SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Year Ended December 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the Transition Period From to
Commission File Number
A. Full title of the Plan and the address of the
Plan, if different from that of the issuer
named below:
ACCEPTANCE INSURANCE COMPANIES INC.
EMPLOYEE STOCK OWNERSHIP AND TAX DEFERRED SAVINGS PLAN
B. Name of issuer of the securities held
pursuant to the Plan and the address of its
principal executive office:
ACCEPTANCE INSURANCE COMPANIES INC.
ONE CENTRAL PARK PLAZA
222 SOUTH 15TH STREET, SUITE 600 NORTH
OMAHA, NEBRASKA 68102
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee
benefit plan) have duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
ACCEPTANCE INSURANCE COMPANIES INC.
EMPLOYEE STOCK OWNERSHIP AND TAX
DEFERRED SAVINGS PLAN
-----------------------------------
(Name of Plan)
June 26,1998 /s/ Georgia M. Mace
Date: __________________ By ________________________________
Georgia M. Mace
Plan Administrator
<PAGE>
REQUIRED INFORMATION
Plan financial statements and schedules are prepared in
accordance with the financial reporting requirements of ERSIA and
are included there in as listed in the table of contents below.
Table of Contents
(a) Financial Statements and Annual Report Schedules
Independent Auditors' Report
Statement of Net Assets Available for Benefits,
December 31, 1997
Statement of Net Assets Available for Benefits,
December 31, 1996
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1997
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1996
Notes to Financial Statements
(b) Annual Report Schedules
Item 27a - Schedule of Assets Held for Investment
Purposes, December 31, 1997
Item 27d - Schedule of Reportable Transactions for
the Year Ended December 31, 1997
(c) Exhibits
Exhibit 23 - Independent Auditors' Consent
Schedules not filed herewith are omitted because of the absence
of the conditions under which they are required.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Administrative Committee
Acceptance Insurance Companies Inc. Employee Stock
Ownership and Tax Deferred Savings Plan
Omaha, Nebraska
We have audited the accompanying statements of net assets
available for benefits of Acceptance Insurance Companies Inc.
Employee Stock Ownership and Tax Deferred Savings Plan (the Plan)
as of December 31, 1997, and the related statements of changes in
net assets available for benefits for the year 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 on our audit. The financial statements
of Acceptance Insurance Companies Inc. Employee Stock Ownership
and Tax Deferred Savings Plan as of Decmber 31, 1996 were audited
by other auditors whose report dated June 5, 1997, expressed an
unqualified opinion on those statements.
We conducted our audit 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
audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the net assets available for benefits of the
Acceptance Insurance Companies Inc. Employee Stock Ownership and
Tax Deferred Savings Plan as of December 31, 1997, and the
changes in net assets available for benefits for the year then
ended in conformity with generally accepted accounting
principles.
Our audit was conducted for the purpose of forming an opinion on
the basic financial statements taken as a whole. The
supplemental annual report schedules are presented for the
purposes of additional analysis and are not a required part of
the basic financial statements, but are supplementary information
required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These schedules are the responsibility of
the Plan's management. Such schedules have been subjected to
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/ Tighe,Massman & Nelson, P.C.
Certified Public Accountants
June 5, 1998
Omaha, Nebraska<PAGE>
<TABLE>
<CAPTION>
Acceptance Insurance Companies Inc.
Employee Stock Ownership and Tax Deferred Savings Plan
Statement of Net Assets Available for Benefits
For the Year Ended December 31, 1997
- ---------------------------------------------------------------------------------------------------
PARTICIPANT DIRECTED
------------------------------------------------------------------
Guaranteed Capital Acceptance
Interest Market Balanced Income Appreciation Common
Contracts Funds Portfolio Portfolio Portfolio Stock Fund
--------- ----- ------ --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Investments at Fair Value:
Acceptance Insurance
Companies Inc.
Common Stock $ -- $ -- $ -- $ -- $ -- $1,536,511
Money Market Fund 85,412 275,085 22,097 9,090 643,185 5,292
U.S. Government Securities &
Agencies -- -- 585,374 272,421 419,225 --
Corporate Bonds -- -- 277,642 217,145 1,798,714 --
Common Stock -- -- 1,054,248 203,986 4,477,643 --
Preferred Stock -- -- 28,626 26,163 -- --
Mutual Funds 817,844 -- -- -- -- --
Participant Loans -- -- -- -- -- --
Investments at Contract Value:
Guaranteed Interest Contracts 18,181 -- -- -- -- --
Certificate of Deposit 174,935 -- -- -- -- --
Receivables:
Employer Contributions -- -- -- -- -- --
Employee Contributions -- -- -- -- -- --
Accrued Interest 13,439 1,341 15,603 8,203 56,093 8
-------- -------- -------- -------- ---------- ---------
Total Assets 1,109,811 276,426 1,983,590 737,008 7,394,860 1,541,811
----------- --------- ---------- -------- ---------- ---------
<PAGE>
Liabilities
ESOP Loan -- -- -- -- -- --
-------- -------- -------- -------- -------- ----------
Total Liabilities -- -- -- -- -- --
-------- -------- -------- -------- -------- ----------
Net Assets Available for
Benefits $1,109,811 $ 276,426 $1,983,590 $737,008 $7,394,860 $1,541,811
=========== ========= ========== ========= ============ ==========
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Acceptance Insurance Companies Inc.
Employee Stock Ownership and Tax Deferred Savings Plan
Statement of Net Assets Available for Benefits
For the Year Ended December 31, 1997
- ---------------------------------------------------------------------------------------------------
PARTICIPANT DIRECTED NON-PARTICIPANT
DIRECTED
--------------------- -----------------------------------
Employee Stock
Ownership
Other Allocated Unallocated Total
---------- --------- ----------- --------
<S> <C> <C> <C> <C>
Assets
Investments at Fair Value:
Acceptance Insurance
Companies Inc.
Common Stock $ -- $1,411,776 $369,585 $3,317,872
Money Market Fund -- 30 -- 1,040,191
U.S. Government Securities
& Agencies -- -- -- 1,277,020
Corporate Bonds -- -- -- 2,293,501
Common Stock -- -- -- 5,735,877
Preferred Stock -- -- -- 54,789
Mutual Funds -- -- -- 817,844
Participant loans 449,252 -- -- 449,252
Investments at Contract Value:
Guaranteed Interest Contracts -- -- -- 18,181
Certificate of Deposit -- -- -- 174,935
Receivables:
Employer Contributions 1,066,917 -- -- 1,066,917
Employee Contributions 151,796 -- -- 151,796
Accrued Interest -- -- -- 94,687
---------- -------- -------- ----------
Total Assets 1,667,965 1,411,806 369,585 16,492,862
---------- ---------- --------- ----------
<PAGE>
Liabilities
ESOP Loan -- -- 168,098 168,098
-------- -------- -------- ----------
Total Liabilities -- -- 168,098 168,098
-------- -------- -------- ---------
Net Assets Available for
Benefits $1,667,965 $1,411,806 $ 201,487 $16,324,764
========== ========== ========= ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Acceptance Insurance Companies Inc.
Employee Stock Ownership and Tax Deferred Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1996
- ---------------------------------------------------------------------------------------------------
PARTICIPANT DIRECTED
--------------------------------------------------------------------
Guaranteed Money Capital Acceptance
Interest Market Balanced Income Appreciation Common
Contracts Funds Portfolio Portfolio Portfolio Stock Fund
--------- ----- ------ --------- ---------- -----------
<C> <C> <C> <C> <C> <C>
Assets
Investments at Fair Value:
Acceptance Insurance
Companies Inc.
Common Stock $ -- $ -- $ -- $ -- $ -- $1,112,517
Money Market Fund 101,885 229,767 88,446 27,745 273,246 17,175
U.S. Government Securities
& Agencies -- -- 228,597 108,763 -- --
Corporate Bonds -- -- 139,174 97,845 1,526,181 --
Common Stock -- -- 531,703 90,117 3,499,464 --
Preferred Stock -- -- 70,750 32,800 -- --
Mutual Funds 510,891 -- -- -- -- --
Participant Loans -- -- -- -- -- --
Investments at Contract Value:
Guaranteed Interest Contracts 131,441 -- -- -- -- --
Certificate of Deposit 172,141 -- -- -- -- --
Cash -- -- 34 51 -- --
Receivables:
Employer Contributions -- -- -- -- -- --
Employee Contributions -- -- -- -- -- --
Accrued Interest 6,974 1,085 7,855 3,505 44,813 65
-------- -------- ---------- --------- -------- ------------
Total Assets 923,332 230,852 1,066,559 360,826 5,343,704 1,129,757
-------- ---------- ---------- --------- --------- ------------
<PAGE>
Liabilities
Excess Contributions Payable 3,204 94 10,044 3,176 16,763 7,113
ESOP Loan -- -- -- -- -- --
-------- -------- -------- -------- -------- ----------
Total Liabilities 3,204 94 10,044 3,176 16,763 7,113
-------- -------- -------- -------- ---------- ----------
Net Assets Available for
Benefits $920,128 $230,758 $1,056,515 $357,650 $5,326,941 $1,122,644
========= ========== ========== ========= ========== ==========
<PAGE>
<CAPTION>
Acceptance Insurance Companies Inc.
Employee Stock Ownership and Tax Deferred Savings Plan
Statement of Net Assets Available for Benefits
For Year Ended December 31, 1996
- ---------------------------------------------------------------------------------------------------
NON-PARTICIPANT
DIRECTED
---------------- ------------------------------
Employee
Stock
Ownership
Other Allocated Unallocated Total
---------- --------- ----------- -----
<S> <C> <C> <C> <C>
Assets
Investments at Fair Value:
Acceptance Insurance
Companies Inc.
Common Stock $ -- $1,116,823 $373,413 $ 2,602,753
Money Market Fund -- 289 -- 738,553
U.S. Government Securities
& Agencies -- -- -- 337,360
Corporate Bonds -- -- -- 1,763,200
Common Stock -- -- -- 4,121,284
Preferred Stock -- -- -- 103,550
Mutual Funds -- -- -- 510,891
Participant Loans 319,113 -- -- 319,113
Investments at Contract Value:
Guaranteed Interest Contracts -- -- -- 131,441
Certificate of Deposits -- -- -- 172,141
Cash -- -- -- 85
Receivables:
Employer Contributions 848,536 -- -- 848,536
Employee Contributions 111,659 -- -- 111,659
Accrued Interest -- 1 -- 64,298
--------- ---------- -------- ----------
Total Assets 1,279,308 1,117,113 373,413 11,824,864
---------- ---------- -------- ----------
<PAGE>
Liabilities
Excess Contributions Payable -- -- -- 40,394
ESOP Loan -- -- 207,991 207,991
---------- -------- -------- ----------
Total Liabilities -- -- 207,991 248,385
---------- -------- -------- ----------
Net Assets Available for
Benefits $1,279,308 $1,117,113 $165,422 $11,576,479
========== ========== ======== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Acceptance Insurance Companies Inc.
Employee Stock Ownership and Tax Deferred Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1997
- ---------------------------------------------------------------------------------------------------
PARTICIPANT DIRECTED
--------------------------------------------------------------------------------------
Guaranteed Capitol Acceptance
Interest Market Balanced Income Appreciation Common
Contracts Funds Portfolio Portfolio Portfolio Stock Fund
--------- ------ --------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Investment Income:
Interest $ 19,690 $ 15,428 $ 52,706 $ 26,921 $ 196,151 $ 299
Dividends -- -- 11,867 4,867 59,996 --
Realized Gain 4,683 -- 25,867 123,512 829,747 24,420
Unrealized Gain 58 -- 39,202 44,306 563,679 245,181
-------- -------- --------- -------- -------- -----------
24,431 15,428 129,642 199,606 1,649,573 269,900
-------- -------- ---------- ------- ---------- ----------
Allocation of 3,628 shares of
Company Stock at Market -- -- -- -- -- --
--------- ------- ---------- ------- --------- -----------
Contributions:
Employee -- 1,544,134 -- -- -- --
Employee Rollovers 19,102 8,124 51,055 78,100 45,635 8,501
Employer -- 848,537 -- -- -- --
Interest Paid by Acceptance
on behalf of Plan -- -- -- -- -- --
-------- -------- --------- -------- -------- ----------
19,102 2,400,795 51,055 78,100 45,635 8,501
-------- -------- ---------- -------- -------- ----------
Total Additions 43,533 2,416,223 180,697 277,706 1,695,208 278,401
-------- --------- --------- --------- ---------- ---------
Deductions:
Distributions to Plan
Participants 104,782 56,402 150,169 32,257 320,999 68,149
<PAGE>
Allocation of 3,628 shares
of Company Stock at
Market -- -- -- -- -- --
Interest on ESOP Loan -- -- -- -- -- --
-------- -------- --------- -------- -------- ---------
Total deductions 104,782 56,402 150,169 32,257 320,999 68,149
Net Transfer of Assets
(to) from 250,932 (2,314,153) 896,547 133,909 693,710 208,915
-------- ----------- ----------- --------- -------- -----------
Net Increase 189,683 45,668 927,075 379,358 2,067,919 419,167
Net Assets Available for
Benefits Beginning of Year 920,128 230,758 1,056,515 357,650 5,326,941 1,122,644
--------- ---------- ----------- -------- ---------- --------
Net Assets Available for
Benefits End of Year $ 1,109,811 $ 276,426 $1,983,590 $737,008 $7,394,860 $1,541,811
========== =========== ============ ========= ========== ==========
<PAGE>
Acceptance Insurance Companies Inc.
Employee Stock Ownership and Tax Deferred Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1997
- ---------------------------------------------------------------------------------------------------
NON-PARTICIPANT
DIRECTED
----------- ------------------------------------------
Employee Stock
Ownership
Other Allocated Unallocated Total
---------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Additions:
Investment Income:
Interest $ -- $ 24 $ -- $ 311,219
Dividends -- -- -- 76,730
Realized Gain -- 14,976 -- 1,023,205
Unrealized Gain -- 251,963 62,365 1,206,754
-------- -------- -------- ----------
-- 266,963 62,365 2,617,908
--------- --------- -------- ----------
Allocation of 3,628 shares of
Company Stock at Market -- 66,193 -- 66,193
Contributions:
Employee 40,137 -- -- 1,584,271
Employee Rollovers -- -- -- 210,517
Employer 218,380 -- 39,893 1,106,810
Interest Paid by Acceptance
on behalf of Plan -- -- 16,202 16,202
-------- -------- -------- ----------
258,517 -- 56,095 2,917,800
-------- -------- -------- ----------
Total Additions 258,517 333,156 118,460 5,601,901
--------- --------- --------- -----------
Deductions:
Distributions to Plan
Participants -- 38,463 -- 771,221
<PAGE>
Allocation of 3,628 shares
of Company Stock at
Market -- -- 66,193 66,193
Interest on ESOP Loan -- -- 16,202 16,202
-------- -------- -------- ----------
Total deductions -- 38,463 82,395 853,616
Net Transfer of Assets
(to) from 130,140 -- -- --
--------- --------- --------- -----------
Net Increase 388,657 294,693 36,065 4,748,285
Net Assets Available for
Benefits Beginning of Year 1,279,308 1,117,113 165,422 11,576,479
---------- ---------- ---------- --------------
Net Assets Available for
Benefits End of Year $1,667,965 $1,411,806 $201,487 $16,324,764
========== ========== ======== ==============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Acceptance Insurance Companies Inc.
Employee Stock Ownership and Tax Deferred Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1996
- ---------------------------------------------------------------------------------------------------
PARTICIPANT DIRECTED
-----------------------------------------------------
Guaranteed Money
Interest Market Balanced
Contracts FUND Portfolio
--------- ------ ---------
<S> <C> <C> <C>
Additions:
Investment Income:
Interest $ 19,313 $ 13,387 $ 29,663
Dividends -- -- 8,522
Realized Gain (Loss) -- -- 70,757
Unrealized Gain 24,683 -- 35,268
------- ------- --------
43,996 13,387 144,210
-------- -------- ---------
Allocation of 3,366 shares of
Company Stock at Market -- -- --
-------- --------- ----------
Contributions:
Employee -- 1,168,432 --
Employee Rollovers 6,679 90,741 88,643
Employer -- 239,408 (2,395)
Interest Paid by Acceptance
on behalf of Plan -- -- --
------- --------- ---------
6,679 1,498,581 86,248
------- --------- ----------
Total Additions 50,675 1,511,968 230,458
------- --------- ----------
Deductions:
Return of Excess
Contributions 3,204 94 10,044
Distributions to Plan
Participants 15,919 82,582 65,354
Allocation of 3,336 Shares of
Company Stock at Market -- -- --
Interest on ESOP Loan -- -- --
-------- -------- ---------
Total Deductions 19,123 82,676 75,398
Net Transfer of Assets
(to) from 433,375 (1,514,651) 290,328
------- ----------- ---------
Net Increase (Decrease) 464,927 (85,359) 445,388
Net Assets Available for
Benefits Beginning of Year 455,201 316,117 611,127
Net Assets Available for
Benefits End of Year $ 920,128 $ 230,758 $1,056,515
========= ======== ============
<CAPTION>
Acceptance Insurance Companies Inc.
Employee Stock Ownership and Tax Deferred Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1996
- ---------------------------------------------------------------------------------------------------
PARTICIPANT DIRECTED
-----------------------------------------------------
Capital Acceptance
Income Appreciation Common
Portfolio Portfolio Stock Fund Other
--------- ------------ ---------- -------
<S> <C> <C> <C> <C>
Additions:
Investment Income:
Interest $ 12,944 $ 155,630 $ 342 --
Dividends 3,446 62,059 -- --
Realized Gain (Loss) 15,936 (72,055) 6,959 --
Unrealized Gain 3,710 413,068 267,395 --
-------- --------- -------- -------
36,036 558,702 274,696 --
-------- ---------- -------- -------
Allocation of 3,366 shares of
Company Stock at Market -- -- -- --
-------- ---------- -------- -------
Contributions:
Employee -- (83) -- 111,659
Employee Rollovers 50,374 260,496 24,361 --
Employer -- (2,396) -- 609,128
Interest Paid by Acceptance
on Behalf of Plan -- -- -- --
--------- ---------- -------- -------
50,374 258,017 24,361 720,787
-------- --------- -------- --------
Total Additions 86,410 816,719 299,057 720,787
--------- ---------- --------- --------
Deductions:
Return of Excess
Contributions 3,176 16,763 7,113 --
Distributions to Plan
Participants 43,509 268,068 78,604 --
Allocation of 3,366 Shares
of Company Stock at Market -- -- -- --
Interest on ESOP Loan -- -- -- --
-------- ---------- -------- --------
Total Deductions 46,685 284,831 85,717 --
Net Transfer of Assets
(to) from 97,990 557,865 156,530 (22,135)
------- ---------- -------- ---------
Net Increase (Decrease) 137,715 1,089,753 369,870 698,652
Net Assets Available for
Benefits Beginning of Year 219,935 4,237,188 752,774 580,656
-------- ---------- -------- ---------
Net Assets Available for
Benefits End of Year $357,650 $5,326,941 $1,122,644 $1,279,308
======== ========== =========== ===========
<PAGE>
<CAPTION>
Acceptance Insurance Companies Inc.
Employee Stock Ownership and Tax Deferred Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1996
- ---------------------------------------------------------------------------------------------------
NON-PARTICIPANT
DIRECTED
-----------------------------------
Employee
Stock
Ownership
Allocated Unallocated Total
--------- ----------- -----
<S> <C> <C> <C>
Additions:
Investment Income:
Interest $ 40 $ -- $ 231,319
Dividends -- -- 74,027
Realized Gain (Loss) 11,864 -- 33,461
Unrealized Gain 261,886 106,478 1,112,488
-------- -------- ---------
273,790 106,478 1,451,295
-------- -------- ----------
Allocations of 3,366 shares of
Company Stock at Market 64,375 -- 64,375
-------- --------- ----------
Contributions:
Employee -- -- 1,280,008
Employee Rollovers -- -- 521,294
Employer -- 37,019 880,764
Interest Paid by Acceptance
on behalf of Plan -- 19,075 19,075
-------- -------- ---------
-- 56,094 2,701,141
-------- -------- ---------
Total Additions 338,165 162,572 4,216,811
-------- -------- ----------
Deductions:
Return of Excess
Contributions -- -- 40,394
Distributions to Plan
Participants 82,427 -- 636,463
Allocation of 3,366 Shares of
Company Stock at Market -- 64,375 64,375
Interst on ESOP Loan -- 19,075 19,075
-------- -------- ---------
Total Deductions 82,427 83,450 760,307
Net Transfer of Assets
(to) from 699 (1) --
-------- -------- ----------
Net Increase (decrease) 256,437 79,121 3,456,504
Net Assets Available for
Benefits Beginning of year 860,676 86,301 8,119,975
-------- -------- ---------
Net Assets Available for
Benefits End of year $1,117,113 $165,422 $11,576,479
========== ======== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
Acceptance Insurance Companies Inc.
Employee Stock Ownership and Tax Deferred Savings Plan
Notes to Financial Statements
December 31, 1997
1. Description of the Plan
The following description of the Plan provides only general
information. Participants should refer to the Plan agreement
for a more complete description of the Plan's provisions.
A. General
The Acceptance Insurance Companies Inc. Employee Stock
Ownership (ESOP) and Tax Deferred Savings Plan (401[k])(the
Plan) was established to enable participating employees of
Acceptance Insurance Companies Inc. (the Company) to share
in the growth of the employer and to provide participants
with future economic security. Participation in the Plan is
voluntary and is applicable to all employees who have been
credited with one year of service and attained the age of 21
for the ESOP portion and have been credited with six months
of service and attained the age of 21 for the 401(k)portion.
The Plan is administered by the Acceptance Insurance
Companies Inc. Administrative Committee.
B. Contributions
Employee contributions are invested in one or more funds as
elected by the employee. As of December 31,1997, the
following funds were available for investment: Money Market
Funds, Income Portfolio, Balanced Portfolio, Capital
Appreciation Portfolio, Guaranteed Interest Contracts, and
Acceptance Insurance Companies Inc. Common Stock Fund.
Employer contributions are invested only in the Acceptance
Common Stock Fund for the ESOP portion of the Plan and in
one or more funds for the 401(k) portion of the Plan, as
directed by the participant. Participants may change their
investment options quarterly.
Each participant may, subject to the maximum limitations
under ERISA, contribute to the 401(k)portion from 1% to 15%
of their compensation, as defined under the Plan. The
Company may, but is not required to, contribute a matching
contribution. The Company may also make an additional
discretionary contribution. Any Company contributions are
determined by the Company's Board of Directors.
C. Vesting
Employer contributions to the ESOP portion of the Plan
become vested in accordance with a vesting schedule which
increases 20% for each consecutive year of service starting
with the third year of service and are fully vested after
seven years of service. For the 401(k) portion of the Plan,
except upon death, disability or retirement, whereupon
employer contributions become fully vested, employer
contributions are vested 10% with one year of service and
vesting increases to 30%, 50%, 75%, and 100% through five
years of service. Employee contributions are fully vested at
all times.
The normal form of benefit for a participant who terminates
or retires is a lump sum payment. If the participant's
account was invested in Acceptance Insurance Companies Inc.
common stock, the payment can be in the form of stock
or cash. For all other account, balances the lump sum
payment is in cash only.
D. Forfeited Accounts
For terminated employees withdrawing their vested accounts,
forfeited accounts are reallocated to participants in the same
proportion each participant's salary reduction is to the total of
all participants' salary reduction. ESOP forfeitures are
allocated in the same manner as the Employer Discretionary ESOP
contribution. During the Plan Year ended December 31,1997 and
1996, forfeited account balances totaled $35,119 and $7,110,
respectively.
E. Loans to Participants
The Plan provides that participants may be granted loans
subject to certain terms and maximum dollar or vested account
balance limits, as defined by the Plan. These loans mature within
five years from the date they are granted, except loans for the
participant's principal residence can be extended beyond five
years. Loan payments are withheld from employee payroll and
submitted to the trustee.
F. Plan Termination
The term of the plan is indefinite, but may be amended,
modified or terminated at any time by the Company. Regardless of
such actions, the principal and income of the Plan remains for
the exclusive benefit of the Plan's participants and
beneficiaries. In the event the Plan is terminated, with certain
exceptions, each participant's account becomes 100% vested. The
Company is required to direct the Trustee to distribute the
Plan's assets to participants in lump sum distributions, which
shall be made in whole shares of Acceptance Insurance Companies
Inc. stock to the extent the fund is so comprised and cash.
2. Summary of Significant Accounting Policies
A. Basis of Accounting
The financial statements of the Acceptance Insurance
Companies Inc. Employee Stock Ownership and Tax Deferred Savings
Plan are prepared on the accrual basis of accounting.
B. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires the plan
administrator to make estimates and assumptions that affect the
reported amounts of asset and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results may differ from those
estimates.
C. Investment Valuation and Income Recognition
Investments in equity securities are recorded at fair
value. Mutual fund units are recorded at reported net asset
value. Investments in guaranteed interest contracts are valued at
contract value (see Note 3), which approximates fair value.
Participant loans are carried at the balance of outstanding
principal.
Purchases and sales of securities are recorded on a
settlement-date basis, which approximates trade-date basis.
Interest and dividend income are reported on the accrual
basis.
D. Payment of Benefits
Benefits are recorded when paid.
3. Guaranteed Interest Contracts with Insurance Company
Assets that were merged into the Plan from the Redland Group
401(K) Plan include a Guaranteed Interest Account entered
into with Principal Mutual Life Insurance Company
(Principal) on September 1, 1992. Pursuant to the merger,
the contracts were transferred to the Plan trustee, who
maintains the contributions. During 1997 and 1996, funds
from contracts with Principal that had matured were
converted to a mutual fund. The contracts are included in
the financial statements at contract value, which
approximates fair value, as reported to the Plan by
Principal. Contract value represents contributions made
under the contract, plus earnings, less Plan withdrawals.
4. Exercise of Warrants and ESOP Loan
Effective November 28, 1994, the Plan exercised its 27,010
warrants to purchase common stock of Acceptance Insurance
Companies Inc. at $11.00 a share, for a total purchase price
of $297,110, financed by a term note guaranteed by
Acceptance Insurance Companies Inc.
The term note bears interest at 7.5%, payable in annual
installments of $56,094, including principal and interest.
The annual principal and interest payments are due beginning
February 1, 1995, with any remaining principal due February
1, 2001. Effective November 28, 1994, the Company entered
into a contribution agreement whereby the Company agrees to
contribute to the Plan a sufficient amount to allow the Plan
to pay the annual installments of principal and interest on
the loan. The Plan agrees to apply any amounts received
toward the annual principal and interest installments.
Interest of $16,202 was paid by the Company on behalf of the
Plan, for the year ended December 31, 1997. Loan principal
repayments will be made as follows:
<TABLE> <S> <C>
1998 $ 43,487
1999 46,749
2000 50,254
2001 27,608
--------
$168,098
========
</TABLE>
The loan is collateralized by the unallocated shares of
stock. As the ESOP loan is paid, stock is released from
encumbrance and allocated to participants' accounts based on
a predetermined formula. The lender has no right against
shares that have been released and allocated under the ESOP.
Accordingly, the financial statements present separately the
assets and liabilities and changes therein related to:
. Stock already released and allocated to
participant accounts.
. Stock not yet allocated to employees
(unallocated).
5.Income Tax Status
The Internal Revenue Service has informed the Company that
the Plan, as amended and restated October 1, 1990, is
qualified under Section 401(a) of the Internal Revenue Code
(IRC) and is, accordingly, exempt from federal income taxes
under the provisions of Section 501(a) of the IRC.
A participant's contributions to the 401(k) portion of the
Plan are made on a pre-tax basis, i.e., they are excluded
from gross income for tax purposes, but are subject to
social security taxes. A participant is not subject to
federal income taxes on the amount of participant
conributions, Company contributions or Plan earnings until
such amounts are withdrawn or distributed. The tax
consequences to participants will vary depending on the
circumstances at the time of distribution.
6. Fees and Expenses
Fees and expenses that are incurred directly in the interest
of the Plan were paid by Acceptance Insurance Companies Inc.
for the years ended December 31, 1997 and 1996.
7. Related Party Transactions
Silverstone Group, a related party through common
management, began administering the Plan on July 1, 1994. As
stated in Note 6, all fees incurred for Plan administration
were paid by Acceptance Insurance Companies Inc.
<PAGE>
8. Investments
Investments held by the Plan at December 31, are:
<TABLE>
<CAPTION>
1997 1996
Cost Market Cost Market
---- ------ ---- ------
<S> <C> <C> <C> <C>
*Acceptance Insurance Companies
Inc. Common Stock (121,893
shares and 112,878 shares) $ 1,647,411 $ 2,948,287 $1,418,759 $2,229,340
*Acceptance Insurance Companies
Inc. Common Stock (15,280 shares
and 18,908 shares encumbered by
ESOP Loan (Note 4)) 168,080 369,585 207,977 373,413
Common Stock of unaffiliated
Companies 4,542,544 5,735,877 3,508,195 4,121,284
Preferred Stock 81,000 54,789 103,375 103,550
Mutual funds 748,176 817,844 479,486 510,891
U.S. Government Securities &
Agencies 1,255,511 1,277,020 329,675 337,360
Corporate Bonds 2,241,250 2,293,501 1,719,211 1,763,200
Guaranteed Interest Contracts 18,181 18,181 131,441 131,441
Certificate of Deposit 174,935 174,935 172,141 172,141
Money Market Fund 1,040,191 1,040,191 738,553 738,553
Participant Loans - 449,252 - 319,113
---------- ---------- ---------- ----------
$11,917,279 $15,179,462 $8,808,813 $10,800,286
============ =========== ========== ============
At December 31,1997, individual investments representing 5% or more of net assets available are as follows:
Cost Market
---------- -----------
*Acceptance Insurance Companies
Common Stock $1,815,491 $3,317,672
Key Trust EB Managed Guaranteed
Investment Contract 748,176 817,844
First National Bank-U.S. Government
Obligation Fund 1,040,191 1,040,191
*Represents a Party-In-Interest
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Acceptance Insurance Companies Inc.
Employee Stock Ownership and Tax Deferred Savings Plan
Annual Report Schedules
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
Tax Identification Number 31-0742926
Plan Number 001
- ---------------------------------------------------------------------------------------------------
Column B Column C Column D Column E
- -------------------------------- ------------------------------------------ ----------- -----------
Description of Investment, Including
Identity of Issue, Borrower Collateral, Rate of Interest,
Lessor or Similar Party Maturity Date, Par on Maturity Value
Current
Common Stock Number of Shares Cost Value
- ----------------------------------- ------------------------------------------ ---------- -----------
<S> <C> <C> <C>
*Acceptance Insurance Companies Inc. 121,893 $ 1,647,411 $ 2,948,287
*Acceptance Insurance Companies Inc. 15,280 collateralized by term note,
7.5%, maturing 2/1/2001 168,080 369,585
Allied Group, Inc. 3,075 35,704 88,022
Alrenco Inc. 800 9,000 13,100
Allstate Corp. 650 29,189 58,825
American Oilfield Divers Inc. 6,800 101,150 86,700
American West Holding Corp.-B 10,400 144,663 193,700
Amerus Life Holding 5,000 82,500 184,375
Apogee Enterprises, Inc. 2,200 25,575 26,125
Arrow Electronics Inc. 1,218 27,285 39,509
Banco Latinoamericano 1,200 55,094 49,650
Bedford Property Investors 4,500 78,188 98,438
Belden & Blake Corp 1,800 47,339 63,450
Brierly Invts Ltd 48,200 34,800 34,125
Brunswick Corp 1,700 34,315 51,531
Calenergy Inc. 3,800 97,682 109,250
Calpine Corporation 6,500 104,000 96,688
Capital Sr. Living Group 11,000 148,500 114,813
Cavalier Homes Inc. 707 3,672 6,894
Chevron Corp. 510 32,601 39,270
Chilenger Corporation 4,521 107,527 110,765
Coachman Industries, Inc. 5,600 105,151 120,750
Comstock Resources Inc. 5,700 46,099 68,044
Corecom Inc. 1,496 22,609 15,147
Excel Realty Trust Inc. 3,000 64,529 94,500
FHLMC VT 1,200 32,553 62,906
Florida East Coast Inds. 41 2,815 3,941
Foremost Corp. of America 780 24,668 54,405
Franklin Covey Co. 1,860 42,706 40,920
Fruit of the Loom CL A 920 29,813 23,575
Geon Company 5,100 116,566 119,213
H & R Block 4,200 156,676 188,213
Hexcel Corp. 5,800 28,507 144,638
IHOP Corp. 1,140 28,643 37,050
IMC Global 2,700 91,118 88,425
Int'l Dairy Queen Inc. 1,650 33,619 44,189
Int'l Multfoods Corp. 3,900 82,637 110,419
Insignia Financial Group 3,600 76,630 82,800
Integrated Health Services, Inc. 2,700 61,030 84,206
KCS Energy Inc. 4,000 72,388 83,000
Lancaster Colony 1,200 45,275 67,650
Lincoln Electric Co CL A 1,079 33,868 38,844
Lone Star Steakhouse & Saloon 1,900 45,663 33,250
McCormick & Company Inc. 2,500 63,125 70,000
NCR Corporation 80 2,375 2,225
New Century Energies, Inc. 3,500 151,729 167,781
Office Depot 8,600 139,337 205,863
Omniquip Int'l Inc. 6,000 105,100 119,625
Paragon Health Network Inc. 6,192 106,260 121,131
Premier Parks 2,600 75,400 105,300
Prentiss Properties Trust SH Ben Int 3,500 70,000 97,781
Reynolds & Reynolds CI A 1,829 31,148 33,722
Richfood Holding Corp 6,100 123,861 172,325
Rollins Inc. 1,000 21,486 20,250
Scana Corp. 5,800 154,959 173,638
SPDR Trust Units Ser 1 4,720 433,442 458,135
Symantec Corp 6,700 121,816 146,981
TCA Cable TV Inc. 270 7,973 12,420
Telecom Italia-SPA 1,100 30,577 70,400
Tele Communications Inc. New 5,800 74,712 162,038
Tupperware Corp 2,552 73,438 71,137
TV Azteca S.A. 1,300 24,823 29,331
U S Freightways Corp 2,800 59,276 91,000
U S West Media Group 1,600 33,948 46,200
Valassis Communications Inc. 1,025 16,174 37,925
Viacom Inc C1 B 2,020 61,042 83,705
Wang Laboratories 2,010 22,864 44,471
Weatherford Enterra 1,070 49,032 74,370
Whitman Corp 1,796 46,300 46,808
--------- --------
Total Common Stock 6,358,035 9,053,749
*Represents a Party-In-Interest
Mutual Funds:
Keytrust EB Managed Guaranteed
Investment Contact 6,657 748,176 817,844
Preferred Stock:
Westbridge Cap Corp. 40 36,000 9,853
Microsoft Corp 500 45,000 44,936
------ --------
81,000 54,789
U.S. Government Securities and Agencies:
U.S. Treasury 50,000 49,984 50,172
Note Dated 12/12/96-5.875% Mat-11/30/97
U.S. Treasury 67,000 64,741 72,423
Note Dated 8/15/94-7.25% Mat-8/15/2004
U.S. Treasury 100,000 105,063 105,313
Bond Dated 5/15/75-8.25% Mat-5/15/2005
U.S. Treasury 410,000 411,395 419,225
Note Dated 2/15/93-6.25% Mat-2/15/2003
FNMA 100,000 100,000 99,940
Note Dated 10/24/97-6.0% Mat-10/26/99
FHLB 75,000 75,000 75,000
Bond Dated 11/20/97-6.439% Mat-5/20/2003-98
FHLMC 100,000 101,000 100,157
Deb. Dated 6/12/96-8.0% Mat-6/12/2006-98
FHLMC 75,000 76,688 77,157
Deb. Dated 7/5/96-7.86% Mat-6/12/2006
FHLB 50,000 50,375 50,565
Bond Dated 9/10/97-7.024% Mat-9/10/2007-99
FHLB 100,000 101,062 100,562
Bond Dated 6/5/97-8.00% Mat-6/15/2012-98
FHLB 225,000 70,000 76,428
Bond Dated 6/16/97-0.0% Mat-7/2/2012/98
FHLB 50,000 50,203 50,078
Bond Dated 10/29/97-7.5% Mat-10/29/2012-98
----------- ----------
Total U.S.Government Securities and Agencies 1,255,511 1,277,020
Corporate Bonds:
AES 5,000-10.25% Mat-7/15/2006-01 5,200 5,438
Agricul Minerals & Chems 30,000-10.75% Mat-9/30/2003-98 31,612 32,250
Alliant Techsystems Inc. 30,000-11.75% Mat-3/1/2003-99 33,000 33,150
Avondate Mills Inc. 70,000-10.25% Mat-5/1/2006-01 69,037 75,250
Ceasars World Inc. 50,000-8.3875% Mat-8/15/2002-97 51,626 51,555
California Energy Co Inc. 70,000-9.875% Mat-6/30/2003-00 72,100 75,908
COHO Energy Inc. 105,000-8.75% Mat-10/15/2007-02 104,803 105,522
Cole National Group 85,000-9.875% Mat-12/31/2006-01 88,363 90,950
Collins & Aikman Products 80,000-11.5% Mat-4/15/2006-01 89,600 90,600
Commercial Federal Corp 50,000-7.95% Mat-3/15/2004-99 50,000 49,500
Corporate Express Inc. 35,000-9.125% Mat-3/15-2004-99 35,079 35,592
Coty Inc. 28,000-10.25% Mat-5/1/2005-00 29,916 29,803
Dawson Production Services 65,000-9.375% Mat-2/1/2007-02 66,950 68,250
Dynacare Inc. 40,000-10.75% Mat-1/15/2006-01 41,025 42,100
First State Banc 40,000-7.5% Mat-4/30/2017-01 40,000 51,750
Giant Industries Inc. 95,000-9.75% Mat-11/15/2003-98 100,106 97,432
Hayes Wheels Int Co 70,000-11.0% Mat-7/15/2006-01 76,125 78,400
Host Marriott Travel Plaza 60,000-9.5% Mat-5/15/2005-00 60,450 63,900
Mark IV Industries Inc. 50,000-4.75% Mat-11/1/2004-00 50,000 46,970
McKesson Corp 40,000-4.5% Mat-3/1/2004-99 34,950 36,374
Moog Inc. 55,000-10.0% Mat-5/1/2006-01 55,605 57,052
Nabi Inc. 40,000-6.5% Mat-2/1/2003-99 39,000 29,850
National Energy Group 75,000-10.75% Mat-11/1/2006-01 80,906 78,750
Newport News Shipbuilding Co. 105,000-9.25% Mat-12/1/2006-01 109,725 111,563
Novacare Inc. 50,000-5.5% Mat-1/15/2000-96 45,006 47,126
Nuevo Energy Co. 65,000-9.5% Mat-4/15/2006-01 65,675 69,550
Outdoor Systems Inc. 70,000-9.325% Mat-10/15/96 71,750 74,725
Owens & Minor Inc. 70,000-10.875% Mat-6/1/2006-01 72,956 77,350
Premier Parks 35,000-9.75% Mat-1/15/2007-02 35,641 37,275
Quantam Health Res Inc 25,000-4.75% Mat-10/1/2000-95 23,062 23,281
Quest Diagnostic Inc. 80,000-10.75% Mat-12/16/96 84,188 87,800
Quorom Health 25,000-8.75% Mat-11/1/2005-00 23,063 23,281
Stater Brothers 50,000-11.0% Mat-3/1/2001 50,312 54,970
Swift Energy Co. 50,000-6.25% Mat-11/15/2005-99 46,438 47,220
Tenet Healthcare Corporation 45,000-10.125% Mat-3/1/2005-00 46,237 49,163
Texas Bottling Group Inc. 105,000-9.0% Mat-11/15/2003-98 108,413 108,371
Tultex Corp UBS Finance Del Mtn 65,000-10.25% Mat-3/15/2005-00 68,331 67,600
UBS Finance Del Mtn Company
Guarantee 400,000-Mat-7/16/2007-99 85,000 87,880
-------- ---------
2,241,250 2,293,501
Guaranteed Investment Contracts:
Principal Financial Group GIC, 6.06% Matures 12/31/98 18,181 18,181
Certificate of Deposit:
First National Bank of Omaha 174,935-6.75% Mat-12/31/98 174,935 174,935
Money Market Fund:
First National Bank of Omaha 1,040,191 Units 1,040,191 1,040,191
Loans to Participants: Participant loans bearing various
dates and interest rates - 449,252
---------- -----------
Total Investments $11,917,279 $15,179,462
========== ===========
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Acceptance Insurance Companies Inc.
Employee Stock Ownership and Tax Deferred Savings Plan
Annual Report Schedules
Item 27d - Schedule of Reportable Transactions
December 31, 1997
Tax Identification Number 31-0742926
Plan Number 001
- ------------------------------------------------------------------------------
Series Transactions, When Aggregated, Involving an Amount
in Excess of 5 Percent of the Current Value of Plan Assets
Column A Column B Column C Column D Column E Column F Column G
Total Total
Identity of Number of Number of Dollar Value Dollar Value Net
Party Involved Description of Assets Purchases Sales of Purchases of Sales Change
- -------------- --------------------- --------- --------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
First National
Bank of Omaha Money Market Funds Various Various $10,820,170 $10,523,685 $296,485
SPDR TR Unit Seri Unit Trust 10 7 $ 1,387,830 $ 935,970 $451,860
</TABLE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the registration
statement on Form S-8 of Acceptance Insurance Companies Inc.
relating to the Acceptance Insurance Companies Inc. Employee
Stock Ownership and Tax Deferred Savings Plan of our report dated
June 5,1998, appearing in this Annual Report on Form 11-K of the
Acceptance Insurance Companies Inc. Employee Stock Ownership and
Tax Deferred Savings Plan for the year ended December 31,1997.
Tighe, Massman & Nelson, P.C.
Certified Public Accountants
Omaha, Nebraska
June 5,1998
