<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
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995.
-----------------
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 1-10890
---------------
HORACE MANN SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN
(Full title of the Plan)
HORACE MANN EDUCATORS CORPORATION
1 Horace Mann Plaza, Springfield, Illinois 62715
Registrant's telephone number, including area code:
(217) 789 - 2500
(Name, Address and Telephone Number of Issuer)
1
<PAGE>
REQUIRED INFORMATION
Financial Statements:
Item 4. In lieu of the requirements of Items 1-3, audited statements and
schedules prepared in accordance with the requirements of ERISA for the Plan's
fiscal years ended December 31, 1995 and 1994 are presented on pages 3 through
16.
2
<PAGE>
Financial Statements
and Supplemental Schedules
Horace Mann Supplemental
Retirement and Savings Plan
Years ended December 31, 1995 and 1994
with Report of Independent Auditors
3
<PAGE>
Horace Mann Supplemental
Retirement and Savings Plan
Financial Statements
and Supplemental Schedules
Years ended December 31, 1995 and 1994
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Auditors................................... 1
Audited Financial Statements
Statements of Net Assets Available for Plan Benefits............. 2
Statements of Changes in Net Assets Available for Plan Benefits.. 3
Notes to Financial Statements.................................... 4
Supplemental Schedules
Assets Held for Investment....................................... 10
Reportable Transactions (all other required schedules are
not applicable).................................................. 11
</TABLE>
4
<PAGE>
Report of Independent Auditors
Pension Committee and The Board of Directors
Horace Mann Educators Corporation
We have audited the accompanying statements of net assets available for plan
benefits of Horace Mann Supplemental Retirement and Savings Plan ("Plan") as of
December 31, 1995 and 1994, 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 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 Plan at
December 31, 1995 and 1994, and the changes in its net assets available for plan
benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment as of December 31, 1995, and reportable transactions for the
year then ended, are presented for purposes of complying with the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974, and are not a required part of the
financial statements. The fund information in the statements of changes in net
assets available for plan benefits is presented for purposes of additional
analysis rather than to present the changes in net assets available for plan
benefits of each fund. The supplemental schedules and fund information have
been subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the financial statements taken as a whole.
March 4, 1996
/s/ ERNST & YOUNG LLP
5
<PAGE>
Horace Mann Supplemental Retirement and Savings Plan
Statements of Net Assets Available for Plan Benefits
<TABLE>
<CAPTION>
December 31
1995 1994
------------------------
<S> <C> <C>
ASSETS
Group annuity contract with Horace Mann
Life Insurance Company, at contract value $38,700,668 $36,576,702
Separate account with Horace Mann
Life Insurance Company, at market value:
Horace Mann Growth Fund (cost $12,469,629 13,437,556 8,732,141
in 1995, $9,768,913 in 1994)
Horace Mann Balanced Fund (cost $9,368,362 10,202,604 7,527,305
in 1995, cost $7,992,436 in 1994)
Horace Mann Income Fund (cost $398,925 400,245 278,606
in 1995, $299,213 in 1994)
Horace Mann Short-Term Investment Fund (cost $47,176 45,669 41,120
in 1995, $42,234 in 1994)
Horace Mann Educators Corporation Common
Stock, at market value (cost $2,354,168 in 1995,
$2,362,215 in 1994) 3,116,090 2,144,231
------------------------
Total assets 65,902,832 55,300,105
LIABILITIES
Withdrawals payable to participants 462,857 168,465
------------------------
Net assets available for plan benefits $65,439,975 $55,131,640
========================
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
Horace Mann Supplemental Retirement and Savings Plan
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
TOTAL FIXED FUND GROWTH FUND
- --------------------------------------------------------------------------------------------------------------------------------
1995 1994 1995 1994 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS
Investment Income:
Net realized and unrealized
appreciation (depreciation)
of investments $ 4,423,734 $(1,945,559) $ - $ - $ 2,022,104 $(1,005,760)
Interest 2,708,304 2,417,838 2,707,909 2,417,573
Dividends 1,872,428 1,544,843 - - 1,079,706 933,869
------------------------------------------------------------------------------------------
9,004,466 2,017,122 2,707,909 2,417,573 3,101,810 (71,891)
Contributions:
Employer 1,627,035 1,551,051 614,887 593,570 533,929 460,931
Participants 3,820,153 3,616,493 1,430,233 1,369,458 1,265,376 1,084,483
------------------------------------------------------------------------------------------
Total additions 14,451,654 7,184,666 4,753,029 4,380,601 4,901,115 1,473,523
DEDUCTIONS
Withdrawals by participants (4,143,319) (2,116,546) (3,014,026) (1,547,460) (516,971) (193,156)
Interfund transfers - - 87,043 (775,673) 283,181 338,848
------------------------------------------------------------------------------------------
Net increase (decrease) 10,308,335 5,068,120 1,826,046 2,057,468 4,667,325 1,619,215
NET ASSETS AVAILABLE FOR PLAN
BENEFITS
Beginning of year 55,131,640 50,063,520 36,478,594 34,421,126 8,731,347 7,112,132
------------------------------------------------------------------------------------------
End of year $65,439,975 $55,131,640 $38,304,640 $36,478,594 $13,398,672 $ 8,731,347
==========================================================================================
<CAPTION>
SHORT-TERM HMEC COMMON
BALANCED FUND INCOME FUND INVESTMENT FUND STOCK FUND
- ----------------------------------------------------------------------------------------------------------------------------------
1995 1994 1995 1994 1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS
Investment Income:
Net realized and unrealized
appreciation (depreciation)
of investments $ 1,317,516 $ (671,633) $ 21,813 $(22,879) $ (108) $ (109) $1,062,409 $ (245,178)
Interest 395 265
Dividends 728,181 574,480 22,560 16,277 2,565 1,477 39,416 18,740
---------------------------------------------------------------------------------------------
2,045,697 (97,153) 44,373 (6,602) 2,457 1,368 1,102,220 (226,173)
Contributions:
Employer 325,423 341,776 15,341 16,738 5,655 3,862 131,800 134,174
Participants 764,576 798,462 34,468 38,565 13,771 9,761 311,729 315,764
---------------------------------------------------------------------------------------------
Total additions 3,135,696 1,043,085 94,182 48,701 21,883 14,991 1,545,749 223,765
DEDUCTIONS
Withdrawals by participants (490,797) (306,828) (35,790) (13,066) (4,687) (2,206) (81,048) (53,830)
Interfund transfers 72,692 (118,407) 62,365 (66,647) (12,689) (8,574) (492,592) 630,453
---------------------------------------------------------------------------------------------
Net increase (decrease) 2,717,591 617,850 120,757 (31,012) 4,507 4,211 972,109 800,388
NET ASSETS AVAILABLE FOR PLAN
BENEFITS
Beginning of year 7,465,102 6,847,252 278,606 309,618 41,118 36,907 2,136,873 1,336,485
---------------------------------------------------------------------------------------------
End of year $10,182,693 $7,465,102 $399,363 $278,606 $ 45,625 $41,118 $3,108,982 $2,136,873
=============================================================================================
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
Horace Mann Supplemental Retirement and Savings Plan
Notes to Financial Statements
December 31, 1995
1. General Plan Information
Description of the Plan
The Horace Mann Supplemental Retirement and Savings Plan ("the Plan") is
sponsored by Horace Mann Service Corporation ("HMSC") which is a wholly owned
subsidiary of Horace Mann Educators Corporation ("HMEC"; HMSC and HMEC
collectively referred to as "the Company"). The following brief description of
the Plan is provided for general information purposes. Readers should refer to
the actual Plan Document or the employee Summary Plan Description entitled Your
Horace Mann Benefits Program for additional information.
The Plan is a voluntary defined contribution plan covering all employees of the
Company. It is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
Contributions and Vesting
Participating employees may contribute up to 10% of eligible compensation,
including salary, overtime, commissions and certain incentive bonuses on a
before-tax basis to one or more of six available investment funds.
The Company contributes an amount equal to 50% of the first 6% of eligible
compensation contributed by participating employees. Employer contributions and
earnings thereon are 20% vested for each year of service, with full vesting
occurring after 5 years of service. In addition, employer contributions
generally become fully vested in the event of disability or death. Forfeitures
of nonvested employer contributions serve to reduce Company matching
contributions. Participant contributions and earnings thereon are fully vested
at all times.
Effective January 1, 1994, in accordance with the Omnibus Budget Reconciliation
Act of 1993, eligible compensation for purposes of contributions has been
limited to $150,000 and highly compensated employees are limited to 5%
participant contributions and 2.5% Company matching contributions.
8
<PAGE>
Horace Mann Supplemental Retirement and Savings Plan
Notes to Financial Statements (continued)
1. General Plan Information (continued)
Participant Accounts and Benefits
Each participant's account is credited with the participant's contribution, the
Company's matching contribution and an allocation of Plan investment earnings.
The benefit to which a given participant is entitled is the benefit that can be
provided from that participant's vested account. A participant subaccount is
maintained in each of the investment funds in which a participant chooses to
invest. There were 1,844 and 1,876 participants at December 31, 1995 and 1994,
respectively. At December 31, 1995 and 1994, the number of participant
subaccounts in the respective investment funds were as follows:
<TABLE>
<CAPTION>
1995 1994
-------------------------
<S> <C> <C>
Fixed Fund 1,485 1,422
Growth Fund 1,214 1,007
Balanced Fund 977 848
Income Fund 168 134
Short-Term Investment Fund 67 53
HMEC Common Stock Fund 515 488
</TABLE>
Transfers and Withdrawals
Participants may transfer all or a portion of their account balance between the
various investment funds on a monthly basis. Participant's withdrawals as
allowed under the Plan are permitted on a monthly basis.
Termination
Although it has not expressed any intent to do so, the Company has the right to
terminate the Plan at any time, subject to the provisions of ERISA. In the
event of Plan termination, participants become fully vested.
9
<PAGE>
Horace Mann Supplemental Retirement and Savings Plan
Notes to Financial Statements (continued)
2. Investments
Trust Agreement
All plan assets are held in trust by American National Bank and Trust Company of
Chicago, pursuant to a trust agreement. The assets of the Plan are currently
deposited in three participant-directed investments: a group annuity contract
with Horace Mann Life Insurance Company ("HMLIC", a subsidiary of HMEC), one of
four divisions of a separate account of HMLIC or an HMEC Common Stock Fund.
Group Annuity Contract
Plan participants may invest in a fixed interest rate guaranteed value group
annuity contract with HMLIC ("Fixed Fund"). Plan assets invested in this
contract are guaranteed by HMLIC and, as a result, are presented in the
financial statements at contract value. Contract value represents contributions
made under the contract, plus interest at the contract rate, less withdrawals by
participants. The market value of the group annuity contract is approximately
equal to contract value.
The actual credited interest rate on the group annuity contract for the years
ended December 31, 1995 and 1994 was as follows:
1995 1994
---------------------
Actual credited interest rate 7.4% 7.0%
The minimum guaranteed annual interest rate per the group annuity contract is
4.5%. The actual credited rate may be reset by HMLIC with 30 days advance
notice, but is generally changed once at the beginning of each Plan year.
Beginning January 1, 1996, the actual crediting rate was changed to 7.25%.
Separate Account
A separate account has been established by HMLIC for the purpose of separately
investing Plan assets in one or more of four corresponding mutual funds ("Growth
Fund", "Balanced Fund", "Income Fund", and "Short-Term Investment Fund",
collectively "the Horace Mann Funds"). The investment in the separate account is
stated at market value. The investments of the underlying mutual funds are
primarily common stocks, U.S. Government and corporate bonds and short-term
commercial paper. The common stocks and bonds are presented
10
<PAGE>
Horace Mann Supplemental Retirement and Savings Plan
Notes to Financial Statements (continued)
2. INVESTMENTS (CONTINUED)
at market value, based on quoted market prices, and the short-term commercial
paper is presented at cost, which approximates market value.
The units owned by the Plan through its investment in the separate account and
unit values of each of the Horace Mann Funds at December 31, 1995 and 1994 were
as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------------------------------
Division UNITS OWNED UNIT VALUE UNITS OWNED UNIT VALUE
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Fund 620,386 $21.66 495,019 $17.64
Balanced Fund 566,811 18.00 493,270 15.26
Income Fund 30,717 13.03 23,179 12.02
Short-Term Investment Fund 4,567 10.00 4,079 10.08
</TABLE>
Total average annualized returns for each of the Horace Mann Funds were as
follows:
<TABLE>
<CAPTION>
-----------------------------------------------------
1 YEAR PERIOD ENDED DECEMBER 31, 1995
-----------------------------------------------------
1995 1994 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Growth Fund 33.67% (.35)% 17.20% 13.61%
Balanced Fund 27.12 (1.12) 13.84 11.90
Income Fund 14.93 (2.21) 8.40 8.84
Short-Term
Investment Fund 5.25 3.89 4.17 5.57
</TABLE>
11
<PAGE>
Horace Mann Supplemental Retirement and Savings Plan
Notes to Financial Statements (continued)
2. INVESTMENTS (CONTINUED)
The composition of the underlying investments in each the Horace Mann Funds at
December 31, 1995 and 1994 was as follows:
<TABLE>
<CAPTION>
1995 1994
-----------------
<S> <C> <C>
Horace Mann Growth Fund:
Common and preferred stock 97% 97%
Cash and short-term investments 3 3
Horace Mann Balanced Fund:
Common and preferred stock 65% 64%
U.S. and foreign government and agency obligations 25 19
Corporate bonds/notes 7 12
Cash and short-term investments 3 5
Horace Mann Income Fund:
U.S. and foreign government and agency obligations 70% 50%
Corporate bonds/notes 26 42
Cash and short-term investments 4 8
Horace Mann Short-Term Investment Fund:
U.S. and foreign government and agency obligations 100% 100%
</TABLE>
12
<PAGE>
HMEC COMMON STOCK FUND
The Plan's HMEC Common Stock Fund at December 31, 1995 and 1994 consisted of a
pooled investment in 99,715 shares and 100,905 shares, respectively, of HMEC
common stock, which is traded on the New York Stock Exchange under the symbol
HMN. This investment is presented in the financial statements at market value
of $31.25 and $21.25 per share, respectively.
Total average annualized returns for investments in the HMEC Common Stock Fund
were as follows:
<TABLE>
<CAPTION>
1 Year
------------------ Since inception
1995 1994 (November, 1991)
------------------ ----------------
<S> <C> <C>
49.2% (14.0)% 15.6%
</TABLE>
3. ADMINISTRATIVE EXPENSES
The Company pays all administrative costs for the operation of the Plan and
related trust, which consist primarily of trustee, audit and legal fees. The
investment results of the separate account are net of investment and operating
expenses charged by Horace Mann Funds. Minimal brokerage and commission fees
for the purchase of HMEC common stock are paid directly by the Trustee from the
HMEC Common Stock Fund.
4. INCOME TAX STATUS
The Plan has received a determination from the Internal Revenue Service that the
Plan has met the provisions of the Internal Revenue Code ("the Code") as being
exempt from federal income tax.
The Plan is organized in accordance with section 401(k) of the Code.
Participants are not subject to federal income tax on amounts contributed to the
Plan, or on earnings attributable to such contributions, until such time as
these amounts are either distributed to or withdrawn by the participants.
13
<PAGE>
Supplemental Schedules
14
<PAGE>
Horace Mann Supplemental Retirement and Savings Plan
Assets Held for Investment
December 31, 1995
<TABLE>
<CAPTION>
Number
of Shares Contract or
or Units Name Cost Market Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
N/A Horace Mann Life Insurance
Company Group Annuity Contract $38,700,668 $38,700,668
620,386 Horace Mann Growth Fund 12,469,629 13,437,556
566,811 Horace Mann Balanced Fund 9,368,362 10,202,604
30,717 Horace Mann Income Fund 398,925 400,245
4,567 Horace Mann Short-Term Investment Fund 47,176 45,669
99,715 Horace Mann Educators
Corporation Common Stock 2,345,168 3,116,090
------------------------
$63,329,928 $65,902,832
========================
</TABLE>
15
<PAGE>
Horace Mann Supplemental Retirement and Savings Plan
Reportable Transactions
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Purchase Selling Number of Cost of Net Gain
Identity of Party Involved Description of Asset Price Price Transactions Asset or (Loss)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fixed Fund Group Annuity Contract(1) $5,418,800 -- 55 $5,518,800 --
Horace Mann Life Insurance -- $3,294,834 16 3,294,834 --
Company (HMLIC)
Growth Fund Horace Mann Growth Fund(1) 3,480,005 -- 33 3,480,005 --
HMLIC Separate Account -- 796,694 18 779,289 $17,405
Balanced Fund Horace Mann Balanced Fund(1) 2,247,758 -- 36 2,247,758 --
HMLIC Separate Account -- 889,975 20 871,832 18,143
Income Fund Horace Mann Income Fund(1) 173,715 -- 31 173,715 --
HMLIC Separate Account -- 73,889 16 74,003 (114)
Short-Term Investment Fund Horace Mann Short-Term
HMLIC Separate Account Investment Fund(1) 27,786 -- 27 27,786 --
-- 23,129 15 22,844 285
HMEC Common Stock Fund Horace Mann Educators Corp.
Common Stock(1) 444,632 18 444,632 --
-- 535,182 6 461,679 73,503
</TABLE>
(1) Party-in-interest investment which is not prohibited investment under ERISA
rules and regulations.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Pension
Plan Committee of the Horace Mann Supplemental Retirement and Savings Plan has
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Date 26 June 1996 HORACE MANN SUPPLEMENTAL RETIREMENT
------------- AND SAVINGS PLAN
/s/ Kathryn E. Karr
---------------------------
Kathryn E. Karr
Plan Administrator
Secretary Employee Benefits
Administration
17
<PAGE>
EXHIBITS
23. Consent of Independent Auditors
18
<PAGE>
Exhibit 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
--------------------------------------------------
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-45152) pertaining to the Supplemental Retirement and Savings Plan of
Horace Mann Educators Corporation and in the related Prospectus of our report
dated March 4, 1996, with respect to the financial statements and supplemental
schedules of the Horace Mann Supplemental Retirement and Savings Plan included
in this Annual Report (Form 11-K) for the year ended December 31, 1995.
/s/ ERNST AND YOUNG, LLP
Chicago, Illinois
June 24, 1996
19
