As filed with the Securities and Exchange Commission on April 29, 1997
Registration No. 33-4711
SECURITIES AND EXCHANGE COMMISSION
POST-EFFECTIVE AMENDMENT NO. 11 TO THE
REGISTRATION STATEMENT ON FORM S-1 UNDER THE
SECURITIES ACT OF 1933
(WITH S-3 INFORMATION ABOUT LINCOLN NATIONAL CORPORATION)
Lincoln National Corporation The Lincoln National Life Insurance
(Exact name of registrant as Company Agents' Savings and
specified in its charter) Profit-Sharing Plan
(Exact name of registrant
as specified in its charter)
Indiana Indiana
(State of Incorporation) (State of Incorporation)
35-1140070 35-0472300
(I.R.S. Employer (I.R.S. Employer
Identification No.) Identification No.)
200 E.Berry Street 1300 South Clinton Street
Fort Wayne, Indiana 46802 Fort Wayne, Indiana 46802
(219)455-2000 (219)455-2000
(Address, including zip code and (Address, including zip code and
telephone number, including area telephone number, including area
code of registrant's principal code of registrant's principal
executive offices) executive offices)
Jack D. Hunter
200 E. Berry Street
Fort Wayne, Indiana 46802
(219)455-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. [ X ]
Pursuant to Rule 429 of the General Rules and Regulations under the
Securities Act of 1933, as amended, the Prospectus contained in this
Registration Statement will also be used in connection with the
securities registered pursuant to Registration Statements Nos. 2-91708
and 2-83029.
<PAGE>
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY AGENTS'
SAVINGS AND PROFIT-SHARING PLAN
POST-EFFECTIVE AMENDMENT NO. 11
Cross Reference Sheet
Showing Location in Prospectus of Information Required by Items of
Form S-1 Pursuant to Item 501(b) of Regulation S-K.
Item of Form S-1 Location in Prospectus
Item 1. Forepart of the Registration Forepart of the Registration
Statement and Outside Front Statement and Front Cover
Cover Page of Prospectus Page of Prospectus
Item 2. Inside Front and Outside Back Inside Front Cover Page of
Cover Pages of Prospectus Prospectus
Item 3. Summary Information, Risk GENERAL INFORMATION
Factors and Ratio of Earnings
to Fixed Charges
Item 4. Use of Proceeds SUMMARY OF THE PLAN --
Investment of Contributions
Item 5. Determination of Offering Price Not Applicable
Item 6. Dilution Not Applicable
Item 7. Selling Security Holders Not Applicable
Item 8. Plan of Distribution SUMMARY OF THE PLAN -- Sale
of Stock to the Trustee
Item 9. Description of Securities to SUMMARY OF THE PLAN
be Registered
Item 10. Interests of Named Experts Not Applicable
and Counsel
Item 11. Information with Respect to SUMMARY OF THE PLAN
the Registrant
Item 12. Disclosure of Commission INDEMNIFICATION OF OFFICERS,
Position on Indemnification DIRECTORS, EMPLOYEES AND
for Securities Act Liabilities AGENTS
<PAGE>
LINCOLN NATIONAL CORPORATION
Cross Reference Sheet
Showing Location in Prospectus of Information Required by Items of
Form S-3 Pursuant to Item 501(b) of Regulation S-K.
Item of Form S-3 Location in Prospectus
Item 1. Forepart of the Registration Forepart of the Registration
Statement and Front Cover Page Statement and Front Cover
of Prospectus Page of Prospectus
Item 2. Inside Front and Outside Back Inside Front and Outside Back
Cover Pages of Prospectus Cover Pages of Prospectus
Item 3. Summary Information, Risk GENERAL INFORMATION
Factors and Ratio of Earnings
to Fixed Charges
Item 4. Use of Proceeds Not Applicable
Item 5. Determination of Offering Not Applicable
Price
Item 6. Dilution Not Applicable
Item 7. Selling Security Holders Not Applicable
Item 8. Plan of Distribution SUMMARY OF THE PLAN -- Sale
of Stock to the Trustee
Item 9. Description of Securities to LINCOLN NATIONAL CORPORATION
be Registered COMMON STOCK
Item 10. Interests of Named Experts Not Applicable
and Counsel
Item 11. Material Changes Not Applicable
Item 12. Incorporation of Certain INCORPORATION OF ADDITIONAL
Information by Reference DOCUMENTS BY REFERENCE
Item 13. Disclosure of Commission INDEMNIFICATION OF OFFICERS,
Position on Indemnification DIRECTORS, EMPLOYEES AND
for Securities Act Liabilities AGENTS
The Lincoln National Life Insurance Company
1300 South Clinton Street
Fort Wayne, Indiana 46802-3506
(219) 455-2000
Agents Savings and Profit-Sharing Plan
Offering
Lincoln National Corporation Common Stock
This amended Prospectus relates to 20,000,000 Plan Interests in The
Lincoln National Life Insurance Company Agents Savings and
Profit-Sharing Plan (the Plan) registered by the initial Registration
Statement on April 30, 1986. It also relates to 1,600,000 shares of
Common Stock of Lincoln National Corporation, being offered and sold to
eligible agents of The Lincoln National Life Insurance Company and its
affiliates who participate in the Plan (singly, an Agent ;
collectively, the Agents ). A previous registration is still in effect
with respect to the above- mentioned shares of Lincoln National
Corporation Common Stock.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
(NOTE: FOUR (4) OF THE THIRTEEN INVESTMENT OPPORTUNITIES AVAILABLE TO
PARTICIPATING AGENTS ARE HIGH-RISK COMMON STOCK FUNDS. SEE PAGE 9 OF THE
PROSPECTUS.)
No person is authorized to give any information or to make any
representation not contained in this Prospectus and, if given or made,
such information or representation must not be relied upon as having
been authorized by Lincoln National Corporation or the Plan. This
Prospectus does not constitute an offer to sell or the solicitation of
an offer to buy any of the securities offered hereby in any jurisdiction
to or from any person to whom it is unlawful to make or solicit such
offer in such jurisdiction. Neither the delivery of this Prospectus nor
any sale made hereunder shall under any circumstances create any
implication that there has or has not been any change in the information
contained herein since the date hereof.
The date of this Prospectus is April 30, 1997.
Lincoln National Corporation is subject to the informational
requirements of the Securities and Exchange Act of 1934 and in
accordance therewith files reports and other information with the
Securities and Exchange Commission. Such reports, proxy statements and
other information can be inspected and copied at the Commission s Public
Reference Room: 450 Fifth Street, N.W., Room 1024, Washington, D.C.; and
at certain of its Regional Offices located at Room 1204, Everett
McKinley Dirksen Building, 219 South Dearborn Street, Chicago, Illinois
60604; and at the Federal Building, 75 Park Place, Room 1228, New York,
New York 10007. Copies of these materials may also be obtained from the
Commission at prescribed rates by mailing a request to the Public
Reference Branch, Securities and Exchange Commission, Washington, D.C.
20549. Such reports, proxy statements and other information can also be
inspected at the offices of the New York, Midwest, Pacific, London and
Tokyo Stock Exchanges. In addition, Lincoln National Corporation will
provide without charge to each person to whom this Prospectus is
delivered, upon written or oral request of such person, a copy of any
and all of the information that has been incorporated by reference into
this Prospectus (excluding unincorporated exhibits) but not delivered
with it. Such requests should be made to C. Suzanne Womack, Secretary,
Lincoln National Corporation, 200 East Berry Street, Fort Wayne, Indiana
46802-2706, telephone: (219) 455-3271.
Table of contents
Page
General Information. . . . . . . . . .
Summary of the plan. . . . . . . . . .
Purpose. . . . . . . . . . . . . . . .
Eligibility and participation. . . . .
Agent Contributions. . . . . . . . . .
Rollover Contributions . . . . . . . .
Suspension of Agent Contributions. . .
Company Contributions. . . . . . . . .
Limitations on Contributions . . . . .
Investment of Contributions. . . . . .
Comparative performance
of investment funds. . . . . . . . . .
Risk factors . . . . . . . . . . . . .
Valuation of Investments . . . . . . .
Expenses of the Plan
Vesting. . . . . . . . . . . . . . . .
Accounts . . . . . . . . . . . . . . .
Withdrawals. . . . . . . . . . . . . .
Agent Loans. . . . . . . . . . . . . .
Distributions. . . . . . . . . . . . .
Vested Amounts . . . . . . . . . . .
Death, Disability, Retirement
or Termination of Service. . . . .
Periodic Withdrawals of
Distributions. . . . . . . . . . . . .
At retirement . . . . . . . . . . .
At disability . . . . . . . . . . .
At death . . . . . . . . . . . . . .
Fractional Shares. . . . . . . . . . .
Company Contribution Account . . . . .
Automatic Crediting of
Account Balances . . . . . . . . . .
Withdrawals from the
Company Contribution Account . . . .
Investment of Contributions. . . . .
Beneficiary Designation. . . . . . . .
Assignment . . . . . . . . . . . . . .
Amendment or Termination . . . . . . .
Administration of the Plan . . . . . .
Trustee. . . . . . . . . . . . . . .
Plan Administrator . . . . . . . . .
Voting of Shares . . . . . . . . . . .
Federal Income Tax Consequences. . . .
Tax and Withholding. . . . . . . . . .
Employee Retirement Income
Security Act of 1974 . . . . . . . . .
Agent s Rights Under ERISA . . . . . .
Participation Interests
are Securities . . . . . . . . . . . .
Financial Statements . . . . . . . . .
Lincoln National Corporation
Common Stock . . . . . . . . . . . . .
Dividend Rights. . . . . . . . . . . .
Voting Rights. . . . . . . . . . . . .
Liquidation Rights . . . . . . . . . .
Pre-Emptive Rights . . . . . . . . . .
Assessment . . . . . . . . . . . . . .
Modification of Rights . . . . . . . .
Other Provisions . . . . . . . . . . .
Indemnification of Officers,
Directors, Employees and Agents. . . .
Experts. . . . . . . . . . . . . . . .
Legal Opinion. . . . . . . . . . . . .
Incorporation of additional
documents. . . . . . . . . . . . . . .
Index to financial statements. . . . .
General information
The Plan was first adopted by the Board of Directors of The Lincoln
National Life Insurance Company (the Company ) on May 11, 1978,
effective January 1, 1979, for the benefit of eligible Agents of the
Company and any participating affiliates, sometimes collectively
referred to in this Prospectus as Employers. However, as of the date of
this Prospectus, the Company was the only Employer.
The Plan enables eligible Agents serving the Company as independent
contractors a convenient and systematic method of saving. Under the
Plan there are thirteen investment funds, one of which is the Lincoln
National Corporation ( LNC ) Stock Fund (see Investment of Contributions).
Norwest Bank Fort Wayne, N.A., Fort Wayne, Indiana, is the Trustee of
the Plan (see Administration of the Plan - Trustee ).
LNC, an Indiana corporation, is an insurance holding company which
provides through its subsidiaries and on a national basis life and
health insurance and annuities, property-casualty insurance, reinsurance
and other financial services. The Company is a subsidiary of LNC. The
principal executive offices of LNC are at 200 East Berry Street, Fort
Wayne, Indiana 46802-2706. Its telephone number is (219) 455-2000.
The major features of the Plan, as amended, are described below. The
statements contained in this Prospectus concerning the Plan are brief
summaries and are qualified in their entirety by reference to the terms
of the Plan itself. Copies of the Plan may be examined by eligible
Agents and their beneficiaries upon request at the principal executive
offices of the Company.
Summary of the plan
Purpose
The purpose of the Plan is to encourage and assist eligible Agents in
adopting a regular savings and investment program and to help provide
additional security for their retirement.
Eligibility and participation
Agents who are at least 21 years of age and have completed one
Eligibility Year of Service are qualified to participate in the Plan. An
Agent is an independent contractor classified by Company as a full-time
life insurance salesman under the Federal Insurance Contributions Act
and operating under a contract directly with Company. This definition
does not include any person who is a party to a subsidy or an advance
agreement with Company. An Eligibility Year of Service is the first
twelve-month period after the date of the Agents full-time contract.
For purposes of determining eligibility, service includes any service as
an employee of the Company or of an affiliate.
An eligible Agent may become a participant in the Plan by filing an
appropriate enrollment form with the Plan Administrator (see Plan
Administrator ) which designates his rate of Pre-Tax contributions
(minimum 1%), the manner in which his contributions are to be invested
(see Investment of Contributions ), and a beneficiary to receive
benefits under the Plan in the event of the Agent s death. The
enrollment form also authorizes the Company to reduce an Agent s earned
commissions for his contributions. Enrollment forms are available from
the Company s Benefit Section. Participation in the Plan will become
effective on the Enrollment Date (which is defined as January 1, April
1, July 1, or October 1) next following (by at least 10 days) the date
the form is received by the Plan Administrator.
As of December 31, 1996, there were 1,050 Agents eligible to participate
in the Plan, and 837 Agents actually participating in the Plan.
PARTICIPATION IN THE PLAN IS ENTIRELY VOLUNTARY, AND THE EMPLOYERS MAKE
NO RECOMMENDATIONS AS TO WHETHER ANY ELIGIBLE AGENT SHOULD OR SHOULD NOT
PARTICIPATE.
Agent Contributions
A participating Agent may make Pre-Tax contributions at a rate of at
least 1%, but not more than 15%, of his earned commissions provided,
however, that the percentage rate of Pre-Tax contributions for any
highly compensated Agent shall not exceed the greater of the annual
deferral percentage allowed for the highly compensated for the
immediately preceding Plan Year, and 6%. The Agent consents to this
reduction of compensation in his enrollment form.
Contributions must be made in whole multiples of 1%. An Agent may change
the rate of contributions on any payday, by completing a new enrollment
card within ten working days prior to that payday.
Rollover Contributions
An Agent who is or may become a Participant may, in accordance with
procedures established by the LNC Benefits Committee, make a Rollover
Contribution to the Plan, in the form and manner required by the Plan
and the Code.
Suspension of Agent Contributions
A participating Agent, upon written notice to the Plan Administrator,
may suspend contributions to the Plan. An Agent who suspends
contributions may again begin contributing to the Plan only upon
executing and filing a new enrollment form (see Eligibility and
Participation ).
Company Contributions
Each Plan Year the Company will contribute from 25 cents to $1.50 for
every $1 invested, up to 6% of earnings. The amount the Company
contributes is based on the average of LNC s performance each year over
the three-year period ending with the Plan Year for which the
contribution is being determined, compared to the performance over this
same time period of a peer group of 14 companies selected by the
Compensation Committee of the LNC Board of Directors. Value sharing
return on equity, called VROE, is the measure used to determine
performance.
Contributions above 25 cents will be made when LNC s performance is
above the average performance of the peer companies. The maximum Company
contribution of $1.50 will be made when LNC s performance is equal to or
better than 75% of its peers. Amounts in between 25 cents and $1.50 will
be based on LNC s relative performance between average and the 75th
percentile. The LNC Board has complete discretion to determine this
comparative performance after each Plan Year.
Average performance is defined as the VROE average of the middle 8 peer
companies over the 3-year performance period. The 75% level of
performance is defined as the VROE average of the peer companies ranked
third, fourth and fifth.
The minimum Company contribution ($.25) will be made each pay period.
Any additional Company contribution necessary to bring the total Company
contribution to the level noted above will be made in a lump sum
following the annual determination of the ratio of percentage increase.
To be eligible for this additional amount, the individual must have been
in service with the Company or an affiliate as either a full time life
insurance salesman or an employee on the last day of the Plan Year for
which the contribution is being made.
Agents who terminated due to death, disability, or retirement are deemed
not to have terminated prior to the last day of the Plan Year for
purposes of this additional Company contribution.
Limitations on Contributions
It may be necessary to amend the Plan from time to time in order to
establish and maintain its qualified status under the Internal Revenue
Code of 1986, as amended (the Code ). These amendments may cause
prospective reductions to the Agent and Company contributions. The
Company also reserves the right to amend or terminate the Plan at any
time; however, such termination shall not affect already earned
benefits.
The Plan (and other similar plans maintained by LNC and the Company and
its affiliates), must meet specified nondiscrimination rules as
established by the Internal Revenue Service ( IRS ). The IRS has
established these rules to assure that the Plan does not favor higher
paid Agents. If it is determined that the Plan (separately or, at the
Company s option, when combined with other plans maintained by LNC and
its subsidiaries) is not in compliance and does not meet the
non-discrimination rules, adjustments may be necessary and may require
that the Plan Administrator revoke or modify the Agent s election to
make Contributions, or direct the Company to delay payment of Agent
Pre-Tax Contributions for a period not to exceed 30 days past the end of
the Plan Year in question.
If the foregoing limits are exceeded, then, first, in order to reduce
the excess, the Plan Administrator will reduce the amount of Company
contributions for that year to the extent necessary to eliminate the
excess; and, if additional adjustments are required, the Plan
Administrator will then reduce the Agent s contributions for that year,
to the extent necessary to eliminate the excess. Excess Agent
contributions will be refunded and excess Company contributions will be
held in a suspense account to reduce the amount of Company contributions
under the Plan due thereafter, or, if the Plan is terminated, the excess
amount will be allocated pro rata to the other Agents participating in
the Plan as of the date of Plan termination.
Notwithstanding the foregoing, during any calendar year, the sum of the
Agent s Pre-Tax contributions and Company contributions may not exceed the
lesser of 25% of the Agent s taxable income or $30,000. In addition, the
maximum amount of compensation to be taken into account in determining
benefits under the Plan may not exceed $160,000 for 1997, and the Agent s
Pre-Tax contributions may not exceed $9,500 for calendar year 1997. The
figures for calendar year 1998 and thereafter, may also change, depending
upon certain cost-of-living adjustments.
Investment of Contributions
All contributions under the plan will be held in trust for the Agents. All
Agents Pre-Tax and rollover (if any) contributions (and earnings thereon)
will be invested by the Trustee in one or more of the following funds at
the direction of the Agent:
1. LNC Common Stock Fund, which invests in shares of LNC Common Stock
( Common Stock or LNC Common Stock ). A fund such as the LNC Common
Stock Fund which invests in the stock of a single issuer is not
diversified and therefore is a riskier investment than a fund which
invests in a diversified pool of stocks of companies with similar
characteristics as the LNC Common Stock. The fund manager is Norwest
Bank.
2. Government Bond Fund, which directly or indirectly invests in fixed
income securities issued by the U.S. Government. This is a moderate
risk fund. Because this account invests 100% of
its monies in bonds guaranteed by the U.S. government, there is no
default risk. However, this account will often produce lower returns
than other bond accounts because of its shorter maturities and lower
risk. The Trustee currently holds a group annuity contract issued by
The Lincoln National Life Insurance Company ( LNL ) which provides
for contributions to an LNL segregated investment account whose
investment objectives are the same as those of the Government Bond
Fund. The fund manager is Lincoln Investment Management, Inc.
3. Guaranteed Fund, which invests primarily in contracts which guarantee
a rate of interest and principal. This fund is considered a safe
investment because of the guarantee of the principal investment, as
well as a minimum interest guarantee. The Trustee currently holds a
group annuity contract issued by LNL which is the primary asset of
this Fund. The fund manager is Lincoln Investment Management, Inc.
4. Core Equity Fund, which directly or indirectly primarily invests in
the common stock of established companies. This is a conservative
equity fund and has lower risk than investments in the more
aggressive equity funds, because this fund invests primarily in
large, well-established companies which are generally less risky than
a new company or a company that is not well established. The Trustee
currently holds a group annuity contract issued by LNL which provides
for contributions to an LNL segregated investment account whose
investment objectives are the same as those of the Core Equity Fund.
The fund manager is Vantage Global Advisors, Inc.
5. Medium Capitalization Equity Fund, which directly or indirectly
primarily invests in the stock of new, rapid growth companies. This
is a high risk aggressive equity fund and is riskier than investments
in large, established companies, because the stock of medium-size
companies may not be as well known and may experience more sudden
fluctuations. The Trustee currently holds a group annuity contract
issued by LNL which provides for contributions to an LNL segregated
investment account whose investment objectives are the same as those
of the Medium Capitalization Equity Fund. The current description of
that segregated account identifies it as a high-risk, aggressive
common stock fund. The fund manager is Provident Investment Counsel.
6. Short Term Fund, which invests directly or indirectly primarily in
notes of government agencies and private corporations. This is
considered a low risk investment. Because investments in this fund
are high quality and have short maturities, they are considered
relatively safe. However, the fund will generally produce lower
returns than both bonds and stocks. The Trustee currently holds a
group annuity contract issued by LNL which provides for contributions
to an LNL segregated investment account whose investment objectives
are the same as those of the Short Term Fund. The fund manager is
Lincoln Investment Management, Inc.
7. 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 over an 18 to 24-month
period. The additional risk over that associated with other common
stock funds may result in greater returns. The Trustee currently
holds a group annuity contract issued by LNL which provides for
contributions to an LNL segregated investment account whose
investment objectives are the same as those of the Large
Capitalization Equity Fund. The fund manager is Lynch & Mayer, Inc.
8. Government/Corporate Bond Fund, which invests directly or indirectly
in Corporate and U.S. Government bonds, and mortgage-backed
securities. This is a moderate risk fund, with less risk than the
High Yield Fund because it invests mostly in higher-quality bonds.
The Trustee currently holds a group annuity contract issued by LNL
which provides for contributions to an LNL segregated investment
account whose investment objectives are the same as the Government/
Corporate Bond Fund. The fund manager is Lincoln Investment
Management, Inc.
9. Value Equity Fund, which directly or indirectly primarily invests in
large capitalization stocks of conservative companies which are
leaders in their industries. This is a conservative stock account.
Therefore, investments in this account are not as risky as
investments in aggressive equity accounts because the account invests
in stocks of large, well-known companies that are bought at low
prices but which have strong earning power. The Trustee currently
holds a group annuity contract issued by LNL which provides for
contributions to an LNL segregated investment account whose
investment objectives are the same as those of the Value Equity Fund.
The fund manager is first Fiduciary Investment Counsel, Inc.
10.International Equity Fund, which directly or indirectly invests in
stocks of non-United States companies. The International Equity Fund
is an aggressive equity account which is a high-risk investment in
non-U.S. stocks involving the same type of risk as in domestic
aggressive equity stocks but bears an additional risk factor because
of changes in the exchange rates between U.S. dollars and foreign
currencies and other variables associated with international
investing. The Trustee currently holds a group annuity contract
issued by LNL which provides for contributions to an LNL segregated
investment account whose investment objectives are the same as those
of the International Equity Fund. The fund manager is Walter Scott &
Partners Limited.
11.High Yield Fund, which directly or indirectly primarily invests in
below-investment-grade bonds. This is a high-risk fund. There is
greater risk in investing in this fund than in the Government/
Corporate Bond Fund because this fund invests in lower-quality
bonds (commonly known as junk bonds ) and there is a higher chance
that the issuer will not be able to repay the promised interest or
principal. The Trustee currently holds a group annuity contract
issued by LNL which provides for contributions to an LNL segregated
investment account whose investment objectives are the same as
those of the High Yield Bond Fund. The fund manager is Lincoln
Investment Management, Inc.
12.Small Capitalization Equity Fund, which directly or indirectly
primarily invests in stocks of small companies which have the
potential to grow rapidly and produce superior returns. This Fund
is an aggressive equity account that has higher risk than
investments in large- and medium-sized companies. The additional
risk over that associated with other common stock funds may result
in greater returns. The Trustee currently holds a group annuity
contract issued by LNL which provides for contributions to an LNL
segregated investment account whose investment objectives are the
same as those of the Small Capitalization Equity Fund. The fund
manager is Delaware Management Holdings, Inc.
13.Balanced Fund , which directly or indirectly primarily invests in
three different assets classes: stocks, bonds, and money market
instruments. Because the Balanced Fund contains a wide variety of
investments, it has a correspondingly wide variety of risk
characteristics across those securities. A wide variety of risk
characteristics means that balanced accounts can have less volatility
over time than a fund which invests in only one type of security. The
Balanced Fund is riskier than a pure bond account but less risky than
a conservative stock account. The Trustee currently holds a group
annuity contract issued by LNL which provides for contributions to an
LNL segregated investment account whose investment objectives are the
same as those of the Balanced Fund. The fund manager is Lincoln
Investment Management, Inc.
Depending on his or her investment needs and objectives, an Agent may
concentrate or diversify the investment of deposits in the funds listed
above. Any direction by an Agent for the investment of deposits will be
deemed a continuing direction until changed by the Agent. The trustee will
invest an Agent s deposits in the short term fund if no investment
direction is in effect. All Company contributions (and earnings thereon),
when made, will be invested by the Trustee in the LNC Common Stock Fund.
Distributions will generally be in cash or, in the case of the LNC Common
Stock Fund, in LNC Common Stock. The named fiduciary reserves the right to
direct the Trustee to make distributions of assets of the Trust in kind
(see Distributions ).
An Agent may terminate his election to invest in a particular Fund or
change investment selection for his future deposits by filing with the
Plan Administrator a written direction specifying such termination or
change. In addition, other than with respect to Company contributions
which have not matured (been in the Plan for at least two Plan Years after
the Plan Year for which they were contributed), an Agent may, no more than
once each quarter, transfer part or all of the current Fund balances to
another Fund or Funds, subject to any limitations imposed by a particular
fund. Forms for making changes are available from the Company s Benefits
Section. Any such terminations, changes, or transfers permitted by this
paragraph and for which the Plan Administrator is given proper written
direction, will take effect on a date to be determined by the Plan
Administrator, which, under normal circumstances, will be the next
valuation date following receipt of the written direction. In the event
market conditions restrict the ability of the Trustee to comply with
transfer requests, transfer amounts will be pro-rated per each Participant
making a transfer request. This will be based on the total value of the
amounts being requested for transfer.
Amounts contributed to the Plan will be invested by the Trustee as soon as
reasonably possible after receipt, and in accordance with the Agent s
directions and the provisions of the Plan. Assets acquired under the Plan
are purchased primarily in the open market. In addition to purchasing LNC
Common Stock on the open market, the Trustee may from time to time
purchase authorized and unissued shares directly from LNC, or purchase
outstanding shares directly from LNC shareholders. Under the terms of the
Plan certain fees, commissions, and other expenses are charged to the
Plan.
The election of investment Funds is the sole responsibility of the Agent
and should be made in light of his investment needs and objectives. The
following Table sets forth, for the various Investment Funds in the Plan,
the annualized yield earned on investments in those Funds (assuming the
reinvestment of dividends and interest, respectively) for the Plan Years
1992 through 1996. The comparison is based on past performance of the
Investment Funds and is not necessarily indicative of future performance.
AGENTS PLEASE READ:
THIS TABLE HAS BEEN PREPARED TO ASSIST YOU IN MAKING YOUR INVESTMENT
DESIGNATIONS UNDER THE PLAN. HOWEVER, THE VALUE OF THIS INFORMATION IS
LIMITED, AND YOU SHOULD CONSULT A QUALIFIED INVESTMENT ADVISER BEFORE
MAKING YOUR DESIGNATIONS.
Comparative performance of investment funds
[Percentage increase/(decrease) in value of investments, assuming such
investments were held in each fund for a Plan Year](1)
Plan Year
Investment Fund 1992 1993 1994 1995 1996
LNC Common Stock Fund 37.51% 15.10% (16.06%) 59.95% 1.56%
Government Bond Fund 6.81% 7.21% (1.60%) 14.1%) 4.4%
Guaranteed Fund(3) 8.15% 7.25% 7.27%) 6.9%) 6.8%
Core Equity Fund 2.00% 11.63% 1.00%) 38.0%) 20.4%
Medium Capitalization
Equity Fund(2) 12.01% 12.71% (2.40%) 32.6%) 14.8%
Short Term Fund 3.49% 2.97% 3.90%) 6.2%) 5.6%
Large Capitalization
Equity Fund(2) 6.24% 10.88% (2.50%) 29.5%) 18.9%
Government/Corporate
Bond Fund 7.25% 12.36% (4.00%) 20.2%) 2.5%
Balanced Fund(4) N/A N/A (2.30%) 25.5%) 10.5%
High Yield Fund(4) N/A N/A .40%) 18.4%) 11.3%
Value Equity Fund(4) N/A N/A (.70%) 31.4%) 17.1%
Small Capitalization
Equity Fund(2)(4) N/A N/A (3.60%) 15.9%) 5.2%
International Equity
Fund(2)(4) N/A N/A 1.40%) 11.2%) 10.3%
Footnotes:
(1) The yield information given here is measured by overall performance
of each Fund as if the investments were held for the entire Plan
Year. This table should not be compared to tables presented prior to
April 30, 1986. For the 1990 Plan Year, the last day of the Plan Year
was December 30. For all other years it is December 31.
(2) This is a high-risk fund. See Investment of Contributions , in this
Prospectus.
(3) Effective January 1, 1991, the Plan began offering the Large
Capitalization Equity Fund.
(4) Effective April 1, 1994, the rate which is guaranteed is no longer
guaranteed for twelve (12) months, but rather just for the calendar
quarter in which the investment is received. Monies invested in
quarters beginning prior to April 1, 1994, are guaranteed at a
minimum to be credited with a rate of interest not less than the
guaranteed rate on those monies for the remainder of the period of
the existing guarantee.
(5) Effective April 1, 1994, the Plan began offering the Balanced Fund,
High Yield Fund, Value Equity Fund, Small Capitalization Equity Fund,
and the International Equity Fund.
RISK FACTORS
BECAUSE OF FLUCTUATIONS IN THE STOCK MARKET WHICH ARE GENERALLY INHERENT
IN COMMON STOCK INVESTING, IT SHOULD BE NOTED THAT INVESTMENT IN EQUITY
(I.E., STOCK) FUNDS IS GENERALLY MORE RISKY THAN INVESTMENT IN BOND FUNDS,
THE SHORT TERM FUND OR THE GUARANTEED FUND.
Investing in Foreign Securities. Investments in foreign securities involve
risks that are different in some respects from investments in securities
of U.S. issuers, such as the risk of fluctuations in the value of the
currencies in which they are denominated; the risk of adverse political
and economic developments; and, with respect to certain countries, the
possibility of expropriation, nationalization, or confiscatory taxation, or
of limitations on the removal of funds or other assets of the particular
fund in question. Securities of such foreign countries are less liquid and
more volatile than securities of comparable domestic companies.
There may be less publicly available information about foreign issuers
than domestic issuers, and foreign issuers generally are not subject to
the uniform accounting, auditing and financial reporting standards,
practices and requirements applicable to domestic issuers. Delays may be
encountered in settling securities transactions in certain foreign markets,
and the Fund in question will incur costs in converting foreign currencies
into U.S. dollars. Custody charges are generally higher for foreign
securities. Special currency-hedging strategies may also be necessary as
the relationship of the foreign issuer s currency to the U.S. dollar
changes.
High-Yield/High Risk Bonds. Lower-rated bonds involve a higher degree of
credit risk (the risk that the issuer will not make interest or principal
payments when due). In the event of an unanticipated default, the Fund in
question would experience a reduction in its income, and could expect a
decline in the market value of the securities so affected. During an
economic downturn or substantial period of rising interest rates,
highly-leveraged issuers may experience financial stress which would
adversely affect their ability to service their principal and interest
payment obligations, to meet projected business goals, and to obtain
additional financing.
The market prices for lower-grade securities are generally less sensitive
to interest rate changes than are the prices for higher-rated investments,
but they are more sensitive to adverse economic or political changes (or,
in the case of corporate issuers, to individual corporate developments.)
Periods of economic or political uncertainty and change can be expected to
result in volatility of prices of these securities. Since the last major
economic recession, there has been a substantial increase in the use of
high-yield debt securities to fund highly-leveraged corporate acquisitions
and restructurings, so past experience with high-yield securities in a
prolonged economic downturn may not provide an accurate indication of
future performance during such periods. Lower-rated securities may also
have less liquid markets than higher-rated securities, and their liquidity
as well as their value may be negatively affected by adverse economic
conditions. Adverse publicity and investor perceptions, as well as new or
proposed laws, may also have a negative impact on the market for
high-yield/high-risk bonds. Finally, unrated debt securities including
sovereign debt of foreign governments may also be deemed high-risk
securities by the Fund in question.
Valuation of Investments
Securities authorized for investment under the Plan will be valued as of
the Valuation Date on the basis of (1) the closing price on an exchange on
which such securities are listed, (2) the average bid quotations for such
securities (3) quotations from other sources deemed by the Plan
Administrator to be reliable as fairly reflecting the market price or
redemption price of the securities, (4) the value as reported by an
insurance company with respect to a segregated investment account in which
the Plan invests, or (5) the average sale or purchase price of the
securities when the Trustee is required to sell or purchase securities on
the open market to comply with the requests of employees. A Valuation Date
is the date following a payday, on which all distributions, loans and
transfers are processed but normally no longer than 14 days from the
payday following receipt of the written request. The named fiduciary may
declare additional Valuation Dates throughout the year.
Expenses of the Plan
Certain expenses relating to the Plan are charged against the investments
in the individual account. Auditing fees are charged to all the funds.
Brokerage fees and trustee fees, however, are charged only to the LNC
Common Stock fund. Investment management fees are charged to each of the
other funds. Expenses per participant vary, based on the investment fund
selected. More specific information about these fees is available upon
request.
Vesting
An Agent is fully vested in his Pre-Tax contributions under the Plan at
all times.
Company contributions vest based upon years of service:
Years of Service Percent Vested
1 0%
2 50%
3 or more 100%
A year of service means any calendar year in which the Agent is at least
18 years of age and is either a full-time life insurance salesman or an
employee in the service of the Company, LNC, or an affiliate on the last
day of that Plan Year.
Accounts
The Trustee will establish and maintain for each participating Agent
separate participant accounts. A Pre-Tax Contribution Account will be
created for each participating Agent to hold the portion of an Agent s
interest in the Plan which is attributable to his Pre-Tax contributions.
An After-Tax Contribution Account will also be maintained for each Agent
who had an interest in the Plan attributable to his After-Tax
contributions prior to 1989. Company Contribution Accounts will be
created for each participating Agent to hold the portion of his interest
in the Plan which is attributable to Company contributions made on that
Agent s behalf, including one account for Company contributions that have
been in the Plan for at least two Plan Years after the Plan Year for which
they were contributed, and a second account for Company contributions in
the Plan less than two Plan Years after the Plan Year for which they were
contributed. A Rollover Account will be created to hold rollover
contributions, if any, accepted into the Plan.
Shortly after the end of each Plan Year, the Trustee will furnish to each
participating Agent a current statement of his accounts in the Plan. This
statement will indicate the amount of investments purchased during the
Plan Year with that Agent s contributions and Company contributions, the
amount, if any, of cash credits to that Agent s accounts and a statement
of the assets currently being held by the Trustee for that Agent. Within
nine months after the end of each Plan Year, the Plan Administrator will
furnish each participating Agent a Summary Annual Report (see Agents
Rights under ERISA ). Appropriate adjustments resulting from stock
dividends, stock splits and similar changes will be made in Agent s
accounts invested in the LNC Common Stock Fund.
Withdrawals
If a participating Agent needs to withdraw money, the Agent may do so, but
the rules for withdrawing money differ for withdrawals from different
accounts.
An Agent may withdraw the entire balance of his After-Tax Account for any
completed Plan Year subject to any limitation applicable to the Fund in
which such contribution is invested. An Agent may elect to withdraw all or
a portion of his Matured Company Contribution Account, subject to any
limitation of the Investment Fund in which is it invested and further
subject to the following limitations: 1) the minimum amount an Agent can
withdraw is $500; 2) if the amount in the Matured Company Contribution
Account is less than $500, the Agent must withdraw the entire amount; 3)
no more than four withdrawals may be made in twelve months; and, 4) the
Agent cannot make withdrawals if the Plan is terminated or if a notice of
Plan termination has been issued.
Even though an Agent may be 100% vested in Company contributions, only the
Matured Company contributions may be withdrawn. These are contributions
that have been in the Plan for at least two Plan Years after the Plan Year
for which they were contributed. Non-matured Company contributions are
amounts contributed which have not been in the Plan for at least two Plan
Years after the Plan Year for which they were contributed, and are not
available for withdrawal.
An Agent may withdraw all or a portion of the Rollover Account, subject
to any withdrawal limitations which apply to the Fund in which the
Account is invested and further subject to the following limitations: 1)
the minimum withdrawal is $500; 2) no more than four withdrawals may be
made in twelve months; 3) amounts attributable to Company contributions
which were rolled over to the Plan as the result of a spinoff or merger
of the Agents prior plan in the Account may not be withdrawn for two
years from the date of the rollover; and, 4) the Agent cannot make
withdrawals if the Plan is terminated or if a notice of Plan termination
has been issued.
If an Agent has no balance in his After-Tax Contribution Account, or his
Matured Company Contribution Account, and he has attained age 59-1/2, he
may make a full withdrawal or partial withdrawals from his Pre-Tax
Contribution Account, subject to the following conditions: 1) these
withdrawals are limited to 4 in a 12-month period; 2) each must be for a
minimum of $500; and 3) the maximum available for withdrawal will be
reduced, under a formula provided in the Plan, if the Agent has
outstanding loan balances with the Plan at the time he requests
withdrawal.
If an Agent has no balance in his After-Tax Contribution Account,
Matured Company Contribution Account or Rollover Account and has not
attained age 59-1/2, then it may be possible for that Agent to withdraw
amounts which the Agent contributed (not including earnings on such
amounts) from the Pre-Tax Contribution Account for a hardship. Only the
following four situations are currently designated by I.R.S. regulations
to be hardship situations: 1) existence of nonreimbursable medical
expenses; 2) tuition and related educational fees for post-secondary
education for the Agent or the Agent s dependents; 3) purchase of a
primary residence; and 4) imminent foreclosure of or eviction from the
Agent s primary residence. Such a withdrawal must be demonstrably
necessary due to an Agent s immediate and heavy financial need and the
withdrawal cannot exceed the exact amount required to meet the hardship.
(However, the withdrawal may include an amount necessary to pay any
taxes and penalties associated with the withdrawal.) In order to be
deemed to meet the immediate and heavy financial need requirement, the
Agent must fulfill the following conditions: 1) the Agent must have
obtained all distributions other than hardship distributions, and all
non-taxable loans currently available under all plans maintained by the
Company; 2) the Agent may not make any contributions to the Pre-Tax
Contribution Account or to any other pension, profit-sharing or deferred
compensation plan for 12 months from the date of receipt of the hardship
withdrawal; and 3) the amount which may be contributed to the Pre-Tax
Contribution Account during the calendar year after the year in which
the hardship withdrawal is received is reduced by the amount contributed
by the Agent in the year of the hardship withdrawal.
Subject to the foregoing discussion, a withdrawal will be made upon the
written request of the Agent delivered to the Plan Administrator. At the
election of the Agent, the Trustee will deliver to the Agent the
securities and cash in the applicable account, or a total cash
distribution (based upon the current market value or any applicable
current redemption value of the securities in the account as of the date
of withdrawal). See Fractional Shares for settlement of fractional
share interests in LNC Common Stock.
A withdrawal payment will be paid by check normally within 60 days after
the Valuation Date.
Agent Loans
An Agent may, subject to the consent of the Plan Administrator, obtain a
loan from the Plan. The amount which the Agent may borrow is determined
as follows:
1. The Agent may borrow up to fifty percent (50%) of the VESTED
ACCOUNT, but not more than the total value of the Pre-Tax
Contribution, matured Company Contribution, and Rollover Accounts,
and further limited to a maximum loan in any event of $50,000.
VESTED ACCOUNT is defined to mean the value of Pre-Tax
Contributions, After-Tax Contributions, Vested Company
Contributions (if any), and the Rollover Account.
2. The $50,000 maximum loan referred to in (1) above will be further
reduced by the highest outstanding loan balance for the previous
12-month period.
3. The loan will be evidenced by a written note which provides for
repayment by the Agent through payroll deduction over a period of
one, three or five years (10, 15, or 20 years if the loan is used
to acquire a principal residence of the Agent, as defined by
Section 267(c)(4) of the Code) and for interest at the then
prevailing rate for loans of a similar nature.
4. The loan is subject to withdrawal restrictions applicable to the
Funds in which the Pre-Tax Contribution Account, the matured
Company Contribution Account, and the Rollover Account are
invested.
5. In the event that an Agent has an outstanding loan balance when his
Pre-Tax Contribution Account is paid to him or to his beneficiary
on account of disability, termination or attainment of age 59-1/2,
the loan balance (including accrued interest) will be deducted from
the amount otherwise payable.
6. In the event that an Agent has an outstanding loan balance when
his/her account is paid to him/her upon death, the promissory note
shall be distributable to his/her beneficiary.
7. The LNC Benefits Committee shall adopt written loan procedures
which may impose such other terms and conditions in its sole
discretion. These are available upon request from the Benefits
Section, LNC Human Resources.
Distributions
Vested Amounts
Distribution of the Pre-Tax Contribution Account is not made until
termination of service or attainment of age 59-1/2 (see below). All
amounts in the Agent s non-matured Company Contribution Account are
transferred to the matured Company Contribution Account as soon as
practicable after December 31 of the year in which these contributions
have been in the Plan for two years. An Agent who has invested in funds
other than the LNC Stock Fund will generally not receive the underlying
investment at distribution; subject, however, to the Plan Administrator
directing the Trustee to make an in-kind distribution. Instead, the
Trustee will distribute in cash the value of the Agent s proportionate
share of the fund in which his contributions have been invested.
Distributions from the LNC Stock Fund are, at the election of the Agent,
in cash or in kind. (see Fractional Shares for treatment of fractional
share interest in LNC Common Stock.) The amount in an Agent s Pre-Tax
Contribution Account will only be distributed upon an Agent s death,
disability, retirement or termination of service with the Company and
all its affiliates.
Death, Disability, Retirement or Termination of Service
An Agent (or his beneficiary or legal representative in the event of his
death) will be entitled to the full value of the Agent s Pre-Tax
Contribution, Company Contribution, and After-Tax Contribution Accounts
upon the date of his termination of service by reason of death,
disability or retirement ( Termination Date ). Such amount shall be paid
in a lump sum, in accordance with the following rules:
1. If the total amount of the distribution is no more than $3,500 or
if the distribution is to a Beneficiary on account of the death of
a Agent, distribution shall be made either (i) as soon as
practicable after the last day of the Plan Year in which an Agent s
Termination Date occurs, unless the Plan Administrator in its sole
discretion directs an earlier distribution; or (ii) in the case of
an Agent s Termination Date prior to age 55, as soon as practicable
after that Termination Date.
2. If the total amount of the distribution is greater than $3,500, the
agent s termination date is prior to age 55, and the Agent has
elected in a writing filed with the Plan Administrator to receive
the distribution, distribution shall be made as soon as practicable
after his Termination Date.
3. If the total amount of the distribution is greater than $3,500 and
the Agent has not filed an election in accordance with Rule (2)
above, distribution shall be made no later than the sixtieth
calendar day next following the last day of the Plan Year in which
the latest of the following occurs: (i) the Agent attains age 65
years; (ii) the Agent s Termination Date occurs; or (iii) the 10th
anniversary of the Plan Year in which the Agent commenced his
participation in the Plan.
If an Agent s service is terminated prior to age 55 and for any reason
other than death or disability, the balances in all of his accounts,
except the balance in his Company Contribution Account which is
non-vested and earnings thereon, will be distributable.
Periodic Withdrawals of Distributions
At retirement
As an alternative to taking a lump sum distribution when the Agent
retires, the Agent may leave the distribution amount in the Plan and
make periodic withdrawals. These withdrawals are limited to one per
calendar year and must be the greater of $3,500, or 20% of the account
value. If the Agent has a balance in his or her account when he or she
reaches age 70-1/2, this balance will be automatically distributed to
the Agent on the April 1 following attainment of age 70-1/2. (NOTE: If
there is an outstanding loan balance at the time of retirement, the
Agent must repay the entire amount before making periodic withdrawals
from the distribution amount.)
At disability
If the Agent becomes eligible for a distribution from the Plan, he or
she may, as an alternative to taking a lump sum distribution, make
periodic withdrawals. These withdrawals are limited to one per calendar
year and must be the greater of $3,500, or 20% of the Agent s account
value. (NOTE: If there is an outstanding loan balance at the time of
retirement, the Agent must repay the entire amount before making
periodic withdrawals from the distribution amount.)
At death
As an alternative to the Agent s beneficiary taking a lump sum
distribution of the Agent s account at the time of the Agent s death,
the beneficiary may leave the distribution in the Plan for up to five
years and make periodic withdrawals. These withdrawals are limited to
one per calendar year and must be the greater of $3,500, or 20% of the
Agent s account value in the name of such beneficiary. For example, if
the account value is $7,000 on the date of the Agent s death, and the
Agent has designated two beneficiaries, they must take an immediate
distribution.
In the event that an Agent forfeits amounts in his/her Company
Contribution Account and such Agent does not incur a 5-year-break-in-
service, such forfeited amount shall be recredited to his/her Company
Contribution Account upon his/her return to service as an agent or
employee of the Company, LNC or an Affiliate, and shall vest in
accordance with the Plan s vesting schedule. A 5-year-break-in-service
is a period of five consecutive Plan Years, beginning with the Plan Year
in which the Agent terminates, during which the Agent is not a full-time
life insurance salesman under the Internal Revenue Code of 1986, as
amended, a general agent, or an employee of Company, LNC or an Affiliate
on the last day of each Plan Year. For the purposes of determining a
break-in-service, any Plan Year in which an Agent is absent from work on
the last day of the Plan Year on account of pregnancy of the Agent; the
birth of a child of the Agent; the placement of a child with the Agent
in connection with the adoption of that child by that Agent; or the care
of a child for a period beginning immediately after a child s birth or
placement because of the preceding three reasons, and the Agent is a
full-time life insurance salesman under the Federal Income Contributions
Act, a general agent, or an employee of the Company, Related Company or
Affiliate on the last day of the Plan Year next following the Plan Year
in which the Agent s termination occurs, shall not be counted in
determining the break-in-service. If an Agent is no longer a full-time
life insurance salesman and becomes an employee of the Company or of an
Affiliate, no further contributions will be made on behalf of that Agent
and the securities and cash in his Company Contribution Account will
continue to vest.
Fractional Shares
Interests in fractional shares of LNC Common Stock will not be subject
to distribution or withdrawal. Rather, fractional share interests in LNC
Common Stock will be paid in cash on the basis of the market value of
such security, as of the valuation date immediately preceding the date
of distribution, termination of service or withdrawal, as may be
applicable.
Company Contribution Account
Automatic Crediting of Account Balances
Two years after the end of any given Plan Year, the then value of an
Agent s non-matured Company Contribution Account from that given year
shall be automatically credited to the Matured Company Contribution
Account as of the Valuation Date following the end of that given Plan
Year.
Withdrawals from the Company Contribution Account
Subject to certain restrictions, an Agent may from time to time withdraw
all or any part of the assets in his Matured Company Contribution
Account. (See Withdrawals )
Investment of Contributions
The Trustee will administer the Matured Company Contribution Account
assets in a manner similar to that applicable to the other accounts
until the Agent s Termination Date (see Investment of Contributions ).
Beneficiary Designation
Each Agent may designate on an appropriate form filed with the Plan
Administrator, a beneficiary or beneficiaries to whom, in the event of
the Agent s death, any securities and cash to which the Agent is
entitled under the Plan will be payable. A beneficiary designation may
be changed or cancelled by an Agent from time to time by filing an
appropriate form with the Plan Administrator. If the Agent was married
on the date of his death, his surviving spouse shall be deemed to be his
Beneficiary, unless that surviving spouse has consented (in the manner
required by the Code) by writing filed with the Plan Administrator in
such form as it may require, to the otherwise effective Beneficiary
designation by the Agent. If no Beneficiary designated by the Agent
survives to receive payment of benefits on account of the death of the
Agent, then payment shall be made to the Agent s surviving spouse, if
any, or, if none, to the estate of the Agent.
Assignment
No right or interest of any Agent or beneficiary in the Plan is
assignable or transferable in whole or in part, either directly or by
operation of law or otherwise, including, without limitation, execution,
levy, garnishment, attachment, pledge, or bankruptcy, except in
connection with a loan from the Plan to an Agent, or as provided under
the terms of a qualified domestic relations order ("QDRO") (as defined
in 414(p) of the Code) as determined by the Plan Administrator. The LNC
Benefits Committee shall adopt QDRO procedures which shall be available
upon request from the Benefits Area.
Amendment or Termination
By action of its Board of Directors, the Company may terminate or amend
the Plan or suspend the operation of any provision of the Plan,
provided, however, that:
1. No amendment shall be made which will result in the recovery by the
Company of any part of its contribution to the Plan, except under
limited circumstances as may be provided under the trust agreement
and permitted under the Code;
2. Any amendment that affects the rights and duties of the Trustee may
be made only with the consent of the Trustee;
3. No amendment of the Plan shall affect the rights of an Agent as to
the continuance of vesting of such securities and cash attributable
to Company contributions or earnings thereon;
4. Upon the termination or suspension of the Plan, the rights of all
Agents to the amounts credited to their account as of the date of
such termination or suspension shall be nonforfeitable.
Administration of the Plan
Trustee
The Company, acting by its Board of Directors, has the authority to
appoint one or more individuals or corporations to act as Trustee. The
Trustee is responsible for the custody, investment and distribution of
Plan assets. No specific bond is furnished by the Trustee in connection
with custody of Plan assets.
The Trustee, Norwest Bank Indiana, N.A., 111 East Wayne Street, Fort
Wayne, Indiana, 46802 ( NBIN ), is a major banking facility used in
processing monies received by the Company and its affiliates and is the
principal bank through which the Company and its affiliates make
payments to policyholders and others. As of April 30, 1997, the Company
and its affiliates owned no outstanding common stock of the Trustee;
however, Ian M. Rolland, Chief Executive Officer of LNC, is on the board
of directors of the Trustee. The Trustee, in its capacity as trustee for
various corporations and individuals, may own shares of LNC Common Stock
for its beneficiaries.
The Trustee serves pursuant to the terms of a written trust agreement.
This agreement is available for inspection by Plan participants. The
Company may discharge or remove the Trustee and appoint a successor
Trustee upon 30 days written notice to the Trustee; provided, however,
that such successor is a banking institution legally qualified to serve
as a Trustee. In the event of discharge or removal, the Trustee agrees
to transfer the Trust assets to its named successor, and upon such
transfer, the Trustee will be discharged and relieved of its duties. In
the event of discontinuance of the Plan, the Trust Agreement may be
discontinued by action of the Company s Board of Directors; provided,
however, that until all assets of the trust have been distributed, the
Trustee will have all the rights and powers given to it by the Trust
Agreement.
The Company assumes all expenses reasonably incurred by the Trustee in
connection with the administration and operation of the trust and the
Plan. The Trustee receives no compensation from the assets of the Plan.
Plan Administrator
The LNC Benefits Committee ( Committee ) is the Plan Administrator and
Named Fiduciary. Members of the Committee are appointed by the Chief
Executive Officer of LNC. A listing of current members appears below.
Members of the Committee are named fiduciaries , as that term is
defined by ERISA, and, as such, have the authority to control and manage
the operation and administration of the Plan. Members of the Committee
receive no compensation from the Plan.
The Committee s responsibilities include enforcing the Plan in
accordance with its terms; determining all questions arising under the
Plan (including determinations of eligibility and of benefits payable);
and directing payments of benefits. In aid of its responsibilities, the
Committee is empowered to adopt regulations and procedures necessary for
the proper and efficient administration of the Plan.
A Committee member may resign by giving 10 days written notice to the
Company, to the Company, and to the other Committee members. The Company
may remove a member at any time by giving advanced written notice to the
member, to the Company, and to the other Committee members.
Members of the Lincoln National Corporation Benefits Committee
Committee
Name Title Title
George E. Davis Member Senior Vice President of LNC
Peter P. Fettig Member Assistant Secretary of LNC
Collin Kebo Member American States Insurance Company
B. Jane Kite Member Second Vice President of Lincoln
Investment Management, Inc.
Martha K. Mullins Member Manager, Payroll & Benefit
Services
Denise L. Whiteside Member Associate Director Reinsurance
Luann Boyer Member Agents Benefits Manager
The business address of Messrs. Davis, Fettig and Ms. Kite is 200 E.
Berry Street, Fort Wayne, Indiana 46802-2706; the business address of
Mr. Kebo is 500 North Meridian Street, Post Office Box 1636,
Indianapolis, Indiana 46206; the business address of Ms. Boyer and Ms.
Mullins is 1300 South Clinton Street, Fort Wayne, Indiana 46802-3506;
the business address of Ms. Whiteside is 1700 Magnavox Way, Fort Wayne,
Indiana 46804.
Voting of Shares
Voting rights with respect to all securities held by the Plan will be
exercised by the Trustee or by a proxy solicited by the Trustee.
Federal Income Tax Consequences
The following is a general discussion of the federal income tax effects
of participation in the plan based on provisions of the Code and
applicable regulations as in effect as of the date of this Supplement to
the Prospectus. The actual tax consequences for any individual will
depend on his or her own circumstances. EACH AGENT SHOULD CONSULT A
QUALIFIED TAX ADVISER TO DETERMINE THE APPLICATION OF THE FEDERAL INCOME
TAX LAWS TO HIS OR HER INDIVIDUAL CIRCUMSTANCES.
The Plan is a qualified employee benefit plan under Section 401(a) of
the Code. Company contributions to the plan are deductible by the
Company under Section 404(a) of the Code. Agents will not be subject to
Federal Income Tax on Company contributions, on their contributions, or
on income of the trust except to the extent they receive distribution or
withdrawals from the Plan. Agents will not be taxed on loans from the
Plan made in accordance with Federal Tax requirements if they are repaid
in accordance with their terms. Agents Pre-Tax contributions will,
however, be subject to social security taxes and federal unemployment
taxes. Income of the trust is exempt from federal income tax.
The Code limits current contributions to the lesser of 15% of
compensation or $7,000 annually, with certain cost of living adjustments
($9,500.00 for the 1997 tax year). The Code also requires that the sum
of Pre-Tax contributions, Company contributions plus all After-Tax
contributions may not exceed the lesser of 25% of compensation or
$30,000.00 (also subject to certain cost of living adjustments).
Amounts received by an Agent upon withdrawal prior to termination of
service will be taxable as ordinary income to the extent that the
amounts received exceed the amount of that Agent s After-Tax
contributions made prior to January 1, 1987 and not previously received
( Net Unrecovered Contributions ). Once the amount of After-Tax
contributions made prior to January 1, 1987, is deemed to have been
recovered, subsequent distributions will be taxed as pro-rata
distributions of After-Tax contributions and earnings thereon. If the
Agent receives LNC Common Stock, the fair market value of the stock on
the date of distribution over its basis ( Net Unrealized Appreciation )
attributable to that Agent s After-Tax contributions will not be taxed
at the time of distribution (unless the Agent elects to be taxed at that
time, under procedures to be prescribed by the IRS).
In general, a distribution under the Plan upon an Agent s retirement,
disability, death, or other separation from service is taxable as
ordinary income to the extent that it exceeds the amount of the Agent s
Net Unrecovered Contributions and Net Unrealized Appreciation attributed
to the Agent s After-Tax contributions (unless the Agent elects to be
taxed on this latter amount). However, if distribution of all amounts to
the Agent s credit under the Plan is received within one taxable year in
a lump sum distribution as defined in Section 402(e) of the Code and the
Agent does not rollover all or a part of the lump sum distribution, the
Agent will be taxed as follows:
1. The Net Unrecovered Contributions and the total Net Unrealized
Appreciation in LNC Common Stock received are not taxable to the
Agent.
2. The remaining amount is taxable to the Agent as ordinary income and
may be eligible for a special income averaging method of taxation.
The special income averaging rules, for amounts distributed, have
been modified, subject to transitional rules for individuals who
attained age 50 before January 1, 1986.
An Agent may also be eligible to make a tax-free rollover of a
distribution of the Agent s Accounts. In general, the amount that may be
rolled over is the taxable portion of the distribution. If less than
100% of the balance of the Agent s Accounts is distributed, any
subsequent distribution will not be eligible for the special lump sum
distribution rules described above. If 100% of the balance of the
Agent s Accounts is distributed, the rollover may be made to an
individual retirement account or annuity or to another qualified plan.
Rollovers must be made within 60 days of receipt of the distribution and
are subject to other rules.
The Code provisions for required distributions from the Plan have been
modified and no longer require distributions to commence by April 1 of
the calendar year after an Agent attains age 70-1/2, even if the Agent
has not separated from service. Distributions prior to death, disability
or age 59-1/2 are subject to a penalty tax of 10% of the taxable amount
distributed unless certain exceptions are applicable. A 15% penalty tax
will generally be imposed on the aggregate amount of distributions from
the Plan and other specified retirement arrangements in excess of
$150,000 annually, (waived for distributions made in 1997, 1998 and
1999) subject to transitional rules and certain other special rules.
For purposes of taxation on the subsequent sale or disposition of any
LNC Common Stock received by an Agent in a distribution, the Agent s
basis in the stock will be equal to the sum of the amount of the
distribution that is required to be included as income by the Agent in
the year of distribution plus the amount, if any, of the distribution of
the LNC Common Stock attributable to the Agent s After-Tax contributions
(plus any other amount of the distribution of LNC Common Stock on which
the Agent was taxed at his election at the time of distribution). Upon
the sale or other taxable disposition of the LNC Common Stock acquired
from the Plan as a lump sum distribution as defined in Section 402(e) of
the Code, any gain up to the amount of the Net Unrealized Appreciation
which was not taxed at the time of distribution shall be treated as
long-term capital gain. Any additional gain on LNC Common Stock acquired
in a lump sum distribution will be treated as long-term or short-term
capital gain, depending on the combined holding period of the Plan and
the Seller. All gain on LNC Common Stock acquired from the Plan other
than a lump sum distribution, will be treated as long-term or short-term
capital gain, depending on the Seller s holding period. Long-term
capital gains generally are taxed at the same rates as ordinary income,
but capital gains will still be offset against capital losses.
If an Agent dies, generally, the amount which is not exempt from federal
income tax will be taxable to the beneficiary under the same rules which
are applicable to distributions to the Agent. A beneficiary who is the
surviving spouse of the Agent may be eligible to make a tax-free
rollover of a distribution under the same rules applicable to rollovers
by Agents. Other beneficiaries may not make rollovers.
Tax and Withholding
Under the Unemployment Compensation Amendments of 1992 ( UCA ), twenty
percent (20%) income tax withholding may apply to eligible rollover
distributions. All taxable distributions from the Plan are eligible
rollover distributions, except (1) annuities paid out over life or life
expectancy, (2) installments paid for a period spanning ten (10) years
or more, and (3) required minimum distributions. The UCA imposes
mandatory twenty percent (20%) income tax withholding on any eligible
rollover distribution that an Agent does not elect to have paid in a
direct rollover to another qualified plan, or individual retirement
account. In the event a distribution is comprised of LNC Common Stock,
LNC Common Stock is not required to be sold to satisfy income tax
withholding requirements.
Employee Retirement Income Security Act of 1974
The Plan is subject to many of the provisions of the Employee Retirement
Income Security Act of 1974 ( ERISA ). Principal among these are ERISA
requirements regarding reporting and disclosure to government agencies
and participants, fiduciary responsibility and transactions with
parties-in-interest. The Plan is a profit-sharing plan and is,
therefore, not subject to the funding standards of Title I of ERISA. The
Plan is an individual account plan, and is, therefore, not covered by
the plan termination insurance program of Title IV of ERISA which is
administered by the Pension Benefit Guaranty Corporation.
The Plan is intended to comply with Section 404(c) of ERISA. Under
404(c), the individual is responsible for the selection of investments.
Investment information is periodically provided so that the individual
has the opportunity to exercise meaningful, independent control over the
assets in his or her account. Plan fiduciaries of a 404(c) plan are not
liable for plan losses that are the direct result of the individual s
investment instructions.
More information, including a description of the annual operating
expenses of each investment fund, copies of financial reports for each
fund, and copies of the confidentiality procedures, is available at a
nominal charge. Interested parties can contact Rosalie Bennett,
Secretary of the LNC Benefits Committee at (219) 455-3839, or Human
Resources, 1H14, P.O. Box 7837, Fort Wayne, Indiana 46801-7837.
Agents Rights Under ERISA
Agents in the Plan are entitled to certain rights and protections under
ERISA. ERISA provides that all Plan participants are entitled to:
Examine, without charge, at the Plan Administrator s office and at other
locations, all Plan documents including copies of all documents filed by
the Plan Administrator with the U.S. Department of Labor, such as
detailed annual reports and Plan descriptions.
Obtain copies of all Plan documents and other Plan information upon
written request to the Plan Administrator. The Plan Administrator may
make a reasonable charge for the copies.
Receive a summary of the Plan s annual financial report. The Plan
Administrator is required by law to furnish each participant with a copy
of this summary annual report.
In addition to creating rights for Plan participants, ERISA imposes
duties upon the persons who are responsible for the operation of the
Plan. The persons who operate the Plan, called fiduciaries, have a
duty to do so prudently and in the interest of Plan participants and
beneficiaries. Fiduciaries who violate ERISA may be removed and required
to repay losses they have caused the Plan.
No one, including a Company, a union, or any other person, may fire or
otherwise discriminate against an Agent in any way to prevent him from
obtaining a Plan benefit or exercising any rights under ERISA. If a
claim for Plan benefits is denied in whole or in part, a written
explanation of the reason for the denial must be provided to the
claimant. The claimant has the right to have the Plan Administrator
review and reconsider a claim. Under ERISA, there are steps an Agent can
take to enforce the above rights. For instance, if a participant
requests materials from the Plan Administrator and does not receive them
within 30 days, he may file suit in a federal court. In such a case, the
court may require the Plan Administrator to provide the materials and
pay up to $100 a day until the materials are provided, unless the
materials were not sent because of reasons beyond the control of the
Plan Administrator. If a participant has a claim for benefits which is
denied or ignored, in whole or in part, he may file suit in a state or
federal court. If the Plan fiduciaries misuse the Plan s money, or if a
participant is discriminated against for asserting any of his rights,
the participant may seek assistance from the U.S. Department of Labor,
or may file suit in a federal court. The court will decide who should
pay court costs and legal fees. If the participant is successful, the
court may order the person he has sued to pay these costs and fees. If
the participant loses, the court may order the participant to pay these
costs and fees, for example, if it finds the claim is frivolous. If a
participant has any questions about the Plan, he should contact the Plan
Administrator. If a participant has any questions about this statement
or about his rights under ERISA, he should contact the nearest Area
Office of the U.S. Labor-Management Services Administration, Department
of Labor.
Participation Interests are Securities
Agents participating in the Plan acquire an interest in the Plan assets
held and administered by the Trustee. This interest is itself a security
and its acquisition entails the risk of loss as well as the possibility
of gain. The character and extent of the participant s interest in the
Plan assets and his rights and options in relation thereto are discussed
in detail beginning on page 4 of this Prospectus. Before deciding to
participate, Agents should carefully consider and assess the risks and
opportunities in view of their individual situation.
Financial Statements
The Statements of Net Assets Available for Plan Benefits as of December
31, 1996 and 1995, and the related Statements of Changes in Net Assets
Available for Plan Benefits for the years ended December 31, 1996, 1995
and 1994, and the report of Ernst & Young LLP, independent auditors,
thereon, appear elsewhere herein, and in the Registration Statement.
Lincoln National Corporation Common Stock
The Plan enables Agents to acquire shares of LNC Common Stock. LNC is
authorized to issue 800,000,000 shares of Common Stock and 10,000,000
shares of Preferred Stock. LNC currently has a Series of Preferred
Stock: $3.00 Cumulative Convertible Preferred Stock, Series A ( Series A
Preferred Stock ). A portion of the shares of Common Stock is authorized
for quotation on the New York, Chicago, Pacific, London and Tokyo Stock
Exchanges. A portion of the shares of Series A Preferred Stock is
authorized for quotation on the New York and Chicago Stock Exchanges.
On March 15, 1997, the following number of shares were issued and
outstanding: Common Stock: 103,189,253; Series A Preferred Stock:
36,762.
The following brief summary contains certain information regarding the
LNC Common Stock and does not purport to be complete, but is qualified
in its entirety by reference to the LNC Articles of Incorporation, The
Indiana General Corporation Act, and the LNC By-Laws. The Articles of
Incorporation of LNC contain provisions relating to the size,
classification and removal of directors, and to the fair pricing of LNC
stock, which could have the effect of delaying, deferring, or preventing
a hostile or unsolicited attempt to gain control of LNC.
Dividend Rights
Holders of Common Stock are entitled to dividends when and as declared
by the Board of Directors out of funds legally available for the payment
of dividends after dividends accrued on all preferred or special classes
of shares entitled to preferential dividends have been paid, or declared
and set apart for payment.
Voting Rights
Each shareholder of LNC Common Stock has the right to one vote for each
share of LNC Common Stock standing in his name on the books of LNC on
each matter submitted to a vote at any meeting of the shareholders. The
vote of holders of at least three-fourths of the outstanding shares of
LNC Common Stock is necessary to approve (i) the sale, lease, exchange,
mortgage, pledge or other disposition of the shares of LNC Common Stock
and (ii) the removal of any or all members of the Board of Directors of
LNC.
Liquidation Rights
On any liquidation or dissolution of LNC the holders of LNC Common Stock
are entitled to share ratably in such assets of LNC as remain after due
payment or provision for payment of the debts and other liabilities of
LNC including amounts to which the holders of preferred or special
classes of shares may be entitled.
Pre-Emptive Rights
Holders of LNC Common Stock have no pre-emptive right to subscribe for
or purchase additional issues of shares or any treasury shares of LNC
Common Stock.
Assessment
The LNC Common Stock issued and outstanding is fully paid and
non-assessable, and the LNC Common Stock when issued upon conversion of
the Series A, E and F Preferred Stock will be fully paid and
non-assessable.
Modification of Rights
The rights of holders of LNC Common Stock are subject to the preference
granted to the holders of the Series A Preferred Stock and any
additional preferred stock of LNC. Holders of Series A Preferred Stock
have the right to vote, upon the basis of one vote per share, together
with the holders of LNC Common Stock, upon matters submitted to
shareholders; and, to vote as a class, to elect two directors at the
next annual meeting of shareholders if six or more quarterly dividends
on the Series A Preferred Stock shall be in default.
Other Provisions
The LNC Common Stock has no conversion rights or cumulative voting
rights for the election of directors. There are no restrictions on the
repurchase or redemption of shares of LNC Common Stock from funds
legally available therefor.
Boston EquiServe acts as Transfer Agent and Registrar for
the LNC Common Stock.
Indemnification of Officers, Directors, Employees and Agents
The By-Laws of LNC and the Company, pursuant to authority contained in
the Indiana Business Corporation Law and the Indiana Insurance Law,
provide for the indemnification of their officers, directors, employees
and agents against reasonable expenses that may be incurred by them in
connection with the defense of any action, suit or proceeding to which
they are made or threatened to be made parties except with respect to
matters as to which they are adjudged liable for negligence or
misconduct in the performance of duties to their respective
corporations. LNC and the Company may also reimburse such officers,
directors, and employees for reasonable costs of settlement of any such
action, suit or proceeding. In the case of directors, a determination as
to whether indemnification or reimbursement is proper shall be made by a
majority of the disinterested directors or a committee thereof or by
special legal counsel. In the case of individuals who are not directors,
such determination shall be made by the chief executive officer of the
respective corporation or, if he so directs, in the manner it would be
made if the individual were a director of the corporation.
Such indemnification may apply to claims arising under the Securities
Act of 1933, as amended. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to directors,
officers, or persons controlling LNC and the Company pursuant to the
foregoing provisions, LNC and the Company have been informed that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in that Act and therefore
unenforceable.
Experts
The financial statements of The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan as of December 31, 1996 and 1995,
and for each of the three years in the period ended December 31, 1996,
appearing in this Prospectus and Registration Statement have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report
thereon appearing elsewhere herein and in the Registration Statement.
In addition, the consolidated financial statements and schedules of
Lincoln National Corporation, incorporated by reference from the Lincoln
National Corporation's Annual Report (Form 10-K) for the year ended
December 31, 1996 in this Prospectus and Registration Statement,
have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon also incorporated by reference. The
financial statements and schedules referred to above are included in
reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
Legal opinion
Certain matters with respect to the LNC Common Stock to which this
Prospectus relates were passed upon for LNC by John L. Steinkamp,
Esquire, Associate General Counsel and Vice President of LNC, 200 East
Berry Street, Fort Wayne, Indiana 46802-2706. Certain matters with
respect to the interests in the Plan to which this Prospectus relates
were passed upon for the Plan by Elizabeth Frederick, Esquire, Associate
General Counsel and Vice President of LNC, 1300 South Clinton Street,
Fort Wayne, Indiana 46802-3506.
Incorporation of Additional Documents by Reference
LNC hereby incorporates the following documents by reference into this
prospectus:
1. LNC s 1996 Annual Report on Form 10-K filed pursuant to the
Securities Exchange Act of 1934 (the 1934 Act ).
2. All other LNC reports filed pursuant to Section 13(a) or 15 (d) of
the 1934 Act since December 31, 1996.
3. LNC s definitive proxy statement (except for the Performance Graph
and Compensation Committee Report which are NOT incorporated by
reference) filed pursuant to Section 14 of the 1934 Act in
connection with LNC s latest annual meeting of stockholders.
4. The description of LNC Common Stock contained in Form 10 filed by
LNC pursuant to the 1934 Act on April 28, 1969, including any
amendment or reports filed for the purpose of updating such
description.
In addition, all documents filed by LNC or the Plan with the Commission
pursuant to Sections 13, 14, and 15(d) of the 1934 Act prior to the
termination of the offering made hereby shall be deemed to be
incorporated by reference into this Prospectus and to be a part thereof
from the date of filing of such documents.
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
AGENTS' SAVINGS AND PROFIT-SHARING PLAN
FORT WAYNE, INDIANA
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Financial Statements
Years ended December 31, 1996, 1995 and 1994
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
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 Life Insurance Company
Agents' 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 each of the three years in the period ended
December 31, 1996. 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 each of the three
years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
March 13, 1997
Fort Wayne, Indiana
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Statements of Net Assets Available for Plan Benefits
December 31
1996 1995
Assets
Investments:
Common stock--Lincoln National
Corporation (cost: 1996--
$31,457,823; 1995--$28,178,295) $45,079,808 $44,791,273
Segregated investment accounts--The
Lincoln National Life Insurance
Company Separate Accounts
(cost: 1996--$24,356,726;
1995--$19,546,015) 36,246,117 28,142,841
Unallocated insurance contracts
The Lincoln National Life
Insurance Company 10,412,955 10,955,545
Participant loans 3,724,214 3,317,440
95,463,094 87,207,099
Accrued interest receivable 10,212 6,216
Cash and invested cash (deficit) 17,083 (90,446)
Other receivables 24,480 194,104
Contributions receivable:
Participants 161,828 -
The Lincoln National Life
Insurance Company 3,203,212 2,656,985
Total assets 98,879,909 89,973,958
Miscellaneous payables 134,520 23,104
Net assets available for
plan benefits $98,745,389 $89,950,854
See accompanying notes.
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Statements of Changes in Net Assets Available for Plan Benefits
Year ended December 31
1996 1995 1994
Investment income:
Cash dividends--Lincoln
National Corporation $ 1,552,560 $ 1,414,060 $ 1,239,781
Interest:
The Lincoln National Life
Insurance Company 577,671 841,750 746,163
Other 332,634 246,464 227,602
910,305 1,088,214 973,765
2,462,865 2,502,274 2,213,546
Net realized gain on sale,
distribution and forfeitures
of investments:
Common stock--Lincoln
National Corporation 2,196,645 2,236,343 694,283
Segregated investment
accounts--The Lincoln
National Life Insurance
Company Separate
Accounts 1,056,483 864,428 704,323
3,253,128 3,100,771 1,398,606
Net unrealized appreciation
(depreciation) of
investments 301,572 18,165,654 (8,080,629)
Contributions:
Agents 4,604,114 4,724,597 4,603,511
The Lincoln National
Life Insurance Company
(net of forfeitures:
1996--$5,566; 1995--$6,078;
1994--$3,355) 3,735,645 3,087,927 3,351,434
8,339,759 7,812,524 7,954,945
Distributions to participants (5,476,308) (5,949,349) (3,413,968)
Administrative expenses (86,481) (79,139) (93,617)
Net increase (decrease) in
net assets available for
plan benefits 8,794,535 25,552,735 (21,117)
Net assets available for
plan benefits at beginning
of the year 89,950,854 64,398,119 64,419,236
Net assets available for
plan benefits at end of
the year $98,745,389 $89,950,854 $64,398,119
See accompanying notes.
The Lincoln National Life Insurance Company
Agents' 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 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
("Company"). Contract value represents net contributions made under
the contract plus interest at the contract rate.
Participant loans are valued at cost which approximates fair value.
The cost of investments sold, distributed or forfeited is determined
using the specific identification method.
Use of Estimates
Preparation of the financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities 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 Lincoln National Life Insurance Company Agents' Savings and
Profit-Sharing Plan ("Plan") is a contributory, defined contribution
plan which covers eligible agents of the Company. Any person 21
years of age or older who is a full-time agent of the Company is
eligible to enroll in the Plan if the agent has completed one
eligibility year of service as defined in the Plan agreement. A
participant may make pre-tax contributions at a rate of at least 1%,
but not more than 15% of earned commissions, up to a maximum annual
amount as determined and adjusted annually by the Internal Revenue
Service ("IRS").
Participants 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 plan year for which they were contributed.
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
2. Description of the Plan (continued)
The Company's 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 varies according to LNC's return on equity in relation to
similar companies in the insurance industry. The Company's
contributions are invested in the LNC Common Stock Fund. Agents are
fully vested in their contributions. The Company contributions vest
based upon years of service as defined in the Plan agreement as
follows:
Years of Service Percent Vested
1 0%
2 50%
3 or more 100%
During 1995, the Board of Directors of the Company approved certain
revisions to the contribution formula which was effective for the
1996 plan year. For 1995, the Company used a transitional approach
of the greater of the old or new contribution formula which resulted
in a contribution based on the new formula.
The Company has the right 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 accounts excluding employer
contributions that haven't 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 Company's 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 Company contributions.
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
3. Investments
The following is a summary of assets held for investment:
December 31, 1996
Number of Market
Shares Value
Common stock--LNC 858,663 $45,079,808*
Segregated investment
accounts--with the Company:
Government Bond Fund 319,334.099 480,701
Core Equity Fund 1,295,357.182 10,726,542*
Medium Capitalization
Equity Fund 991,548.636 8,988,074*
Short-Term Fund 485,933.152 1,340,243
Government/Corporate
Bond Fund 196,953.329 966,139
Large Capitalization
Equity Fund 1,133,678.280 6,513,579*
Balanced Fund 91,023.162 401,269
High Yield Bond Fund 214,695.508 447,340
Small Capitalization
Equity Fund 500,743.628 1,629,157
Value Equity Fund 705,183.942 1,122,754
International Equity Fund 723,943.712 3,630,319
Total segregated investment
accounts 36,246,117
Par
Amount
Unallocated insurance
contracts with the Company $10,412,955 10,412,955*
Participant loans 3,724,214 3,724,214
Total investments $95,463,094
*Investments that represent 5% or more of the fair value of net
assets available for benefits as of the indicated date.
December 31, 1995
Number of Market
Shares Value
Common stock LNC 833,326 $44,791,273*
Segregated investment
accounts with the Company:
Government Bond Fund 388,827.030 562,704
Core Equity Fund 1,264,092.105 8,773,122*
Medium Capitalization
Equity Fund 899,403.376 7,117,250*
Short-Term Fund 407,724.196 1,068,759
Government/Corporate
Bond Fund 239,667.620 1,151,219
Large Capitalization
Equity Fund 1,054,128.353 5,127,004*
Balanced Fund 44,201.747 177,252
High Yield Bond Fund 78,023.346 146,681
Small Capitalization
Equity Fund 320,513.868 998,577
Value Equity Fund 455,888.394 626,101
International Equity Fund 521,418.540 2,394,172
Total segregated investment
accounts $28,142,841
Par
Amount
Unallocated insurance
contracts with the Company $10,955,545 10,955,545*
Participant loans 3,317,440 3,317,440
Total investments $87,207,099
*Investments that represent 5% or more of the fair value of net
assets available for benefits as of the indicated date.
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
3. Investments (continued)
Net realized gain on sale, distribution and forfeitures of investments is
summarized as follows:
Year ended December 31
1996 1995 1994
Common stock:
Proceeds from disposition of
stock $9,419,060 $10,013,495 $6,145,172
Cost of stock disposed 7,222,415 7,777,152 5,450,889
Net realized gain on sale,
distribution and forfeitures
of common stock $2,196,645 $2,236,343 $694,283
Segregated investment accounts:
Proceeds from disposition of
units $4,948,738 $4,627,606 $4,329,973
Cost of units disposed 3,892,255 3,763,178 3,625,650
Net realized gain on sale,
distribution and forfeitures
of common stock $1,056,483 $864,428 $704,323
The net change in unrealized appreciation (depreciation) of
investments in total and by investment classification is summarized
as follows:
Year ended December 31
1996 1995 1994
Market value in excess of cost:
At beginning of the year $25,209,804 $7,044,150 $15,124,779
At end of the year 25,511,376 25,209,804 7,044,150
Change in net unrealized
appreciation (depreciation)
of investments $301,572 $18,165,654 $(8,080,629)
Common stock $(2,990,993) $12,966,702 $(7,180,098)
Segregated investment
accounts 3,292,565 5,198,952 (900,531)
Change in net unrealized
appreciation (depreciation)
of investments $301,572 $18,165,654 $(8,080,629)
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
3. Investments (continued)
The unallocated insurance contracts earned an average interest rate
of approximately 6.82% and 6.75% in 1996 and 1995, respectively.
The credited interest rate for new contributions, which approximates
the current market rate, at December 31, 1996 and 1995, were 7.00%
and 6.25%, 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 6.80% and 6.90%, respectively, and
are determined based upon the performance of the Company's general
account. The credited interest rates change at least quarterly.
The minimum guaranteed rate is 4.50% for the first 5 contract years,
4.00% for years 6-10 and 3.50% following year 10. The guarantee is
based on the Company's ability to meet its financial obligations
from the general assets of the Company. The fair value of the
unallocated insurance contracts approximates contract value.
<PAGE>
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
4. Investment Options
The detail of the net assets available for plan benefits by investment
option is as follows:
<TABLE>
<CAPTION>
December 31, 1996
Investment Options
Total 1 2 3 4 5 6
Assets
Investments:
<s > <C> <C> <C> <C> <C> <C> <C>
Common stock $45,079,808 $45,079,808
Segregated investment accounts 36,246,117 $480,701 $10,726,542 $8,988,074 $1,340,243
Unallocated insurance contracts 10,412,955 $10,412,955
Participant loans 3,724,214
95,463,094 45,079,808 480,701 10,412,955 10,726,542 8,988,074 1,340,243
Accrued interest receivable 10,212
Cash and invested cash (deficit) 17,083 49,125 (262) (820) (10,480) (11,943) 27,524
Other receivables 24,480 8 368 23,542
Contribution receivable:
Participant 161,828 28,231 964 10,661 23,501 25,348 627
Lincoln National Life
Insurance Company 3,203,212 3,203,212
Total assets 98,879,909 48,360,376 481,411 10,423,164 10,739,563 9,001,479 1,391,936
Miscellaneous payables 134,520 74,373 12,909 13,367
Net assets available for
plan benefits $98,745,389 $48,286,003 $481,411 $10,423,164 $10,726,654 $8,988,112 $1,391,936
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
Investment Options
Total 1 2 3 4 5 6
Assets
Investments:
<S> <C> <C> <C> <C> <C> <C> <C>
Common stock $44,791,273 $44,791,273
Segregated investment accounts 28,142,841 $562,704 $8,773,122 $7,117,250 $1,068,759
Unallocated insurance contracts 10,955,545 $10,955,545
Participant loans 3,317,440
87,207,099 44,791,273 562,704 10,955,545 8,773,122 7,117,250 1,068,759
Accrued interest receivable 6,216
Cash and invested cash (deficit) (90,446) 39,365 (14,122) 7,636 (13,848) (15,181) (29,147)
Other receivables 194,104 14,122 44,548 25,957 15,181 29,147
Contribution receivable 2,656,985 2,656,985
Total assets 89,973,958 47,487,623 562,704 11,007,729 8,785,231 7,117,250 1,068,759
Miscellaneous payables 23,104 23,104
Net assets available for
plan benefits $89,950,854 $47,464,519 $562,704 $11,007,729 $8,785,231 $7,117,250 $1,068,759
</TABLE>
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
4. Investment Options
The detail of the net assets available for plan benefits by
investment option is as follows:
<TABLE>
<CAPTION>
December 31, 1996
Investment Options
7 8 9 10 11 12 13 Loans
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments:
Common stock
Segregated investment accounts $966,139 $6,513,579 $401,269 $447,340 $1,629,157 $1,122,754 $3,630,319
Unallocated insurance contracts
Participant loans $3,724,214
966,139 6,513,579 401,269 447,340 1,629,157 1,122,754 3,630,319 3,724,214
Accrued interest receivable 10,212
Cash and invested cash (deficit) (1,802) (9,317) (2,058) (1,933) (13,763) 1,438 (8,626)
Other receivables 7 555
Contribution receivable:
Participant 2,776 22,539 2,051 1,938 15,004 6,654 21,534
Lincoln National Life
Insurance Company
Total assets 967,113 6,526,801 401,269 447,900 1,630,398 1,130,846 3,643,227 3,734,426
Miscellaneous payables 974 12,305 720 7,496 12,376
Net assets available for
plan benefits $966,139 $6,514,496 $401,269 $447,900 $1,629,678 $1,123,350 $3,630,851 $3,734,426
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
Investment Options
7 8 9 10 11 12 13 Loans
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments:
Common stock
Segregated investment accounts $1,151,219 $5,127,004 $177,252 $146,681 $998,577 $626,101 $2,394,172
Unallocated insurance contracts
Participant loans $3,317,440
1,151,219 5,127,004 177,252 146,681 998,577 626,101 2,394,172 3,317,440
Accrued interest receivable 6,216
Cash and invested cash (deficit) (9,218) (23,108) (201) (2,308) (11,809) (5,410) (13,095)
Other receivables 9,218 23,108 201 2,308 11,809 5,410 13,095
Contribution receivable
Total assets 1,151,219 5,127,004 177,252 146,681 998,577 626,101 2,394,172 3,323,656
Miscellaneous payables
Net assets available for
plan benefits $1,151,219 $5,127,004 $177,252 $146,681 $998,577 $626,101 $2,394,172 $3,323,656
</TABLE>
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
4. Investment Options (continued)
The detail of the changes in net assets available for plan benefits by
investment option is as follows:
<TABLE>
<CAPTION>
December 31, 1996
Investment Options
Total 1 2 3 4 5 6
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Cash dividends $ 1,552,560 $ 1,552,560
Interest 910,305 $ 577,671
2,462,865 1,552,560 577,671
Net realized gain on sale,
distribution and forfeitures
of investments:
Common stock 2,196,645 2,196,645
Segregated investment accounts 1,056,483 $ 24,494 $ 376,640 $ 229,263 $ 66,209
3,253,128 2,196,645 24,494 376,640 229,263 66,209
Net unrealized appreciation
(depreciation) of investments 301,572 (2,990,993) (5,603) 1,328,719 840,656 (20,585)
Contributions:
Participant 4,604,114 928,146 18,739 280,525 648,453 757,878 24,023
The Lincoln National
Life Insurance Company 3,735,645 3,735,645
8,339,759 4,663,791 18,739 280,525 648,453 757,878 24,023
Distributions to participants (5,476,308) (2,519,969) (45,389) (1,825,737) (361,544) (162,972) (90,761)
Administrative expenses (86,481) (72,414) (182) (3,649) (3,152) (2,632) (368)
Net transfers - (2,008,136) (73,352) 386,625 (47,693) 208,669 344,659
Net increase (decrease) in net
assets available for plan
benefits 8,794,535 821,484 (81,293) (584,565) 1,941,423 1,870,862 323,177
Net assets available for plan
benefits at beginning of the year 89,950,854 47,464,519 562,704 11,007,729 8,785,231 7,117,250 1,068,759
Net assets available for plan
benefits at end of the year $98,745,389 $48,286,003 $481,411 $10,423,164 $10,726,654 $8,988,112 $1,391,936
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
Investment Options
Total 1 2 3 4 5 6
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Cash dividends $ 1,414,060 $ 1,414,060
Interest 1,088,214 $ 841,750
2,502,274 1,414,060 841,750
Net realized gain on sale,
distribution and forfeitures
of investments:
Common stock 2,236,343 2,236,343
Segregated investment accounts 864,428 $ 23,782 $ 254,878 $ 302,908 $ 38,216
3,100,771 2,236,343 23,782 254,878 302,908 38,216
Net unrealized appreciation
of investments 18,165,654 12,966,702 51,735 2,075,087 1,473,852 28,481
Contributions:
Participant 4,724,597 1,031,057 28,085 444,269 564,727 718,984 31,138
The Lincoln National Life
Insurance Company 3,087,927 3,087,927
7,812,524 4,118,984 28,085 444,269 564,727 718,984 31,138
Distributions to participants (5,949,349) (3,084,570) (49,394) (1,235,196) (387,089) (431,930) (148,671)
Administrative expenses (79,139) (62,984) (310) (5,320) (3,289) (2,723) (599)
Net transfers - (1,252,524) (94,878) (25,842) 113,416 242,249 998
Net increase (decrease) in net
assets available for plan
benefits 25,552,735 16,336,011 (40,980) 19,661 2,617,730 2,303,340 (50,437)
Net assets available for plan
benefits at beginning of the year 64,398,119 31,128,508 603,684 10,988,068 6,167,501 4,813,910 1,119,196
Net assets available for plan
benefits at end of the year $89,950,854 $47,464,519 $562,704 $11,007,729 $8,785,231 $7,117,250 $1,068,759
</TABLE>
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
4. Investment Options (continued)
The detail of the changes in net assets available for plan benefits by
investment option is as follows:
December 31, 1996
Investment Options
7 8 9 10 11 12 13 Loans
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Cash dividends
Interest $ 332,634
332,634
Net realized gain on sale,
distribution and forfeitures
of investments:
Common stock
Segregated investment accounts $ 72,847 $ 210,364 $ 1,747 $ 5,366 $ 12,575 $ 18,728 $ 38,250
72,847 210,364 1,747 5,366 12,575 18,728 38,250
Net unrealized appreciation
(depreciation) of investments (53,517) 761,371 29,524 32,985 43,342 109,712 225,961
Contributions:
Participant 78,660 675,819 69,712 45,269 351,168 175,491 550,231
The Lincoln National Life
Insurance Company
78,660 675,819 69,712 45,269 351,168 175,491 550,231
Distributions to participants (31,195) (155,289) (4,176) (7,064) (19,452) (64,952) (73,291) (114,517)
Administrative expenses (378) (1,922) (106) (70) (373) (264) (971)
Net transfers (251,497) (102,851) 127,316 224,733 243,841 258,534 496,499 192,653
Net increase (decrease) in net
assets available for plan
benefits (185,080) 1,387,492 224,017 301,219 631,101 497,249 1,236,679 410,770
Net assets available for plan
benefits at beginning of the year 1,151,219 5,127,004 177,252 146,681 998,577 626,101 2,394,172 3,323,656
Net assets available for plan
benefits at end of the year $ 966,139 $6,514,496 $401,269 $447,900 $1,629,678 $1,123,350 $3,630,851 $3,734,426
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
Investment Options
7 8 9 10 11 12 13 Loans
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Cash dividends
Interest $ 246,464
246,464
Net realized gain on sale,
distribution and forfeitures
of investments:
Common stock
Segregated investment accounts $ 36,634 $ 166,663 $ 4,767 $ 1,322 $ 15,881 $ 7,592 $ 11,785
36,634 166,663 4,767 1,322 15,881 7,592 11,785
Net unrealized appreciation
of investments 140,554 1,009,582 28,318 11,398 83,069 109,101 187,775
Contributions:
Participant 91,685 650,298 50,131 32,280 326,608 193,369 561,966
The Lincoln National Life
Insurance Company
91,685 650,298 50,131 32,280 326,608 193,369 561,966
Distributions to participants (36,650) (245,114) (23,412) (3,412) (42,492) (39,639) (91,402) (130,378)
Administrative expenses (454) (2,079) (68) (33) (289) (160) (831)
Net transfers 62,844 (167,526) (8,533) 23,953 214,639 126,808 372,323 392,073
Net increase (decrease) in net
assets available for plan
benefits 294,613 1,411,824 51,203 65,508 597,416 397,071 1,041,616 508,159
Net assets available for plan
benefits at beginning of the year 856,606 3,715,180 126,049 81,173 401,161 229,030 1,352,556 2,815,497
Net assets available for plan
benefits at end of the year $1,151,219 $5,127,004 $177,252 $146,681 $998,577 $626,101 $2,394,172 $3,323,656
</TABLE>
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
4. Investment Options (continued)
The detail of the changes in net assets available for plan benefits by
investment option is as follows:
December 31, 1994
Investment Options
Total 1 2 3 4 5 6
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Cash dividends $ 1,239,781 $ 1,239,781
Interest 973,765 $ 746,163
2,213,546 1,239,781 746,163
Net realized gain (loss) on sale,
distribution and forfeitures of
investments:
Common stock 694,283 694,283
Segregated investment accounts 704,323 $ 16,784 $ 279,387 $ 226,810 $ 65,801
1,398,606 694,283 16,784 279,387 226,810 65,801
Net unrealized appreciation
(depreciation) of investments (8,080,629) (7,180,098) (26,448) (169,276) (373,844) (19,300)
Contributions:
Participant 4,603,511 1,176,997 50,527 432,329 725,798 765,034 139,329
The Lincoln National Life
Insurance Company 3,351,434 3,351,434
7,954,945 4,528,431 50,527 432,329 725,798 765,034 139,329
Distributions to participants (3,413,968) 1,771,486 (84,469) (623,233) (393,695) (193,109) (20,387)
Administrative expenses (93,617) (78,744) (317) (5,563) (3,107) (2,411) (620)
Net transfers - (267,333) (71,115) 7,158 (616,625) (93,452) (377,317)
Net increase (decrease) in net
assets available for plan
benefits (21,117) (2,835,166) (115,038) 556,854 (177,518) 329,028 (212,494)
Net assets available for plan
benefits at beginning of the year 64,419,236 33,963,674 718,722 10,431,214 6,345,019 4,484,882 1,331,690
Net assets available for plan
benefits at end of the year $64,398,119 $31,128,508 $603,684 $10,988,068 $6,167,501 $4,813,910 $1,119,196
</TABLE>
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
4. Investment Options (continued)
The detail of the changes in net assets available for plan benefits by
investment option is as follows:
December 31, 1994
Investment Options
7 8 9 10 11 12 13 Loans
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Cash dividends
Interest $ 227,602
Net realized gain (loss) on sale, 227,602
distribution and forfeitures
of investments:
Common stock
Segregated investment accounts $ 41,814 $ 73,006 $ 11 $ 21 $ 30 $ 831 $ (172)
41,814 73,006 11 21 30 831 (172)
Net unrealized appreciation
(depreciation) of investments (78,492) (194,754) 306 1,456 (2,408) 7,160 (44,931)
Contributions:
Participant 125,867 778,686 20,754 14,032 90,582 30,701 252,875
The Lincoln National Life
Insurance Company 125,867 778,686 20,754 14,032 90,582 30,701 252,875
Distributions to participants (109,478) (121,048) (25) (15) (361) (658) (96,004)
Administrative expenses (448) (1,818) (48) (11) (111) (59) (360)
Net transfers (100,238) (172,593) 105,051 65,690 313,429 190,397 1,145,802 (128,854)
Net increase (decrease) in net
assets available for plan
benefits (120,975) 361,479 126,049 81,173 401,161 229,030 1,352,556 2,744
Net assets available for plan
benefits at beginning of the year 977,581 3,353,701 - - - - - 2,812,753
Net assets available for plan
benefits at end of the year $856,606 $3,715,180 $126,049 $81,173 $401,161 $229,030 $1,352,556 $2,815,497
</TABLE>
The Lincoln National Life Insurance Company
Agents' 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
exclusively in the stock of Lincoln
National Corporation.
2 Government Bond Fund, which invests
primarily in bonds backed by the United
States government that will mature in 3 to
5 years.
3 Guaranteed Fund, which invests primarily
in contracts which guarantee a rate of
return and principal.
4 Core Equity Fund, which invests primarily
in large capitalization stocks of well-established
companies.
5 Medium Capitalization Equity Fund, which
invests primarily in medium-sized
companies.
6 Short-Term Fund, which invests in high
quality money market securities that
include commercial paper, bankers
acceptances, certificates of deposit, loan
participation and short-term U.S.
government debt.
7 Government/Corporate Bond Fund, which
invests primarily in corporate and U.S.
government bonds and mortgage-backed
securities.
8 Large Capitalization Equity Fund, which
invests primarily in high-risk common
stocks which have the potential for a
significant appreciation in value within
18 months from the date of purchase.
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
4. Investment Options (continued)
Option Description of Investment Option
9 Balanced Fund, which 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 invests
primarily in below-investment-grade bonds,
providing higher rates of return to
compensate higher risk.
11 Small Capitalization Equity Fund, which
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 invests
primarily in stocks of non-United States
companies.
At December 31, 1996, the fair value of LNC Common Stock in the LNC
Common Stock Fund not subject to agent direction was $4,353,249.
The information as to the number of participants selecting each
investment option is not readily available. Beginning January 1,
1994, the Plan began offering investment options 9 through 13 noted
above to participants. Investment options 2 through 13 are provided
by a group annuity contract issued by the Company.
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.
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
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. Tax Implications to Participating Agents
There are no income tax consequences to participating agents arising
from their pre-tax contributions, the Company's contributions and
income earned in the Plan until actual distribution or withdrawal
from the Plan. The tax basis of securities distributed to the
participant is provided by the Lincoln National Corporation Benefits
Investment Committee.
7. Transactions with Parties-In-Interest
All investments held by the Plan and related investment transactions,
except for short-term cash investments, were with the Company. The
Company charges the Plan for certain administrative expenses including
trustee and audit fees. Total administrative expenses charged were
$86,481, $79,139 and $93,617 in 1996, 1995 and 1994, respectively. The
Company also provides certain administrative services at no charge to
the plan. Expenses incurred solely for the LNC Stock Fund are charged
directly to the LNC Stock Fund while all other administrative expenses
are charged to earnings of the other investment options based upon the
market value of the respective funds applicable to each investment
option. These transactions are exempt.
8. Concentrations of Credit Risks
The Plan has investments in common stock of LNC, and in segregated
investment accounts and unallocated insurance contracts with the
Company of $45,079,808, $36,246,117 and $10,412,955, respectively,
at December 31, 1996 (45.7%, 36.7% and 10.5% of net assets,
respectively). LNC and the Company operate predominately in the
insurance and investment management industries.
The Lincoln National Life Insurance Company
Agents' Savings and Profit-Sharing Plan
Notes to Financial Statements (continued)
9. Reconciliation of Financial Statements to 1996 Form 5500
The following is a reconciliation of net assets available for plan
benefits per the financial statements to the 1996 Form 5500:
December 31
1996 1995
Net assets available for plan
benefits per the financial statements $98,745,389 $89,950,854
Amounts allocated to withdrawing participants (611,241) (152,999)
Net assets available for plan
benefits per the 1996 Form 5500 $98,134,148 $89,797,855
The following is a reconciliation of distributions to participants
per the financial statements to the 1996 Form 5500:
Year ended
December 31,
1996
Distributions to participants per the
financial statements $5,476,308
Add amounts allocated to withdrawing
participants at December 31, 1996 611,241
Deduct amounts allocated to withdrawing
participants at December 31, 1995 (152,999)
Distributions to participants per the
1996 Form 5500 $5,934,550
Amounts allocated to withdrawing participants are recorded on the
Form 5500 for distributions that have been processed and approved
for payment prior to year-end but have not yet been paid.
Form 5500 net realized gain and net unrealized appreciation were
computed in accordance with the requirements of the Department of
Labor. Such amounts differ from amounts reported herein.
<PAGE>
FORM S-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
Reference is hereby made to Item 14 of Form S-3, "Other Expenses of
Issuance and Distribution."
Item 14. Indemnification of Directors and Officers
Pursuant to Indiana law (IND. CODE ANN. Sec. 23-1-37-1 et seq.
(Burns, 1994)), as amended from time to time, and to the respective
by-laws of LNC and the Company, present and former directors, officers,
or employees of LNC and the Company will be indemnified by their
respective corporations against liability incurred in their capacities
as directors, officers, or employees, or arising from their status as
such.
Further, as permitted by IND. CODE ANN. Sec. 23-1-37-14 (Burns
1994), as amended from time to time, and the by-laws, LNC and LNL have
purchased insurance designed to protect and indemnify their officers,
directors, and employees in the event they are required to pay any
amounts arising from certain civil claims, including claims under the
Securities Act of 1933, which might be made against them by reason of
any actual or alleged act, error, omission, misstatement, misleading
statement, neglect or breach of duty while acting in their respective
capacities as directors, officers, employees or agents of the Company.
Item 15. Recent Sales of Unregistered Securities
Not Applicable.
Item 16. Exhibits and Financial Statement Schedules
a) The exhibits furnished with this Registration Statement are
listed on page II-5.
b) All 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 has been included in the financial statements, and
therefore has been omitted.
Item 17. Undertakings
(a) The undersigned registrant undertakes -- (1) to file, during
any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement: (i) to include any Prospectus
required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the Prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; (iii) to include any material information
with respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement; (2) that, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof;
and (3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy
as expressed in the Act and will be governed by the final adjudication
of such issue.
(c) The registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Form S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Set forth below are estimates of all additional expenses incurred or
to be incurred by the Issuer paid in calendar year 1996, in connection
with the issuance and distribution of the securities to be registered,
other than underwriting discounts and commission.
<TABLE>
<S> <C>
Registration fees $ -0-
Printing and engraving -0-
Legal fees -0-
Accounting fees 4,000
State blue sky fees and expenses -0-
Miscellaneous -0-
------
TOTAL $4,000
</TABLE>
The Registrant paid in 1996 an annual premium of approximately
$857,529 (for itself and all subsidiaries) in respect of directors' and
officers' liability insurance which would cover, among other things,
certain claims made against its directors and officers including claims
arising under the Securities Act of 1933, as amended.
Item 15. Indemnification of Directors and Officers
Pursuant to Indiana law (IND. CODE ANN. Sec. 23-1-37-1 et seq.
(Burns 1994)), as amended from time to time and to the respective By-Laws
of LNC and the Company, present and former directors, officers, or
employees of LNC and the Company will be indemnified by their respective
corporations against liability incurred in their capacities as
directors, officers, or employees, or arising from their status as such.
Further, as permitted by IND. CODE ANN. Sec. 23-1-37-14 (Burns
1994) as amended from time to time, and the By-Laws, LNC and LNL have
purchased insurance designed to protect and indemnify their officers,
directors, or employees in the event they are required to pay any
amounts arising from certain civil claims, including claims under the
Securities Act of 1933, which might be made against them by reason of
any actual or alleged act, error, omission, misstatement, misleading
statement, neglect or breach of duty while acting in their respective
capacities as directors, officers, employees or agents of the Company.
Item 16. Exhibits
The exhibits furnished with this Registration Statement are listed
on page II-5.
Item 17. Undertakings
(a) The undersigned registrant undertakes -- (1) to file, during
any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement: (i) to include any Prospectus
required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the Prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; (iii) to include any material information
with respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement; (2) that, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof;
and (3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
<PAGE>
SIGNATURES-REGISTRANT
Lincoln National Corporation ("Registrant") - Pursuant to the
requirements of the Securities Act of 1933, the registrant certifies
that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and Form S-8 and has duly caused
this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Fort Wayne, State
of Indiana on April 23, 1997.
LINCOLN NATIONAL CORPORATION
/S/IAN M. ROLLAND
Ian M. Rolland
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/S/IAN M. ROLLAND Chairman of the Board, CEO 4/23/97
(Ian M. Rolland) President & Director
(Principal Executive Officer)
/S/DONALD L. VANWYNGARDEN Second Vice President & 4/23/97
(Donald L. VanWyngarden) Controller (Principal
Accounting Officer)
/S/RICHARD C. VAUGHAN Executive Vice President 4/23/97
(Richard C. Vaughan) (Principal Financial
Officer)
/S/J. PATRICK BARRETT Director 4/23/97
(J. Patrick Barrett)
/S/** Director 4/23/97
(Thomas D. Bell, Jr.)
/S/* Director 4/23/97
(Daniel K. Efroymson)
/S/** Director 4/23/97
(Harry L. Kavetas)
/S/* Director 4/23/97
(M. Leanne Lachman)
/S/* Director 4/23/97
(Earl L. Neal)
/S/ROEL PIEPER Director 4/23/97
(Roel Pieper)
/S/** Director 4/23/97
(John M. Pietruski)
/S/* Director 4/23/97
(Jill S. Ruckelshaus)
/S/* Director 4/23/97
(Gordon A. Walker)
/S/** Director 4/23/97
(Gilbert R. Whitaker, Jr.)
*/S/JOHN L. STEINKAMP
John L. Steinkamp pursuant to a Power of Attorney filed with the
original Registration Statement, effective April 30, 1986.
**/S/JOHN L. STEINKAMP
John L. Steinkamp pursuant to a Power of Attorney Statement, filed with
Post-Effective Amendment No. 5 to the registration statement, effective
April 30, 1991.
<PAGE>
POWER OF ATTORNEY
LET IT BE KNOWN that each officer or director of The Lincoln
National Life Insurance Company whose signature appears in paragraph (b)
under "SIGNATURES-REGISTRANT" below revokes all Powers of Attorney
authorizing any person to act as his/her attorney-in-fact relative to
The Lincoln National Life Insurance Company Agents' Savings and
Profit-Sharing Plan which were previously executed by him/her and
appoints John L. Steinkamp, Dennis L.Schoff, and C. Suzanne Womack,
jointly and severally, his/her attorneys-in-fact, with power of
substitution, for him/her in all capacities to sign amendments and
post-effective amendments to the Registration Statement of The Lincoln
National Life Insurance Company Agents' Savings and Profit-Sharing Plan,
and to file such amendments with exhibits with the Securities and
Exchange Commission, hereby ratifying all that each attorney-in-fact
may do or cause to be done by virtue of this power.
SIGNATURES-REGISTRANT
(a) Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Forms S-3 and S-8 and has
duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Fort Wayne,
State of Indiana, on April 23, 1997.
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By: /S/JON A. BOSCIA
(Jon A. Boscia, President)
(b) Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
/S/JON A. BOSCIA President and Chief Operating 4/23/97
(Jon A. Boscia) Officer and Director
/S/O. DOUGLAS WORTHINGTON Vice President, Controller and 4/23/97
(O. Douglas Worthington) (Principal Financial and
Accounting Officer)
/S/JACK D. HUNTER Director 4/23/97
(Jack D. Hunter)
/S/H. THOMAS MCMEEKIN Director 4/23/97
(H. Thomas McMeekin)
/S/IAN M. ROLLAND Director 4/23/97
(Ian M. Rolland)
/S/LARRY ROWLAND Director 4/23/97
(Larry Rowland)
/S/RICHARD C. VAUGHAN Director 4/23/97
(Richard C. Vaughan)
<PAGE>
SIGNATURES-PLAN
The Lincoln National Life Insurance Company Agents' Savings and
Profit-Sharing Plan ("Plan"). Pursuant to the requirements of the
Securities Act of 1933, the Plan certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on
Form S-8 and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Fort Wayne, State of Indiana on April 23, 1997.
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY AGENTS' SAVINGS AND PROFIT-
SHARING PLAN
By: /S/GEORGE S. DAVIS
George S. Davis, Chairman
Lincoln National Corporation
Benefits Committee
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
23 Consent of Ernst &
Young LLP, Independent
Auditors
219-455-1263
April 23, 1997
Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, NW
Washington, DC 20549
Re: The Lincoln National Life Insurance
Company Agents' Savings and Profit-
Sharing Plan -- Reg. No. 33-4711:
Post-Effective Amendment Number 11 on Form S-1 (with Form S-3
Information about Lincoln National Corporation)
Ladies and Gentlemen:
On behalf of the Lincoln National Life Insurance Company Agents' Savings
and Profit-Sharing Plan (the "Plan") and Lincoln National Corporation
(the "Registrant"), and in conformity with Section 8(c) of the
Securities Act of 1933 and Regulation C thereunder, I enclose
Post-Effective Amendment No. 11 to the Registration Statement of
reference which includes the Plan's financial statements. Also enclosed
is a separate letter requesting acceleration of the effective date of
the Prospectus to April 30, 1997 and the consent of Ernst & Young LLP.
As with prior filings, this Amendment follows the hybrid registration
format agreed upon after extensive discussions with the Commission staff
in 1983. It was agreed at that time that the Plan would file on Form
S-1 and in addition, would provide S-3-type disclosure with respect to
the Issuer, and S-8-type disclosure with respect to the Plan itself.
If you have any questions or comments with respect to this Registration,
please call me at the above number. The Registrant sincerely hopes
that the Staff will see fit to grant acceleration of the effective date
of this amended Prospectus to April 30, 1997.
Sincerely,
/S/DENNIS L. SCHOFF
Dennis L. Schoff
Vice President and
Associate General Counsel
Enclosures
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
"Experts" and "Financial Statements" in Post-Effective Amendment
No. 11 to the Registration Statement (Form S-1 No. 33-4711) and
related Prospectus pertaining to The Lincoln National Life
Insurance Company Agents' Savings and Profit-Sharing Plan (the "Plan)
dated April 30, 1997, and to use in such Registration Statement and
related Prospectus of our reports dated (a) March 13, 1997, included
therein with respect to the financial statements of the Plan as of
December 31, 1996 and 1995, and for each of the three years in the
period ended December 31, 1996, and (b) February 6, 1997, incorporated
by reference therein with respect to the consolidated financial
statements and schedules of Lincoln National Corporation included
in its Annual Report (Form 10-K) for the year ended December 31, 1996,
filed with the Securities and Exchange Commission.
/S/ ERNST & YOUNG LLP
Fort Wayne, Indiana
April 23, 1997
