UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
[ x ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED December 31, 1999 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________ TO _____________
Commission file number: 1-9250
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
ConsecoSave Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive offices:
Conseco, Inc.
11825 North Pennsylvania Street
Carmel, Indiana 46032
<PAGE>
CONSECOSAVE PLAN
INDEX
<TABLE>
<S> <C>
a) Financial Statements
Report of Independent Accountants.................................................................... 3
Statement of Net Assets Available for Plan Benefits - December 31, 1999 and 1998..................... 4
Statement of Changes in Net Assets Available for Plan Benefits
for the year ended December 31, 1999............................................................. 5
Notes to Financial Statements........................................................................ 6
Supplemental Schedules............................................................................... 13
b) Exhibit
23 Consent of Independent Accountants
2
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Plan Trustees
ConsecoSave Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the ConsecoSave Plan (the "Plan") at December 31, 1999 and 1998, and the
changes in net assets available for benefits for the year ended December 31,
1999 in conformity with accounting principles generally accepted in the United
States. 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 of these statements in
accordance with auditing standards generally accepted in the United States,
which 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes as of December 31, 1999 and reportable transactions for
the year ended December 31, 1999 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
June 16, 2000
3
<PAGE>
CONSECOSAVE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Assets:
Investments at fair value $205,204,104 $155,779,016
Employer contribution receivable 5,049,538 3,118,942
------------ ------------
Total assets 210,253,642 158,897,958
Liabilities:
Excess contribution refunds due to participants 556,833 --
------------ ------------
Net assets available for plan benefits $209,696,809 $158,897,958
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
4
<PAGE>
CONSECOSAVE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1999
<TABLE>
<S> <C>
Investment income:
Interest and dividends $ 19,030,922
Net depreciation in the fair value of investments (186,594)
------------
Net investment income 18,844,328
------------
Contributions:
Employee contributions 15,595,347
Employer contributions 5,049,538
Assets transferred into the Plan (Note 1) 26,631,923
------------
Total contributions 47,276,808
------------
Deductions:
Benefits paid 15,322,285
------------
Net increase in net assets available for plan benefits 50,798,851
Net assets available for plan benefits, beginning of year 158,897,958
------------
Net assets available for plan benefits, end of year $209,696,809
============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
5
<PAGE>
CONSECOSAVE PLAN
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
The accompanying financial statements of the ConsecoSave Plan (the "Plan") have
been prepared in accordance with generally accepted accounting principles which
require management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expense during the reporting period. Actual results may differ
from these estimates. During 1999, assets with a fair value of $26,631,923 were
transferred to the Plan. Such assets primarily consist of the assets of the
401(k) plans of certain subsidiaries previously acquired by Conseco, Inc.
("Conseco"). During 1999, these plans were merged with the Plan.
In September 1999, the Accounting Standards Executive Committee issued Statement
of Position 99-3, "Accounting for and Reporting of Certain Defined Contribution
Benefit Plan Investments and Other Disclosure Matters" ("SOP 99-3"). SOP 99-3
simplifies the disclosure for certain investments and is effective for plan
years ending after December 15, 1999. The Plan adopted SOP 99-3 during the Plan
year ended December 31, 1999. Accordingly, information previously required to be
disclosed about participant-directed fund investment programs is not presented
in the Plan's 1999 financial statements and prior period amounts have been
reclassified to conform with the current year presentation.
Investments
The Plan provides the following investment options for voluntary employee
contributions: (i) the following funds offered by Conseco Fund Group, which is
managed by Conseco Capital Management, Inc., a wholly owned subsidiary of
Conseco - Conseco Balanced Fund, Conseco 20 Fund, Conseco Convertible Securities
Fund, Conseco High Yield Fund, Conseco Equity Fund and Conseco Fixed Income
Fund; (ii) Conseco Stock Portfolio; (iii) Government Securities Portfolio; (iv)
Interest Income Portfolio; (v) Money Market Portfolio; and (vi) the Standard and
Poor's 500 Index ("S & P 500") Portfolio. Employer contributions are invested
solely in the common stock of Conseco. The Plan's investments, except for the
Conseco Stock portfolio which is held by the Trustees of the Plan, are
maintained under a group annuity contract in a separate account of Bankers
National Life Insurance Company, an indirect wholly owned subsidiary of Conseco.
On June 21, 1999, the Government Securities Portfolio was removed as an
investment option. On June 21, 1999, the Conseco 20, Conseco Convertible
Securities and Conseco High Yield Funds were added to the Plan.
The Conseco Balanced Fund invests in debt securities, equity securities, and
money market instruments.
The Conseco 20 Fund generally invests at least 65 percent of its assets in
common stocks of companies that the advisor believes have above-average growth
prospects. The fund is non-diversified and will generally concentrate its
investments in a core position of approximately 20 to 30 common stocks.
The Conseco Convertible Securities Fund generally invests at least 65 percent of
the fund's assets in convertible securities. These are often lower grade
investment quality than other types of investments. At any given time over 50%
of the fund's assets may be invested in below investment grade securities.
The Conseco High Yield Fund seeks to provide a high level of current income with
a secondary objective of capital appreciation. The fund generally invests at
least 65 percent of the fund's assets in below investment grade securities.
6
<PAGE>
CONSECOSAVE PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
1. Summary of Significant Accounting Policies (Continued)
Investments (continued)
The Conseco Equity Fund invests primarily in equity securities and other
securities having the investment characteristics of common stocks.
The Conseco Fixed Income Fund invests primarily in investment-grade debt
securities.
The above funds are valued using the net asset value at the end of each New York
Stock Exchange business day.
The Conseco Stock Portfolio only invests in the common stock of Conseco except
for cash which remains in the fund to meet the fund's liquidity needs. The
Conseco common stock is valued at its closing market price on the New York Stock
Exchange.
The Government Securities Portfolio invested in securities issued by the U.S.
Government or an agency or instrumentality of the U.S. Government, including
mortgage-backed securities and direct obligations issued by the U.S. Treasury,
such as Treasury Bills, certificates of indebtedness, notes and bonds. On June
21, 1999, the Government Securities Portfolio was removed as an investment
option.
The Interest Income Portfolio consists of guaranteed interest contracts. The
guaranteed interest contracts are carried at the accumulated contract values,
which are cost adjusted for interest credited (at a blended rate of 5.42 percent
and 5.48 percent for years ended December 31, 1999 and 1998, respectively). Such
carrying values approximate fair values. As of December 31, 1999, the contract,
interest rate, and expiration date are as follows:
Conseco Variable Insurance Company, an
indirect wholly owned subsidiary of
Conseco - 6.00% December 31, 2000
Principal Mutual Life Insurance Company - 5.75% December 31, 2000
The Money Market Portfolio invests in money market instruments maturing within
one year, with an average maturity of 120 days or less. Such investments are
carried at amortized cost which approximates fair value.
The S & P 500 Portfolio invests in a Standard and Poor's Depository Receipt,
which is a trust that is traded on the American Stock Exchange (Ticker Symbol
SPY) and is intended to track the price performance and dividend yield of the
S & P 500 Index. The S & P 500 Portfolio is valued using the net asset value at
the end of each New York Stock Exchange business day.
The Plan presents in the Statement of Changes in Net Assets Available for Plan
Benefits the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains (losses) and the unrealized
appreciation (depreciation) on those investments.
7
<PAGE>
CONSECOSAVE PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
1. Summary of Significant Accounting Policies (Continued)
Administrative Expenses
Operating expenses and maintenance fees incurred during the years ended December
31, 1999 and 1998, were paid by Conseco Services, LLC ("CSL"), the Plan sponsor
and a wholly owned subsidiary of Conseco, on behalf of the Plan. Future payment
of such expenses by CSL is at its discretion.
Income Taxes
Under Sections 401(a) and 501(a), respectively, of the Internal Revenue Code
(the "IRC"), the Plan is qualified and the ConsecoSave Trust, a trust
established under the Plan, is tax-exempt. The Plan has been amended since
receiving its last determination letter. However, the Plan administrator
believes that the Plan is currently designed and being operated in compliance
with the applicable requirements of the IRC.
2. Plan Description
The Plan is a defined contribution plan pursuant to Section 401(k) of the IRC.
The Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA"). Established on April 1, 1989, and amended and restated on
January 1, 1993, October 1, 1995, January 1, 1997, and November 15, 1999, the
Plan includes all employees of CSL as determined pursuant to the Plan of CSL and
any participating employer (unless otherwise excluded pursuant to the Plan).
Participation is voluntary. Employees previously were eligible to become a
participant on the first day of the second month immediately following: (1) the
employee's date of hire or on the first day of any month thereafter if such
employee's customary employment is for at least 1,000 hours of service per year;
or (2) if the employee's customary employment is less than 1,000 hours of
service per year, the last day of either the employee's initial six-month period
of employment or any subsequent six-month period during which the employee
completes 500 hours of service. Effective November 15, 1999, the Plan was
amended and every employee is eligible to become a participant on the first day
of the fourth month immediately following the employee's date of hire.
Employee contributions to the Plan are made through periodic payroll deductions
in increments of 1.0 percent of the participant's annual earnings, not to exceed
the lesser of 15.0 percent of the participant's annual earnings or the maximum
amount specified by federal tax law ($10,000 for pre-tax contributions for
1999). Participants can make pre-tax and/or after-tax contributions.
Participants designate the portfolios in which their contributions are invested.
8
<PAGE>
CONSECOSAVE PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
2. Plan Description (continued)
The employer matches 50.0 percent of each participant's pre-tax contributions up
to a maximum of 4.0 percent of the participant's annual earnings. In 1999, the
employer matched an additional 25.0 percent of each participant's pre-tax
contributions up to a maximum of 4.0 percent of each participant's annual
earnings for achieving certain corporate return on equity goals. Additional
amounts may be contributed by the employer at the discretion of its Board of
Directors. All employer contributions are made to the Conseco Stock Portfolio,
which invests solely in Conseco common stock. Such contributions are made no
later than the due date for filing Conseco's federal income tax return,
including extensions.
ERISA and the IRC provide that qualified plans, such as the Plan, cannot
discriminate in favor of highly compensated individuals. Certain highly
compensated individuals may be required to receive refunds of any contributions
in excess of the IRC Sections 401(k)(3) and 401(m) limits and all earnings
attributable to such contributions. Amounts in excess of the limits discussed
above are presented in the statement of net assets available for plan benefits
as "Excess contribution refunds due to participants" and were refunded within
2-1/2 months of the Plan's year end.
Participants are immediately vested in their voluntary contributions plus actual
earnings thereon. Participants have a gradual vesting schedule based upon length
of service and are fully vested in Conseco's contributions after six years of
service. The non-vested interests of withdrawn participants are used to reduce
Conseco's future contributions.
Benefits under the Plan are paid in cash in a lump sum, in quarterly or annual
installment payments, whole shares of Conseco common stock, or a combination
thereof. A participant may make withdrawals after reaching age 55 or 59 1/2, and
under certain circumstances are allowed to make hardship withdrawals and
after-tax deposit account withdrawals. Participants are permitted to transfer
account balances between portfolios, except the Conseco Stock Portfolio, at any
time in 1.0 percent increments. Transfers involving participant-directed
contributions to the Conseco Stock Portfolio may only be made during a
10-business day period each quarter, beginning on the 3rd business day following
the quarterly earnings release.
Participants may obtain loans up to 50.0 percent of the vested portion of their
account balances, excluding employer contributions, to a maximum loan of
$50,000. Only one loan may be outstanding at a time. Repayment of both principal
and interest is made to the participant's account via payroll deduction or a
lump sum. As of December 31, 1999, the participant loans had interest rates
ranging from 6.0 percent to 10.5 percent, and maturity dates ranging from
January 2000 to October 2017.
The Plan is administered by CSL who establishes the rules and procedures
necessary for the Plan's operations. Although it has not expressed any intent to
do so, CSL has the right to terminate the Plan. In the event the Plan is
terminated, each participant's account shall be nonforfeitable with respect to
both the participant's and employer's contributions and the net assets shall be
set aside for payment to the participants. Distribution shall be made by the
Trustee in a lump sum or in substantially equal installments during a period not
exceeding one year following such termination.
The foregoing description of the Plan provides only limited information.
Participants should refer to the Summary Plan Description for a more complete
description of the Plan's provisions.
9
<PAGE>
CONSECOSAVE PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
3. Investments
Investments that represent 5 percent or more of the Plan's net assets available
for plan benefits as of December 31, 1999 and 1998, are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Conseco Equity Fund $79,488,321 $49,634,063
S&P 500 Portfolio 32,996,184 18,367,828
Conseco Stock Portfolio (a) 27,642,899 43,552,107
Money Market Portfolio 19,843,681 10,072,484
Interest Income Portfolio 16,437,853 16,517,909
Fixed Income Fund (b) 9,223,310
<FN>
---------------
(a) Includes both participant-directed and nonparticipant-directed investments.
(b) Represented less than 5 percent of net assets available for plan benefits
at December 31, 1999.
</FN>
</TABLE>
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated (depreciated) as
follows:
<TABLE>
<S> <C>
Various investment portfolios, primarily
mutual funds of the Conseco Fund Group $ 20,811,526
Conseco Stock Portfolio (20,998,120)
------------
$ (186,594)
============
</TABLE>
10
<PAGE>
CONSECOSAVE PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
4. Conseco Stock Portfolio
The Conseco Stock Portfolio includes both participant-directed and
nonparticipant-directed investments. Changes in net assets relating to this
portfolio for the year ended December 31, 1999, are as follows:
<TABLE>
<S> <C>
Investment Income:
Interest and dividends $ 1,058,168
Net depreciation in fair value of investments (20,998,120)
------------
Net investment loss (19,939,952)
------------
Contributions:
Employee contributions 4,098,749
Employer contributions 5,049,538
Assets transferred into the Plan 759,325
------------
Total contributions 9,907,612
------------
Deductions:
Benefits paid 3,858,979
------------
Net employee transfers to participant-
directed investments (167,855)
------------
Net decrease in net assets available for
plan benefits (14,059,174)
Net assets available for plan benefits,
beginning of year 46,671,049
------------
Net assets available for plan benefits,
end of year $ 32,611,875
============
</TABLE>
11
<PAGE>
CONSECOSAVE PLAN
NOTES TO FINANCIAL STATEMENTS - (Continued)
5. Subsequent Events (Unaudited)
The NAL Financial Group 401(k) Benefit Plan and the Conseco Finance Corp. 401(k)
Plan merged into the Plan effective January 1, 2000. The assets of these plans
totaled $53,427,232 and were transferred into the Plan in early 2000. On March
31, 2000, Conseco announced that it plans to explore the sale of Conseco Finance
Corp.
12
<PAGE>
<TABLE>
<CAPTION>
CONSECOSAVE PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
As of December 31, 1999
<S> <C> <C> <C> <C>
(a) (b) (c) (d) (e)
Identity of Issuer, Borrower, Description Current
Lessor or Similar Party of Investment Cost Value
------------------------------------------------------------------------------------------------------------------------------------
Conseco Fund Group 593,420 shares of Conseco Balanced Fund $ 7,157,890 $ 8,064,574
Conseco Fund Group 201,571 shares of Conseco 20 Fund 3,289,632 4,130,190
Conseco Fund Group 64,001 shares of Conseco Convertible Securities Fund 826,627 956,176
Conseco Fund Group 31,099 shares of Conseco High Yield Fund 310,654 311,923
Conseco Fund Group 4,826,249 shares of Conseco Equity Fund 58,058,224 79,488,321
Conseco Fund Group 1,047,850 shares of Conseco Fixed Income Fund 10,451,634 10,101,270
Conseco, Inc. 1,512,288 shares of Conseco, Inc. Common Stock 38,784,873 27,270,892
Conseco Variable Insurance Guaranteed interest contract, interest rate-6.0%,
Company maturity date-December 31, 2000 15,966,491 15,966,491
Principal Mutual Life Insurance Guaranteed interest contract, interest rate-5.75%, maturity
Company date-December 31, 2000 471,362 471,362
Lehman Brothers Commercial paper 500,000 500,000
Lehman Brothers Commercial paper 500,000 500,000
Lehman Brothers Commercial paper 500,000 500,000
Lehman Brothers Commercial paper 550,000 550,000
Merrill Lynch Commercial paper 797,083 797,083
Bank of America Commercial paper 698,396 698,396
Merrill Lynch Commercial paper 696,902 696,902
Goldman Sachs - MMK Commercial paper 747,742 747,742
Goldman Sachs - MMK Commercial paper 697,190 697,190
Merrill Lynch Commercial paper 596,412 596,412
JP Morgan Certificate of deposit 749,985 749,985
Merrill Lynch Commercial paper 794,551 794,551
Goldman Sachs - MMK Commercial paper 794,130 794,130
Merrill Lynch Commercial paper 498,347 498,347
Merrill Lynch Commercial paper 746,529 746,529
Goldman Sachs - MMK Commercial paper 747,758 747,758
Fifth Third Bank Commercial paper 250,000 250,000
Lehman Brothers Commercial paper 497,647 497,647
Merrill Lynch Commercial paper 598,215 598,215
Merrill Lynch Commercial paper 746,648 746,648
Goldman Sachs - MMK Commercial paper 792,595 792,595
Goldman Sachs - MMK Commercial paper 497,833 497,833
Goldman Sachs - MMK Commercial paper 696,690 696,690
Goldman Sachs - MMK Commercial paper 697,918 697,918
Chase Securities Inc. Commercial paper 796,400 796,400
JP Morgan Certificate of deposit 750,030 750,030
Merrill Lynch Commercial paper 573,109 573,109
Lehman Brothers Commercial paper 500,000 500,000
Morgan Stanley & Co. Commercial paper 793,416 793,416
AIM Liquid Assets Portfolio - Commercial paper, time
deposits, repurchase agreements 1,349,686 1,349,686
Bank of New York Collective Short-Term Interest Fund 372,006 372,006
Bank of New York Cash 38,260 38,260
SPDR Trust, Series I 223,205 shares of Standard & Poor's 500 Index Portfolio 24,200,971 32,646,394
Participant loans Interest rates from 6.0% to 10.5%, maturity dates from
January 2000 to October 2017 - 5,231,033
------------ ------------
Total Assets Held for Investment
Purposes $180,083,836 $205,204,104
============ ============
</TABLE>
13
<PAGE>
CONSECOSAVE PLAN
SCHEDULE H, LINE 4j - SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1999
<TABLE>
<CAPTION>
Current
Value of
Identity Description Number Cost Asset on
of Party of of Purchase Selling of Transaction Net
Involved Transactions Transactions Price Price Asset Date Gain
--------------------------------------------------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Conseco Common Purchases 158 $ 8,719,827 $ - $ - $ 8,719,827 $ -
Stock Portfolio Sales 100 - 4,612,732 1,686,657 4,612,732 2,926,075
Conseco Equity Purchases 221 27,153,513 - - 27,153,513 -
Fund Sales 205 - 12,268,604 9,913,300 12,268,604 2,355,304
S&P 500 Purchases 10 11,184,642 - - 11,184,642 -
Portfolio Sales 4 - 1,222,935 608,759 1,222,935 614,176
</TABLE>
14
<PAGE>
CONSECOSAVE PLAN
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees of the Plan have duly caused this annual report to be signed on its
behalf by the undersigned thereunto duly authorized.
CONSECOSAVE PLAN
Dated: June 27, 2000 By: /s/ James S. Adams
---------------------------
James S. Adams, Trustee
15
