As in effect
3/1/61
FORM 10K/A2
------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
AMENDMENT TO APPLICATION OR REPORT
Filed Pursuant to Section 12, 13, or 15 (d) of
THE SECURITIES EXCHANGE ACT OF 1934
OLD REPUBLIC INTERNATIONAL CORPORATION
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
AMENDMENT NO. 2
---
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its ANNUAL REPORT FOR 1997 on Form
10-K as set forth in the pages attached hereto:
(List all such items, financial statements, exhibits or other portions amended).
FORM 11-K
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
OLD REPUBLIC INTERNATIONAL CORPORATION
--------------------------------------
(Registrant)
Date April 17, 1998 By: /s/ Paul D. Adams
------------------------------------
(Signature)
Paul D. Adams
Sr. Vice President
and
Chief Financial Officer
Total Pages: 34
<PAGE>
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, 1997
------------
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
OLD REPUBLIC INTERNATIONAL CORPORATION
307 NORTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60601
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administration Committee has duly caused this Annual Report to be signed on
behalf of the undersigned, thereunto duly authorized.
THE OLD REPUBLIC INTERNATIONAL CORPORATION EMPLOYEES
SAVINGS AND STOCK OWNERSHIP PLAN
(Registrant)
By: /s/ A.C. Zucaro
-------------------------------------
A. C. Zucaro, Member of the
Administration Committee
Date: April 17, 1998
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
REPORT ON AUDITS OF FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
----------
Pages
-----
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits as of
December 31, 1997 and 1996 2
Statements of Changes in Net Assets Available for Plan
Benefits for the years ended December 31, 1997 and 1996 3
Notes to Financial Statements 4-22
Supplemental Schedules (Required by the Department of Labor):
Item 31 - Assets and Liabilities at December 31, 1997 and 1996 24
Item 32 - Income, Expenses, and Changes in Net Assets for
the year ended December 31, 1997 25
Item 27a - Schedule I - Schedule of Assets Held for
Investment Purposes at December 31, 1997 26-27
Item 27a - Schedule II - Schedule of Assets Held for Investment
Purposes-Investment Assets Both Acquired and Sold in 1997 28
Item 27d -Schedule of Reportable Transactions for the year
ended December 31, 1997 29
Supplemental Schedules (Required by the Securities Exchange Commission):
Schedules I, II and III have been omitted because the required information is
shown in the financial statements or notes thereto.
Note
- ----
Supplemental schedules required by the Employee Retirement Income Security Act
of 1974 that have not been included herein are not applicable.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Administration Committee
of the Old Republic International Corporation
Employees Savings and Stock Ownership Plan
Chicago, Illinois
We have audited the accompanying statements of net assets available for plan
benefits of Old Republic International Corporation Employees Savings and Stock
Ownership Plan (the Plan) as of December 31, 1997 and 1996, and the related
statements of changes in net assets available for plan benefits for the years
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based upon 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 as
of December 31, 1997 and 1996, and the changes in net assets available for plan
benefits for the years ended December 31, 1997 and 1996, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
accompanying index 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 and by the Securities and Exchange Commission's Regulation S-X. The
supplemental schedules have been subjected to the auditing procedures applied in
the audit 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/ Coopers & Lybrand, L.L.P.
Chicago, Illinois
April 10, 1998
1
<PAGE>
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1997 and 1996
----------------
1997 1996
----------------------------------------- -----------------------------------------
Employees' Companies' Combined Employees' Companies' Combined
Account Account Account Account Account Account
----------- ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Collective Trusts:
Short-term Investment Fund $9,949,785 $1,917,691 $11,867,476 $11,385,002 $305,182 $11,690,184
Old Republic International Corporation:
Series "D" preferred shares 0 0 0 0 174,280,974 174,280,974
Common shares 7,315,413 231,694,897 239,010,310 5,262,180 924,881 6,187,061
United States Government obligations 7,833,076 0 7,833,076 10,549,652 0 10,549,652
Corporate bonds 19,199,137 0 19,199,137 15,332,393 0 15,332,393
Mutual funds 20,568,434 1,775,464 22,343,898 11,065,160 1,230,187 12,295,347
---------- ------------ ------------ ------------ ------------ ------------
64,865,845 235,388,052 300,253,897 53,594,387 176,741,224 230,335,611
Contributions receivable:
Companies 0 4,137,401 4,137,401 0 3,739,210 3,739,210
Employees 0 0 0 0 0 0
Accrued interest and dividends receivable 773,710 176,635 950,345 501,482 1,021 502,503
----------- ------------ ------------ ----------- ------------ ------------
$65,639,555 $239,702,088 $305,341,643 $54,095,869 $180,481,455 $234,577,324
=========== ============ ============ =========== ============ ============
LIABILITIES AND NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Notes payable $0 $8,324,234 $8,324,234 $0 $11,109,234 $11,109,234
Advances from plan sponsor
(non-interest bearing) 0 0 0 0 738,895 738,895
Accrued interest payable 0 93,307 93,307 0 119,921 119,921
Unpaid withdrawal and termination benefits 139,847 0 139,847 877,248 0 877,248
Unpaid administrative expenses 165,087 204,262 369,349 33,198 (53,750) (20,552)
----------- ------------ ------------ ----------- ------------ ------------
Total liabilities 304,934 8,621,803 8,926,737 910,446 11,914,300 12,824,746
----------- ------------ ------------ ----------- ------------ ------------
Net assets available for plan benefits:
Allocated to participants 65,334,621 207,801,484 273,136,105 53,185,423 148,405,823 201,591,246
Not allocated to participants 0 23,278,801 23,278,801 0 20,161,332 20,161,332
----------- ------------ ------------ ----------- ------------ ------------
Total net assets available for plan benefits 65,334,621 231,080,285 296,414,906 53,185,423 168,567,155 221,752,578
----------- ------------ ------------ ----------- ------------ ------------
$65,639,555 $239,702,088 $305,341,643 $54,095,869 $180,481,455 $234,577,324
=========== ============ ============ =========== ============ ============
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
Statements of Changes in Net Assets Available for Plan Benefits
for the years ended December 31, 1997 and 1996
----------------
1997 1996
----------------------------------------- -----------------------------------------
Employees' Companies' Combined Employees' Companies' Combined
Account Account Account Account Account Account
----------- ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Employer contributions $0 $4,139,625 $4,139,625 $0 $3,755,042 $3,755,042
Employee contributions 9,632,853 0 9,632,853 8,890,832 0 8,890,832
Interest income 2,330,229 88,002 2,418,231 2,196,148 59,134 2,255,282
Dividend income 565,336 4,570,820 5,136,156 278,614 2,954,326 3,232,940
Net appreciation in fair value
of investments 5,415,241 66,281,217 71,696,458 1,681,389 19,349,816 21,031,205
----------- ------------ ------------ ----------- ------------ ------------
17,943,659 75,079,664 93,023,323 13,046,983 26,118,318 39,165,301
----------- ------------ ------------ ----------- ------------ ------------
Deductions:
Termination and withdrawal benefits 5,782,069 11,728,786 17,510,855 6,624,016 14,572,770 21,196,786
Interest expense 0 609,277 609,277 0 777,063 777,063
Administrative expenses 12,392 228,471 240,863 33,199 154,176 187,375
----------- ------------ ------------ ----------- ------------ ------------
5,794,461 12,566,534 18,360,995 6,657,215 15,504,009 22,161,224
----------- ------------ ------------ ----------- ------------ ------------
NET ADDITIONS 12,149,198 62,513,130 74,662,328 6,389,768 10,614,309 17,004,077
Net assets available for plan benefits,
beginning of year 53,185,423 168,567,155 221,752,578 46,795,655 157,952,846 204,748,501
----------- ------------ ------------ ----------- ------------ ------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, END OF YEAR $65,334,621 $231,080,285 $296,414,906 $53,185,423 $168,567,155 $221,752,578
=========== ============ ============ =========== ============ ============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
----------
1. Summary of Significant Accounting Policies
A. Basis of Presentation
The accompanying financial statements of the Old Republic International
Corporation Employees Savings and Stock Ownership Plan (the Plan) include plan
assets for employees of Old Republic International Corporation (the Corporation
or Plan Sponsor), and participating subsidiaries (the Companies or Employers).
These financial statements and accompanying notes together provide only general
information about the Plan. Participants should refer to the Plan agreement for
a complete description of the Plan's provision.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of additions and deductions during the reporting period.
Actual results could differ from those estimates.
B. Investments
Investments in the Collective Trust-Short-term Investment Fund of the Northern
Trust Company (Northern), are valued by the Northern at cost which approximates
fair value, and consist of short term obligations. Securities traded
over-the-counter, such as common stocks, mutual funds, corporate bonds and U.S.
Government obligations, are valued at the final bid price on the valuation date.
Temporary investments in short-term securities are carried at cost, which
approximates market value. Investment in Old Republic International Corporation
Series D preferred stock, which were not registered, were stated at fair value
as determined by the Board of Directors, based on appraisals received from an
investment banker. However, because of the inherent uncertainty of the
valuation, the Board of Directors' estimate of fair value may have differed
significantly from the value that would have been used had a ready market
existed for the securities, and the differences could have been material. Such
preferred shares amounted to $174,280,974 at December 31, 1996 (74.3% of total
plan assets). In August, 1997, the remaining preferred shares were converted
into common shares of the Corporation. Old Republic International Corporation
common shares are stated at closing market value on the last business day of the
year.
The Plan presents in the statements of changes in net assets the net
appreciation (depreciation) in the fair value of its investments which consists
of the realized gains or losses and the unrealized appreciation (depreciation)
on those investments. For purposes of generally accepted accounting principles,
the Plan uses the historical cost method for determining the basis of its
investments, whereas, for ERISA reporting purposes, the Plan uses the current
value method for determining the basis of its investments. Purchases and sales
of securities are reflected on a trade-date basis. Gain or loss on sales of
securities are based on the average cost method. Interest income is recorded as
earned and dividend income is recorded as earned on the ex-dividend date. The
investments in common stock and Series D preferred stock of Old Republic
International Corporation have not been adjusted, as to number of shares, to
reflect a 50% stock dividend declared on March 13, 1998.
4
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
----------
1. Summary of Significant Accounting Policies, Continued
C. Contributions
Employees become participants in the Plan on the first January 1, they are
employees and they elect to make contributions to the Plan.
Contributions from employees (savings) are made on a post-tax basis and are
recorded in the period in which the Companies make payroll deductions from Plan
participants. Participants elect the amount of contribution which ranges from a
minimum of 1% to a maximum of 15% of recognized compensation as defined in the
Plan. Any employee who does not contribute to the Plan will not receive a
Company matching contribution. Employee contributions up to 6% will be matched.
However, the maximum amount of contribution which can be matched per employee
cannot exceed $9,000 (6% of $150,000) per Plan year. The maximum amount which
can be withheld is 15% limited to $22,500 (15% of $150,000). Contributions are
also subject to other Internal Revenue Code limitations (including the limits
imposed by Internal Revenue Code Section 415).
There is no penalty to participants for withdrawing a part of accumulated
employee savings and earnings thereon if the cumulative withdrawal, in any one
year, is the lower of $15,000 or 50% of the accumulated savings balance as of
the most recent calculation date (June 30 or December 31). Such withdrawals are
permitted only on January 1 or July 1 of each year. The penalty for withdrawing
excess amounts, in any one year, is exclusion from participation in the Plan for
one year starting on the January 1, following the date of the excess withdrawal.
The company matching contribution is based on the following formula:
Percentage of If the percentage increase in average operating
Recognized Compen- earnings per share for the most recent five year
sation Contributed period is:
- ------------------ --------------------------------------------------
Less Than 6.01% 9.01% 15.01% Over
6% to 9% to 15% to 20% 20%
The Resulting Employer Matching Contribution on
the First 6% of Employee Savings will be:
--------------------------------------------------
1.00% 30% 40% 65% 100% 140%
1.01 to 2.00% 28% 38% 63% 98% 138%
2.01 to 3.00% 26% 36% 61% 96% 136%
3.01 to 4.00% 24% 34% 59% 94% 134%
4.01 to 5.00% 22% 32% 57% 92% 132%
5.01 to 6.00% 20% 30% 55% 90% 130%
6.01 to 15.00% None None None None None
--------------------------------------------------
. The percentage increase in average operating earnings per share is obtained
by comparing the average operating earnings per share for the Company for
the five years ending with the calculation year, with the same average for
the five years ending the year prior to the calculation year. Operating
earnings per share are determined pursuant to generally accepted accounting
principles and are equal to net income per share exclusive of realized
capital gains or losses and extraordinary items and income taxes applicable
thereto.
5
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
----------
1. Summary of Significant Accounting Policies, Continued
C. Contributions, Continued
Company matching contributions are allocated on December 31, and a Plan
participant receives a matching contribution only if:
. the Companies meet certain minimum profit objectives;
. the participant completes 1,000 or more hours of service during the year;
and
. the participant is employed by one of the Companies on December 31 of that
year, died or became fully disabled during the year, or retired during the
year after age 65.
Additional amounts from consolidated annual net profits after taxes or
accumulated earnings as the Board of Directors of the Companies may determine
from time to time may be added to the contributions resulting from the above
formula. The amount of the Companies' contributions are subject to the following
limitations:
. No contribution shall be made if the Companies' consolidated annual net
profit before extraordinary items and taxes is less than $2,500,000.
. No contribution shall be made by any Employer for any fiscal year which
exceeds the maximum amount currently deductible by that Employer under
section 404 of the Internal Revenue Code.
. No contribution shall be made by any Employer for any fiscal year which
would cause its total contribution to exceed the amount of its annual net
profit before taxes and its accumulated earnings.
D. Administrative and Operating Expenses
Office personnel, space and equipment are furnished by the Companies at no
charge to the Plan. All other administrative expenses of the Plan are paid by
and reflected as expenses of the Plan.
2. Benefits
The benefits a plan participant receives depends upon amounts allocated to his
accounts under the Plan. Amounts in his accounts are affected by the amount of
employee contributions he makes, his vested interest in his matching
contributions and discretionary contributions, forfeitures, and earnings.
When a plan participant makes employee contributions, his employee contributions
are allocated to his "Employee Account." Earnings are allocated to each plan
participant's Employee Account on a semi-annual basis, based upon the
performance of the investment fund that the plan participant has selected. Upon
termination of service for any reason, a plan participant receives all amounts
in his Employee Account.
6
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
----------
2. Benefits, Continued
Each year, the matching contributions and discretionary contributions are
allocated to the "Company Accounts" of plan participants. If a plan participant
terminates service with the Companies, the amount that he receives from his
Company Account depends upon his vested interest in such account. A plan
participant vests in his Company Account based on his "Years of Service,"
according to the following table:
Years of Service Vesting Schedule
---------------- ----------------
1 0%
2 0
3 20
4 40
5 60
6 80
7 100%
A plan participant earns a Year of Service for each calendar year during which
he completes 1,000 or more hours of service for the Companies. However, a plan
participant will become 100% vested in his Company Account prior to seven years
of service if:
. the plan participant has reached age 65, or
. termination is caused by death, or
. termination is caused by total and permanent disability which renders the
employee incapable of performing satisfactory service for the Companies.
The amount a plan participant receives from his Company Account is also affected
by forfeitures, earnings, and released shares. If a plan participant terminates
service prior to full vesting, the non-vested portion of his Company Account is
forfeited. Forfeited amounts are re-allocated to remaining participants who made
employee contributions, completed 1,000 or more hours of service for the
Companies during the year, and are employed by the Companies on December 31 or
terminated service due to retirement on or after age 65, death, or total and
permanent disability. Forfeitures are allocated based upon the ratio of the plan
participant's recognized compensation to the recognized compensation of all plan
participants. In addition to forfeitures, the balance in a plan participant's
Company Account is affected by the net cash revenues over expenses of the
Corporation's stock fund plus the market value of shares released to
participants from payment of loan principal and/or interest during the year.
7
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
----------
2. Benefits, Continued
Unallocated net assets, in the Companies' Account, available for plan benefits
at December 31, are comprised of items not allocated to participants, as
follows:
<TABLE>
Assets 1997 1996
- ------ ---- ----
<S> <C> <C>
Unreleased shares:
Series D preferred shares:
5,731,675 shares at $5.35 $ 30,664,461
Common Shares:
853,325 shares at $37.1875 $ 31,733,023
26,801 shares at $26.75 716,927
------------ ------------
Total 31,733,023 31,381,388
------------ ------------
Liabilities
- -----------
Unpaid loan principal at December 31 8,324,234 11,109,234
Accrued interest expense payable on loans at
December 31 93,307 119,921
Accrued administrative expenses (prepaid) 36,681 (9,099)
------------ ------------
Total 8,454,222 11,220,056
------------ ------------
Unallocated net assets available for plan benefits $ 23,278,801 $ 20,161,332
============ ============
</TABLE>
8
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
----------
3. Investments
Investments held by the Plan at December 31, 1997 and 1996 are summarized as
follows:
<TABLE>
1997 1996
--------------------------------------- -----------------------------------------
Shares/ Shares/
Units/ Units/
Par Value Cost Fair Value Par Value Cost Fair Value
--------- ---- ---------- --------- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Collective Trusts:
Short-term Investment
Fund 11,867,476 $11,867,476 $ 11,867,476 11,690,184 $11,690,184 $ 11,690,184*
Old Republic Inter-
national Corporation:
Series D-Preferred
Stock - - - 32,575,883 38,579,244 174,280,974*
Common Stock 6,427,168 38,332,010 239,010,310* 231,292 1,642,198 6,187,061
United States Government
obligations $ 7,625,000 7,864,662 7,833,076 $10,475,000 10,644,997 10,549,652
Corporate bonds $18,889,000 19,279,225 19,199,137 $15,217,000 15,537,593 15,332,393
Mutual funds 702,195 18,527,876 22,343,898 512,862 10,524,927 12,295,347
----------- ------------ ----------- ------------
$95,871,249 $300,253,897 $88,619,143 $230,335,611
=========== ============ =========== ============
</TABLE>
* - These investments represent 5% or more of the Plan assets at December 31,
1997 or 1996, as applicable.
Net appreciation (depreciation) in fair value of investments is broken down as
follows for the years ended December 31:
<TABLE>
1997 1996
---- ----
<S> <C> <C>
Collective Trusts:
Short-term Investment
Fund $ - $ -
Old Republic Inter-
national Corporation:
Series D-Preferred
Stock (135,701,729) 17,216,801
Common Stock 204,077,441 2,614,723
Debentures - (4,890)
United States Government
obligations 12,173 (212,561)
Corporate bonds 66,677 222,479
Other common stock - (364,576)
Mutual funds 3,241,896 1,559,229
------------- -----------
$ 71,696,458 $21,031,205
============= ===========
</TABLE>
9
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
----------
4. ERISA Compliance
The Plan became effective January 1, 1978, and accordingly, in the opinion of
the Plan's Sponsor and its Legal Counsel, was drafted, as were subsequent
amendments and restatements, to comply with the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA" or "the ACT"), as amended from
time to time.
5. Termination Priorities
The Corporation reserves the right, either with or without formal action, to
terminate the Plan. Each Employer reserves the right to permanently discontinue
its contributions to the Plan. In the event that an Employer permanently
discontinues its contributions to the Plan, or the Corporation terminates the
Plan, or the Plan is partially terminated under operation of law, the accounts
of the affected participants shall be fully vested and non-forfeitable. In
addition, because the Plan is a defined contribution plan and not a defined
benefit plan, no termination priorities apply to the Plan under ERISA.
6. Notes Payable
The following table sets forth certain data with respect to debt assumed by the
Plan and guaranteed by the Corporation:
Original loan principal $51,500,000
Cost of shares acquired $49,899,963
Unpaid principal balance
at December 31, 1997 $ 8,324,234
Shares acquired:
Series B 9,881,937
Series D 33,385,023
Common 44,967
Unreleased shares a December 31, 1997:
Common 853,325
Principal due April 30,
1998 $ 3,224,234
1999 2,600,000
2000 2,500,000
-----------
$ 8,324,234
===========
10
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
----------
6. Notes Payable, Continued
Except for loan proceeds of $100,037, all proceeds were used by the Plan to
acquire preferred and common shares of the Corporation, as indicated above, at
appraised values. Remaining funds were utilized to meet periodic cash needs or
to refinance existing loans. The Series "D" preferred stock had a cumulative
annual dividend rate of $.087 per share, had a minimum redemption value of $0.87
at the option of the Corporation, had one vote per share and was convertible
into common stock of the Corporation at any time at the rate of five shares of
Series"D" preferred stock for one common share. During 1997, the Plan exercised
its option to convert its holdings of Series "D" preferred stock (32,575,883
shares) into common stock of the Corporation (6,515,176 shares).
It is anticipated that principal and interest payments on the Plan's loans are
to be met by the Companies' annual profit sharing contributions, interest on
funds invested, and dividends on the Corporation's common stock.
During 1988, a number of loans with an aggregate outstanding principal balance
of $23,374,234 were refinanced. $11,084,234 was refinanced with the Corporation
and $12,290,000 was refinanced with a bank.
The interest rate on loans with the Corporation is set at 1.5% in excess of the
current rate on six month certificates of deposit. The interest rates on the
bank loans range from 75% to 85% of the Prime Rate.
The carrying amounts of the notes payable approximates their fair value.
In April 1996, the Plan received a non-interest bearing advance of $1,738,895,
from the Plan Sponsor. The Plan paid back $1,000,000 in June 1996, and the
remaining $738,895 in January, 1997.
7. Tax Status
The Internal Revenue Service on April 25, 1995, issued a determination letter
stating that the Plan, as amended through December 1, 1994, was qualified under
Section 401 of the Internal Revenue Code and the Plan was exempt under the
provisions of Section 501(a). The Plan has not been amended since the
determination letter was received. The Plan's Sponsor and Tax Counsel believe
that the Plan is designed and is currently being operated in compliance with the
applicable requirements of the Internal Revenue Code.
11
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
----------
8. Contributions
Contributions by the Participants and by Participating Companies were as follows
for the years shown:
<TABLE>
1997 1996
---------------------- ----------------------
Partici- Partici-
pants Company pants Company
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Old Republic International Corporation $ 46,787 $ 14,850 $ 45,133 $ 13,464
Old Republic Life Insurance Company 61,335 26,001 55,997 24,104
Old Republic Insurance Company 156,884 65,330 172,727 75,762
International Business & Mercantile
REassurance Company - - 39,646 8,419
Old Republic National Title Insurance
Company & its Subsidiaries and Affiliates 1,457,167 582,423 1,314,204 493,518
Old Republic Insured Credit Services, Inc. 91,654 36,729 100,460 44,889
Brummel Brothers, Inc. 38,175 19,015 35,579 17,956
J. Huell Briscoe & Associates, Inc. 19,254 10,793 19,800 10,488
Old Republic General Services, Inc. 283,846 100,892 302,470 107,100
Old Republic Union Insurance Company 13,629 7,226 16,816 9,011
Old Republic Mortgage Guaranty Group,
Inc. & its Subsidiaries 1,098,381 491,411 1,053,287 449,076
Old Republic Title Holdings, Inc.
& its Subsidiaries and affiliates 3,166,976 1,307,000 2,922,322 1,210,866
Old Republic Asset Management Co. 22,612 11,978 23,091 10,639
Old Republic Dealer Service Corp. 17,527 8,082 13,742 5,009
Phoenix Aviation Managers, Inc. 158,432 59,405 135,401 50,867
Chicago Underwriting Group 89,610 45,178 107,296 42,247
Old Republic Risk Mgmt. Corp. 273,319 104,182 134,959 57,719
Bitco Corp. & its Subsidiaries 627,702 315,736 582,340 286,392
Great West Casualty and Agencies 746,961 406,825 655,089 358,647
Old Republic RE 119,901 43,934 110,797 38,597
Old Republic Home Protection 112,582 51,000 76,459 36,214
Old Republic Surety Group 392,814 142,191 361,880 132,366
Old Republic Standard Group 142,783 49,760 123,414 42,041
Employers General Insurance Group 404,508 202,525 397,506 195,145
Old Republic Minnehoma Insurance Co. 38,310 20,469 40,440 16,023
ORDESCO Inc. 13,288 6,771 14,068 7,731
Church Rickards, Whitlock & Co. 38,416 9,919 35,909 10,752
---------- ---------- ---------- ----------
$9,632,853 $4,139,625 $8,890,832 $3,755,042
========== ========== ========== ==========
</TABLE>
9. Alternative Investment Funds
In November, 1982, the Plan was amended to permit participants to transfer
monies from Fund "A", the primary goal of which is protection of capital and
stability of income through investments in high-grade, liquid investments, into
a newly created Fund "O", and to elect to have their future contributions to the
Plan invested, in whole or in part, in Fund "O".
12
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
----------
9. Alternative Investment Funds, Continued
Under the terms of the Plan, Fund "O" may be invested by the Trustee upon the
direction of the Plan's Administration Committee ("Committee") in any property,
real or personal and shares of stock, whether common or preferred, voting trust
certificates, bonds, mortgages, secured or unsecured obligations, notes, annuity
and life insurance contracts, whether group or individual, and other securities
and property of every kind and description as the Committee selects (including
securities of the Company or any Employer under the Plan and any subsidiary or
affiliate of the Company or an Employer). Fund "O" may, as a result, be more
speculative and may incur a higher degree of risk than Fund "A" since the
Committee is permitted to direct the Trustee to invest in private offerings,
joint ventures, small, unseasoned or embryonic companies without a record of
earnings, companies not traded on an established market, and other investments.
The Committee has the authority to direct the Trustee to borrow by pledging Fund
"O" assets.
At December 31, 1997 there were 2,472 participants in Fund "A" and 1,620
participants in Fund "O".
The Plan also has other Funds which offer participants the opportunity to
further diversify their future and accumulated contributions (savings) and
earnings thereon. The Funds are designated as "H", "I", "J", "K", "L" and "M".
Directions to change the Funds to which savings can be directed or transfers
from Fund "A" and "O" can be done on January 1, or July 1 of each year. At
December 31, 1997, there were 715; 802; 1,140; 587; 120; and 493 participants in
Funds "H", "I", "J", "K", "L" and "M", respectively.
A description of these investment options are as follows:
Fund "H" - Oakmark Fund seeks long-term capital appreciation and invests in
common stocks and other equity-type securities seeking long-term capital
appreciation.
Fund "I" - Fidelity Fund seeks long-term capital growth with current income and
invests mainly in common stocks and securities that are convertible into
common stock.
Fund "J" - Vanguard/Windsor II seeks to provide long-term growth of capital and
income with a secondary objective to provide current income.
Fund "K" - T. Rowe Price International Stock Fund seeks long-term growth of
capital through investments primarily in common stocks of established,
non-U.S. companies.
Fund "L" - Benchmark Short-Intermediate Bond Portfolio Fund invests in a broad
range of short to intermediate term bonds and other fixed income
securities.
Fund "M" - Vanguard 500 Stock Index Fund seeks to establish and manage its
assets to track very closely to the Standard and Poor's 500 Stock Index.
This Fund became effective January 1, 1997.
13
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
----------
9. Alternative Investment Funds, Continued
Effective January 1, 1989, the Tax Reform Act provided that plan participants
who reach age 55 and have 10 years of service in the Plan are provided with the
option of diversifying a portion of their companies' account balance out of
company stock and into alternative investment funds. The diversification is
limited to 25% of all company stock acquired after December 31, 1986. After age
60 (and with 10 years of service in the Plan), such participants have the right
to diversify up to 50% of all company stock acquired after December 31, 1986.
The period to make the election to diversify is during the first 90 days of the
calendar year in which a participant attains age 55 and has completed 10 years
of service in the plan.
The investment options available for diversification at December 31, 1997 are:
Fund "E" - Short-term investment fund composed of high grade money market
investments with very short-term maturities.
Fund "F" - Intermediate-term fund composed of high-grade securities with
maturities of five years or less.
Fund "G" - Open ended no load mutual fund with primary objective being capital
appreciation.
At December 31, 1997, there were 24 participants in Fund "E", 33 participants in
Fund "F" and 94 participants in Fund "G".
Statements for each fund described above follow (Fund "B" is employer directed
only and is included for informational purposes only):
14
<PAGE>
9. Alternative Investment Funds, Continued
---------------------------------------
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
Allocation of Net Assets Available for Plan Benefits
Employee's Account by Investment Program
December 31, 1997
-----------------
Fund "A" Fund "O" Fund "H" Fund "I"
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Collective Trusts:
Short-term Investment Fund $4,690,066 $5,090,259 $32,424 $30,384
Old Republic International Corporation:
Common shares 0 7,315,413 0 0
United States Government obligations 4,455,934 3,377,142 0 0
Corporate bonds 19,199,137 0 0 0
Mutual funds 0 338,366 4,745,614 4,073,981
----------- ------------ ---------- -----------
28,345,137 16,121,180 4,778,038 4,104,365
Contributions receivable:
Employee 187 1,453 176 (176)
Accrued interest and dividends receivable 471,945 96,590 81 202,355
----------- ------------ ---------- -----------
$28,817,269 $16,219,223 $4,778,295 $4,306,544
=========== ============ ========== ===========
LIABILITIES AND NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Unpaid withdrawal and termination benefits $62,382 $18,301 $28,462 $10,323
Other payables (receivables) 38,375 (28,955) 710 640
----------- ------------ ---------- -----------
Total liabilities 100,757 (10,654) 29,172 10,963
Net assets available for plan benefits 28,716,512 16,229,877 4,749,123 4,295,581
----------- ------------ ---------- -----------
$28,817,269 $16,219,223 $4,778,295 $4,306,544
=========== ============ ========== ===========
</TABLE>
<TABLE>
Fund "J" Fund "K" Fund "L" Fund "M" Combined
----------- ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Collective Trusts:
Short-term Investment Fund $58,268 $21,683 $2,995 $23,706 $9,949,785
Old Republic International Corporation:
Common shares 0 0 0 0 7,315,413
United States Government obligations 0 0 0 0 7,833,076
Corporate bonds 0 0 0 0 19,199,137
Mutual funds 6,675,703 2,885,485 346,342 1,502,943 20,568,434
----------- ---------- ---------- ------------ -----------
6,733,971 2,907,168 349,337 1,526,649 64,865,845
Contributions receivable:
Employee (1,145) 1,011 (1,480) (26) 0
Accrued interest and dividends receivable 152 54 15 2,518 773,710
----------- ---------- ----------- ------------ -----------
$6,732,978 $2,908,233 $347,872 $1,529,141 $65,639,555
=========== ========== =========== ============ ===========
LIABILITIES AND NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Unpaid withdrawal and termination benefits $18,110 $1,585 $0 $684 $139,847
Other payables (receivables) (429,322) 551,377 32,167 95 165,087
----------- ---------- ----------- ------------ -----------
Total liabilities (411,212) 552,962 32,167 779 304,934
Net assets available for plan benefits 7,144,190 2,355,271 315,705 1,528,362 65,334,621
----------- ---------- ----------- ------------ -----------
$6,732,978 $2,908,233 $347,872 $1,529,141 $65,639,555
=========== ========== =========== ============ ===========
</TABLE>
15
<PAGE>
9. Alternative Investment Funds, Continued
---------------------------------------
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
Allocation of Net Assets Available for Plan Benefits
Employee's Account by Investment Program
December 31, 1996
----------------
Fund "A" Fund "O" Fund "H" Fund "I"
------------ ----------- ---------- ----------
<S> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Collective Trusts:
Short-term Investment Fund $9,073,766 $2,220,347 $22,353 $18,053
Old Republic International Corporation:
Common shares 0 5,262,180 0 0
United States Government obligations 4,651,918 5,897,734 0 0
Corporate bonds 15,332,393 0 0 0
Mutual funds 0 287,220 2,624,798 2,437,266
----------- ----------- ---------- ----------
29,058,077 13,667,481 2,647,151 2,455,319
Contributions receivable:
Employee 0 1,505 0 0
Accrued interest and dividends receivable 406,522 94,647 54 99
----------- ----------- ---------- ----------
$29,464,599 $13,763,633 $2,647,205 $2,455,418
=========== =========== ========== ==========
LIABILITIES AND NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Unpaid withdrawal and termination benefits $310,837 $228,537 $85,129 $93,666
Other payables (receivables) 19,439 8,234 1,336 1,306
----------- ----------- ---------- ----------
Total liabilities 330,276 236,771 86,465 94,972
Net assets available for plan benefits 29,134,323 13,526,862 2,560,740 2,360,446
----------- ----------- ---------- ----------
$29,464,599 $13,763,633 $2,647,205 $2,455,418
=========== =========== ========== ==========
</TABLE>
<TABLE>
Fund "J" Fund "K" Fund "L" Combined
----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Collective Trusts:
Short-term Investment Fund $32,646 $15,435 $2,402 $11,385,002
Old Republic International Corporation:
Common shares 0 0 0 5,262,180
United States Government obligations 0 0 0 10,549,652
Corporate bonds 0 0 0 15,332,393
Mutual funds 3,738,894 1,706,886 270,096 11,065,160
----------- ---------- ------------ -----------
3,771,540 1,722,321 272,498 53,594,387
Contributions receivable:
Employee (1,011) 1,011 (1,505) 0
Accrued interest and dividends receivable 84 63 13 501,482
----------- ---------- ------------ -----------
$3,770,613 $1,723,395 $271,006 $54,095,869
=========== ========== ============ ===========
LIABILITIES AND NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Unpaid withdrawal and termination benefits $102,973 $51,805 $4,301 $877,248
Other payables (receivables) 1,855 887 141 33,198
----------- ---------- ------------ -----------
Total liabilities 104,828 52,692 4,442 910,446
Net assets available for plan benefits 3,665,785 1,670,703 266,564 53,185,423
----------- ---------- ------------ -----------
$3,770,613 $1,723,395 $271,006 $54,095,869
=========== ========== ============ ===========
</TABLE>
16
<PAGE>
9. Alternative Investment Funds, Continued
---------------------------------------
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
Allocation of Net Assets Available for Plan Benefits
Companies' Account by Investment Program
December 31, 1997
-----------------
Fund "B" Fund "E" Fund "F" Fund "G" Combined
------------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Collective Trusts:
Short-term Investment Fund $1,772,382 $145,029 $176 $104 $1,917,691
Old Republic International Corporation:
Series "D" preferred shares 0 0 0 0 0
Common shares 231,694,897 0 0 0 231,694,897
United States Government obligations 0 0 0 0 0
Corporate bonds 0 0 0 0 0
Mutual funds 0 0 312,601 1,462,863 1,775,464
------------ ---------- ---------- ------------ ------------
233,467,279 145,029 312,777 1,462,967 235,388,052
Contributions receivable:
Employee 4,137,401 0 0 0 4,137,401
Accrued interest and dividends receivable 9,158 697 3 166,777 176,635
------------ ---------- ---------- ------------ ------------
$237,613,838 $145,726 $312,780 $1,629,744 $239,702,088
============ ========== ========== ============ ============
LIABILITIES AND NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Notes payable $8,324,234 $0 $0 $0 $8,324,234
Advances from plan sponsor
(non-interest bearing) 0 0 0 0 0
Accrued interest payable 93,307 0 0 0 93,307
Unpaid(recoverable) adminstrative
expenses 37,111 32 49 167,070 204,262
------------ ---------- ---------- ------------ ------------
Total liabilities 8,454,652 32 49 167,070 8,621,803
------------ ---------- ---------- ------------ ------------
Net assets available for plan benefits
Allcoated to participants 205,880,385 145,694 312,731 1,462,674 207,801,484
Not allocated to participants 23,278,801 0 0 0 23,278,801
------------ ---------- ---------- ------------ ------------
Total net assets available
for plan benefits 229,159,186 145,694 312,731 1,462,674 231,080,285
------------ ---------- ---------- ------------ ------------
$237,613,838 $145,726 $312,780 $1,629,744 $239,702,088
============ ========== =========== ============ ============
</TABLE>
17
<PAGE>
9. Alternative Investment Funds, Continued
---------------------------------------
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
Allocation of Net Assets Available for Plan Benefits
Companies' Account by Investment Program
December 31, 1996
-----------------
Fund "B" Fund "E" Fund "F" Fund "G" Combined
------------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Collective Trusts:
Short-term Investment Fund $173,502 $131,586 $65 $29 $305,182
Old Republic International Corporation:
Series "D" preferred shares 174,280,974 0 0 0 174,280,974
Common shares 924,881 0 0 0 924,881
United States Government obligations 0 0 0 0 0
Corporate bonds 0 0 0 0 0
Mutual funds 0 0 127,619 1,102,568 1,230,187
------------ ---------- ---------- ------------ ------------
175,379,357 131,586 127,684 1,102,597 176,741,224
Contributions receivable:
Employee 3,739,210 0 0 0 3,739,210
Accrued interest and dividends receivable 412 601 0 8 1,021
------------ ---------- ---------- ------------ ------------
$179,118,979 $132,187 $127,684 $1,102,605 $180,481,455
============ ========== ========== ============ ============
LIABILITIES AND NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Notes payable $11,109,234 $0 $0 $0 $11,109,234
Advances from plan sponsor
(non-interest bearing) 738,895 0 0 0 738,895
Accrued interest payable 119,921 0 0 0 119,921
Unpaid(recoverable) adminstrative
expenses (54,551) 70 86 645 (53,750)
------------ ---------- ---------- ------------ ------------
Total liabilities 11,913,499 70 86 645 11,914,300
------------ ---------- ---------- ------------ ------------
Net assets available for plan benefits
Allcoated to participants 147,044,148 132,117 127,598 1,101,960 148,405,823
Not allocated to participants 20,161,332 0 0 0 20,161,332
------------ ---------- ---------- ------------ ------------
Total net assets available
for plan benefits 167,205,480 132,117 127,598 1,101,960 168,567,155
------------ ---------- ---------- ------------ ------------
$179,118,979 $132,187 $127,684 $1,102,605 $180,481,455
============ ========== =========== ============ ============
</TABLE>
18
<PAGE>
9. Alternative Investment Funds, Continued
---------------------------------------
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
Allocation of Changes in Net Assets Available for Plan Benefits
Employee's Account by Investment Program
for the year ended December 31, 1997
----------------
Fund "A" Fund "O" Fund "H" Fund "I"
------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
Additions:
Employee contributions $3,657,894 $1,980,080 $780,132 $733,592
Interfund transfers (2,510,984) (724,631) 630,041 348,584
Interest income 1,796,980 520,925 2,443 2,250
Dividend income 0 105,441 42,959 240,474
Net appreciation (depreciation) in
fair value of investments 66,454 2,109,693 980,557 872,775
------------ ------------ ---------- ----------
3,010,344 3,991,508 2,436,132 2,197,675
------------ ------------ ---------- ----------
Deductions:
Termination and withdrawal benefits 3,421,885 1,285,343 247,043 261,896
Administrative expenses 6,270 3,150 706 644
------------ ------------ ---------- ----------
3,428,155 1,288,493 247,749 262,540
------------ ------------ ---------- ----------
NET ADDITIONS (DEDUCTIONS) (417,811) 2,703,015 2,188,383 1,935,135
Net assets available for plan benefits,
beginning of year 29,134,323 13,526,862 2,560,740 2,360,446
------------ ------------ ---------- ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, END OF YEAR $28,716,512 $16,229,877 $4,749,123 $4,295,581
============ ============ ========== ==========
</TABLE>
<TABLE>
Fund "J" Fund "K" Fund "L" Fund "M" Combined
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Additions:
Employee contributions $1,245,208 $581,012 $75,417 $579,518 $9,632,853
Interfund transfers 1,039,816 465,343 (1,249) 753,080 0
Interest income 3,228 2,149 281 1,973 2,330,229
Dividend income 135,249 0 21,848 19,365 565,336
Net appreciation (depreciation) in
fair value of investments 1,345,760 (167,596) (1,502) 209,100 5,415,241
---------- ----------- ----------- ----------- -----------
3,769,261 880,908 94,795 1,563,036 17,943,659
---------- ----------- ----------- ----------- -----------
Deductions:
Termination and withdrawal benefits 289,843 195,887 45,593 34,579 5,782,069
Administrative expenses 1,013 453 61 95 12,392
---------- ----------- ----------- ----------- -----------
290,856 196,340 45,654 34,674 5,794,461
---------- ----------- ----------- ----------- -----------
NET ADDITIONS (DEDUCTIONS) 3,478,405 684,568 49,141 1,528,362 12,149,198
Net assets available for plan benefits,
beginning of year 3,665,785 1,670,703 266,564 0 53,185,423
---------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, END OF YEAR $7,144,190 $2,355,271 $315,705 $1,528,362 $65,334,621
========== =========== =========== =========== ===========
</TABLE>
19
<PAGE>
9. Alternative Investment Funds, Continued
---------------------------------------
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
Allocation of Changes in Net Assets Available for Plan Benefits
Employee's Account by Investment Program
for the year ended December 31, 1996
----------------
Fund "A" Fund "O" Fund "H" Fund "I"
------------ ----------- ---------- ----------
<S> <C> <C> <C> <C>
Additions:
Employee contributions $4,245,128 $1,985,824 $641,920 $679,165
Interfund transfers (2,006,271) 247,603 538,703 281,396
Interest income 1,849,624 339,700 1,464 1,546
Dividend income 0 100,144 26,197 31,415
Net appreciation (depreciation) in
fair value of investments (483,970) 785,064 304,813 329,850
------------ ----------- ---------- ----------
3,604,511 3,458,335 1,513,097 1,323,372
------------ ----------- ---------- ----------
Deductions:
Termination and withdrawal benefits 4,105,814 1,525,730 223,148 296,450
Administrative expenses 19,439 8,235 1,337 1,306
------------ ----------- ---------- ----------
4,125,253 1,533,965 224,485 297,756
------------ ----------- ---------- ----------
NET ADDITIONS (DEDUCTIONS) (520,742) 1,924,370 1,288,612 1,025,616
Net assets available for plan benefits,
beginning of year 29,655,065 11,602,492 1,272,128 1,334,830
------------ ----------- ---------- ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, END OF YEAR $29,134,323 $13,526,862 $2,560,740 $2,360,446
============ =========== ========== ==========
</TABLE>
<TABLE>
Fund "J" Fund "K" Fund "L" Combined
---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Additions:
Employee contributions $848,190 $419,300 $71,305 $8,890,832
Interfund transfers 643,707 221,170 73,692 0
Interest income 1,782 849 1,183 2,196,148
Dividend income 87,011 21,445 12,402 278,614
Net appreciation (depreciation) in
fair value of investments 566,444 181,190 (2,002) 1,681,389
---------- ---------- ------------ -----------
2,147,134 843,954 156,580 13,046,983
---------- ---------- ------------ -----------
Deductions:
Termination and withdrawal benefits 281,883 162,247 28,744 6,624,016
Administrative expenses 1,854 887 141 33,199
---------- ---------- ------------ -----------
283,737 163,134 28,885 6,657,215
---------- ---------- ------------ -----------
NET ADDITIONS (DEDUCTIONS) 1,863,397 680,820 127,695 6,389,768
Net assets available for plan benefits,
beginning of year 1,802,388 989,883 138,869 46,795,655
---------- ---------- ------------ -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, END OF YEAR $3,665,785 $1,670,703 $266,564 $53,185,423
========== ========== ============ ===========
</TABLE>
20
<PAGE>
9. Alternative Investment Funds, Continued
---------------------------------------
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
Allocation of Changes in Net Assets Available for Plan Benefits
Companies' Account by Investment Program
for the year ended December 31, 1997
----------------
Fund "B" Fund "E" Fund "F" Fund "G" Combined
------------- -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Additions:
Employer contributions $4,139,625 $0 $0 $0 $4,139,625
Interfund transfers (610,225) 27,580 184,470 398,175 0
Interest income 77,996 7,975 605 1,426 88,002
Dividend income 4,386,491 0 17,559 166,770 4,570,820
Net appreciation (depreciation) in
fair value of investments 66,322,478 0 (452) (40,809) 66,281,217
------------- -------- --------- ------------ ------------
74,316,365 35,555 202,182 525,562 75,079,664
------------- -------- --------- ------------ ------------
Deductions:
Termination and withdrawal benefits 11,525,291 21,946 17,001 164,548 11,728,786
Interest expense 609,277 0 0 0 609,277
Administrative expenses 228,091 32 48 300 228,471
------------- -------- --------- ------------ ------------
12,362,659 21,978 17,049 164,848 12,566,534
------------- -------- --------- ------------ ------------
NET ADDITIONS (DEDUCTIONS) 61,953,706 13,577 185,133 360,714 62,513,130
Net assets available for plan benefits,
beginning of year 167,205,480 132,117 127,598 1,101,960 168,567,155
------------- -------- --------- ------------ ------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, END OF YEAR $229,159,186 $145,694 $312,731 $1,462,674 $231,080,285
============= ======== ========= ============ ============
</TABLE>
21
<PAGE>
9. Alternative Investment Funds, Continued
---------------------------------------
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
Allocation of Changes in Net Assets Available for Plan Benefits
Companies' Account by Investment Program
for the year ended December 31, 1997
----------------
Fund "B" Fund "E" Fund "F" Fund "G" Combined
------------- -------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Additions:
Employer contributions $3,755,042 $0 $0 $0 $3,755,042
Interfund transfers (475,253) 92,460 43,870 338,923 0
Interest income 45,974 5,490 7,243 427 59,134
Dividend income 2,946,154 0 0 8,172 2,954,326
Net appreciation (depreciation) in
fair value of investments 19,219,562 0 (1,146) 131,400 19,349,816
------------- -------- --------- ----------- ------------
25,491,479 97,950 49,967 478,922 26,118,318
------------- -------- --------- ----------- ------------
Deductions:
Termination and withdrawal benefits 14,446,481 2,608 25,798 97,883 14,572,770
Interest expense 777,063 0 0 0 777,063
Administrative expenses 153,376 70 85 645 154,176
------------- -------- --------- ----------- ------------
15,376,920 2,678 25,883 98,528 15,504,009
------------- -------- --------- ----------- ------------
NET ADDITIONS (DEDUCTIONS) 10,114,559 95,272 24,084 380,394 10,614,309
Net assets available for plan benefits,
beginning of year 157,090,921 36,845 103,514 721,566 157,952,846
------------- -------- --------- ----------- ------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, END OF YEAR $167,205,480 $132,117 $127,598 $1,101,960 $168,567,155
============= ======== ========= =========== ============
</TABLE>
22
<PAGE>
SUPPLEMENTAL SCHEDULES
23
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
ASSETS AND LIABILITIES
AT DECEMBER 31, 1996 and 1997
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
31. Current value of plan assets and liabilities at the beginning and end of
the plan year. Combine the value of plan assets held in more than one
trust. Allocate the value of the plan's interest in a comingled trust
containing the assets of more than one plan on a line-by-line basis unless
the trust meets one of the specific exceptions described in the
instructions. Do not enter the value of that portion of an insurance
contract that guarantees, during this plan year, to pay specific dollar
benefit at a future date. ROUND OFF AMOUNTS TO THE NEAREST DOLLAR; ANY
OTHER AMOUNTS ARE SUBJECT TO REJECTION. Plans with no assets at the
beginning and the end of the plan year, enter -0- on line 31f.
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS | | (a)Beginning of Year | (b)End of Year
<S> <C> <C> <C>
a Total noninterest-bearing cash |a | 0 | 0
b Receivables: (1) Employer contributions |b(1) | 3,739,210 | 4,137,401
(2) Participant contributions |(2) | 0 | 0
(3) Income |(3) | 502,503 | 950,345
(4) Other |(4) | 0 | 0
(5) Less allowance for doubtful accounts |(5) | 0 | 0
(6) Total. Add lines 31b(1) through 31b(4) and subtract line 31b(5) > |(6) | 4,241,713 | 5,087,746
c General investments: (1) Interest-bearing cash | | 0 | 0
(including money market funds) |c(1) | 0 | 0
(2) Certificates of deposit |(2) | 0 | 0
(3) U.S. Government securities |(3) | 10,549,652 | 7,833,076
(4) Corporate debt instruments: (A) Preferred |(4)(A)| 15,332,393 | 19,199,137
(B) All other |(4)(B)| 0 | 0
(5) Corporate stocks: (A) Preferred |(5)(A)| 0 | 0
(B) Common |(5)(B)| 0 | 0
(6) Partnership/joint venture interests |(6) | 0 | 0
(7) Real estate: (A) Income-producing |(7)(A)| 0 | 0
(B) Nonincome-producing |(7)(B)| 0 | 0
(8) Loans (other than to participants) secured by mortgages: | | |
(A) Residential |(8)(A)| 0 | 0
(B) Commercial |(8)(B)| 0 | 0
(9) Loans to participants: (A) Mortgages |(9)(A)| 0 | 0
(B) Other |(9)(B)| 0 | 0
(10) Other loans |(10) | 0 | 0
(11) Value of interest in common/collective trusts |(11) | 11,690,184 | 11,867,476
(12) Value of interest in pooled separate accounts |(12) | 0 | 0
(13) Value of interest in master trusts |(13) | 0 | 0
(14) Value of interest in 103-12 investment entities |(14) | 0 | 0
(15) Value of interest in registered investment companies |(15) | 0 | 0
(16) Value of funds held in insurance company general account | | |
(unallocated contracts) |(16) | 0 | 0
(17) Other MUTUAL FUNDS |(17) | 12,295,347 | 22,343,898
(18) Total. Add lines 31c(1) through 31c(17) > |(18) | 49,867,576 | 61,243,587
d Employer-related investments: (1) Employer securities |d(1) | 180,468,035 | 239,010,310
(2) Employer real property |(2) | 0 | 0
e Buildings and other property used in plan operation |e | 0 | 0
f TOTAL assets. Add lines 31a, 31b(6), 31c(18), 31d(1), 31d(2), and 31e > |f | 234,577,324 | 305,341,643
| | |
LIABILITIES | | |
g Benefit claims payable |g | 877,248 | 139,847
h Operating payables |h | 838,264 | 462,656
i Acquisition indebtedness |i | 11,109,234 | 8,324,234
j Other liabilities |j | 0 | 0
k TOTAL liabilities. Add lines 31g through 31j > |k | 12,824,746 | 8,926,737
| | |
NET ASSETS | | |
l Subtract line 31k from line 31f. > |l | 221,752,578 | 296,414,906
</TABLE>
24
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
INCOME, EXPENSES, AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
32. Plan income, expenses, and changes in net assets for the plan year. Include
all income and expenses of the plan, including any trust(s) or seperately
maintained fund(s), and any payments/receipts to/from insurance carriers.
ROUND OFF AMOUNTS TO THE NEAREST DOLLAR; ANY OTHER AMOUNTS ARE SUBJECT TO
REJECTION.
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME | | (a) Amount | (b) Total
a Contributions: | | |
(1) Received or receivable from: | | |
(A) Employers |a(1)(A)| 4,139,625 |
(B) Participants |(B) | 9,632,853 |
(C) Others |(C) | 0 |
(2) Noncash contributions |(2) | 0 |
(3) Total contributions. Add lines 32a(1)(A),(B),(C) and line 32a(2). > |(3) | | 13,772,478
b Earnings on investments: | | |
(1) Interest: | | |
(A) Interest-bearing cash (including money market funds) |b(1)(A)| 676,984 |
(B) Certificates of deposit |(B) | 0 |
(C) U.S. Government securities |(C) | 630,211 |
(D) Corporate debt instruments |(D) | 1,111,036 |
(E) Mortgage loans |(E) | 0 |
(F) Other loans |(F) | 0 |
(G) Other interest |(G) | 0 |
(H) Total interest. Add lines 32b(1)(A) through (G) > |(H) | | 2,418,231
(2) Dividends: (A) Preferred stock |b(2)(A)| 2,706,055 |
(B) Common stock |(B) | 2,430,101 |
(C) Total dividends. Add lines 32b(2)(A) and (B). > |(C) | | 5,136,156
(3) Rents |(3) | |
(4) Net gain (loss) on sale of assets: (A) Aggregate proceeds |(4)(A) | 19,202,382 |
(B) Aggregate carrying amount (see instructions) |(B) | 10,172,104 |
(C) Subtract (B) from (A) and enter result |(C) | | 9,030,278
(5) Unrealized appreciation (depreciation) of assets |(5) | | 62,666,180
(6) Net investment gain (loss) from common/collective trusts |(6) | | 0
(7) Net investment gain (loss) from pooled separate accounts |(7) | | 0
(8) Net investment gain (loss) from master trusts |(8) | | 0
(9) Net investment gain (loss) from 103-12 investment entities |(9) | | 0
(10) Net investment gain (loss) from registered investment companies |(10) | | 0
c Other income |c | | 0
d Total income. Add all amounts in column (b) and enter total. > |d | | 93,023,323
EXPENSES | | |
e Benefit payment and payments to provide benefits: | | |
(1) Directly to participants or beneficiaries |e(1) | 17,510,855 |
(2) To insurance carriers for the provision of benefits |(2) | 0 |
(3) Other |(3) | 0 |
(4) Total payments. Add lines 32e(1) through 32e(3) > |(4) | | 17,510,855
f Interest expense |f | | 609,277
g Administrative expenses: (1) Salaries and allowances |g(1) | 0 |
(2) Accounting fees |(2) | 57,343 |
(3) Actuarial fees |(3) | 0 |
(4) Contract administrator fees |(4) | 0 |
(5) Investment advisory and management fees |(5) | 162,568 |
(6) Legal fees |(6) | 18,452 |
(7) Valuation/appraisal fees |(7) | 2,500 |
(8) Trustees fees/expenses (including travel, seminars, meetings, etc.) |(8) | 0 |
(9) Other |(9) | 0 |
(10) Total administrative fees. Add lines 32g(1) through 32g(9). |(10) | | 240,863
h Total expenses. Add lines 32e(4), 32f, and 32g(10). > |h | | 18,360,995
i Net income (loss). Subtract line 32h from line 32d. > |i | | 74,662,328
j Transfers to (from) the plan (see instructions) |j | | 0
k Net assets at beginning of year (line 31l, column (a)). |k | | 221,752,578
l Net assets at end of year (line 31l, column (b)). > |l | | 296,414,906
</TABLE>
25
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION SCHEDULE I
EMPLOYEES SAVINGS & STOCK OWNERSHIP PLAN PAGE 1 of 2
FORM 5500-ANNUAL RETURN/REPORT OF EMPLOYEE BENEFIT PLAN
ITEM 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
---------------------------------------------------------------------------
<TABLE>
(c)
DESCRIPTION OF INVESTMENT INCLUDING MATURITY DATE,
RATE OF INTEREST, COLLATERAL, PAR OR MATURITY VALUE
--------------------------------------------------------------------------------
(b) SHARES, PAR, (e)
IDENTITY OF ISSUE, BORROWER, MATURITY RATE OF OR MATURITY (d) CURRENT
(a) LESSOR, OR SIMILAR PARTY DATE INTEREST COLLATERAL VALUE COST VALUE
- --- ------------------------------------------ ---------- --------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
COLLECTIVE TRUSTS:
SHORT-TERM INVESTMENT FUND N/A VARIABLE N/A 11,867,476sh $11,867,476 $11,867,476
========== ---- ------- -----------
EMPLOYER SECURITIES:
OLD REPUBLIC INTERNATIONAL CORP.:
COMMON STOCK N/A N/A N/A 6,427,168sh $38,332,010 $239,010,310
========== ----------- ------------
UNITED STATES GOVERNMENT OBLIGATIONS:
FEDERAL FARM CREDIT BUREAU 10/01/2002 6.100% N/A $500,000par $500,000 $503,595
FEDERAL HOME LOAN MORTGAGE CORP. 09/19/2001 7.900% N/A 500,000par 566,719 532,500
FEDERAL NATIONAL MORTGAGE CORP. 02/11/2002 7.500% N/A 325,000par 357,594 343,129
INTER AMERICAN DEVELOPMENT BANK 05/01/2001 8.500% N/A 500,000par 532,130 535,300
USA TREASURY NOTE 08/15/98 5.875% N/A 600,000par 598,313 600,846
USA TREASURY NOTE 02/28/99 5.500% N/A 500,000par 502,969 499,220
USA TREASURY NOTE 08/31/2000 6.250% N/A 600,000par 603,563 608,064
USA TREASURY NOTE 08/15/2005 6.500% N/A 500,000par 511,016 521,250
USA TREASURY; SERIES B 08/15/2003 5.750% N/A 500,000par 486,875 500,310
USA TREASURY; SERIES C 08/15/2004 7.250% N/A 500,000par 534,766 540,390
USA TREASURY; SERIES D 11/15/2001 7.500% N/A 500,000par 522,109 530,080
USA TREASURY; SERIES G 07/15/98 8.250% N/A 500,000par 517,188 507,030
USA TREASURY; SERIES G 08/15/99 6.375% N/A 600,000par 605,250 606,282
USA TREASURY; SERIES H 10/15/98 7.125% N/A 500,000par 527,500 505,705
USA TREASURY; SERIES M 04/30/98 5.125% N/A 500,000par 498,672 499,375
---------- ----------- ------------
$7,625,000par $7,864,662 $7,833,076
========== ----------- ------------
MUTUAL FUNDS:
MFO OAKMARK FUND,HARRIS ASSOC.INVEST.TR. N/A N/A N/A 4,664sh $84,649 $188,480
MFO OAKMARK INTERNATIONAL FUND N/A N/A N/A 11,682sh 152,092 149,886
MFO OAKMARK FUND, HARRIS ASSOC.INVEST.TR. N/A N/A N/A 117,437sh 3,645,485 4,745,614
MFO FIDELITY FUND N/A N/A N/A 136,665sh 3,218,745 4,073,981
MFO VANGUARD/WINDSOR II N/A N/A N/A 233,253sh 5,152,695 6,675,703
MFO T. ROWE PRICE INTERNATIONAL FUNDS N/A N/A N/A 215,014sh 2,847,946 2,885,485
MFB BENCHMARK SHORT-INTERMEDIATE BONDS N/A N/A N/A 17,011sh 345,958 346,342
MFO VANGUARD INDEX TRUST - 500 PORTFOLIO N/A N/A N/A 16,686sh 1,303,972 1,502,943
MFB BENCHMARK SHORT-INTERMEDIATE BONDS N/A N/A N/A 15,354sh 311,895 312,601
MFO FIDELITY TREND FUND N/A N/A N/A 27,040sh 1,464,440 1,462,863
----------- ----------- ------------
794,806sh $18,527,876 $22,343,898
=========== ----------- ------------
</TABLE>
26
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION SCHEDULE I
EMPLOYEES SAVINGS & STOCK OWNERSHIP PLAN PAGE 2 of 2
FORM 5500-ANNUAL RETURN/REPORT OF EMPLOYEE BENEFIT PLAN
ITEM 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
---------------------------------------------------------------------------
<TABLE>
(c)
DESCRIPTION OF INVESTMENT INCLUDING MATURITY DATE,
RATE OF INTEREST, COLLATERAL, PAR OR MATURITY VALUE
--------------------------------------------------------------------------------
(b) SHARES, PAR, (e)
IDENTITY OF ISSUE, BORROWER, MATURITY RATE OF OR MATURITY (d) CURRENT
(a) LESSOR, OR SIMILAR PARTY DATE INTEREST COLLATERAL VALUE COST VALUE
- --- ------------------------------------------ ---------- --------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CORPORATE BONDS:
ALABAMA POWER CO. 08/01/99 6.375% N/A $250,000par $254,985 $250,850
AMOCO CANADA PETROLEUM CO. 12/01/2002 7.250% N/A 250,000par 261,193 261,870
ARCHER DANIELS MIDLAND CO. 05/15/2003 6.250% N/A 250,000par 253,478 250,445
ASSOCIATES CORP. NORTH AMERICA 01/15/2001 5.600% N/A 250,000par 241,663 246,110
BAKER HUGHERS INC. 02/15/99 7.625% N/A 250,000par 255,283 253,973
BELLSOUTH TELECOMMUNICATIONS, INC. 02/15/99 7.625% N/A 250,000par 262,835 252,253
BP AMERICA, INC. 04/15/2001 8.500% N/A 250,000par 268,248 267,930
CAROLINA POWER & LIGHT CO. 02/01/2000 6.125% N/A 250,000par 253,063 250,215
CHASE MANHATTAN CORP. 02/15/2001 5.500% N/A 250,000par 240,760 245,028
CHESAPEAKE & POTOMAC TELE. CO. MD 05/01/2003 6.000% N/A 250,000par 249,068 247,868
CINCINNATI GAS & ELECTRIC CO. 02/15/99 5.800% N/A 250,000par 249,835 249,373
CIT GROUP HOLDINGS INC., 08/01/2002 6.375% N/A 250,000par 250,420 250,600
CLOROX CO. 07/15/2001 8.800% N/A 200,000par 217,288 216,414
COCA COLA CO. 09/15/98 7.875% N/A 250,000par 249,230 253,078
CSX TRANSIT INC. 03/15/2001 6.070% N/A 250,000par 244,743 249,593
DAYTON HUDSON CORP. 03/01/99 7.500% N/A 250,000par 260,233 253,640
DEERE JOHN CAPITAL CORP. 10/18/2000 6.230% N/A 250,000par 247,250 251,318
DELUXE CORP. 02/15/2001 8.550% N/A 125,000par 132,893 133,004
DILLARD DEPT. STORES, INC. 06/15/99 7.375% N/A 215,000par 225,266 218,945
DOW JONES & CO., INC. 12/01/2000 5.750% N/A 271,000par 264,445 268,851
DUPONT, E.I. DE NEMOURS & CO. 12/01/2001 6.000% N/A 250,000par 244,063 248,750
EMPIRE DIST. ELECTRIC CO. 07/01/2002 7.500% N/A 300,000par 315,600 315,411
EXXON CAPITAL CORP. 12/15/2001 7.450% N/A 253,000par 261,223 265,038
FORTUNE BRANDS, INC. 05/15/99 7.500% N/A 250,000par 263,000 254,395
GANNETT, INC. 03/01/98 5.250% N/A 250,000par 247,338 249,698
GTE NORTHWEST 02/15/99 6.125% N/A 250,000par 252,560 250,308
HALLIBURTON CO. 08/05/2002 6.300% N/A 250,000par 251,460 251,423
HEINZ, H . J . CO. 10/15/99 6.750% N/A 250,000par 254,253 252,840
HERTZ CORP. 04/01/2000 6.500% N/A 275,000par 274,062 276,559
HONEYWELL INC. 04/15/2001 6.600% N/A 250,000par 249,553 252,938
HOUSTON LIGHTING & POWER CO. 03/01/2000 6.100% N/A 150,000par 150,422 150,197
ICI WILMINGTON, INC. 11/15/2000 9.500% N/A 250,000par 287,353 270,625
INGERSOL RAND CO. 07/28/2000 6.600% N/A 250,000par 250,195 252,678
INTERNATIONAL PAPER CO. 03/15/2000 9.700% N/A 250,000par 282,083 267,208
KIMBERLY-CLARK CORP. 05/01/2001 8.625% N/A 250,000par 267,153 268,190
LILLY, ELI 11/15/99 6.750% N/A 250,000par 255,275 253,098
LOUISVILLE GAS & ELECTRIC CO. 06/01/98 6.750% N/A 250,000par 237,960 250,098
LUCENT TECHNOLOGIES, INC. 07/15/2001 6.900% N/A 250,000par 252,363 256,470
MONONGAHELA POWER 04/01/2000 5.625% N/A 250,000par 247,223 247,380
MONSANTO CORP. 07/01/2000 6.000% N/A 250,000par 246,253 248,893
MORGAN, J.P. & CO. 11/15/98 7.625% N/A 250,000par 272,280 253,260
MOUNTAIN STATES TELEPHONE & TELEGRAPH CO. 05/01/2000 9.500% N/A 250,000par 284,113 268,380
NATIONSBANK CORP. 09/15/2001 7.000% N/A 250,000par 252,793 255,820
NEW ENGLAND TELEPHONE & TELEGRAPH CO. 03/15/2003 6.250% N/A 250,000par 253,360 250,648
NORDSTROM, INC. 02/15/98 8.875% N/A 250,000par 265,505 250,780
NORFOLK & SOUTHERN RAILWAY CO. 08/01/99 6.500% N/A 500,000par 501,670 503,165
NORWEST FINANCIAL, INC. 04/15/98 5.500% N/A 250,000par 248,155 249,805
OHIO BELL TELEPHONE CO. 05/01/2000 5.750% N/A 150,000par 151,839 149,075
PACIFIC GAS & ELECTRIC CO. 03/01/2002 7.875% N/A 250,000par 266,375 265,730
PACIFIC TELEPHONE & TELEGRAPH CO. 05/01/2000 4.625% N/A 500,000par 437,855 485,200
PENNEY, J. C., INC. 11/15/98 5.375% N/A 250,000par 247,580 248,728
PEPSICO, INC. 10/01/98 7.750% N/A 250,000par 262,885 253,230
POTOMOC EDISON CO. 03/01/2000 5.875% N/A 250,000par 249,643 249,450
PRIVATE EXPORT FUNDING CORP. 01/31/2002 7.300% N/A 500,000par 550,215 524,845
PROCTOR & GAMBLE CO. 08/01/2001 8.700% N/A 250,000par 268,380 269,533
PUBLIC SERVICE CO. of COLORADO 01/01/2000 6.000% N/A 250,000par 245,090 248,335
PUBLIC SERVICE ELECTRIC & GAS CO. 07/01/99 8.750% N/A 250,000par 261,055 259,038
ROCKWELL INTERNATIONAL CORP. 02/15/2001 8.375% N/A 250,000par 288,465 265,513
SHELL OIL CO. 12/15/98 6.950% N/A 250,000par 258,458 252,328
SOUTHERN BELL TELEPHONE & TELEGRAPH CO. 09/01/2000 4.750% N/A 500,000par 438,010 484,290
SOUTHERN CALIFORNIA EDISON CO. 04/15/99 7.500% N/A 500,000par 519,675 508,335
TAMPA ELECTRIC CO. 05/01/2000 5.750% N/A 250,000par 250,780 248,190
TEXACO CAPITAL, INC. 07/15/99 6.875% N/A 500,000par 499,030 505,165
UNION ELECTRIC CO. 10/15/99 6.750% N/A 250,000par 251,683 252,390
UNION PACIFIC RAILROAD CO. 01/15/98 6.440% N/A 200,000par 202,192 200,006
UPJOHN CO. 04/15/2000 5.875% N/A 250,000par 252,893 249,065
WARNER LAMBERT 09/01/98 8.000% N/A 250,000par 270,373 253,188
WEST PENNSYLVANIA POWER CO. 06/01/98 5.500% N/A 250,000par 249,318 249,653
WILLAMETTE INDUSTRIES, INC. 08/15/2000 9.625% N/A 250,000par 271,128 270,460
WMX TECHNOLOGIES, INC. 06/15/2001 7.125% N/A 250,000par 253,235 254,268
XEROX CORP. 03/15/2000 9.750% N/A 250,000par 283,633 267,723
----------- ----------- ------------
$18,889,000par $19,279,225 $19,199,137
=========== ----------- ------------
PLAN TOTAL $95,871,249 $300,253,897
=========== ============
</TABLE>
27
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION SCHEDULE II
EMPLOYEES SAVINGS & STOCK OWNERSHIP PLAN
FORM 5500-ANNUAL RETURN/REPORT OF EMPLOYEE BENEFIT PLAN
ITEM 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES-
INVESTMENT ASSETS BOTH ACQUIRED AND SOLD IN 1997
DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
(b)
DESCRIPTION OF INVESTMENT INCLUDING MATURITY DATE,
RATE OF INTEREST, COLLATERAL, PAR OR MATURITY VALUE
--------------------------------------------------------------------------------
(a) PAR (c) (d)
IDENTITY OF ISSUE, BORROWER, MATURITY RATE OF OR MATURITY COST OF PROCEEDS OF
LESSOR, OR SIMILAR PARTY DATE INTEREST COLLATERAL VALUE ACQUISITIONS DISPOSITIONS
- ------------------------------------------ ---------- --------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CORPORATE BONDS:
TEXAS INSRUMENTS, INC. 10/16/97 9.00% N/A $250,000 $268,255 $272,095
</TABLE>
28
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1997
------------
<TABLE>
Dividend/ Face Value
Interest Date of of Amount of Net Gain
Identity of Party or Investment Involved Rate Maturity Transaction Investment Transaction Cost or (Loss)
- ---------------------------------------- --------- -------- ----------- ---------- ----------- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases of Investments
- ------------------------
Collective Trust-Short-Term N/A N/A VARIOUS $54,293,084 $ 54,293,084 $54,293,084 -0-
Investment Fund
Sales of Investments
- --------------------
Collective Trust-Short-Term N/A N/A VARIOUS $53,943,502 $ 53,943,502 $53,943,502 -0-
Investment Fund
Old Republic International
Corporation Common Stock
(319,300 shares) N/A VARIOUS N/A $ 9,833,437 $ 1,889,433 $ 7,944,004
Conversion of Securities
- ------------------------
Old Republic International Corporation
Series D Preferred Stock (32,575,883 shares)
were converted into Old Republic International
Corporation Common Stock (6,515,176 shares) N/A VARIOUS N/A $230,231,939 $38,579,248 $ (C)
</TABLE>
Notes:
(A) This schedule lists all transactions or series of transactions which
aggregate in excess of 5% of the Fund assets at the beginning of the
current year, as required by the Department of Labor.
(B) The cost and the current value of asset for purchases of investments are
not presented as they are the same.
(C) No gain was recognized on the conversion of the Series D preferred stock
into common stock as the cost of such preferred stock was assigned to the
converted common stock. Gain or loss will be recognized upon the sale of
common stock to outside parties.
29
