SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 1996
LINCOLN NATIONAL CORPORATION
EMPLOYEES' SAVINGS AND PROFIT-SHARING PLAN
(Full Title of Plan)
[Current Reg. No. 33-52667]
LINCOLN NATIONAL CORPORATION
200 East Berry Street
Fort Wayne, Indiana 46802
(Name of Issuer and Principal Executive Office)
FORM 11-K
Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
<PAGE>
TABLE OF CONTENTS
Facing Sheet
Financial Statements
Signature
Exhibit 23--Consent of Ernst & Young LLP, Independent Auditors
Financial Statements
and Schedules
Lincoln National Corporation
Employees' Savings
and Profit-Sharing Plan
Years ended December 31, 1996 and 1995
with Report of Independent Auditors
<PAGE>
Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Financial Statements
and Schedules
Years ended December 31, 1996 and 1995
Contents
Report of Independent Auditors
Audited Financial Statements
Statements of Net Assets Available for Plan Benefits
Statements of Changes in Net Assets Available for Plan Benefits
Notes to Financial Statements
Schedules
Schedule of Assets Held for Investment Purposes
Schedule of Reportable Transactions
<PAGE>
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, 1996 and 1995, 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan
at December 31, 1996 and 1995, and the changes in its net assets available for
plan benefits for the years then ended, in conformity with generally accepted
accounting principles.
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 for investment purposes as of December 31, 1996, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the financial statements. The supplemental schedules
have been subjected to the auditing procedures applied in our audit 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.
Ernst & Young LLP
Fort Wayne, Indiana
June 2, 1997
<PAGE>
Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Statements of Net Assets Available for Plan Benefits
December 31
1996 1995
Assets
Investments:
Common stock--Lincoln National Corporation $109,451,501 $191,353,118
Segregated investment accounts--The
Lincoln National Life Insurance
Company Separate Accounts 72,586,832 95,253,320
Unallocated insurance contracts--The
Lincoln National Life Insurance Company 30,194,850 76,276,541
Participant loans 8,740,008 15,852,291
Total investments 220,973,191 378,735,270
Cash and invested cash 198,023 3,918,059
Accrued interest receivable 23,986 30,578
Other receivables 1,319,840 0
Contributions receivable
from Employer Companies 8,849,872 12,004,120
Total assets 231,364,912 394,688,027
Liability--miscellaneous payables 857,802 1,147,957
Net assets available for plan benefits $230,507,110 $393,540,070
See accompanying notes.
<PAGE>
Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Statements of Changes in Net Assets Available for Plan Benefits
Year ended December 31
1996 1995
Additions:
Net realized and unrealized
appreciation (depreciation) in
fair value of investments $ (3,017,943) $ 85,420,076
Investment income:
Dividends--Lincoln National Corporation 5,933,463 5,969,559
Interest:
The Lincoln National Life
Insurance Company 1,894,621 6,493,723
Other 1,093,843 1,203,060
Total investment income 8,921,927 13,666,342
Contributions:
Employees 18,237,161 19,897,636
Participating employers (net of
forfeitures: 1996 $15,008; 1995 $16,376) 10,713,394 14,167,259
Total contributions 28,950,555 34,064,895
Total additions 34,854,539 133,151,313
Deductions:
Distributions to participants (21,915,376) (20,363,921)
Transfer to American States
Financial Corporation Employees'
Savings and Profit-Sharing Plan (175,764,524) 0
Administrative expenses (207,599) (217,696)
Total deductions (197,887,499) (20,581,617)
Net increase (decrease) in net
assets available for plan benefits (163,032,960) 112,569,696
Net assets available for plan
benefits at beginning of the year 393,540,070 280,970,374
Net assets available for plan
benefits at end of the year $230,507,110 $393,540,070
See accompanying notes.
<PAGE>
Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Notes to Financial Statements
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 fair value of the participation units
owned by Lincoln National Corporation Employees' Savings and Profit-Sharing
Plan ("Plan") in segregated investment accounts is based on quoted redemption
value on the last business day of the year.
The unallocated insurance 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.
Participant loans are valued at cost which approximates fair value.
Use of Estimates
Preparation of financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liability at the
date of the financial statements and the related amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
2. Description of the Plan
The Plan is a contributory, defined contribution plan which covers eligible
employees of LNC and certain of its subsidiaries ("Employer Companies"). Any
person 21 years of age or older who is an employee of the Employer Companies
is eligible to enroll in the Plan on the next Plan entry date if the person
has been employed by LNC and any of its subsidiaries for at least one year.
A participant may make pretax contributions at a rate of at least 1%, but not
more than 15% of compensation, 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 as
described in Note 4. Participants can direct employer contributions, but
only after the contributions have been in the Plan for two full plan years
following the year for which they were contributed.
The Employer Companies contribute to the Plan an amount equal to a
participant's contributions, not to exceed 6%, multiplied by a percentage,
ranging from 25% to 150%, which varies according to LNC's return on equity
in relation to pre-identified peer companies. The Employer Companies'
contributions are invested in the LNC Common Stock Fund. The Employer
Companies 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 Companies have the right in accordance with the Plan to
discontinue contributions at any time and terminate participation in 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.
Upon termination of service due to death, disability or retirement, a
participant may elect to receive either a lump-sum amount equal to the value
of the participant's vested interest in his or her account, or annual
installments over a five year period. 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 contribution
and the Employer Companies' matching contribution and allocations of Plan
earnings, and charged with an allocation of administrative expenses.
Allocations are based on participant earnings or 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 nonvested
amounts are used to reduce future Employer Companies' contributions.
3. Investments
Individual investments greater than 5% of Net Assets Available for Benefits
at December 31, 1996 and 1995 are as follows:
December 31, 1996
Shares/ Market
Par Value Value
Common stock--Lincoln
National Corporation 2,084,790 $109,451,501
Segregated investment accounts:
Core Equity Fund 2,039,150.637 16,888,478
Medium Capitalization Equity Fund 2,082,404.287 18,876,487
Large Capitalization Equity Fund 2,154,330.425 12,377,768
Unallocated insurance contracts $30,194,850 $ 30,194,850
December 31, 1995
Shares/ Market
Par Value Value
Common stock--Lincoln
National Corporation 3,560,058 $191,353,118
Segregated investment accounts:
Core Equity Fund 1,264,092.105 22,920,130
Medium Capitalization Equity Fund 3,112,599.024 23,772,967
Large Capitalization Equity Fund 2,708,547.495 12,969,067
Unallocated insurance contracts $76,276,541 $ 76,276,541
The unallocated insurance contracts earned an average interest rate of
approximately 6.8% and 6.7% in 1996 and 1995, respectively. The credited
interest rates for new contributions at December 31, 1996 and 1995 were 7.0%
and 6.3%, respectively. The rate on new contributions is guaranteed through
the succeeding three calendar year quarters. The credited interest rates
for the remaining contract value balance at December 31, 1996 and 1995 were
6.8% and 6.9%, respectively, and were 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 5
contract years, 4.0% for years 6-10 and 3.5% 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 unallocated insurance contracts approximates contract value.
Participants are allocated interest on the unallocated insurance contracts
based on the average rate earned on all Plan investments in unallocated
insurance contracts.
Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
4. Investment Options
The detail of net assets available for plan benefits by investment option is
as follows:
December 31, 1996
Investment Options
Total 1 2 3 4
<S> <C> <C> <C> <C> <C>
Assets
Investments:
Common stock $109,451,501 $109,451,501
Segregated investment accounts 72,586,832 $3,732,897 $16,888,478
Unallocated insurance contracts 30,194,850 $30,194,850
Participant loans 8,740,008
Total investments 220,973,191 109,451,501 3,732,897 30,194,850 16,888,478
Cash and invested cash 198,023 1,083,337 (6,823) (300,713) (7,320)
Accrued interest receivable 23,986
Other receivables 1,319,840 9,868 484,841 43,212
Contributions receivable from
Employer Companies 8,849,872 8,849,872
Total assets 231,364,912 119,384,710 3,735,942 30,378,978 16,924,370
Liability--miscellaneous payables 857,802 786,713
Net assets available for plan benefits $230,507,110 $118,597,997 $3,735,942 $30,378,978 $16,924,370
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996
Investment Options
5 6 7 8 9
<S> <C> <C> <C> <C> <C>
Assets
Investments:
Common stock
Segregated investment accounts $ 18,876,487 $ 3,915,270 $4,652,521 $12,377,768 $ 1,708,663
Unallocated insurance contracts
Participant loans
Total investments 18,876,487 3,915,270 4,652,521 12,377,768 1,708,663
Cash and invested cash (158,135) (36,717) (44,806) (175,836) (21,012)
Accrued interest receivable
Other receivables 211,106 79,637 50,622 205,013 23,495
Contributions receivable from
Employer Companies
Total assets 18,929,458 3,958,190 4,658,337 12,406,945 1,711,146
Liability--miscellaneous payables
Net assets available for plan benefits $ 18,929,458 $ 3,958,190 $4,658,337 $12,406,945 $ 1,711,146
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996
Investment Options
10 11 12 13 Loans
<S> <C> <C> <C> <C> <C>
Assets
Investments:
Common stock
Segregated investment accounts $989,778 $2,526,822 $2,521,725 $4,396,423
Unallocated insurance contracts
Participant loans $8,740,008
Total investments 989,778 2,526,822 2,521,725 4,396,423 8,740,008
Cash and invested cash (24,569) (20,832) (80,832) (78,808) 71,089
Accrued interest receivable 23,986
Other receivables 24,778 21,656 82,447 83,165
Contributions receivable from
Employer Companies
Total assets 989,987 2,527,646 2,523,340 4,400,780 8,835,083
Liability--miscellaneous payables 71,089
Net assets available for plan benefits $989,987 $2,527,646 $2,523,340 $4,400,780 $8,763,994
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
Investment Options
Total 1 2 3 4
<S> <C> <C> <C> <C> <C>
Assets
Investments:
Common stock $191,353,118 $191,353,118
Segregated investment accounts 95,253,320 $8,624,705 $22,920,130
Unallocated insurance contracts 76,276,541 $76,276,541
Participant loans 15,852,291
Total investments 378,735,270 191,353,118 8,624,705 76,276,541 22,920,130
Cash and invested cash 3,918,059 2,516,096 1,401,963
Accrued interest receivable 30,578
Other receivables 0
Contributions receivable from
Employer Companies 12,004,120 12,004,120
Total assets 394,688,027 205,873,334 8,624,705 77,678,504 22,920,130
Liability--miscellaneous payables 1,147,957 578,264 569,693
Net assets available for plan benefits $393,540,070 $205,295,070 $8,624,705 $77,108,811 $22,920,130
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
Investment Options
5 6 7 8 9
<S> <C> <C> <C> <C> <C>
Assets
Investments:
Common stock
Segregated investment accounts $23,772,967 $8,902,420 $7,702,430 $12,969,067 $1,734,231
Unallocated insurance contracts
Participant loans
Total investments 23,772,967 8,902,420 7,702,430 12,969,067 1,734,231
Cash and invested cash
Accrued interest receivable
Other receivables
Contributions receivable from
Employer Companies
Total assets 23,772,967 8,902,420 7,702,430 12,969,067 1,734,231
Liability--miscellaneous payables
Net assets available for plan benefits $23,772,967 $8,902,420 $7,702,430 $12,969,067 $1,734,231
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
Investment Options
10 11 12 13 Loans
<S> <C> <C> <C> <C> <C>
Assets
Investments:
Common stock
Segregated investment accounts $770,346 $2,029,374 $1,858,664 $3,968,986
Unallocated insurance contracts
Participant loans $15,852,291
Total investments 770,346 2,029,374 1,858,664 3,968,986 15,852,291
Cash and invested cash
Accrued interest receivable 30,578
Other receivables
Contributions receivable from
Employer Companies
Total assets 770,346 2,029,374 1,858,664 3,968,986 15,882,869
Liability--miscellaneous payables
Net assets available for plan benefits $770,346 $2,029,374 $1,858,664 $3,968,986 $15,882,869
</TABLE>
<TABLE>
<CAPTION>
The detail of the changes in net assets available for plan benefits by
investment option is as follows:
Year ended December 31, 1996
Investment Options
Total 1 2 3 4
<S> <C> <C> <C> <C> <C>
Additions:
Net realized and unrealized
appreciation (depreciation)
in fair value of investments $ (3,017,943) $(15,041,531) $ 143,367 $ 3,768,123
Investment income:
Dividends 5,933,463 5,933,463
Interest 2,988,464 $ 1,894,621
Total investment income 8,921,927 5,933,463 1,894,621
Contributions:
Employees 18,237,161 3,860,254 422,316 3,160,217 2,043,734
Participating employers
(net of forfeitures) 10,713,394 10,713,394
Total contributions 28,950,555 14,573,648 422,316 3,160,217 2,043,734
Total additions 34,854,539 5,465,580 565,683 5,054,838 5,811,857
Deductions:
Distributions to participants (21,915,376) (9,613,257) (477,478) (5,663,295) (1,434,977)
Transfer to American States
Financial Corporation Employees'
Savings and Profit-Sharing Plan (175,764,524) (76,082,981) (4,592,411) (47,006,178) (11,818,472)
Administrative expenses (207,599) (191,420) (823) (6,744) (1,940)
Net transfers (6,274,995) (383,734) 891,546 1,447,772
Total deductions (197,887,499) (92,162,653) (5,454,446) (51,784,671) (11,807,617)
Net increase (decrease) in net assets
available for plan benefits (163,032,960) (86,697,073) (4,888,763) (46,729,833) (5,995,760)
Net assets available for plan
benefits at beginning of the year 393,540,070 205,295,070 8,624,705 77,108,811 22,920,130
Net assets available for plan
benefits at end of the year $230,507,110 $118,597,997 $3,735,942 $30,378,978 $16,924,370
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31, 1996
Investment Options
5 6 7 8 9
<S> <C> <C> <C> <C> <C>
Additions:
Net realized and unrealized
appreciation (depreciation)
in fair value of investments $ 4,316,435 $ 304,350 $ 5,661 $ 2,374,239 $ 175,374
Investment income:
Dividends
Interest
Total investment income
Contributions:
Employees 2,450,567 296,439 759,809 1,816,085 698,051
Participating employers
(net of forfeitures)
Total contributions 2,450,567 296,439 759,809 1,816,085 698,051
Total additions 6,767,002 600,789 765,470 4,190,324 873,425
Deductions:
Distributions to participants (1,370,504) (347,190) (556,164) (844,182) (281,324)
Transfer to American States
Financial Corporation Employees'
Savings and Profit-Sharing Plan (11,272,913) (4,703,573) (2,976,419) (4,699,957) (1,480,296)
Administrative expenses (2,094) (921) (741) (1,386) (253)
Net transfers 1,035,000 (493,335) (276,239) 793,079 865,363
Total deductions (11,610,511) (5,545,019) (3,809,563) (4,752,446) (896,510)
Net increase (decrease) in net assets
available for plan benefits (4,843,509) (4,944,230) (3,044,093) (562,122) (23,085)
Net assets available for plan
benefits at beginning of the year 23,772,967 8,902,420 7,702,430 12,969,067 1,734,231
Net assets available for plan
benefits at end of the year $18,929,458 $3,958,190 $4,658,337 $12,406,945 $1,711,146
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31, 1996
Investment Options
10 11 12 13 Loans
<S> <C> <C> <C> <C> <C>
Additions:
Net realized and unrealized
appreciation (depreciation)
in fair value of investments $ 88,081 $ 165,356 $ 301,715 $ 380,887
Investment income:
Dividends
Interest $ 1,093,843
Total investment income 1,093,843
Contributions:
Employees 274,330 618,570 602,804 1,035,379 198,606
Participating employers
(net of forfeitures)
Total contributions 274,330 618,570 602,804 1,035,379 198,606
Total additions 362,411 783,926 904,519 1,416,266 1,292,449
Deductions:
Distributions to participants (38,304) (133,929) (223,044) (368,132) (563,596)
Transfer to American States
Financial Corporation Employees'
Savings and Profit-Sharing Plan (409,847) (882,793) (950,784) (1,543,572) (7,344,328)
Administrative expenses (124) (315) (264) (574)
Net transfers 305,505 731,383 934,249 927,806 (503,400)
Total deductions (142,770) (285,654) (239,843) (984,472) (8,411,324)
Net increase (decrease) in net assets
available for plan benefits 219,641 498,272 664,676 431,794 (7,118,875)
Net assets available for plan
benefits at beginning of the year 770,346 2,029,374 1,858,664 3,968,986 15,882,869
Net assets available for plan
benefits at end of the year $989,987 $2,527,646 $2,523,340 $4,400,780 $ 8,763,994
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31, 1995
Investment Options
Total 1 2 3 4
<S> <C> <C> <C> <C> <C>
Additions:
Net realized and
unrealized appreciation
in fair value of investments $ 85,420,076 $ 67,988,471 $1,073,220 $ 5,905,550
Investment income:
Dividends 5,969,559 5,969,559
Interest 7,696,783 $ 6,493,723
Investment income 13,666,342 5,969,559 6,493,723
Contributions:
Employees 19,897,636 5,304,242 615,540 4,382,570 1,870,696
Participating employers
(net of forfeitures) 14,167,259 14,167,259
Total contributions 34,064,895 19,471,501 615,540 4,382,570 1,870,696
Total additions 133,151,313 93,429,531 1,688,760 10,876,293 7,776,246
Deductions:
Distributions to participants (20,363,921) (8,699,052) (569,094) (6,562,834) (1,033,475)
Administrative expenses (217,696) (199,511) (1,055) (8,872) (2,202)
Net transfers (10,215,054) (627,068) 2,723,555 462,160
Total deductions (20,581,617) (19,113,617) (1,197,217) (3,848,151) (573,517)
Net increase (decrease) in net assets
available for plan benefits 112,569,696 74,315,914 491,543 7,028,142 7,202,729
Net assets available for plan
benefits at beginning of the year 280,970,374 130,979,156 8,133,162 70,080,669 15,717,401
Net assets available for plan
benefits at end of the year $393,540,070 $205,295,070 $8,624,705 $77,108,811 $22,920,130
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31, 1995
Investment Options
5 6 7 8 9
<S> <C> <C> <C> <C> <C>
Additions:
Net realized and
unrealized appreciation
in fair value of investments $ 5,037,349 $ 433,404 $1,174,621 $ 2,717,975 $ 226,389
Investment income:
Dividends
Interest
Total investment income
Contributions:
Employees 2,384,637 509,372 784,575 1,693,786 457,925
Participating employers
(net of forfeitures)
Total contributions 2,384,637 509,372 784,575 1,693,786 457,925
Total additions 7,421,986 942,776 1,959,196 4,411,761 684,314
Deductions:
Distributions to participants (538,697) (1,101,485) (283,377) (893,780) (72,358)
Administrative expenses (2,292) (903) (779) (1,339) (115)
Net transfers 783,458 2,053,683 362,043 202,635 542,517
Total deductions 242,469 951,295 77,887 (692,484) 470,044
Net increase (decrease) in net assets
available for plan benefits 7,664,455 1,894,071 2,037,083 3,719,277 1,154,358
Net assets available for plan
benefits at beginning of the year 16,108,512 7,008,349 5,665,347 9,249,790 579,873
Net assets available for plan
benefits at end of the year $23,772,967 $8,902,420 $7,702,430 $12,969,067 $1,734,231
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31, 1995
Investment Options
10 11 12 13 Loans
<S> <C> <C> <C> <C> <C>
Additions:
Net realized and
unrealized appreciation
in fair value of investments $ 65,341 $ 129,576 $ 315,646 $ 352,534
Investment income:
Dividends
Interest $ 1,203,060
Total investment income 1,203,060
Contributions:
Employees 167,759 442,232 352,295 932,007
Participating employers
(net of forfeitures)
Total contributions 167,759 442,232 352,295 932,007
Total additions 233,100 571,808 667,941 1,284,541 1,203,060
Deductions:
Distributions to participants (14,593) (25,432) (12,063) (74,208) (483,473)
Administrative expenses (42) (144) (117) (325)
Net transfers 364,156 694,825 584,215 855,443 1,213,432
Total deductions 349,521 669,249 572,035 780,910 729,959
Net increase (decrease) in net assets
available for plan benefits 582,621 1,241,057 1,239,976 2,065,451 1,933,019
Net assets available for plan
benefits at beginning of the year 187,725 788,317 618,688 1,903,535 13,949,850
Net assets available for plan
benefits at end of the year $770,346 $2,029,374 $1,858,664 $3,968,986 $15,882,869
</TABLE>
<PAGE>
Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
4. Investment Options (continued)
Information with respect to investment options is as follows:
Option Description of Investment Option
1 LNC Common Stock Fund, which invests
in shares of Lincoln National
Corporation's common stock;
2 Government Bond Fund, which directly
or indirectly invests primarily in
fixed income securities issued by the
United States Government;
3 Guaranteed Fund, which invests
primarily in contracts which
guarantee a rate of return and
principal;
4 Core Equity Fund, which directly or
indirectly invests primarily in the
common stock of established
companies;
5 Medium Capitalization Equity Fund,
which directly or indirectly invests
primarily in the stock of new, rapid
growth companies;
6 Short-Term Fund, which directly or
indirectly invests primarily in notes
of government agencies and private
corporations;
7 Government/Corporate Bond Fund, which
directly or indirectly invests
primarily in corporate and U.S.
government bonds and mortgage-backed
securities;
8 Large Capitalization Equity Fund,
which directly or indirectly invests
primarily in high-risk common stocks
which have the potential for a
significant appreciation in value;
9 Balanced Fund, which directly or
indirectly invests in three different
asset classes: stocks, bonds and
money market instruments, which
provides growth through the stock
portion and reduced risk through the
bond and money market portion;
10 High Yield Bond Fund, which directly
or indirectly invests primarily in
below-investment-grade bonds,
providing higher rates of return to
compensate higher risk;
11 Small Capitalization Equity Fund,
which directly or indirectly invests
primarily in the stock of new, rapid
growth companies;
12 Value Equity Fund, which invests
primarily in large capitalization
stocks of undervalued companies that
are industry leaders;
13 International Equity Fund, which
directly or indirectly invests
primarily in stocks of non-United
States companies;
At December 31, 1996, the net assets in the LNC Common Stock Fund not subject
to participant direction was $20,051,267.
Investment options 2 through 13 are provided by a group annuity contract issued
by Lincoln Life.
Interest charged on new loans to participants is established monthly based upon
prevailing rates for similar loans. Loans are repaid over 1, 3, 5, 10, 15 or
20 year periods depending on the purpose of the loan or when a participant
withdraws from the Plan.
5. Income Tax Status
On February 9, 1995, the IRS ruled that the Plan qualifies as defined by
Section 401(a) of the Internal Revenue Code ("IRC") and, therefore, is not
subject to tax based on the present income tax laws. Further, the Plan is
required to operate in conformity with the IRC to maintain its qualification.
The Plan's administrator is not aware of any course of action or series of
events that have occurred that might adversely affect the Plan's qualified
status.
6. Transactions With Parties-In-Interest
The Plan has investments in common stock of LNC, and in segregated investment
accounts and unallocated insurance contracts with Lincoln Life of $109,451,501,
$72,586,832 and $30,194,850, respectively, at December 31, 1996 (47.5%,
31.5% and 13.1% of net assets, respectively). LNC and Lincoln Life
operate predominately in the insurance and financial services industries.
Lincoln Life also provides 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.
7. Transfer of Assets
Effective May 28, 1996, LNC's principal subsidiary within its Property-Casualty
segment, American States Financial Corporation, closed an initial public
offering of 17% of its common stock. As a result, the subsidiary formed the
American States Financial Corporation Employees' Savings and Profit-Sharing
Plan ("American States Plan") effective June 24, 1996. Assets transferred from
the Plan to the American States Plan attributed to employees of American States
Financial Corporation were $175,764,524 as of the effective date.
8. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for plan benefits per
the financial statements to Form 5500:
1996 1995
Net assets available for plan
benefits per the financial statements $230,507,110 $393,540,070
Amounts allocated to
withdrawing participants (687,332) (1,273,955)
Net assets available
for plan benefits per Form 5500 $229,819,778 $392,266,115
The following is a reconciliation of distributions to participants per the
financial statements to Form 5500:
1996 1995
Distributions to participants
per the financial statements $ 21,915,376 $ 20,363,921
Add amounts allocated to withdrawing
participants at end of the year 687,332 1,273,955
Deduct amounts allocated to withdrawing
participants at beginning of the year (1,273,955) (1,089,639)
Distributions to participants
per Form 5500 $ 21,328,753 $ 20,548,237
Amounts allocated to withdrawing participants are recorded on Form 5500 for
distributions that have been processed and approved for payment prior to year
end but have not yet been paid.
<PAGE>
<TABLE>
<CAPTION>
Schedules
Item 27a
Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Schedule of Assets Held for Investment Purposes
December 31, 1996
(c)
Description of Investment
(b) Including Maturity (e)
Identity of Issuer, Borrower, Date, Rate of Interest, (d) Current
Lessor or Similar Party Par or Maturity Value Cost Value
<S> <C> <C> <C>
Common stock--
Lincoln National Corporation* 2,084,790 shares $ 79,023,984 $109,451,501
Segregated investment
accounts--The Lincoln
National Life Insurance
Company Separate Accounts*:
Government Bond Fund 2,479,697.460 participation units 2,862,613 3,732,897
Core Equity Fund 2,039,150.637 participation units 9,911,879 16,888,478
Medium Capitalization Equity Fund 2,082,404.287 participation units 11,584,770 18,876,487
Short-Term Fund 1,419,564.724 participation units 3,359,224 3,915,270
Government/Corporate Bond Fund 948,419.273 participation units 3,511,478 4,652,521
Large Capitalization Equity Fund 2,154,330.425 participation units 8,585,512 12,377,768
Balanced Fund 387,588.405 participation units 1,507,530 1,708,663
High Yield Bond Fund 475,030.360 participation units 884,803 989,778
Small Capitalization Equity Fund 776,653.839 participation units 2,363,038 2,526,822
Value Equity Fund 1,583,854.688 participation units 2,097,979 2,521,725
International Equity Fund 876,718.122 participation units 3,980,367 4,396,423
Total segregated investment accounts 50,649,193 72,586,832
Unallocated insurance contracts--
The Lincoln National Life
Insurance Company* 30,194,850 30,194,850
Participant loans Various loans at interest rates
varying from 5.01% to 12.00%
due from 1997 to 2016. 8,740,008 8,740,008
$168,608,035 $220,973,191
*Indicates party-in-interest to the Plan.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item 27d
Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan
Schedule of Reportable Transactions
Year ended December 31, 1996
(h)
Current Value (i)
(a) (c) (d) (g) of Assets on Net
Identity of (b) Purchase Selling Cost of Transaction Gain
Party Involved Description of Assets Price Price Assets Date (Loss
)
<S> <S> <C> <C> <C> <C> <C>
Category (iii) Series of transactions in excess of 5 percent of plan assets.
Norwest Bank Lincoln National Corporation
shares of common stock:
Purchases $40,843,048 $ 0 $40,843,048 $40,843,048 $ 0
Sales 0 31,570,726 23,912,722 31,570,726 7,658,004
Transfer (1) 0 0 60,899,047 76,082,981 0
The Lincoln National Unallocated insurance contracts--
Life Insurance Company The Lincoln National Life
Insurance Company:
Purchases 9,112,754 0 9,112,754 9,112,754 0
Sales 0 8,188,267 8,188,267 8,188,267 0
Transfer (1) 0 0 47,006,178 47,006,178 0
</TABLE>
Note: Columns (e) and (f), and categories (i), (ii) and (iv) are
not applicable.
(1) Amount relates to the transfer of assets to the American States
Financial Corporation Employees' Savings and Profit-Sharing Plan.
<PAGE>
SIGNATURE
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of
1934, the Members of the Lincoln National Corporation Benefits Investment
Committee have duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
LINCOLN NATIONAL CORPORATION
EMPLOYEES' SAVINGS AND
PROFIT-SHARING PLAN
/S/ H. THOMAS MCMEEKIN
Date: 6/24/97 ____________________________________
H. Thomas McMeekin, Chairman
Lincoln National Corporation
Benefits Investment Committee
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-52667) pertaining to the Lincoln National Corporation
Employees' Savings and Profit-Sharing Plan of our report dated June 2, 1997
with respect to the financial statements and schedules of the Lincoln
National Corporation Employees' Savings and Profit-Sharing Plan included in
this Annual Report (Form 11-K) for the year ended December 31, 1996.
/S/ ERNST & YOUNG LLP
Fort Wayne, Indiana
June 25, 1997
