SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 for the fiscal
year ended December 31, 1997 or
( ) TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from __________ to __________
Commission File No. 1-9583
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401 (K) SALARY
DEFERRAL PLAN
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
MBIA Inc.
113 King Street
Armonk, N. Y. 10504
<PAGE>
MBIA INC.
EMPLOYEES PROFIT SHARING AND
401(K) SALARY DEFERRAL PLAN
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1997 AND 1996
<PAGE>
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
FINANCIAL STATEMENTS
INDEX
Pages
-----
Report of Independent Accountants 2
Financial Statements:
Statements of Net Assets Available for Plan
Benefits as of December 31, 1997 and 1996 3
Statements of Changes in Net Assets Available
for Plan Benefits for the years ended
December 31, 1997 and 1996 4
Notes to Financial Statements 5-10
Signatures 11
1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
TO THE PLAN ADMINISTRATOR OF
MBIA INC. EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN:
We have audited the accompanying statements of net assets available for plan
benefits of the MBIA Inc. Employees Profit Sharing and 401(K) Salary Deferral
Plan as of December 31, 1997 and 1996 and the related statements of changes in
net assets available for plan benefits for the years then ended. These financial
statements are the responsibility of the plan administrator. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the MBIA
Inc. Employees Profit Sharing and 401(K) Salary Deferral Plan as of December 31,
1997 and 1996, and the changes in net assets available for plan benefits for the
years then ended in conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND L. L. P.
- -------------------------------
New York, New York
June 25, 1998.
2
<PAGE>
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31 December 31
1997 1996
----------- -----------
Allocated share of MBIA Inc. Master Trust net
assets, at fair value (cost $43,195,589
and $35,216,408, respectively) $52,291,469 $41,184,879
Employer contribution receivable 596 1,356
----------- -----------
Net assets available for
plan benefits $52,292,065 $41,186,235
=========== ===========
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
Years ended December 31
----------------------------
1997 1996
------------- ------------
Contributions:
Employees' salary deferral $2,325,452 $2,192,690
Employer 1,369,955 1,300,350
Interest and dividends 1,859,999 1,710,442
Net appreciation in fair value of investments 9,410,506 6,165,234
Benefit distributions (3,860,082) (2,781,760)
----------- -----------
Net increase 11,105,830 8,586,956
Net assets available for plan
benefits, beginning of year 41,186,235 32,599,279
----------- -----------
Net assets available for plan
benefits, end of year $52,292,065 $41,186,235
=========== ===========
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
1. PLAN DESCRIPTION
- ----------------------
The MBIA Inc. Employees Profit Sharing and 401(K) Salary Deferral Plan (the
"Plan") is a defined contribution plan for employees of MBIA Inc. and
Subsidiaries (the "Company"). Effective April 1, 1987, a 401(K) deferral feature
was implemented enabling eligible participants to defer up to 10% of their total
eligible compensation. Matching contributions are made by the Company at the
rate of 100% of the participant's contribution up to a maximum of 5% of the
participant's eligible compensation. Participants may request loans from their
accounts in accordance with established guidelines.
The assets of both the Plan and the MBIA Inc. Employees Pension Plan are managed
by Fidelity Management Trust Company ("Fidelity"), the investment advisor,
master trustee and custodian. The participants of the Plan have the option to
direct the investment of their contribution share into one or more of ten
Fidelity funds and the Employer Stock Fund.
Vesting in employer contributions begins after three years of service and full
vesting is achieved after five years of service. Participants are fully vested
in their salary deferred contributions at all times. Upon reaching the normal
retirement date, death or becoming disabled, a participant becomes fully vested
in the Company's contributions. Nonvested benefits remaining after termination
of employment serve to reduce future Company contributions.
A participant is entitled to the benefit that can be provided by the
contributions and income thereon, including net realized and unrealized
investment gains and losses of each participant's account. Upon retirement,
disability, death or termination, a participant or beneficiary can elect to
receive a lump-sum distribution, installment distributions or purchase a joint
and survivor annuity contract or single life annuity contract.
The Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA"). Participants should refer to the Summary Plan Description
and Plan Document for specific information regarding Plan provisions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------------
The financial statements have been prepared on the basis of generally accepted
accounting principles (GAAP). The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
5
<PAGE>
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The Plan provides for various investment options in any combination of stocks,
bonds, fixed income securities, mutual funds, and other investment securities.
Investment securities are exposed to various risks, such as interest rate,
market, and credit risks. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that changes in the
values of investment securities will occur in the near term and that such
changes could materially affect participants' account balances and the amounts
reported in the Statements of Net Assets Available for Plan Benefits.
Significant accounting policies are as follows:
INVESTMENTS
The Plan's assets are invested in the MBIA Inc. Master Trust (the "Master
Trust") together with the assets of the MBIA Inc. Employees Pension Plan.
The Plan's share of investments and income from investment activities in the
Master Trust is determined based on the Plan's underlying contribution to the
investment classification which is, in turn, based on the investment fund
elections of the participants.
Investments in the Fidelity funds and the Company's common stock are valued at
their current fair values based on last reported sales prices on the last
business day of the year. Participant loans are stated at cost plus accrued
income, which approximates fair value.
Gain or loss on sale of investments is based on specifically identified cost.
Interest income from investments is recorded as earned on the accrual basis.
Dividend income is recorded on the ex-dividend date.
The Plan's net appreciation (depreciation) in the fair value of its investments
consists of the realized gains or losses and the unrealized appreciation
(depreciation) on those investments.
CONTRIBUTIONS
Contributions from eligible participants and matching Company contributions are
recorded in the month the related payroll deductions are made.
PARTICIPANT ACCOUNTS
Each participant has an account which is credited with the Company's
contribution, employees' contribution and the income (loss) from the investment
activities of the participant's account.
6
<PAGE>
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
ADMINISTRATIVE EXPENSES
Administrative expenses are paid directly by the Company rather than out of Plan
assets. Employee loan fees are paid out of the participants' accounts.
3. PLAN TERMINATION
- --------------------
The Company has not expressed any intent to discontinue its contributions or
terminate the Plan. However, it reserves the right to temporarily suspend
contributions to or amend or terminate the Plan. Upon termination of the Plan,
the accounts of all participants shall become fully vested, and the net assets
of the Plan shall be distributed among the participants and beneficiaries of the
Plan in proportion to their respective account balances.
4. INVESTMENTS
- ---------------
As of December 31, 1997 and 1996, the financial position of the Master Trust on
a cash basis (excluding the ending accrual for employer contributions) and the
Plan's percentage interest in each asset category were as follows:
December 31, 1997
-----------------------------------
Total Master Trust
------------------------ Plan's
Fair %
Cost Value Interest
---------- ----------- --------
Investments at fair value
as determined by quoted market price:
Employer Stock Fund $18,130,563 $23,925,357 100.00%
Fidelity Puritan Fund 1,730,534 1,886,880 42.33
Fidelity Magellan Fund 4,288,915 4,909,785 43.58
Fidelity Growth Company Fund 4,970,304 5,139,987 40.71
Fidelity Growth and Income Portfolio 28,530,042 34,636,906 43.12
Fidelity Intermediate Bond Fund 1,384,879 1,397,680 47.62
Fidelity Value Fund 711,218 659,402 45.81
Fidelity Overseas Fund 2,053,397 2,080,248 45.72
Fidelity Blue Chip Growth Fund 4,432,161 5,153,599 47.03
Fidelity Spartan U. S. Equity
Index Fund 266,771 273,519 53.28
Managed Income Portfolio 6,542,686 6,542,686 42.18
----------- ----------- ------
73,041,470 86,606,049 59.05
Investments at estimated fair value:
Participant loans 1,387,014 1,387,014 83.08
----------- -----------
Total invested assets available for
benefits of participating plans $74,428,484 $87,993,063 59.43%
=========== ===========
<PAGE>
December 31, 1996
-----------------------------------
Total Master Trust
------------------------- Plan's
Fair %
Cost Value Interest
----------- ----------- --------
Investments at fair value as
determined by quoted market price:
Employer Stock Fund $13,510,043 $18,044,834 100.00%
Fidelity Puritan Fund 1,605,846 1,630,058 41.62
Fidelity Magellan Fund 4,124,095 4,005,103 43.40
Fidelity Growth Company Fund 3,661,046 4,007,194 40.43
Fidelity Growth and Income Portfolio 23,515,287 26,433,859 42.86
Fidelity Intermediate Bond Fund 1,425,115 1,387,505 50.07
Fidelity Value Fund 262,517 254,745 43.03
Fidelity Overseas Fund 1,398,480 1,456,140 47.67
Fidelity Blue Chip Growth Fund 3,722,493 3,956,884 47.74
Fidelity Spartan U. S. Equity
Index Fund --- --- ---
Managed Income Portfolio 7,875,966 7,875,966 41.71
----------- -----------
61,100,888 69,052,288 58.05
Investments at estimated fair value:
Participant loans 1,341,044 1,341,044 82.23
----------- -----------
Total invested assets available for
benefits of participating plans $62,441,932 $70,393,332 58.51%
=========== ===========
For the years ended December 31, 1997 and 1996, net appreciation in the fair
value of investments (determined by quoted market price) of the Master Trust
(including investments bought and sold, as well as held during the year) was as
shown on the following page:
7
<PAGE>
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
Years ended December 31
-----------------------
1997 1996
----------- -----------
Fidelity funds $ 8,652,156 $3,669,950
Employer Stock Fund 5,725,073 4,603,368
----------- ----------
$14,377,229 $8,273,318
=========== ==========
For the years ended December 31, 1997 and 1996, investment income consisting of
dividends and interest in the Master Trust was $3,867,311 and $3,628,608,
respectively.
5. NET ASSETS AND CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS BY FUND
- ----------------------------------------------------------------------------
As of December 31, 1997 and 1996, the net assets available for Plan benefits of
the individual investment funds were as follows:
As of December 31
-------------------------
1997 1996
----------- -----------
Employer Stock Fund* $23,925,953 $18,046,190
Fidelity Puritan Fund 798,693 678,400
Fidelity Magellan Fund 2,139,745 1,738,253
Fidelity Growth Company Fund 2,092,411 1,620,017
Fidelity Growth and Income Portfolio* 14,935,204 11,328,480
Fidelity Intermediate Bond Fund 665,509 694,760
Fidelity Value Fund 302,042 109,626
Fidelity Overseas Fund 951,087 694,148
Fidelity Blue Chip Growth Fund 2,423,578 1,888,877
Fidelity Spartan U. S. Equity Index Fund 145,723 ---
Managed Income Portfolio* 2,759,805 3,284,807
Participant Loans 1,152,315 1,102,677
----------- -----------
$52,292,065 $41,186,235
=========== ===========
*Each of these investments represents 5% or more of the Plan's net assets
at December 31, 1997 and 1996. The participant loans are included in the
allocated share of MBIA Inc. Master Trust net assets on the Statements of
Net Assets Available for Plan Benefits.
For the years ended December 31, 1997 and 1996, the changes in net assets
available for Plan benefits of the individual investment funds were as shown on
the following page:
8
<PAGE>
MBIA INC.
EMPLOYEES PROFIT SHARING and 401 (K) SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
Year ended December 31, 1997
-----------------------------------------------------------------------
Employer Growth Growth
Stock Puritan Magellan Company and Income Intermediate
Fund Fund Fund Fund Fund Bond Fund
---------- -------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Employees' salary deferral $ 143,601 $ 82,487 $341,012 $294,275 $ 730,337 $ 62,225
Employer 1,369,955 --- --- --- --- ---
Interest and dividends 272,982 56,621 132,549 208,886 673,643 35,913
Net appreciation (depreciation)
in fair value of investments 5,725,073 76,819 312,489 114,956 2,769,237 4,904
Benefit distributions (1,669,139) (163,238) (141,890) (48,796) (935,175) (198,425)
Transfers from (to) other funds 37,291 67,604 (242,668) (96,927) 368,682 66,132
---------- -------- -------- -------- ---------- --------
Net increase in
net assets available
for Plan benefits $5,879,763 $120,293 $401,492 $472,394 $3,606,724 $(29,251)
========== ======== ======== ======== ========== ========
Year ended December 31, 1997 (Con't)
-----------------------------------------------------------------------------------
Blue Chip Spartan Managed
Value Overseas Growth U. S. Equity Income Participant
Fund Fund Fund Index Fund Portfolio Loans Total
---------- -------- -------- ------------ --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Employees' salary deferral $ 58,006 $135,695 $259,548 $ 10,970 $ 207,296 $ --- $ 2,325,452
Employer --- --- --- --- --- --- 1,369,955
Interest and dividends 39,485 45,294 117,067 966 173,429 103,164 1,859,999
Net appreciation
(depreciation) in fair
value of investments (9,510) 31,611 381,584 3,343 --- --- 9,410,506
Benefit distributions (19,910) (3,299) (167,840) --- (413,147) (99,223) (3,860,082)
Transfers from (to)
other funds 124,345 47,638 (55,658) 130,444 (492,580) 45,697 ---
-------- -------- -------- --------- --------- --------- -----------
Net increase in
net assets available
for Plan benefits $192,416 $256,939 $534,701 $145,723 $(525,002) $ 49,638 $11,105,830
======== ======== ======== ======== ========= ========= ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year ended December 31, 1996
-----------------------------------------------------------------------
Employer Growth Growth
Stock Puritan Magellan Company and Income Intermediate
Fund Fund Fund Fund Fund Bond Fund
---------- -------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Employees' salary deferral $ 77,374 $ 80,154 $288,597 $268,116 $ 755,966 $72,425
Employer 1,305,218 --- --- --- --- ---
Interest and dividends 246,104 80,017 272,215 68,061 554,757 44,032
Net appreciation (depreciation)
in fair value of investments 4,603,368 13,575 (95,677) 141,511 1,379,550 (20,335)
Benefit distributions (847,017) (79,943) (134,446) (68,033) (1.349,954) (1,832)
Transfers (to) from other funds (107,641) (30,545) (263,877) (21,627) (55,659) (34,557)
---------- -------- -------- -------- ---------- -------
Net increase in
net assets available
for Plan benefits $5,277,406 $ 63,258 $ 66,812 $388,028 $1,304,660 $59,733
========== ======== ======== ======== ========== =======
Year ended December 31, 1996 (Con't)
-----------------------------------------------------------------------------------
Blue Chip Spartan Managed
Value Overseas Growth U. S. Equity Income Participant
Fund Fund Fund Index Fund Portfolio Loans Total
---------- -------- -------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Employees' salary deferral $ 22,050 $118,002 $247,654 $ --- $242,352 $ --- $2,192,690
Employer --- --- --- --- (4,868) --- 1,300,350
Interest and dividends 11,505 41,693 127,634 --- 172,588 91,836 1,710,442
Net appreciation
(depreciation) in fair
value of investments (2,852) 31,864 114,230 --- --- --- 6,165,234
Benefit distributions (921) (35,837) (86,932) --- (168,508) (8,337) (2,781,760)
Transfers (to) from
other funds 79,844 71,246 (20,593) --- 259,945 123,464 ---
---------- -------- -------- ---------- --------- ------- ----------
Net increase in
net assets available
for Plan benefits $109,626 $226,968 $381,993 $ --- $501,509 $206,963 $8,586,956
======== ======== ======== ========= ======== ======== ==========
</TABLE>
9
<PAGE>
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
6. TAX STATUS
- --------------
The Internal Revenue Service has advised that the Plan constitutes a qualified
plan under Section 401 (a) of the Internal Revenue Code and is therefore exempt
from federal income taxes under provisions of Section 501 (a).
The Plan obtained its latest determination letter on July 12, 1995 in which the
Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the applicable requirements of the Internal Revenue Code. The
Plan has been amended since receiving the determination letter. However, the
Plan administrator and the Plan's tax counsel believe that the Plan is currently
designed and being operated in compliance with the applicable requirements of
the Internal Revenue Code. Therefore, they believe that the Plan was qualified
and the related Trust was tax-exempt as of the financial statement date.
7. SUBSEQUENT EVENT
- --------------------
On February 17, 1998, MBIA Inc. and CapMAC Holdings Inc. (CapMAC) consummated a
merger. Effective the date of the merger, the account balances in the CapMAC
401(K) Plan were transferred to the MBIA Inc. Employees Profit Sharing and
401(K) Salary Deferral Plan.
10
<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
thereunto duly authorized.
MBIA INC.
EMPLOYEES PROFIT SHARING AND
401(K) SALARY DEFERRAL PLAN
Date: June 25, 1998 /s/ KEVIN D. SILVA
---------------------------
Kevin D. Silva
Senior Vice President
Plan Administrator
Date: June 25, 1998 /s/ LOUIS G. LENZI
----------------------------
Louis G. Lenzi
General Counsel
11
<PAGE>
EXHIBIT 23
----------
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
MBIA Inc. on Form S-8 (Nos.33-22441 and 33-46062) of our report dated June 25,
1998, on our audits of the financial statements of MBIA Inc. Employees Profit
Sharing and 401(K) Salary Deferral Plan as of December 31, 1997 and 1996 and for
each of the two years in the period ended December 31, 1997, which report is
incorporated by reference in this 1997 Annual Report of Form 11-K.
We also consent to the reference to our firm under the caption "Experts"
included in the Prospectuses.
/s/ COOPERS & LYBRAND L. L. P.
- ------------------------------
New York, New York
June 26, 1998
