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 1998 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 23, 1999 By /s/ Paul D. Adams
-----------------------------------
(Signature)
Paul D. Adams
Sr. Vice President
and
Chief Financial Officer
Total Pages: 30
<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, 1998
------------
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 23, 1999
<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, 1998 AND 1997
<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, 1998 and 1997 2
Statements of Changes in Net Assets Available for Plan Benefit
for the years ended December 31, 1998 and 1997 3
Notes to Financial Statements 4-22
Supplemental Schedules (Required by the Department of Labor):
Item 27a - Schedule I - Schedule of Assets Held for Investment
Purposes at December 31, 1998 24
Item 27a - Schedule II - Schedule of Assets Held for Investment
Purposes- Investment Assets Both Acquired and Sold in 1998 25
Item 27d -Schedule of Reportable Transactions for the year ended
December 31, 1998 26
Supplemental Schedules (Required by the Securities and 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
In our opinion, the accompanying statements of net assets available for plan
benefits present fairly, in all material respects, the financial position of the
Old Republic International Corporation Employees Savings and Stock Ownership
Plan (the "Plan") at December 31, 1998 and 1997, 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 of these statements in accordance with
generally accepted auditing standards 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 performed 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/ PricewaterhouseCoopers LLP
Chicago, Illinois
April 15, 1999
1
<PAGE>
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1998 and 1997
1998 1997
--------------------------------------- ----------------------------------------
Employees' Companies' Combined Employees' Companies' Combined
Account Account Account Account Account Account
----------- ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value (See Note 1.B.):
Collective Trusts:
Short-term Investment Fund $68,506,417 $4,216,253 $72,722,670 $9,949,785 $1,917,691 $11,867,476
Old Republic International Corporation:
Common shares 0 159,807,443 159,807,443 7,315,413 231,694,897 239,010,310
United States Government obligations 0 0 0 7,833,076 0 7,833,076
Corporate bonds 0 0 0 19,199,137 0 19,199,137
Mutual funds 0 0 0 20,568,434 1,775,464 22,343,898
----------- ------------ ------------ ----------- ------------ ------------
68,506,417 164,023,696 232,530,113 64,865,845 235,388,052 300,253,897
Contributions receivable:
Companies 0 7,748,407 7,748,407 0 4,137,401 4,137,401
Employees 24,312 0 24,312 0 0 0
Accrued interest and dividends receivable 132,834 86,594 219,428 773,710 176,635 950,345
----------- ------------ ------------ ----------- ------------ ------------
$68,663,563 $171,858,697 $240,522,260 $65,639,555 $239,702,088 $305,341,643
=========== ============ ============ =========== ============ ============
LIABILITIES AND NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Notes payable $0 $5,100,000 $5,100,000 $0 $8,324,234 $8,324,234
Interfund payable (receivable) 5,883 (5,883) 0 0 0 0
Accrued interest payable 0 58,379 58,379 0 93,307 93,307
Unpaid withdrawal and termination benefits 440,931 0 440,931 139,847 0 139,847
Unpaid administrative expenses 36,665 9,804 46,469 165,087 204,262 369,349
----------- ------------ ------------ ----------- ------------ ------------
Total liabilities 483,479 5,162,300 5,645,779 304,934 8,621,803 8,926,737
----------- ------------ ------------ ----------- ------------ ------------
Net assets available for plan benefits:
Allocated to participants 68,180,084 154,662,095 222,842,179 65,334,621 207,801,484 273,136,105
Not allocated to participants 0 12,034,302 12,034,302 0 23,278,801 23,278,801
----------- ------------ ------------ ----------- ------------ ------------
Total net assets available for plan benefits 68,180,084 166,696,397 234,876,481 65,334,621 231,080,285 296,414,906
----------- ------------ ------------ ----------- ------------ ------------
$68,663,563 $171,858,697 $240,522,260 $65,639,555 $239,702,088 $305,341,643
=========== ============ ============ =========== ============ ============
</TABLE>
The accompanying notes are an integral part of the 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, 1998 and 1997
1998 1997
--------------------------------------- ----------------------------------------
Employees' Companies' Combined Employees' Companies' Combined
Account Account Account Account Account Account
----------- ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Employer contributions $0 $7,776,665 $7,776,665 $0 $4,139,625 $4,139,625
Employee contributions 11,578,445 0 11,578,445 9,632,853 0 9,632,853
Interest income 1,931,566 380,744 2,312,310 2,330,229 88,002 2,418,231
Dividend income 615,792 3,253,481 3,869,273 565,336 4,570,820 5,136,156
Net appreciation (depreciation) in
fair value of investments 3,341,642 (22,547,292) (19,205,650) 5,415,241 66,281,217 71,696,458
----------- ------------ ------------ ----------- ------------- ------------
17,467,445 (11,136,402) 6,331,043 17,943,659 75,079,664 93,023,323
----------- ------------ ------------ ----------- ------------- ------------
Deductions:
Termination and withdrawal benefits 14,585,317 52,568,562 67,153,879 5,782,069 11,728,786 17,510,855
Interest expense 0 415,429 415,429 0 609,277 609,277
Administrative expenses 36,665 263,495 300,160 12,392 228,471 240,863
----------- ------------ ------------ ----------- ------------- ------------
14,621,982 53,247,486 67,869,468 5,794,461 12,566,534 18,360,995
----------- ------------ ------------ ----------- ------------- ------------
NET ADDITIONS (DEDUCTIONS) 2,845,463 (64,383,888) (61,538,425) 12,149,198 62,513,130 74,662,328
Net assets available for plan benefits,
beginning of year 65,334,621 231,080,285 296,414,906 53,185,423 168,567,155 221,752,578
----------- ------------ ------------ ----------- ------------- ------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, END OF YEAR $68,180,084 $166,696,397 $234,876,481 $65,334,621 $231,080,285 $296,414,906
=========== ============ ============ =========== ============ ============
</TABLE>
The accompanying notes are an integral part of the 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. The Plan
Agreement must be referred to for a complete description of the Plan's
provisions.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Plan's administrator 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 can 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. The investment in Old Republic
International Corporation Series D preferred stock, was converted into
common shares of the Corporation in August, 1997 to enhance the dividend
rate received by the Plan on such shares. Old Republic International
Corporation common shares ("Company Stock") are stated at closing market
value on the last business day of the year.
Effective January 1, 1999, Fidelity Investments ("Fidelity") began
providing recordkeeping services to the Plan and also became the Plan's
investment management company, except for the Company Stock. Accordingly,
to facilitate the transfer of recordkeeping and investment management
services, the mutual funds and other investments in place through 1998
were liquidated late in 1998 and the proceeds were invested in short-term
investments prior to their transfer to Fidelity which, on January 4,
1999, invested such proceeds in alternative mutual funds made available
through Fidelity. As a result of the above changes, a transition period
took effect in mid-December, 1998 and continued until late April, 1999.
4
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
----------
1. Summary of Significant Accounting Policies, Continued
-----------------------------------------------------
B. Investments, Continued
The statements of changes in net assets reflect 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.
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 does not receive a Company matching contribution. Only
employee contributions up to 6% are 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%, but is 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.
Beginning in 1999, participants are allowed to withdraw their accumulated
employee savings and earnings thereon up to the balance in their account
as of the December 31, of the previous year. Current year contributions
and earnings cannot be withdrawn except upon termination of employment.
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
The company matching contribution is based on the following formula:
<TABLE>
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:
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
-----------------------------------------------------
</TABLE>
. The percentage increase in average operating earnings per share is
obtained by comparing the average diluted 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.
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 attaining 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.
6
<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
. 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. Following termination of service for any reason, a plan participant
receives all amounts in his Employee Account.
Each year, the matching contributions and any 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%
7
<PAGE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
----------
2. Benefits, Continued
-------------------
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.
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 1998 1997
------ ---- ----
<S> <C> <C>
Unreleased Common Shares:
764,515 shares at $22.50 $ 17,201,588
1,279,988 shares at $24.7917 $ 31,733,023
------------- -------------
Total 17,201,588 31,733,023
------------- -------------
Liabilities
-----------
Unpaid loan principal at December 31 5,100,000 8,324,234
Accrued interest expense payable on loans at
December 31 58,379 93,307
Accrued administrative expenses 8,907 36,681
------------- -------------
Total 5,167,286 8,454,222
------------- -------------
Unallocated net assets available for plan benefits $ 12,034,302 $ 23,278,801
============= =============
</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, 1998 and 1997 are summarized as
follows:
<TABLE>
1998 1997
-------------------------------------- --------------------------------------
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 72,722,670 $ 72,722,670 $ 72,722,670* 11,867,476 $11,867,476 $ 11,867,476
Old Republic Inter-
national Corporation:
Common Stock 7,102,553 28,037,235 159,807,443* 9,640,752 38,332,010 239,010,310*
United States Government
obligations - - - $ 7,625,000 7,864,662 7,833,076
Corporate bonds - - - $18,889,000 19,279,225 19,199,137
Mutual funds - - - 702,195 18,527,876 22,343,898
------------ ------------ ----------- ------------
$100,759,905 $232,530,113 $95,871,249 $300,253,897
============ ============ =========== ============
</TABLE>
* - These investments represent 5% or more of the Plan assets at December 31,
1998 or 1997, as applicable.
Net appreciation (depreciation) in fair value of investments is broken down as
follows for the years ended December 31:
1998 1997
---- ----
Old Republic Inter-
national Corporation:
Series D-Preferred
Stock $ - $(135,701,729)(a)
Common Stock (23,973,007) 204,077,441 (a)
United States Government
obligations 152,128 12,173
Corporate bonds 184,400 66,677
Other common stock (169,660) -
Mutual funds 4,600,489 3,241,896
------------- -------------
$ (19,205,650) $ 71,696,458
============= =============
(a) Represents conversion of Series D Preferred Stock to Common Stock.
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, 1998 $ 5,100,000
-----------
Shares acquired:
Series B 14,822,906
Series D 50,077,535
Common 67,451
-----------
Unreleased shares at December 31, 1998:
Common 764,515
-----------
Principal due April 30,
1999 $ 2,600,000
2000 2,500,000
-----------
$ 5,100,000
===========
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 $.058 per share, had a minimum redemption
value of $0.58 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 (48,863,825 shares) into common stock of the Corporation
(9,772,764 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.
The interest rate on notes payable is set at 1.5% in excess of the current
rate on six month certificates of deposit on the note with the Corporation
and ranges from 75% to 85% of the Prime Rate on the notes with the banks.
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>
1998 1997
---------------------- ----------------------
Partici- Partici-
pants Company pants Company
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Old Republic International Corporation $ 71,571 $ 27,474 $ 46,787 $ 14,850
Old Republic Life Insurance Company 64,006 42,291 61,335 26,001
Old Republic Insurance Company 157,540 98,756 156,884 65,330
Old Republic National Title Insurance
Company & its Subsidiaries and Affiliates 1,796,617 1,080,700 1,457,167 582,423
Old Republic Insured Credit Services, Inc. 91,540 60,707 91,654 36,729
Brummel Brothers, Inc. 31,434 25,164 38,175 19,015
J. Huell Briscoe & Associates, Inc. 17,493 15,789 19,254 10,793
Old Republic General Services, Inc. 261,213 139,029 283,846 100,892
Old Republic Union Insurance Company - - 13,629 7,226
Old Republic Mortgage Guaranty Group,
Inc. & its Subsidiaries 1,387,913 986,258 1,098,381 491,411
Old Republic Title Holdings, Inc.
& its Subsidiaries and affiliates 4,242,288 2,759,327 3,166,976 1,307,000
Old Republic Asset Management Co. 24,889 20,634 22,612 11,978
Old Republic Dealer Service Corp. 11,494 5,398 17,527 8,082
Phoenix Aviation Managers, Inc. 189,482 91,517 158,432 59,405
Chicago Underwriting Group 90,201 64,791 89,610 45,178
Old Republic Risk Mgmt. Corp. 278,540 177,793 273,319 104,182
Bitco Corp. & its Subsidiaries 632,380 491,460 627,702 315,736
Great West Casualty and Agencies 893,475 786,094 746,961 406,825
Old Republic RE 93,218 53,557 119,901 43,934
Old Republic Home Protection 186,875 125,429 112,582 51,000
Old Republic Surety Group 410,409 246,023 392,814 142,191
Old Republic Standard Group 152,448 91,417 142,783 49,760
Employers General Insurance Group 410,351 332,940 404,508 202,525
Old Republic Minnehoma Insurance Co. 36,887 29,773 38,310 20,469
ORDESCO Inc. 9,277 8,098 13,288 6,771
Church Rickards, Whitlock & Co. 36,904 16,246 38,416 9,919
----------- ---------- ---------- ----------
$11,578,445 $7,776,665 $9,632,853 $4,139,625
=========== ========== ========== ==========
</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, 1998 there were 2,788 participants in Fund "A" and 1,972
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, 1998, there were 1,156; 1,178; 1,605; 740; 205; and 939
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 for
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 the experience of the Standard and Poor's 500
Stock Index.
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, 1998
were:
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, 1998, there were 15 participants in Fund "E", 25 participants
in Fund "F" and 72 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, 1998
-----------------
Fund "A" Fund "O" Fund "H" Fund "I"
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments, at fair value (See Note 1.B.):
Collective Trusts:
Short-term Investment Fund $24,870,719 $14,191,161 $6,447,192 $6,079,643
Old Republic International Corporation:
Common shares 0 0 0 0
United States Government obligations 0 0 0 0
Corporate bonds 0 0 0 0
Mutual funds 0 0 0 0
----------- ------------ ---------- -----------
24,870,719 14,191,161 6,447,192 6,079,643
Contributions receivable:
Employee 5,113 4,064 2,638 3,008
Accrued interest and dividends receivable 57,028 34,793 2,911 3,066
----------- ------------ ---------- -----------
$24,932,860 $14,230,018 $6,452,741 $6,085,717
=========== ============ ========== ===========
LIABILITIES AND NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Unpaid withdrawal and termination benefits $149,060 $37,559 $101,611 $44,625
Interfund payable (receivable) (7,209) (158,331) 60,469 21,646
Unpaid administrative expenses 14,331 8,520 3,095 2,853
----------- ------------ ---------- -----------
Total liabilities 156,182 (112,252) 165,175 69,124
Net assets available for plan benefits 24,776,678 14,342,270 6,287,566 6,016,593
----------- ------------ ---------- -----------
$24,932,860 $14,230,018 $6,452,741 $6,085,717
=========== ============ ========== ===========
</TABLE>
<TABLE>
Fund "J" Fund "K" Fund "L" Fund "M" Combined
----------- ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value (See Note 1.B.):
Collective Trusts:
Short-term Investment Fund $9,832,638 $2,724,561 $409,725 $3,950,778 $68,506,417
Old Republic International Corporation:
Common shares 0 0 0 0 0
United States Government obligations 0 0 0 0 0
Corporate bonds 0 0 0 0 0
Mutual funds 0 0 0 0 0
----------- ---------- ---------- ------------ -----------
9,832,638 2,724,561 409,725 3,950,778 68,506,417
Contributions receivable:
Employee 4,912 1,009 280 3,288 24,312
Accrued interest and dividends receivable 4,223 1,239 200 29,374 132,834
----------- ---------- ----------- ------------ -----------
$9,841,773 $2,726,809 $410,205 $3,983,440 $68,663,563
=========== ========== =========== ============ ===========
LIABILITIES AND NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Unpaid withdrawal and termination benefits $70,632 $19,534 $997 $16,913 $440,931
Interfund payable (receivable) 37,299 (8,392) 13,366 47,035 5,883
Unpaid administrative expenses 4,829 1,335 192 1,510 36,665
----------- ---------- ----------- ------------ -----------
Total liabilities 112,760 12,477 14,555 65,458 483,479
Net assets available for plan benefits 9,729,013 2,714,332 395,650 3,917,982 68,180,084
----------- ---------- ----------- ------------ -----------
$9,841,773 $2,726,809 $410,205 $3,983,440 $68,663,563
=========== ========== =========== ============ ===========
</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, 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>
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, 1998
-----------------
Fund "B" Fund "E" Fund "F" Fund "G" Combined
------------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value (See Note 1.B.):
Collective Trusts:
Short-term Investment Fund $3,179,639 $41,092 $153,482 $842,040 $4,216,253
Old Republic International Corporation:
Common shares 159,807,443 0 0 0 159,807,443
United States Government obligations 0 0 0 0 0
Corporate bonds 0 0 0 0 0
Mutual funds 0 0 0 0 0
------------ ---------- ---------- ------------ ------------
162,987,082 41,092 153,482 842,040 164,023,696
Contributions receivable:
Employer 7,748,407 0 0 0 7,748,407
Accrued interest and dividends receivable 32,514 6,668 27,909 19,503 86,594
------------ ---------- ---------- ------------ ------------
$170,768,003 $ 47,760 $181,391 $861,543 $171,858,697
============ ========== ========== ============ ============
LIABILITIES AND NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Notes payable $5,100,000 $0 $0 $0 $5,100,000
Interfund payable (receivable) 1,358,625 (48,660) (781,640) (534,208) (5,883)
Accrued interest payable 58,379 0 0 0 58,379
Unpaid adminstrative expenses 8,907 60 138 699 9,804
------------ ---------- ---------- ------------ ------------
Total liabilities 6,525,911 (48,600) (781,502) (533,509) 5,162,300
------------ ---------- ---------- ------------ ------------
Net assets available for plan benefits
Allocated to participants 152,207,790 96,360 962,893 1,395,052 154,662,095
Not allocated to participants 12,034,302 0 0 0 12,034,302
------------ ---------- ---------- ------------ ------------
Total net assets available
for plan benefits 164,242,092 96,360 962,893 1,395,052 166,696,397
------------ ---------- ---------- ------------ ------------
$170,768,003 $ 47,760 $181,391 $861,543 $171,858,697
============ ========== ========== ============ ============
</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, 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:
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:
Employer 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
Accrued interest payable 93,307 0 0 0 93,307
Unpaid 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
Allocated 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>
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, 1998
----------------
Fund "A" Fund "O" Fund "H" Fund "I"
------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
Additions:
Employee contributions $3,405,565 $2,044,398 $1,306,841 $1,189,720
Interfund transfers (2,024,543) (1,057,280) 1,047,179 522,577
Interest income 1,592,589 307,102 7,850 6,145
Dividend income 158,310 163,881 76,299 (153,867)
Net appreciation (depreciation) in
fair value of investments 32,940 (520,618) 142,831 1,396,224
------------ ------------ ---------- ----------
3,164,861 937,483 2,581,000 2,960,799
------------ ------------ ---------- ----------
Deductions:
Termination and withdrawal benefits 7,090,364 2,816,570 1,039,462 1,236,934
Administrative expenses 14,331 8,520 3,095 2,853
------------ ------------ ---------- ----------
7,104,695 2,825,090 1,042,557 1,239,787
------------ ------------ ---------- ----------
NET ADDITIONS (DEDUCTIONS) (3,939,834) (1,887,607) 1,538,443 1,721,012
Net assets available for plan benefits,
beginning of year 28,716,512 16,229,877 4,749,123 4,295,581
------------ ------------ ---------- ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, END OF YEAR $24,776,678 $14,342,270 $6,287,566 $6,016,593
============ ============ ========== ==========
</TABLE>
<TABLE>
Fund "J" Fund "K" Fund "L" Fund "M" Combined
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Additions:
Employee contributions $1,920,815 $527,943 $104,245 $1,078,918 $11,578,445
Interfund transfers 842,252 (329,192) 52,403 946,604 0
Interest income 9,500 2,143 658 5,579 1,931,566
Dividend income 188,601 80,650 37,111 64,807 615,792
Net appreciation (depreciation) in
fair value of investments 1,093,386 503,148 (7,347) 701,078 3,341,642
---------- ----------- ----------- ----------- -----------
4,054,554 784,692 187,070 2,796,986 17,467,445
---------- ----------- ----------- ----------- -----------
Deductions:
Termination and withdrawal benefits 1,464,902 424,296 106,933 405,856 14,585,317
Administrative expenses 4,829 1,335 192 1,510 36,665
---------- ----------- ----------- ----------- -----------
1,469,731 425,631 107,125 407,366 14,621,982
---------- ----------- ----------- ----------- -----------
NET ADDITIONS (DEDUCTIONS) 2,584,823 359,061 79,945 2,389,620 2,845,463
Net assets available for plan benefits,
beginning of year 7,144,190 2,355,271 315,705 1,528,362 65,334,621
---------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, END OF YEAR $9,729,013 $2,714,332 $395,650 $3,917,982 $68,180,084
========== =========== =========== =========== ===========
</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, 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>
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, 1998
----------------
Fund "B" Fund "E" Fund "F" Fund "G" Combined
------------- -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Additions:
Employer contributions $7,776,665 $0 $0 $0 $7,776,665
Interfund transfers (1,364,508) 48,660 781,640 534,208 0
Interest income 319,608 13,461 27,982 19,693 380,744
Dividend income 3,392,336 0 26,723 (165,578) 3,253,481
Net appreciation (depreciation) in
fair value of investments (22,691,938) 0 (4,209) 148,855 (22,547,292)
------------- -------- --------- ------------ ------------
(12,567,837) 62,121 832,136 537,178 (11,136,402)
------------- -------- --------- ------------ ------------
Deductions:
Termination and withdrawal benefits 51,671,231 111,395 181,836 604,100 52,568,562
Interest expense 415,429 0 0 0 415,429
Administrative expenses 262,597 60 138 700 263,495
------------- -------- --------- ------------ ------------
52,349,257 111,455 181,974 604,800 53,247,486
------------- -------- --------- ------------ ------------
NET ADDITIONS (DEDUCTIONS) (64,917,094) (49,334) 650,162 (67,622) (64,383,888)
Net assets available for plan benefits,
beginning of year 229,159,186 145,694 312,731 1,462,674 231,080,285
------------- -------- --------- ------------ ------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, END OF YEAR $164,242,092 $96,360 $962,893 $1,395,052 $166,696,397
============= ======== ========= ============ ============
</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 $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>
22
<PAGE>
SUPPLEMENTAL SCHEDULES
23
<PAGE>
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION SCHEDULE I
EMPLOYEES SAVINGS & STOCK OWNERSHIP PLAN
FORM 5500-ANNUAL RETURN/REPORT OF EMPLOYEE BENEFIT PLAN
ITEM 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
- --------------------------------------------------------
(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 72,722,670 sh $72,722,670 $72,722,670
=========== ------------ ------------
EMPLOYER SECURITIES:
OLD REPUBLIC INTERNATIONAL CORP.:
COMMON STOCK N/A N/A N/A 7,102,553 sh 28,037,235 159,807,443
=========== ------------ ------------
PLAN TOTAL $100,759,905 $232,530,113
============ ============
</TABLE>
24
<PAGE>
<TABLE>
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 1998
DECEMBER 31, 1998
- ----------------------------------------------------------
(b)
DESCRIPTION OF INVESTMENT INCLUDING MATURITY DATE,
RATE OF INTEREST, COLLATERAL, PAR OR MATURITY VALUE
---------------------------------------------------
SHARES,
(a) PAR OR (c) (d)
IDENTITY OF ISSUE, BORROWER, MATURITY RATE OF MATURITY COST OF PROCEEDS OF
LESSOR, OR SIMILAR PARTY DATE INTEREST COLLATERAL VALUE ACQUISITIONS DISPOSITIONS
- ---------------------------------------- -------- -------- ---------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OTHER COMMON STOCKS:
AMERITECH CORP 5,700 sh $249,589 $283,847
ANHEUSER-BUSCH CO. 5,600 sh 250,460 300,817
AT&T CORP. 4,100 sh 251,279 256,856
BOEING CO. 9,600 sh 504,360 333,421
COMPAQ COMPUTER CORP. 7,200 sh 249,155 229,816
INTEL CORP. 3,200 sh 247,306 279,791
MINNESOTA MINING & MANUFACTURING CORP. 5,900 sh 500,666 422,470
NIKE INC. 6,200 sh 249,221 272,295
RUBBERMAID INC. 9,400 sh 243,921 314,326
SONOCO PRODUCTS CO. 7,150 sh 250,120 175,803
UNION PACIFIC CORP. 4,200 sh 248,745 205,720
--------- ------------ ------------
68,250 sh $3,244,822 $3,075,162
========= ============ ============
MUTUAL FUNDS:
MFO FIDELITY SHORT-TERM BOND PORTFOLIO 2,090,157 sh $20,152,094 $19,947,271
MFO OAKMARK FUND HARRIS ASSOCIATES INVESTMENT TRUST 516 sh 18,797 17,306
MFO FIDELITY DIVIDEND GROWTH FUND 212,572 sh 5,069,299 5,888,243
MFO OAKMARK FUND HARRIS ASSOCIATES INVESTMENT TRUST 86,033 sh 3,370,681 3,075,759
MFO FIDELITY DIVIDEND GROWTH FUND 47,569 sh 1,540,156 1,744,508
MFO VANGAURD/WINDSOR II FUND 113,006 sh 3,416,366 3,388,915
MFO T. ROWE PRICE INTERNATIONAL STOCK FUND 29,123 sh 430,857 435,905
MFB BENCHMARK SHORT-INTERMEDIATE BOND CLASS A FUND 8,439 sh 170,694 166,485
MFO VANGUARD 500 INDEX TRUST 17,239 sh 1,706,720 1,983,570
MFB BENCHMARK SHORT-INTERMEDIATE BOND CLASS A FUND 1,432 sh 28,769 28,460
MFO FIDELITY TREND FUND 11 sh 700 604
--------- ------------ ------------
2,606,097 sh $35,905,133 $36,677,026
========= ============ ============
</TABLE>
25
<PAGE>
<TABLE>
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS for the
year ended December 31, 1998
------------
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 N/A $217,113,301 $217,113,301 $ -0-
Investment Fund
MFO Fidelity Short-Term Bond Portfolio
Mutual Fund N/A N/A VARIOUS N/A 20,152,094 20,152,094 -0-
Sales of Investments
- --------------------
Collective Trust-Short-Term N/A N/A VARIOUS N/A $156,258,107 $156,258,107 $ -0-
Investment Fund
MFO Fidelity Short-Term Bond Portfolio
Mutual Fund N/A N/A VARIOUS N/A 19,947,271 20,152,094 (204,823)
Old Republic International
Corporation Common Stock
(2,511,849 shares) N/A VARIOUS N/A 55,229,860 10,294,783 44,935,077
</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.
26
