<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1999
LINCOLN NATIONAL LIFE INSURANCE COMPANY AGENTS'
SAVINGS AND PROFIT-SHARING PLAN
(Full title of the Plan)
[Current Registration Number 33-04711]
Lincoln National Corporation
Centre Square West
1500 Market Street, Suite 3900
Philadelphia, PA 19102
(Name of Issuer and principal executive office)
<PAGE> 2
Form 11-K
The Lincoln National Life Insurance Company Agents'
Savings and Profit-Sharing Plan
TABLE OF CONTENTS
Facing Sheet
Financial Statements
Signature
<PAGE> 3
Financial Statements
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY AGENTS'
SAVINGS AND PROFIT-SHARING PLAN
Years ended December 31, 1999, 1998 and 1997
with Report of Independent Auditors
<PAGE> 4
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
AGENTS' SAVINGS AND PROFIT-SHARING PLAN
FINANCIAL STATEMENTS
Years ended December 31, 1999, 1998 and 1997
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
<PAGE> 5
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, 1999 and 1998, 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, 1999. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan at
December 31, 1999 and 1998, and the changes in its net assets available
for plan benefits for each of the three years in the period ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States.
March 17, 2000
Ernst & Young
1
<PAGE> 6
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
AGENTS' SAVINGS AND PROFIT-SHARING PLAN
Statements of Net Assets Available for Plan Benefits
DECEMBER 31
1999 1998
---- ----
ASSETS
Investments:
Common stock--Lincoln National Corporation
(cost: 1999-$41,814,475; 1998-$33,969,141) $ 64,456,840 $ 65,019,912
Wells Fargo Bank Short-Term Investment Fund 1,924,477 1,905,255
Pooled separate accounts--The Lincoln National
Life Insurance Company Separate Accounts
(cost: 1999-$50,297,271; 1998-$40,946,428) 88,733,386 67,032,542
Investment contracts --
The Lincoln National Life Insurance Company 12,740,236 12,081,039
Participant loans 5,906,107 5,207,903
------------- -------------
173,761,046 151,246,651
Accrued interest receivable 10,965 8,454
Cash and invested cash (deficit) (340,844) 92,786
Contributions receivable from Employer companies 4,476,358 4,103,596
------------- -------------
Net assets available for plan benefits $ 177,907,525 $ 155,451,487
============= =============
See accompanying notes.
2
<PAGE> 7
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
AGENTS' SAVINGS AND PROFIT-SHARING PLAN
Statements of Changes in Net Assets Available for Plan Benefits
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Investment income:
Cash dividends--Lincoln National Corporation $ 1,687,397 $ 1,639,615 $ 1,604,366
Interest:
The Lincoln National Life Insurance Company 824,582 653,432 690,992
Other 495,956 342,801 320,146
------------- ------------- -------------
1,320,538 996,233 1,011,138
------------- ------------- -------------
3,007,935 2,635,848 2,615,504
Net realized gain on sale, distribution and
forfeitures of investments:
Common stock--Lincoln National Corporation 6,821,567 2,636,667 4,343,393
Pooled separate accounts--The Lincoln National
Life Insurance Company Separate Accounts 5,564,689 2,122,479 2,482,267
------------- ------------- -------------
12,386,256 4,759,146 6,825,660
Net unrealized appreciation of investments 3,941,598 8,990,405 22,635,104
Contributions:
Participants 12,044,177 11,249,342 4,839,046
Employer companies
(net of forfeitures; 1999--$13,076
1998--$18,660; 1997--$12,050) 5,829,738 4,436,110 5,430,354
------------- ------------- -------------
17,873,915 15,685,452 10,269,400
Distributions to participants (14,645,718) (11,405,338) (6,096,184)
Administrative expenses (107,948) (100,648) (108,251)
------------- ------------- -------------
Net increase in net assets available for plan benefits 22,456,038 20,564,865 36,141,233
Net assets available for plan benefits
at beginning of the year 155,451,487 134,886,622 98,745,389
------------- ------------- -------------
Net assets available for plan benefits
at end of the year $ 177,907,525 $ 155,451,487 $ 134,886,622
============= ============= =============
</TABLE>
See accompanying notes.
3
<PAGE> 8
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 Wells Fargo Bank Short-Term Investment Fund is valued at cost which
approximates fair value.
The fair value of participation units in pooled separate accounts is based on
quoted redemption value on the last business day of the year.
The investment contracts are valued at contract value as estimated by The
Lincoln National Life Insurance Company ("Lincoln Life"). Contract value
represents net contributions plus interest at the contract rate. The contracts
are fully benefit responsive.
Participant loans are valued at their outstanding balances which approximate
fair value.
The cost of investments sold, distributed or forfeited is determined using the
specific identification method.
USE OF ESTIMATES
Preparation of financial statements requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
2. DESCRIPTION OF THE PLAN
The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing
Plan ("Plan") is a contributory, defined contribution plan which covers eligible
agents of Lincoln Life and agents and employees of Sagemark Consulting, Inc.
("Sagemark"). Any person who is a full-time agent of Lincoln Life or is an agent
or employee of Sagemark is eligible to enroll in the Plan. Lincoln Life and
Sagemark are the employer companies ("Employer") contributing to the Plan. A
participant may make pre-tax contributions at a rate of at least 1%, but not
more than 15% of eligible earnings, 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 the
investment of Employer contributions, but only after the contributions have been
in the Plan for two years following the date the last contribution for the plan
year was contributed.
4
<PAGE> 9
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
AGENTS' SAVINGS AND PROFIT-SHARING PLAN
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
Employer contributions to the Plan are based on an amount equal to a
participant's contributions, not to exceed 6% of eligible earnings, multiplied
by a percentage, ranging from 25% to 150%, which varies according to LNC's
return on equity in relation to similar companies in the insurance industry. In
early 1998, the Board of Directors of Lincoln Life adopted an amendment
approving certain changes to the contribution formula that became effective
April 1, 1998. Under the new formula, Employer contributions to the Plan are
based on LNC's increase in operating income. The Employer match on eligible
participants' contributions during their first year of employment is limited to
a maximum of 25%. The maximum match for Sagemark agents is 50%.
Employer contributions are invested in the LNC Common Stock Fund. Participants'
contributions are fully vested. Employer contributions vest based upon years of
service as defined in the Plan agreement as follows:
Years of Service Percent Vested
---------------- --------------
1 0%
2 50%
3 or more 100%
The Employer 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 disability or retirement, a participant or
beneficiary, in case of the participant's death, 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 contributions,
matching contributions from the Employer and allocations of Plan earnings, and
is charged with an allocation of administrative expenses. Allocations are based
on participant account balances, as defined. The benefit to which a participant
is entitled is the benefit that can be provided from the participant's vested
account. Forfeited non-vested amounts are used to reduce future Employer
contributions.
5
<PAGE> 10
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:
<TABLE>
<CAPTION>
DECEMBER 31, 1999 December 31, 1998
NUMBER OF Number of
SHARES, UNITS MARKET Shares, Units Market
OR PAR VALUE VALUE or Par Value Value
------------- ----- ------------- -----
<S> <C> <C> <C> <C>
QUOTED MARKET VALUES:
Common stock--LNC 1,611,421 $ 64,456,840* 794,743 $ 65,019,912*
Pooled separate account
investment contracts
underwritten by Lincoln Life:
Government Bond Fund 308,756.794 539,932 484,630.307 847,854
Core Equity Fund 1,326,200.262 20,773,412* 1,403,540.627 18,309,961*
Medium Capitalization
Equity Fund 898,103.437 16,082,430* 930,687.431 11,504,791*
Short-Term Fund 2,402,789.272 7,731,626 1,190,036.159 3,645,178
Government/Corporate
Bond Fund 190,823.533 1,089,109 205,814.429 1,211,364
Large Capitalization
Equity Fund 1,374,932.455 17,868,439* 1,309,420.549 13,204,880*
Balanced Fund 273,746.508 1,883,688 191,351.379 1,162,706
High Yield Bond Fund 478,729.171 1,206,774 515,601.420 1,280,241
Small Capitalization
Equity Fund 1,289,866.133 10,577,034* 1,085,472.627 5,124,246
Value Equity Fund 2,046,160.900 4,880,194 2,231,259.184 5,484,306
International Equity Fund 989,828.346 6,100,748 974,670.259 5,257,015
------------ ------------
88,733,386 67,032,542
CONTRACT VALUE:
Investment contracts
underwritten by Lincoln Life 12,740,236 12,740,236* 12,081,039 12,081,039*
ESTIMATED VALUES:
Wells Fargo Bank short-term
investment fund 1,924,477 1,924,477 1,905,255 1,905,255
Participant loans 5,906,107 5,906,107 5,207,903 5,207,903
------------ ------------
Total investments $173,761,046 $151,246,651
============ ============
</TABLE>
* Investments that represent 5% or more of the fair value of net assets
available for benefits as of the indicated date.
6
<PAGE> 11
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:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
COMMON STOCK:
Proceeds from disposition of stock $11,207,528 $ 4,297,217 $11,100,882
Cost of stock disposed 4,385,961 1,660,550 6,757,489
----------- ----------- -----------
Net realized gain on sale, distribution and
forfeitures of common stock $ 6,821,567 $ 2,636,667 $ 4,343,393
=========== =========== ===========
POOLED SEPARATE ACCOUNTS:
Proceeds from disposition of units $42,965,562 $28,814,807 $12,728,284
Cost of units disposed 37,400,873 26,692,328 10,246,017
----------- ----------- -----------
Net realized gain on sale, distribution and
forfeitures of pooled separate accounts $ 5,564,689 $ 2,122,479 $ 2,482,267
=========== =========== ===========
</TABLE>
The net change in unrealized appreciation (depreciation) of investments in total
and by investment classification as determined by quoted market price is
summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Market value in excess of cost:
At beginning of the year $57,136,885 $48,146,480 $25,511,376
At end of the year 61,078,483 57,136,885 48,146,480
----------- ----------- -----------
Change in net unrealized appreciation
of investments $ 3,941,598 $ 8,990,405 $22,635,104
=========== =========== ===========
Common stock $(8,408,405) $ 471,672 $16,957,113
Pooled separate accounts 12,350,003 8,518,733 5,677,991
----------- ----------- -----------
Change in net unrealized appreciation
of investments $ 3,941,598 $ 8,990,405 $22,635,104
=========== =========== ===========
</TABLE>
The investment contracts (Guaranteed Fund) earned an average interest rate of
approximately 6.22%, 6.45% and 6.60% in 1999, 1998 and 1997, respectively. The
credited interest rates for new contributions, which approximate the current
market rate, were 6.50% and 5.50% at December 31, 1999 and 1998, respectively.
The rate on new contributions is guaranteed through the three succeeding
calendar year quarters. The credited interest rates for the remaining contract
value balance were 6.25% and 6.40% at December 31, 1999 and 1998, respectively,
and are determined based upon the performance of the Lincoln Life'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 Lincoln Life's ability to
meet its financial obligations from the general assets of Lincoln Life. The fair
value of the investment contracts approximates contract value.
7
<PAGE> 12
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>
INVESTMENT OPTIONS
------------------
DECEMBER 31, 1999 Total 1 2 3 4 5 6
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Common stock $ 64,456,840 $64,456,840
Short-term investment fund 1,924,477 1,924,477
Pooled separate accounts 88,733,386 $539,932 $20,773,412 $16,082,430 $7,731,626
Investment contracts 12,740,236 $12,740,236
Participant loans 5,906,107
------------ ----------- -------- ----------- ----------- ----------- ----------
Total investments 173,761,046 66,381,317 539,932 12,740,236 20,773,412 16,082,430 7,731,626
Accrued interest receivable 10,965 10,965
Cash and invested cash (deficit) (340,844) (1,473) (4,673) (65,621) (283,068) 195,707
Other receivables
Contributions receivable from
Employer companies 4,476,358 4,476,358
------------ ----------- -------- ----------- ----------- ----------- ----------
Net assets available for
plan benefits Total assets $177,907,525 $70,868,640 $538,459 $12,735,563 $20,707,791 $15,799,362 $7,927,333
============ =========== ======== =========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT OPTIONS
------------------
DECEMBER 31, 1999 7 8 9 10 11 12 13 LOANS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Common stock
Pooled separate accounts $1,089,109 $17,868,439 $1,883,688 $1,206,774 $10,577,034 $4,880,194 $6,100,748
Investment contracts
Participant loans $5,906,107
---------- ----------- ---------- ---------- ----------- ---------- ---------- ----------
Total investments 1,089,109 17,868,439 1,883,688 1,206,774 10,577,034 4,880,194 6,100,748 5,906,107
Accrued interest receivable
Cash and invested
cash (deficit) (5,064) (87,197) (2,873) (11,792) (102,849) (26,574) 53,895 738
Other receivables
Contributions receivable from
Employer companies
---------- ----------- ---------- ---------- ----------- ---------- ---------- ----------
Net assets available for
plan benefits $1,084,045 $17,781,242 $1,880,815 $1,194,982 $10,474,185 $4,853,620 $6,154,643 $5,906,845
========== =========== ========== ========== =========== ========== ========== ==========
</TABLE>
8
<PAGE> 13
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 net assets available for plan benefits by investment option is
as follows:
<TABLE>
<CAPTION>
INVESTMENT OPTIONS
------------------
DECEMBER 31, 1998 Total 1 2 3 4 5 6
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Common stock $ 65,019,912 $65,019,912
Short-term investment fund 1,905,255 1,905,255
Pooled separate accounts 67,032,542 $847,854 $18,309,961 $11,504,791 $3,645,178
Investment contracts 12,081,039 $12,081,039
Participant loans 5,207,903
------------ ----------- -------- ----------- ----------- ----------- ----------
Total investments 151,246,651 66,925,167 847,854 12,081,039 18,309,961 11,504,791 3,645,178
Accrued interest receivable 8,454 8,454
Cash and invested cash (deficit) 92,786 93,986 (21,131) (298) (149)
Other receivables
Contributions receivable from
Employer companies 4,103,596 4,103,596
------------ ----------- -------- ----------- ----------- ----------- ----------
Net assets available for
plan benefits Total assets $155,451,487 $71,131,203 $826,723 $12,081,039 $18,309,663 $11,504,642 $3,645,178
============ =========== ======== =========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT OPTIONS
------------------
DECEMBER 31, 1998 7 8 9 10 11 12 13 LOANS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Common stock
Pooled separate accounts $1,211,364 $13,204,880 $1,162,706 $1,280,241 $5,124,246 $5,484,306 $5,257,015
Investment contracts
Participant loans $5,207,903
---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
Total investments 1,211,364 13,204,880 1,162,706 1,280,241 5,124,246 5,484,306 5,257,015 5,207,903
Accrued interest receivable
Cash and invested
cash (deficit) 21,131 (407) 236,830 (14) (236,829) 4 (337)
Other receivables
Contributions receivable from
Employer companies
---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets available for
plan benefits $1,232,495 $13,204,473 $1,399,536 $1,280,241 $5,124,232 $5,247,477 $5,257,019 $5,207,566
========== =========== ========== ========== ========== ========== ========== ==========
</TABLE>
9
<PAGE> 14
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>
INVESTMENT OPTIONS
------------------
DECEMBER 31, 1999 TOTAL 1 2 3 4 5 6
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Cash dividends $ 1,687,397 $ 1,687,397
Interest 1,320,538 122,244 $ 702,338
------------ ----------- -------- ----------- ----------- ----------- ----------
Total investment income 3,007,935 1,809,641 702,338
Net realized gain on sale, distribution
and forfeitures of investments:
Common stock 6,821,567 6,821,567
Pooled separate accounts 5,564,689 $ 20,165 $ 1,497,091 $ 818,413 $ 163,220
------------ ----------- -------- ----------- ----------- ----------- ----------
Total realized gains 12,386,256 6,821,567 20,165 1,497,091 818,413 163,220
Net unrealized appreciation
(depreciation) of investments 3,941,598 (8,408,405) (28,592) 2,176,065 4,156,004 127,526
Contributions:
Participant 12,044,177 2,084,402 132,500 1,157,823 1,619,112 1,201,052 498,500
Employer companies 5,829,738 5,829,738
------------ ----------- -------- ----------- ----------- ----------- ----------
Total contributions 17,873,915 7,914,140 132,500 1,157,823 1,619,112 1,201,052 498,500
Distributions to participants (14,645,718) (5,762,669) (4,136) (1,726,040) (1,715,157) (766,649) (1,592,075)
Administrative expenses (107,948) (56,208) (900) (7,433) (11,663) (5,686) (3,844)
Net transfers (2,580,629) (407,301) 527,836 (1,167,320) (1,108,414) 5,088,828
------------ ----------- -------- ----------- ----------- ----------- ----------
Net increase (decrease) in net
assets available for plan benefits 22,456,038 (262,563) (288,264) 654,524 2,398,128 4,294,720 4,282,155
Net assets available for plan
benefits at beginning of the year 155,451,487 71,131,203 826,723 12,081,039 18,309,663 11,504,642 3,645,178
------------ ----------- -------- ----------- ----------- ----------- ----------
Net assets available for plan
benefits at end of the year $177,907,525 $70,868,640 $538,459 $12,735,563 $20,707,791 $15,799,362 $7,927,333
============ =========== ======== =========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT OPTIONS
------------------
DECEMBER 31, 1999 7 8 9 10 11 12 13 LOANS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Cash dividends
Interest $ 495,956
---------- ----------- ---------- ---------- ----------- ---------- ---------- ----------
Total investment income 495,956
Net realized gain on sale, distribution
and forfeitures of investments:
Common stock
Pooled separate accounts $ 33,722 $ 1,280,657 $ 112,210 $ 37,978 $ 1,137,622 $ 408,417 $ 55,194
---------- ----------- ---------- ---------- ----------- ---------- ---------- ----------
Total realized gains 33,722 1,280,657 112,210 37,978 1,137,622 408,417 55,194
Net unrealized appreciation
(depreciation) of investments (79,529) 2,774,181 138,663 (16,792) 3,006,593 (613,836) 709,720
Contributions:
Participant 139,297 1,660,156 341,374 329,419 987,954 998,707 893,881
Employer companies
---------- ----------- ---------- ---------- ----------- ---------- ---------- ----------
Total contributions 139,297 1,660,156 341,374 329,419 987,954 998,707 893,881
Distributions to participants (118,134) (1,368,682) (243,086) (140,694) (424,605) (683,191) (303,898) 203,298
Administrative expenses (1,507) (7,608) (1,833) (2,055) (3,047) (3,299) (2,865)
Net transfers (122,299) 238,065 133,951 (293,115) 645,436 (500,655) (454,408) 25
---------- ----------- ---------- ---------- ----------- ---------- ---------- ----------
Net increase (decrease) in net
assets available for plan benefits (148,450) 4,576,769 481,279 (85,259) 5,349,953 (393,857) 897,624 699,279
Net assets available for plan
benefits at beginning of the year 1,232,495 13,204,473 1,399,536 1,280,241 5,124,232 5,247,477 5,257,019 5,207,566
---------- ----------- ---------- ---------- ----------- ---------- ---------- ----------
Net assets available for plan
benefits at end of the year $1,084,045 $17,781,242 $1,880,815 $1,194,982 $10,474,185 $4,853,620 $6,154,643 $5,906,845
========== =========== ========== ========== =========== ========== ========== ==========
</TABLE>
10
<PAGE> 15
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>
INVESTMENT OPTIONS
------------------
DECEMBER 31, 1998 TOTAL 1 2 3 4 5 6
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Cash dividends $ 1,639,615 $ 1,639,615
Interest 996,233 126,274 $ 653,432
------------ ----------- -------- ----------- ----------- ----------- ----------
Total investment income 2,635,848 1,765,889 653,432
Net realized gain on sale, distribution
and forfeitures of investments:
Common stock 2,636,667 2,636,667
Pooled separate accounts 2,122,479 $ 49,765 $ 699,872 $ 367,765 $ 131,980
------------ ----------- -------- ----------- ----------- ----------- ----------
Total realized gains 4,759,146 2,636,667 49,765 699,872 367,765 131,980
Net unrealized appreciation 8,990,405 471,672 14,412 2,231,163 1,741,637 (3,455)
of investments
Contributions:
Participant 11,249,342 1,774,165 52,317 351,590 1,648,079 1,268,764 372,083
Employer companies 4,436,110 4,436,110
------------ ----------- -------- ----------- ----------- ----------- ----------
Total contributions 15,685,452 6,210,275 52,317 351,590 1,648,079 1,268,764 372,083
Distributions to participants (11,405,338) (4,446,390) (9,056) (1,787,303) (1,490,497) (524,278) (448,308)
Administrative expenses (100,648) (55,518) (848) (7,090) (11,076) (5,520) (2,072)
Net transfers (3,258,640) 296,458 1,877,179 (489,760) (1,172,134) 965,658
------------ ----------- -------- ----------- ----------- ----------- ----------
Net increase in net assets
available for plan benefits 20,564,865 3,323,955 403,048 1,087,808 2,587,781 1,676,234 1,015,886
Net assets available for plan
benefits at beginning of the year 134,886,622 67,807,248 423,675 10,993,231 15,721,882 9,828,408 2,629,292
------------ ----------- -------- ----------- ----------- ----------- ----------
Net assets available for plan
benefits at end of the year $155,451,487 $71,131,203 $826,723 $12,081,039 $18,309,663 $11,504,642 $3,645,178
============ =========== ======== =========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT OPTIONS
------------------
DECEMBER 31, 1998 7 8 9 10 11 12 13 LOANS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Cash dividends
Interest $ 216,527
---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
Total investment income 216,527
Net realized gain on sale, distribution
and forfeitures of investments:
Common stock
Pooled separate accounts $ 46,160 $ 584,743 $ 28,588 $ 39,390 $ 127,318 $ 152,507 $ (105,609)
---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
Total realized gains 46,160 584,743 28,588 39,390 127,318 152,507 (105,609)
Net unrealized appreciation
of investments 51,305 2,647,588 113,691 34,018 605,242 469,198 613,934
Contributions:
Participant 196,693 1,540,806 313,928 410,896 1,072,488 1,089,923 1,157,610
Employer companies
--------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
Total contributions 196,693 1,540,806 313,928 410,896 1,072,488 1,089,923 1,157,610
Distributions to participants (214,675) (912,062) (101,930) (49,831) (147,455) (256,067) (255,782) (761,704)
Administrative expenses (1,053) (6,500) (1,116) (2,029) (2,283) (2,870) (2,673)
Net transfers 277,994 181,922 350,389 (278,899) 198,264 438,882 (153,674) 766,361
---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase in net assets
available for plan benefits 356,424 4,036,497 703,550 153,545 1,853,574 1,891,573 1,253,806 221,184
Net assets available for plan
benefits at beginning of the year 876,071 9,167,976 695,986 1,126,696 3,270,658 3,355,904 4,003,213 4,986,382
---------- ----------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets available for plan
benefits at end of the year $1,232,495 $13,204,473 $1,399,536 $1,280,241 $5,124,232 $5,247,477 $5,257,019 $5,207,566
========== =========== ========== ========== ========== ========== ========== ==========
</TABLE>
11
<PAGE> 16
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>
INVESTMENT OPTIONS
------------------
DECEMBER 31, 1997 TOTAL 1 2 3 4 5 6
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Cash dividends $ 1,604,366 $1,604,366
Interest 1,011,138 $ 690,992
------------ ----------- -------- ----------- ----------- ---------- ----------
Total investment income 2,615,504 1,604,366 690,992
Net realized gain on sale, distribution
and forfeitures of investments:
Common stock 4,343,393 4,343,393
Pooled separate accounts 2,482,267 $38,502 $ 792,850 $ 704,233 $ 33,725
------------ ----------- ------- ----------- ----------- ---------- ----------
Total realized gains 6,825,660 4,343,393 38,502 792,850 704,233 33,725
Net unrealized appreciation
(depreciation) of investments 22,635,104 16,957,113 (6,849) 2,912,192 303,028 63,418
Contributions:
Participant 4,839,046 804,479 13,642 225,243 796,555 745,763 143,661
The Lincoln National Life
Insurance Company 5,430,354 5,430,354
------------ ----------- -------- ----------- ----------- ---------- ----------
Total contributions 10,269,400 6,234,833 13,642 225,243 796,555 745,763 143,661
Distributions to participants (6,096,184) (2,966,329) (24,350) (1,036,813) (355,330) (313,285) (443,836)
Administrative expenses (108,251) (73,949) (476) (5,364) (6,762) (4,220) (1,155)
Net transfers (6,578,182) (78,205) 696,009 855,723 (595,223) 1,441,543
------------ ----------- -------- ----------- ----------- ---------- ----------
Net increase (decrease) in net
assets available for plan benefits 36,141,233 19,521,245 (57,736) 570,067 4,995,228 840,296 1,237,356
Net assets available for plan
benefits at beginning of the year 98,745,389 48,286,003 481,411 10,423,164 10,726,654 8,988,112 1,391,936
------------ ----------- -------- ----------- ----------- ---------- ----------
Net assets available for plan
benefits at end of the year $134,886,622 $67,807,248 $423,675 $10,993,231 $15,721,882 $9,828,408 $2,629,292
============ =========== ======== =========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT OPTIONS
------------------
DECEMBER 31, 1997 7 8 9 10 11 12 13 LOANS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Cash dividends
Interest $ 320,146
-------- ---------- -------- ---------- ---------- ----------- ---------- ----------
Total investment income 320,146
Net realized gain on sale, distribution
and forfeitures of investments:
Common stock
Pooled separate accounts $ 92,386 $ 545,130 $ 18,465 $ 19,644 $ 69,093 $ 63,683 $ 104,556
-------- ---------- -------- ---------- ---------- ----------- ---------- ----------
Total realized gains 92,386 545,130 18,465 19,644 69,093 63,683 104,556
Net unrealized appreciation
(depreciation) of investments (12,556) 1,574,956 77,891 56,692 446,475 557,280 (294,536)
Contributions:
Participant 54,900 686,925 77,923 61,750 396,285 272,302 559,618
The Lincoln National Life
Insurance Company
-------- ---------- -------- ---------- ---------- ----------- ---------- ----------
Total contributions 54,900 686,925 77,923 61,750 396,285 272,302 559,618
Distributions to participants (57,010) (429,179) (5,494) (35,262) (64,180) (26,482) (160,100) (178,534)
Administrative expenses (726) (3,794) (715) (815) (1,238) (1,455) (2,182) (5,400)
Net transfers (167,062) 279,442 126,647 576,787 794,545 1,367,226 165,006 1,115,744
-------- ---------- -------- ---------- ---------- ----------- ---------- ----------
Net increase (decrease) in net
assets available for plan benefits (90,068) 2,653,480 294,717 678,796 1,640,980 2,232,554 372,362 1,251,956
Net assets available for plan
benefits at beginning of the year 966,139 6,514,496 401,269 447,900 1,629,678 1,123,350 3,630,851 3,734,426
-------- ---------- -------- ---------- ---------- ----------- ---------- ----------
Net assets available for plan
benefits at end of the year $876,071 $9,167,976 $695,986 $1,126,696 $3,270,658 $ 3,355,904 $4,003,213 $4,986,382
======== ========== ======== ========== ========== =========== ========== ==========
</TABLE>
12
<PAGE> 17
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 LNC.
However, some funds may be invested in the Wells Fargo Bank Short-Term
Investment Fund until the LNC stock can be purchased.
2 Government Bond Fund, which invests primarily in fixed income
securities backed by the United States government that will mature in
3 to 5 years.
3 Guaranteed Fund, which invests primarily in high-quality bonds and
mortgages. The account's balances are backed by the general assets of
Lincoln Life.
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 U.S.
government and high-quality corporate bonds and 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.
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, 1999, the fair value of LNC common stock in the LNC Common Stock
Fund not subject to participant direction was $5,949,502.
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 and 4 through 13 are invested in pooled separate accounts of Lincoln
Life through a group annuity contract issued by Lincoln Life.
Interest charged on new loans to participants is established monthly based upon
the prime rate plus 1%. Loans may be repaid over any period selected by the
participant up to a maximum repayment period of 5 years except that the maximum
repayment period may be 20 years for the purchase of a principal residence.
13
<PAGE> 18
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
AGENTS' SAVINGS AND PROFIT-SHARING PLAN
Notes to Financial Statements (continued)
5. INCOME TAX STATUS
The Internal Revenue Service ruled on February 9, 1995 that the Plan qualifies
under Section 401(a) of the Internal Revenue Code ("IRC") and, therefore, the
related trust is exempt from taxation. Once qualified, the Plan is required to
operate in conformity with the IRC to maintain its qualification. The Plan's
administrator believes the Plan is being operated in compliance with the
applicable requirements of the IRC and, therefore, believes that the Plan is
qualified and the related trust is tax exempt.
6. TAX IMPLICATIONS TO PARTICIPANTS
There are no income tax consequences to participants arising from their pre-tax
contributions, the Employer'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
The Plan has investments in common stock of LNC, and in pooled separate accounts
and investment contracts with Lincoln Life. Lincoln Life charges the Plan for
certain administrative expenses including trustee and audit fees. Total
administrative expenses charged were $107,948, $100,648, and $108,251 in 1999,
1998, and 1997, respectively.
8. CONCENTRATIONS OF CREDIT RISKS
The Plan has investments in common stock of LNC, and in pooled separate accounts
and unallocated investment contracts with Lincoln Life of $64,456,840,
$88,733,386 and $12,740,236 respectively, at December 31, 1999 (36.2%, 49.9% and
7.2% of net assets, respectively). LNC and Lincoln Life operate predominately in
the insurance and investment management industries.
9. CENTURY COMPLIANCE (UNAUDITED)
The Year 2000 issue was complex and affected many aspects of Lincoln Life's
businesses. Lincoln Life was particularly concerned with Year 2000 issues that
related to Lincoln Life's computer systems and interfaces with the computer
systems of vendors, suppliers, customers and business partners. From 1996
through 1999 Lincoln Life and its operating subsidiaries redirected a large
portion of internal Information Technology ("IT") efforts and contracted with
outside consultants to update systems to address Year 2000 issues. Experts were
engaged to assist in developing work plans and cost estimates and to complete
remediation activities.
For the year ended December 31, 1999, Lincoln Life identified expenditures of
$37.3 million ($24.3 million after-tax) to address this issue. This brings the
expenditures for 1996 through 1999 to $64.9 million ($42.2 million after-tax).
Because updating systems and procedures is an integral part of Lincoln Life's
on-going operations, most of the expenditures shown above for 1999 are expected
to continue after all Year 2000 issues have been resolved. All Year 2000
expenditures have been funded from operating cash flows.
The scope of the overall Year 2000 program included the following four major
project areas: 1) addressing the readiness of business applications, operating
systems and hardware on mainframe, personal computer and local area network
platforms (IT); 2) addressing the readiness of non-IT embedded software and
equipment (non-IT); 3) addressing the readiness of key business partners and 4)
establishing Year 2000 contingency plans. Lincoln Life companies completed these
projects prior to year-end.
Lincoln Life businesses have not identified any major problems in their business
processing. Minor problems have been resolved quickly. Lincoln Life businesses
have not experienced any significant interruption in service to clients or
business partners or in reporting to regulators.
14
<PAGE> 19
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
AGENTS' SAVINGS AND PROFIT-SHARING PLAN
Notes to Financial Statements (continued)
9. CENTURY COMPLIANCE (UNAUDITED) (CONTINUED)
The record keeping for the Plan is currently handled by Wells Fargo. Record
keeping consists of the day to day maintenance of the individual accounts within
the Plan. As a result of Wells Fargo's Year 2000 program and efforts, there were
no significant disruptions in service to the Plan.
15
<PAGE> 20
SIGNATURE
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Administrator of the Plan has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
By /s/ George E. Davis
---------------------------------
George E. Davis,
Administrator
Date: March 27, 2000
16
