large Capitalization Equity Fund 2,737,463.338 participation units** 32,322,765
Balanced Fund 1,201,184.044 participation units** 8,271,041
High Yield Bond Fund 1,120,670.715 participation units** 2,894,062
Small Capitalization Equity Fund 2,417,877.928 participation units** 18,471,054
Value Equity Fund 3,088,970.051 participation units** 6,926,191
International Equity Fund 1,379,595.198 participation units** 8,550,627
Conservative Balanced Fund 84,179.182 participation units** 143,136
Aggressive Balanced Fund 217,813.401 participation units** 462,327
Delaware Growth and Income Fund 95,601.560 participation units** 162,615
Deutsche VIT Equity 500 Index Fund 2,584,973.821 participation units** 2,707,975
VIP II Contrafund 1,313,614.882 participation units** 1,406,645
Janus Fund 2,643,516.253 participation units** 5,329,807
Mid-Cap Value Fund 371,446.082 participation units** 378,915
Social Awareness Fund 243,780.664 participation units** 249,389
T Rowe Price International Equity Fund 1,090,554.021 participation units** 1,430,832
Global Growth Fund 2,243,609.446 participation units** 2,720,762
Delaware Global Bond Fund 185,469.374 participation units** 211,268
Mid-Cap Growth Fund 1,624,549.002 participation units** 2,204,429
Deutsche VIT Small Cap Index Fund 419,827.331 participation units** 470,417
------------
188,930,924
*Investment contracts -- The Lincoln
National Life Insurance Company
(Guaranteed Fund) 6.25% Interest Rate 43,507,028
Participant loans Various loans at interest rates
varying from 8.75% to 10.5%
due from 2001 to 2020 13,065,103
------------
$440,991,079
============
* Indicates party-in-interest to the plan.
** Indicates a participant-directed fund. The cost disclosure is not
applicable.
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Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Plan Number: 005
EIN: 35-1140070
Schedule H, Line 4j -- Schedule of Reportable Transactions
Year ended December 31, 2000
(a) (b) (c) (d) (g) (h) (i)
CURRENT VALUE
OF ASSETS ON NET
IDENTITY OF DESCRIPTION PURCHASE SELLING COST OF TRANSACTION GAIN
PARTY INVOLVED OF ASSETS PRICE PRICE ASSETS DATE (LOSS)
-------------- ----------- ----------- ------- -------- ------------- ------
Category (iii)---Series of transactions in excess of 5 percent of plan assets.
Wells Fargo Bank Wells Fargo Bank Short-Term Investment Fund:
Purchases $52,748,898 $52,748,898 $52,748,898
Sales $51,396,139 51,396,139 51,396,139 $ --
Wells Fargo Bank Lincoln National Corporation shares
of common stock:
Purchases 15,634,114 15,634,114 15,634,114
Sales 20,153,358 9,348,805 20,153,358 10,804,553
Note: Columns (e) and (f), and categories (i), (ii) and (iv) are not applicable.
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SIGNATURE
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Administrator of the Plan has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
June 27, 2001 By /s/ George E. Davis
-------------------
George E. Davis
Administrator
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