<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
For the fiscal year ended December 31, 1996.
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 financial statements
and schedules prepared in accordance with the requirements of ERISA for the
Plan's fiscal years ended December 31, 1996 and 1995 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, 1996 and 1995
with Report of Independent Auditors
3
<PAGE>
Horace Mann Supplemental
Retirement and Savings Plan
Financial Statements
and Supplemental Schedules
Years ended December 31, 1996 and 1995
Contents
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Auditors................................................ 1
Audited Financial Statements
Statements of Net Assets Available for Benefits............................... 2
Statements of Changes in Net Assets Available for 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 benefits
of Horace Mann Supplemental Retirement and Savings Plan ("Plan") as of December
31, 1996 and 1995 and the related statements of changes in net assets available
for 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 benefits of the Plan at
December 31, 1996 and 1995, and the changes in its net assets available for
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, 1996, 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 benefits is presented for purposes of additional analysis
rather than to present the changes in net assets available for 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.
April 3, 1997
/s/ ERNST & YOUNG LLP
5
<PAGE>
Horace Mann Supplemental Retirement and Savings Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
December 31
1996 1995
------------------------
<S> <C> <C>
Assets
Group annuity contract with Horace Mann
Life Insurance Company, at contract value $38,666,126 $38,700,668
Separate account with Horace Mann
Life Insurance Company, at market value:
Horace Mann Growth Fund (cost $18,849,476 20,950,425 13,437,556
in 1996, $12,469,629 in 1995)
Horace Mann Balanced Fund (cost $11,815,332 13,065,409 10,202,604
in 1996, cost $9,368,362 in 1995)
Horace Mann Income Fund (cost $491,996 481,674 400,245
in 1996, $398,925 in 1995)
Horace Mann Short-Term Investment Fund (cost $56,464 55,327 45,669
in 1996, $47,176 in 1995)
Horace Mann Educators Corporation Common
Stock, at market value (cost $2,291,974 in 1996,
$2,345,168 in 1995) 3,721,647 3,116,090
----------- -----------
Total assets 76,940,608 65,902,832
Liabilities
Withdrawals payable to participants 463,070 462,857
----------- -----------
Net assets available for benefits $76,477,538 $65,439,975
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
HORACE MANN SUPPLEMENTAL RETIREMENT & SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1996 and 1995
<TABLE>
<CAPTION>
Total Fixed Fund Growth Fund
------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions
Investment Income:
Net realized and unrealized appreciation
(depreciation) of investments $ 2,638,306 $ 4,423,734 $ - $ - $ 1,273,395 $ 2,022,104
Interest 2,696,366 2,708,304 2,696,255 2,707,909
Dividends 4,126,417 1,872,428 - - 2,615,589 1,079,706
------------------------------------------------------------------------------------
9,461,089 9,004,466 2,696,255 2,707,909 3,888,984 3,101,810
Contributions:
Employer 1,816,466 1,627,035 543,806 614,887 730,335 533,929
Participants 4,301,452 3,820,153 1,265,304 1,430,233 1,752,509 1,265,376
------------------------------------------------------------------------------------
Total additions 15,579,007 14,451,654 4,505,365 4,753,029 6,371,828 4,901,115
Deductions
Withdrawals by participants (4,541,444) (4,143,319) (2,794,816) (3,014,026) (957,513) (516,971)
Interfund transfers - - (1,570,864) 87,043 2,032,914 283,181
------------------------------------------------------------------------------------
Net increase 11,037,563 10,308,335 139,685 1,826,046 7,447,229 4,667,325
Net assets available for benefits
Beginning of year 65,439,975 55,131,640 38,304,640 36,478,594 13,398,672 8,731,347
------------------------------------------------------------------------------------
End of year $76,477,538 $65,439,975 $38,444,325 $38,304,640 $20,845,901 $13,398,672
====================================================================================
</TABLE>
<TABLE>
<CAPTION>
Short-Term
Balanced Fund Income Fund Investment Fund
------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions
Investment Income:
Net realized and unrealized appreciation
(depreciation) of investments $ 560,022 $ 1,317,516 $(10,709) $ 21,813 $ 738 $ (108)
Interest
Dividends 1,440,092 728,181 28,025 22,560 2,402 2,565
-----------------------------------------------------------------------------------
2,000,114 2,045,697 17,316 44,373 3,140 2,457
Contributions:
Employer 391,510 325,423 18,524 15,341 6,532 5,655
Participants 926,778 764,576 44,004 34,468 16,064 13,771
-----------------------------------------------------------------------------------
Total additions 3,318,402 3,135,696 79,844 94,182 25,736 21,883
Deductions
Withdrawals by participants (602,860) (490,797) (20,950) (35,790) (1,441) (4,687)
Interfund transfers 53,938 72,692 19,154 62,365 (14,594) (12,689)
-----------------------------------------------------------------------------------
Net increase 2,769,480 2,717,591 78,048 120,757 9,701 4,507
Net assets available for benefits
Beginning of year 10,182,693 7,465,102 399,363 278,606 45,625 41,118
-----------------------------------------------------------------------------------
End of year $12,952,173 $10,182,693 $477,411 $399,363 $ 55,326 $ 45,625
===================================================================================
</TABLE>
<TABLE>
<CAPTION>
HMEC Common
Stock Fund
-------------------------
1996 1995
-------------------------
<S> <C> <C>
Additions
Investment Income:
Net realized and unrealized appreciation
(depreciation) of investments $ 814,860 $1,062,409
Interest 111 395
Dividends 40,309 39,416
------------------------
855,280 1,102,220
Contributions:
Employer 125,759 131,800
Participants 296,793 311,729
------------------------
Total additions 1,277,832 1,545,749
Deductions
Withdrawals by participants (163,864) (81,048)
Interfund transfers (520,548) (492,592)
------------------------
Net increase 593,420 972,109
Net assets available for benefits
Beginning of year 3,108,982 2,136,873
------------------------
End of year $3,702,402 $3,108,982
========================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Horace Mann Supplemental Retirement and Savings Plan
Notes to Financial Statements
December 31, 1996
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 future 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>
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 1,982 and 1,844 participants at December 31, 1996 and 1995,
respectively. At December 31, 1996 and 1995, the number of participant
subaccounts in the respective investment funds were as follows:
<TABLE>
<CAPTION>
1996 1995
---------------
<S> <C> <C>
Fixed Fund 1,408 1,485
Growth Fund 1,487 1,214
Balanced Fund 1,075 977
Income Fund 159 168
Short-Term Investment Fund 56 67
HMEC Common Stock Fund 558 515
</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>
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 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, 1996 and 1995 was as follows:
<TABLE>
<CAPTION>
1996 1995
-------------
<S> <C> <C>
Actual credited interest rate 7.25% 7.40%
</TABLE>
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, 1997, the actual crediting rate was continued at 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 at market value,
10
<PAGE>
2. Investments (continued)
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, 1996 and 1995 were
as follows:
<TABLE>
<CAPTION>
1996 1995
Division Units Owned Unit Value Units Owned Unit Value
================================================================================
<S> <C> <C> <C> <C>
Growth Fund 881,752 $23.76 620,386 $21.66
Balanced Fund 689,831 18.94 566,811 18.00
Income Fund 37,957 12.69 30,717 13.03
Short-Term Investment Fund 5,516 10.03 4,567 10.00
</TABLE>
Total average annualized returns for each of the Horace Mann Funds were as
follows:
<TABLE>
<CAPTION>
One Year Period ended December 31, 1996
------------------------------------------------------------
1996 1995 5 Years 10 years
------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Fund 25.28% 33.67% 16.98% 14.92%
Balanced Fund 18.27 27.12 13.20 12.07
Income Fund 3.50 14.93 6.13 7.47
Short-Term
Investment Fund 5.02 5.25 3.97 5.44
</TABLE>
11
<PAGE>
2. Investments (continued)
The composition of the underlying investments in each the Horace Mann Funds at
December 31, 1996 and 1995 was as follows:
<TABLE>
<CAPTION>
1996 1995
-----------------
<S> <C> <C>
Horace Mann Growth Fund:
Common and preferred stock 96% 97%
Cash and short-term investments 4 3
Horace Mann Balanced Fund:
Common and preferred stock 69% 65%
U.S. and foreign government and agency obligations 23 25
Corporate bonds/notes 7 7
Cash and short-term investments 1 3
Horace Mann Income Fund:
U.S. and foreign government and agency obligations 68% 70%
Corporate bonds/notes 30 26
Cash and short-term investments 2 4
Horace Mann Short-Term Investment Fund:
U.S. and foreign government and agency obligations 99% 100%
Cash and short-term investments 1 ---
</TABLE>
12
<PAGE>
HMEC Common Stock Fund
The Plan's HMEC Common Stock Fund at December 31, 1996 and 1995 consisted of a
pooled investment in 92,177 shares and 99,715 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
$40.38 and $31.25 per share, respectively.
Total average annualized returns for investments in the HMEC Common Stock Fund
were as follows:
1 Year
--------------- Since inception
1996 1995 (November 1991)
-------------------------------
30.9% 49.2% 18.4%
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, 1996
<TABLE>
<CAPTION>
Number
of Shares Contract or
or Units Name Cost Market Value
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
N/A HMLIC Group Annuity
Contract $38,666,126 $38,666,126
881,752 Horace Mann Growth Fund 18,849,476 20,950,425
689,831 Horace Mann Balanced Fund 11,815,332 13,065,409
37,957 Horace Mann Income Fund 491,996 481,674
5,516 Horace Mann Short-Term Investment Fund 56,464 55,327
92,177 Horace Mann Educators
Corporation Common Stock 2,291,974 3,721,647
---------------------------------
$72,171,368 $76,940,608
=================================
</TABLE>
15
<PAGE>
Horace Mann Supplemental Retirement and Savings Plan
Reportable Transactions
Year Ended December 31, 1996
<TABLE>
<CAPTION>
Purchase Selling Number of Cost of
Identity of Party Involved Description of Asset Price Price Transactions Asset Net Gain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fixed Fund Group Annuity Contract(1) $4,652,088 - 44 $4,652,088 -
Horace Mann Life Insurance - $4,686,630 21 4,686,630 -
Company (HMLIC)
Growth Fund Horace Mann Growth Fund(1) 7,238,264 - 48 7,238,264 -
HMLIC Separate Account - 998,790 16 858,417 $140,373
Balanced Fund Horace Mann Balanced Fund(1) 3,307,405 - 40 3,307,405 -
HMLIC Separate Account - 1,004,622 17 860,435 144,187
Income Fund Horace Mann Income Fund(1) 143,868 - 31 143,868 -
HMLIC Separate Account - 51,730 19 50,797 933
Short-Term Investment Fund Horace Mann Short-Term Investment Fund(1) 37,456 - 26 37,456 -
HMLIC Separate Account - 28,536 17 28,168 368
HMEC Common Stock Fund Horace Mann Educators Corp.
Common Stock(1) 390,558 - 15 390,558 -
- 599,861 9 443,752 156,109
</TABLE>
(1) Party-in-interest investment which is not a 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 1997 HORACE MANN SUPPLEMENTAL RETIREMENT
----------------- AND SAVINGS PLAN
---------------------------
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 Horace Mann Supplemental Retirement and
Savings Plan and in the related Prospectus of our report date April 3, 1997,
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, 1996.
Chicago, Illinois
June 24, 1997
