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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, 1999.
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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
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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
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REQUIRED INFORMATION
Financial Statements:
Item 4. In lieu of the requirements of Items 1-3, audited statements and
schedule are prepared in accordance with the requirements of ERISA for the
Plan's fiscal years ended December 31, 1999 and 1998 are presented on pages 3
through 15.
2
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Financial Statements
and Supplemental Schedule
Horace Mann Supplemental
Retirement and Savings Plan
Years ended December 31, 1999 and 1998
with Report of Independent Auditors
3
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Horace Mann Supplemental
Retirement and Savings Plan
Financial Statements
and Supplemental Schedule
Years ended December 31, 1999 and 1998
Contents
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Auditors.............................................. 5
Audited Financial Statements
Statements of Net Assets Available for Benefits............................. 6
Statements of Changes in Net Assets Available for Benefits.................. 7
Notes to Financial Statements............................................... 8
Supplemental Schedule
Schedule H, Line 4i- Schedule of Assets Held for Investment Purposes
at end of year (all other required schedules are not applicable)...... 15
</TABLE>
4
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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, 1999 and 1998, 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 auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the changes in its net assets available for
benefits for the years then ended in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying schedule of assets held for
investment purposes at end of year as of December 31, 1999, is presented for
purposes of additional analysis and is not a required part of the financial
statements but is 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. The supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
May 5, 2000
5
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Horace Mann Supplemental Retirement and Savings Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
December 31
1999 1998
--------------------------
<S> <C> <C>
Assets
Separate Account-Horace Mann Funds,
at fair value:
Growth Fund (cost $26,791,509
in 1999, $27,280,731 in 1998) $ 25,483,501 $ 28,787,067
Balanced Fund (cost $15,256,169
in 1999, $15,045,041 in 1998) 14,605,263 15,748,909
Small Cap Growth Fund (cost $4,067,799
in 1999, $2,890,648 in 1998) 6,087,551 3,111,828
Socially Responsible Fund (cost $3,616,165
in 1999, $2,644,865 in 1998) 3,894,558 2,743,426
International Equity Fund (cost $2,463,532
in 1999, $999,089 in 1998) 3,307,078 1,096,659
Income Fund (cost $649,405
in 1999, $645,690 in 1998) 598,416 635,009
Short-Term Investment Fund (cost $208,007
in 1999, $79,831 in 1998) 201,402 77,775
---------------------------
Total Separate Account - Horace Mann Mutual Funds 54,177,769 52,200,673
Group annuity contract, at contract value 38,135,792 38,076,205
Horace Mann Educators Corporation Common
Stock, at fair value (cost $8,455,636 in 1999,
$5,689,529 in 1998) 7,843,436 8,373,617
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Total assets 100,156,997 98,650,495
Liabilities
Withdrawals payable to participants 819,450 177,079
---------------------------
Net assets available for benefits $ 99,337,547 $ 98,473,416
===========================
</TABLE>
See accompanying notes to financial statements.
6
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Horace Mann Supplemental Retirement and Savings Plan
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---------------------------
<S> <C> <C>
Additions
Investment Income:
Net realized and unrealized
depreciation of investments $(4,296,217) $(1,700,182)
Interest 2,303,243 2,489,336
Dividends 3,802,221 5,339,647
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1,809,247 6,128,801
Contributions
Employer 2,320,304 2,314,820
Employee 5,744,428 5,684,388
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Total additions 9,873,979 14,128,009
Deductions
Withdrawals by participants (9,009,848) (5,711,338)
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Net increase 864,131 8,416,671
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Net assets available for benefits
Beginning of year 98,473,416 90,056,745
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End of year $99,337,547 $98,473,416
===========================
</TABLE>
See accompanying notes to financial statements.
7
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Horace Mann Supplemental Retirement and Savings Plan
Notes to Financial Statements
December 31, 1999
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 nine 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 five 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.
In accordance with the Omnibus Budget Reconciliation Act of 1993, eligible
compensation for purposes of contributions was limited to $160,000 in 1999 and
1998. Highly compensated employees are limited to 6% participant contributions
and 3% Company matching contributions.
8
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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 2,452 and 2,410 participants at December 31, 1999 and 1998,
respectively. At December 31, 1999 and 1998, the number of participants'
subaccounts in the respective investment funds were as follows:
1999 1998
----------------------
Separate Account - Horace Mann
Mutual Funds:
Growth Fund 1,744 1,795
Balanced Fund 1,160 1,159
Small Cap Growth Fund 771 604
Socially Responsible Fund 714 533
International Equity Fund 577 301
Income Fund 189 172
Short-Term Investment Fund 69 57
Fixed Fund 1,232 1,220
HMEC Common Stock Fund 1,033 1,036
Trust Agreement
All plan assets are held in trust by The Northern Trust Quantitative Advisors,
Inc. The assets of the Plan are deposited in participant-directed investments:
any of seven Horace Mann Mutual Fund Options available within the Horace Mann
Life Insurance Company (HMLIC) Separate Account, a group annuity contract with
HMLIC, or an HMEC Common Stock Fund.
9
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Horace Mann Supplemental Retirement and Savings Plan
Notes to Financial Statements (continued)
Transfers and Withdrawals
Participants may transfer all or a portion of their account balance between the
various investment funds on a monthly basis. Participant 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 in the Company's
matching contributions and related investment earnings.
Reclassification
Certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 presentation.
2. Investments
Separate Account - Horace Mann Mutual Funds
A separate account has been established by HMLIC for the purpose of separately
investing Plan assets in one or more of seven mutual funds, (Growth Fund,
Balanced Fund, Small Cap Growth Fund, Socially Responsible Fund, International
Equity Fund, Income Fund, and Short-Term Investment Fund, collectively the
Horace Mann Funds).
The investment in the separate account is valued at quoted market prices which
represent the net asset values of shares held by the Plan at year-end. 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, based on quoted market prices,
and the short-term commercial paper is presented at cost, which approximates
market value.
10
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Horace Mann Supplemental Retirement Savings Plan
Notes to Financial Statements (continued)
2. Investments (continued)
Total annual returns for each of the Horace Mann Mutual Funds were as follows:
<TABLE>
<CAPTION>
Annual Investment Returns
-------------------------------------------------------
Separate Account - 1 Year Period ended December 31, 1999
------------------- ------------------------------
Horace Mann Mutual Funds 1999 1998 5 years 10 years
------------------------ ------------------- ------------------------------
<S> <C> <C> <C> <C>
Growth Fund ( 2.54)% 7.64% 16.67% 12.98%
Balanced Fund ( 1.11) 7.68 13.71 11.05
Small Cap Growth Fund 71.55 5.81 - -
Socially Responsible Fund 8.39 9.80 - -
International Equity Fund 51.83 18.95 - -
Income Fund ( 1.57) 8.09 6.75 6.84
Short-Term Investment Fund 4.77 4.97 5.00 4.84
</TABLE>
11
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Horace Mann Supplemental Retirement Savings Plan
Notes to Financial Statements (continued)
2. Investments (continued)
The composition of the underlying investments in each of the Separate Account -
Horace Mann Mutual Funds at December 31, 1999 and 1998 was as follows:
<TABLE>
<CAPTION>
1999 1998
--------------
<S> <C> <C>
Growth Fund:
Common and preferred stock 99% 99%
Cash and short-term investments 1 1
Balanced Fund:
Common and preferred stock 60% 60%
U.S. and foreign government and agency obligations 18 18
U.S. and foreign corporate bonds/notes 18 21
Cash and short-term investments 4 1
Small Cap Growth Fund:
Common stock 93% 95%
Cash and short-term investments 7 5
Socially Responsible Fund:
Common and preferred stock 96% 98%
Cash and short-term investments 4 2
International Equity Fund:
Common and preferred stock 92% 90%
Cash and short-term investments 8 10
Income Fund:
U.S. and foreign government and agency obligations 45% 47%
Corporate bonds/notes 47 44
Cash and short-term investments 2 3
Municipal bonds 6 6
Short-Term Investment Fund:
U.S. and foreign government and agency obligations 100% 100%
</TABLE>
12
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Horace Mann Supplemental Retirement Savings Plan
Notes to Financial Statements (continued)
Investments (continued)
Group Annuity Contract
Plan participants may invest in a fixed interest rate 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 fair value
of the group annuity contract is approximately equal to contract value.
The actual credited interest rate on the group annuity contract was 6.25% and
7.00% for the years ended December 31, 1999 and 1998, respectively.
The minimum guaranteed annual interest rate per the group annuity contract is
4.5%. The actual credited interest 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, 2000, the actual crediting rate will be continued at
6.25%.
HMEC Common Stock Fund
The Plan's HMEC Common Stock Fund at December 31, 1999 and 1998 consisted of a
pooled investment in 399,660 shares and 293,811 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 fair value
with a quoted market price of $19.63 and $28.50 per share, respectively.
Total annual returns for investments in the HMEC Common Stock Fund were as
follows:
Annual Investment Returns
-----------------------------------
1 Year Since inception
--------------
1999 1998 (November 1991)
-----------------------------------
(30.1)% 1.3% 11.4%
13
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Horace Mann Supplemental Retirement Savings Plan
Notes to Financial Statements (continued)
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 HMLIC and the Separate Account - Horace Mann Mutual 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 letter 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.
14
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Supplemental Schedule
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Horace Mann Supplemental Retirement and Savings Plan
Schedule H, Line 4i-Schedule of Assets Held for Investment Purposes at
End of Year
December 31, 1999
EIN #: 37-0972590
Plan #: 004
<TABLE>
<CAPTION>
Number
of Shares Contract or
or Units Description of Investment Cost Fair Value
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Separate Account - Horace Mann
Mutual Funds:
1,162,568 Growth Fund $26,791,509 $ 25,483,501
845,701 Balanced Fund 15,256,169 14,605,263
308,074 Small Cap Growth Fund 4,067,799 6,087,551
282,010 Socially Responsible Fund 3,616,165 3,894,558
188,760 International Equity Fund 2,463,532 3,307,078
48,890 Income Fund 649,405 598,416
20,364 Short-Term Investment Fund 208,007 201,402
-----------------------------
Total Separate Account - Horace
Mann Mutual Funds 53,052,586 54,177,769
N/A HMLIC Group Annuity
Contract 38,135,792 38,135,792
399,660 Horace Mann Educators
Corporation Common Stock 8,455,636 7,843,436
--------------------------------
$99,644,014 $100,156,997
================================
</TABLE>
15
<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 28 June 2000 HORACE MANN SUPPLEMENTAL RETIREMENT
-----------------
AND SAVINGS PLAN
/s/ Kathryn E. Karr
-----------------------------------
Kathryn E. Karr
Plan Administrator
Assistant Vice President,
Corporate Benefits Administration
16
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EXHIBITS
23. Consent of Independent Auditors
17
