<PAGE>
UNITED STATES
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
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
_____ EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
_____ EXCHANGE ACT OF 1934
For the transition period from ________________________ to
- ---------------------------------.
Commission file number 0-19239
LAW COMPANIES GROUP, INC. 401(k) SAVINGS PLAN
(the "Plan")
-------------------------------------------------------------------------------
(Full title of the Plan)
LAWGIBB GROUP, INC.
1105 Sanctuary Parkway, Suite 300, Alpharetta, Georgia 30004
- --------------------------------------------------------------------------------
(Name of issuer of the securities held pursuant to the Plan and the
address of its principal executive office)
Exhibit Index at Page 23
<PAGE>
REQUIRED INFORMATION
Audited financial statements and supplemental schedules for the Plan prepared in
accordance with the financial reporting requirements of the Employee Retirement
Income Security Act of 1974, as amended, are filed herein in lieu of an audited
statement of financial condition and statement of income and changes in plan
equity.
Financial Statements and Exhibits
- ---------------------------------
A) The following financial statements and schedules are being filed pursuant to
the Required Information to Form 11-K:
1) Statements of Net Assets Available for Benefits - December 31, 1998
and 1997
2) Statement of Changes in Net Assets Available for Benefits -
Year Ended December 31, 1998
3) Schedules
a) Assets Held for Investment Purposes - December 31, 1998
b) Transactions in Excess of 5% of the Current Value of Plan Assets
Year Ended December 31, 1998
B) The following exhibit is filed as part of this annual report:
Exhibit 23 Consent of Independent Auditors
<PAGE>
Audited Financial Statements and Supplemental Schedules
Law Companies Group, Inc.
401(k) Savings Plan
Year ended December 31, 1998 and
as of December 31, 1997
With Report of Independent Auditors
<PAGE>
Law Companies Group, Inc.
401(k) Savings Plan
Audited Financial Statements and Supplemental Schedules
Year ended December 31, 1998 and as of December 31, 1997
Contents
Report of Independent Auditors.................................................1
Audited Financial Statements
Statements of Net Assets Available for Benefits................................2
Statement of Changes in Net Assets Available for Benefits......................3
Notes to Financial Statements..................................................4
Supplemental Schedules
Line 27a - Schedule of Assets Held for Investment Purposes....................14
Line 27d - Schedule of Reportable Transactions................................15
<PAGE>
Report of Independent Auditors
Plan Administrator
Law Companies Group, Inc. 401(k) Savings Plan
We have audited the accompanying statements of net assets available for benefits
of Law Companies Group, Inc. 401(k) Savings Plan as of December 31, 1998 and
1997, and the related statement of changes in net assets available for benefits
for the year ended December 31, 1998. 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, 1998 and 1997, and the changes in its net assets available for
benefits for the year ended December 31, 1998, 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 purposes as of December 31, 1998, and reportable
transactions for the year then ended, are presented for purpose of additional
analysis and are not a required part of the 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 supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules 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.
/s/ Ernst & Young LLP
Atlanta, Georgia
May 21, 1999
1
<PAGE>
Law Companies Group, Inc.
401(k) Savings Plan
Statements of Net Assets Available for Benefits
December 31
1998 1997
------------- -------------
Assets
Investments
Massachusetts Mutual Life Insurance Company:
Guaranteed Income Fund at contract value (Note 3) $16,426,838 $15,643,010
Investments, at fair value:
Core Equity Account 20,451,234 19,333,108
Balanced Account 5,895,221 5,110,168
Small Cap Equity Account 3,041,629 3,458,916
Core Bond Account 1,003,567 644,609
Law Companies Common Stock 1,284,058 1,196,096
Contrafund Account 1,790,531 -
Destiny Aggressive Account 151,115 -
Destiny Conservative Account 21,722 -
Destiny Equity Account 152,635 -
Destiny Moderate Account 151,898 -
Money market account 103,346 325,125
Participant loans receivable 1,475,976 1,419,529
============= =============
Net assets available for benefits $51,949,770 $47,130,561
============= =============
See accompanying notes.
2
<PAGE>
<TABLE>
<CAPTION>
Law Companies Group, Inc.
401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 1998
<S> <C>
Additions to net assets attributed to:
Participant contributions ........................................ $ 5,936,974
Employer contributions ........................................... 946,448
Investment income ................................................ 1,272,421
-----------
8,155,843
Deductions from net assets attributed to:
Distributions to participants .................................... 7,352,477
Administrative expenses .......................................... 126,564
-----------
7,479,041
Net realized and unrealized appreciation in fair value of investments 4,142,407
-----------
Net increase ........................................................ 4,819,209
Net assets available for benefits at beginning of year .............. 47,130,561
===========
Net assets available for benefits at end of year .................... $51,949,770
===========
</TABLE>
See accompanying notes.
3
<PAGE>
Law Companies Group, Inc.
401(k) Savings Plan
Notes to Financial Statements
December 31, 1998
1. Description of Plan
The Law Companies Group, Inc. 401(k) Savings Plan (the "Plan") is a defined
contribution plan sponsored by Law Companies Group, Inc. (the "Company").
The following description of the Plan provides only general information.
Participants should refer to the Summary Plan Description for Law Companies
Group, Inc. 401(k) Savings Plan for a more complete description of the Plan's
provisions. Copies of this booklet are available from the plan administrator.
General
The Plan covers substantially all U.S. employees of the Company who are age
twenty-one or older. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended (ERISA).
Contributions
Each year, participants may contribute up to the lesser of 20% of their pre-tax
annual compensation, as defined by the Plan, or the maximum allowable by the
Internal Revenue Service. Participants may also contribute amounts representing
distributions from other qualified defined benefit or defined contribution
plans.
Effective May 1996, the Plan was amended to remove the provision for Company
matching contributions in the form of Company common stock (see Note 8). The
Company is currently funding matching contributions in the form of cash.
Effective February 14, 1997, the Board of Directors elected to increase the
Company's matching percentage from 1 1/2% to 2% of the participant's
compensation. The Company matches 100% of contributions from participants on the
first 1% of the participant's compensation, and 50% of contributions from
participants on the next 2% of the participant's compensation. All contributions
are remitted to the Plan bi-weekly.
4
<PAGE>
Law Companies Group, Inc.
401(k) Savings Plan
Notes to Financial Statements (continued)
1. Description of Plan (continued)
Participant Accounts
Each participant's account is credited with the participant's contributions,
rollovers and allocations of (a) the Company's contributions and (b) Plan
earnings and losses. Investment results are allocated to participant's accounts
based upon relative balances of the individual accounts on the valuation date as
defined by the Plan. Forfeited balances of terminated participants' non-vested
accounts are applied to future employer contributions. Forfeitures in 1998
totaled approximately $240,000 and were applied to employer contributions.
Vesting
Participants are immediately vested in their contributions plus earnings
thereon. Company contributions plus earnings thereon vest 100 percent after 5
years of credited service.
Payment of Benefits
The vested value of benefits are payable to a participant upon termination of
service, retirement, disability, or to the participant's beneficiary upon death
of the participant in either lump-sum or annuity distributions.
Participant Loans Receivable
A participant may borrow from his or her fund account a minimum of $1,000 up to
a maximum of the lesser of $50,000 or 50% of his/her vested account balance. The
loans bear interest at the prime rate plus 2% and must be repaid within 5 years.
The respective participant's loan principal and interest are repaid ratably
through bi-weekly payroll deductions.
5
<PAGE>
Law Companies Group, Inc.
401(k) Savings Plan
Notes to Financial Statements (continued)
1. Description of Plan (continued)
Administrative Expenses
The Plan pays all administrative expenses not paid by the Company. In 1998 and
1997, the Company paid the majority of the Plan's administrative expenses.
2. Summary of Significant Accounting Policies
Basis of Presentation
The financial statements of the Plan are prepared on the accrual basis of
accounting.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Valuation of Investments
The Plan has a group annuity contract with Massachusetts Mutual Life Insurance
Company (Mass Mutual). Mass Mutual receives contributions in exchange for
participation units in various investment options.
The fair values of the participation units owned by the Plan in Mass Mutual's
separate investment accounts are based on quoted redemption values as determined
by Mass Mutual on the last business day of the plan year. The investment in the
guaranteed income fund is stated at contract value, as determined by Mass
Mutual, which represents contributions made under the contract, plus interest,
less distributions and administrative expenses.
Investments in Law Companies Common Stock are stated at fair value as determined
in good faith by Mass Mutual and based on a third party appraisal.
6
<PAGE>
Law Companies Group, Inc.
401(k) Savings Plan
Notes to Financial Statements (continued)
3. Investment with Insurance Company
The guaranteed income fund held by the Plan is fully benefit-responsive and as
such has been recorded at contract value in accordance with AICPA's Statement of
Position 94-4 "Reporting of Investment Contracts Held by Health and Welfare
Benefit Plans and Defined-Contribution Pension Plans" (SOP 94-4).
The average yield for the guaranteed income fund for the year ended December 31,
1998 was 7.1%. The crediting interest rate was also 7.1% at December 31, 1998.
At December 31, 1998 and 1997, the fair values of the investment accounts were
approximately $17,019,476 and $15,682,401, respectively, as determined by Mass
Mutual. The Plan's intention is to hold the guaranteed income fund until
maturity and to make withdrawals from the accounts to pay benefits in the normal
course of operations of the Plan.
7
<PAGE>
Law Companies Group, Inc.
401(k) Savings Plan
Notes to Financial Statements (continued)
4. Separate Investment Option Information
Below is a summary of the changes in investments by investment option.
<TABLE>
<CAPTION>
Year ended December 31, 1998
Participant Directed
--------------------------------------------------------------------------------------------
Law Companies
Guaranteed Income Core Small Cap Core Common
Fund Equity Balanced Equity Account Bond Stock
Account Account Account
----------------- ----------------- ------------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investments at beginning of year $15,643,010 $19,333,108 $5,110,168 $3,458,916 $ 644,609 $1,196,096
Additions to net assets attributed to:
Employer contributions 417,327 342,421 102,917 131,886 27,944 -
Participant contributions 1,248,578 2,263,494 883,943 826,228 242,801 -
Investment income 1,126,442 - - - - -
----------------- ----------------- ------------- ------------- -------------- ------------
2,792,347 2,605,915 986,860 958,114 270,745 -
Deductions from net assets attributed to:
Distribution to participants 2,688,863 2,976,967 911,253 558,073 161,036 15,413
Administrative expenses 12,777 6,130 2,034 2,182 450 11
----------------- ----------------- ------------- ------------- -------------- ------------
2,701,640 2,983,097 913,287 560,255 161,486 15,424
Fund transfers, net 693,121 (1,541,636) 24,304 (486,577) 188,668 (400,622)
Net realized and unrealized appreciation
(depreciation) in fair value of investments - 3,036,944 687,176 (328,569) 61,031 504,008
----------------- ----------------- ------------- ------------- -------------- ------------
Investments at end of year $16,426,838 $20,451,234 $5,895,221 $3,041,629 $1,003,567 $1,284,058
================= ================= ============= ============= ============== ============
</TABLE>
8
<PAGE>
Law Companies Group, Inc.
401(k) Savings Plan
Notes to Financial Statements (continued)
4. Separate Investment Option Information (continued)
Below is a summary of the changes in investments by investment option.
<TABLE>
<CAPTION>
Year Ended December 31, 1998
Participant Directed
-----------------------------------------------------------------------------------------------
Destiny Destiny Destiny Destiny
Contrafund Aggressive Conservative Equity Moderate Account Participant Loans
Account Account Account Account
------------- --------------- -------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Investments at beginning
of year $ - $ - $ - $ - $ - $1,419,529
Additions to net assets
attributed to:
Employer contributions 41,693 11,087 2,009 11,500 5,176 -
Participant contributions 235,852 95,388 10,242 53,726 76,722 -
Investment income - - - - - 117,758
------------- --------------- -------------- ---------------- ---------------- ----------------
277,545 106,475 12,251 65,226 81,898 117,758
Deductions from net assets
attributed to:
Distribution to
participants 30,298 1,104 210 7,574 1,686 -
Administrative expenses 253 61 7 63 108 -
------------- --------------- -------------- ---------------- ---------------- ----------------
30,551 1,165 217 7,637 1,794 -
Fund transfers, net 1,363,819 42,506 8,852 100,001 68,875 (61,311)
Net realized and unrealized
appreciation (depreciation)
in fair value of
investments 179,718 3,299 836 (4,955) 2,919 -
------------- --------------- -------------- ---------------- ---------------- ----------------
Investments at end of year $1,790,531 $151,115 $21,722 $152,635 $151,898 $ 1,475,976
============= =============== ============== ================ ================ ================
</TABLE>
9
<PAGE>
Law Companies Group, Inc.
401(k) Savings Plan
Notes to Financial Statements (continued)
<TABLE>
<CAPTION>
Year Ended December 31, 1998
Non Participant
Directed
----------------- --------------
Money
Market Account TOTAL
----------------- --------------
<S> <C> <C>
Investments at beginning
of year $ 325,125 $47,130,561
Additions to net assets
attributed to:
Employer contributions (147,512) 946,448
Participant contributions - 5,936,974
Investment income 28,221 1,272,421
----------------- --------------
(119,291) 8,155,843
Deductions from net assets
attributed to:
Distribution to
participants - 7,352,477
Administrative expenses 102,488 126,564
----------------- --------------
102,488 7,479,041
Fund transfers, net - -
Net realized and unrealized
appreciation (depreciation)
in fair value of
investments - 4,142,407
----------------- --------------
Investments at end of year $ 103,346 $51,949,770
================= ==============
</TABLE>
10
<PAGE>
Law Companies Group, Inc.
401(k) Savings Plan
Notes to Financial Statements (continued)
5. Plan Termination
Under provisions of the Plan, the Company reserves the right to amend or
terminate the Plan at any time provided that amendments will not divert a vested
interest, permit any part of the Plan's assets to revert to the Company, or
permit any part of the Plan's assets to be used for any purpose other than for
the exclusive benefit of participants or their beneficiaries. Upon Plan
termination, each participant's account will become fully vested.
6. Benefits Payable
At December 31, 1998 and 1997, Plan assets included approximately $494,671 and
$218,742, respectively, which represent amounts allocated to participants who
have elected to withdraw from the Plan as of year-end but have not yet received
payments.
7. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
dated March 5, 1998, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax exempt.
8. Transactions with Related Party
Effective May 14, 1996, the Plan was amended to eliminate the ability of
participants to invest in the Company common stock and to eliminate the
Company's matching contributions in the form of the Company common stock. As of
December 31, 1998 and 1997, the Plan held 59,310 and 80,708 shares of Company
common stock respectively, with a fair value of $1,284,058 and $1,196,096
respectively.
11
<PAGE>
Law Companies Group, Inc.
401(k) Savings Plan
Notes to Financial Statements (continued)
9. Differences Between Financial Statements and Form 5500
The following is a reconciliation of net assets available for benefits per the
accompanying financial statements to those per the Form 5500 as of December 31:
1998 1997
---------------------------
Net assets available for benefits per the financial
statements $51,949,770 $47,130,561
Benefits payable to participants (494,671) -
Other reconciling items - (3,947)
===========================
Net assets available for benefits per the Form
5500 $51,455,099 $47,126,614
===========================
The following is a reconciliation of benefits paid to participants per the
financial statements to those per the Form 5500:
Year Ended
December 31, 1998
-----------------
Benefits paid to participants per the financial
statements $7,352,477
Benefits payable to participants at December 31, 1998 494,671
Other reconciling items (3,947)
=================
Benefits paid to participants per the Form 5500 $7,843,201
=================
12
<PAGE>
Law Companies Group, Inc.
401(k) Savings Plan
Notes to Financial Statements (continued)
10. Year 2000 Issue (Unaudited)
The Plan Sponsor has determined that it will be necessary to take certain steps
in order to ensure that the Plan's information systems are prepared to handle
year 2000 dates. The Plan Sponsor is taking a two phase approach. The first
phase addresses internal systems that must be modified or replaced to function
properly. Both internal and external resources are being utilized to replace or
modify existing software applications, and test the software and equipment for
the year 2000 modifications. The Plan Sponsor anticipates substantially
completing this phase of the project by mid 1999. Costs associated with
modifying software and equipment are not estimated to be significant and will be
paid by the Plan Sponsor.
For the second phase of the project, Plan management established formal
communications with its third party service providers to determine that they
have developed plans to address their own year 2000 problems as they relate to
the Plan's operations. No significant third party service providers have
indicated that they will not be year 2000 compliant during 1999. If modification
of data processing systems of either the Plan, the Plan Sponsor, or its service
providers are not completed timely, the year 2000 problem could have a material
impact on the operations of the Plan. Plan management has developed contingency
plans, regardless of the reported year 2000 readiness of the provider or
industry.
13
<PAGE>
SUPPLEMENTAL SCHEDULES
<PAGE>
<TABLE>
<CAPTION>
Law Companies Group, Inc.
401(k) Savings Plan
EIN: 58-0537111
Plan Number: 002
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
Identity of Issue, Borrower,
Lessor or Similar Party
Description of Investment Cost Current Value
- ------------------------------------ ----------------------------------------------- ------------------ ------------------
<S> <C> <C> <C>
*Massachusetts Mutual Life Guaranteed Income Fund, (1) maturing
Insurance Company December 31, 2000, 7.1% $16,426,838 $16,426,838
*Massachusetts Mutual Life
Insurance Company Core Equity Account 11,773,507 20,451,234
*Massachusetts Mutual Life
Insurance Company Balanced Account 4,152,980 5,895,221
*Massachusetts Mutual Life
Insurance Company Small Cap Equity Account 2,806,539 3,041,629
*Massachusetts Mutual Life
Insurance Company Core Bond Account 911,330 1,003,567
*Law Companies Group, Inc.
Law Companies Common Stock 712,579 1,284,058
*Massachusetts Mutual Life
Insurance Company Money market account 103,346 103,346
*Massachusetts Mutual Life
Insurance Company Destiny Aggressive Account 146,937 151,115
*Massachusetts Mutual Life
Insurance Company Destiny Conservative Account 20,941 21,722
*Massachusetts Mutual Life
Insurance Company Destiny Equity Account 152,708 152,635
*Massachusetts Mutual Life
Insurance Company Destiny Moderate Account 148,685 151,898
*Massachusetts Mutual Life
Insurance Company Contrafund Account 1,592,237 1,790,531
*Participants Loans, rates from 9.75% to 11.00%, maturing
through December 31, 2004 - 1,475,976
================== ==================
Total investments $38,948,627 $ 51,949,770
================== ==================
</TABLE>
*Indicates a party-in-interest to the Plan.
(1) Reported at contract value.
14
<PAGE>
<TABLE>
<CAPTION>
Law Companies Group, Inc. 401(k) Savings Plan
EIN: 58-0537111
Plan Number: 002
Line 27d - Schedule of Reportable Transactions
Year ended December 31, 1998
Current Value
of Asset on
Identity of Description Purchase Selling Cost of Transaction Net Gain
Party Involved of Assets Price Price Asset Date (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Category (iii) - Series of securities transactions in excess of 5% of plan
assets.
Massachusetts Mutual
Life Insurance Company Guaranteed Income Fund $5,111,585 $ - $5,111,585 $5,111,585 $ -
Massachusetts Mutual
Life Insurance Company Guaranteed Income Fund - 5,454,199 5,454,199 5,454,199 -
Massachusetts Mutual
Life Insurance Company Equity Fund 4,652,246 - 4,652,246 4,652,246 -
Massachusetts Mutual
Life Insurance Company Equity Fund - 6,571,064 4,376,233 6,571,064 2,194,831
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Law Companies Group, Inc. 401(k) Savings Plan
EIN: 58-0537111
Plan Number: 002
Line 27d - Schedule of Reportable Transactions (continued)
Year ended December 31, 1998
Current Value
of Asset on
Identity of Description Purchase Selling Cost of Transaction Net Gain
Party Involved of Assets Price Price Asset Date (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Category (iii) - Series of securities transactions in excess of 5% of plan
assets (continued).
Massachusetts Mutual
Life Insurance Company Balanced Fund $1,662,407 $ - $1,662,407 $1,662,407 $ -
Massachusetts Mutual
Life Insurance Company Balanced Fund - 1,564,530 1,190,006 1,564,530 374,524
Massachusetts Mutual
Life Insurance Company Small Company Fund 1,803,550 - 1,803,550 1,803,550 -
Massachusetts Mutual
Life Insurance Company Small Company Fund - 1,892,268 1,666,440 1,892,268 225,828
</TABLE>
There were no category (i), (ii) or (iv) transactions during 1998.
Note: Lease rental and expense incurred with transaction are not applicable.
16
<PAGE>
SIGNATURE
The Plan.
- ---------
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 their behalf by the undersigned
hereunto duly authorized.
LAW COMPANIES GROUP, INC.
401(k) SAVINGS PLAN
/s/ R.B. Fooshee
- ---------------------
Robert B. Fooshee
Member of the Plan Administrative Committee
Dated: June 29, 1999
17
FORM 11-K
INDEX TO EXHIBITS
EXHIBIT NUMBER PAGE NUMBER
23 Consent of Independent Auditors 19
18
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-99114) pertaining to the Law Companies Group, Inc. 401(k) Savings
Plan of our report dated May 21, 1999, with respect to the financial statements
and supplemental schedules of the Law Companies Group, Inc. 401(k) Savings Plan
included in this Annual Report (Form 11-K) for the year ended December 31, 1998.
/s/ Ernst & Young LLP
--------------------
Ernst & Young LLP
Atlanta, Georgia
June 25, 1999
19
