<PAGE>
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 REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to __________
Commission file number 0-18298
Unitrin 401K Savings Plan
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A. (Full Title of Plan)
Unitrin, Inc.
One East Wacker Drive
Chicago, IL 60601
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B. (Name and Address of Issuer of Securities Held Pursuant to Plan)
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Required Information
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Pursuant to the section of the General Instructions to Form 11-K entitled
"Required Information," the Annual Report on Form 11-K for the fiscal year ended
December 31, 1997, consists of the audited financial statements of the Unitrin
401K Savings Plan for the year ended December 31, 1997, and the related
schedules thereto. The Unitrin 401K Savings Plan is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and in accordance
with Item 4 of the section of the General Instructions to Form 11-K entitled
"Required Information," the financial statements and schedules furnished
herewith have been prepared in accordance with the financial reporting
requirements of ERISA, in lieu of the requirements of Item 1-3 of that section
of the General Instructions. Schedules I, II and III are not submitted because
they are either not applicable or the required information is included in the
financial statements or notes thereto.
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Pages
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Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits
at December 31, 1997 and 1996 2
Statement of Changes in Net Assets Available for Plan
Benefits for the Year Ended December 31, 1997 3
Notes to the Financial Statements 4 - 6
Line 27a - Schedule of Assets Held for Investments Purposes 7
Line 27d - Schedule of Reportable Transactions 8
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Independent Auditors' Report
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The Plan Administrative Committee
Unitrin 401K Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of Unitrin 401K Savings Plan (the "Plan") as of December 31, 1997 and
1996, and the related statement of changes in net assets available for plan
benefits for the year ended December 31, 1997. These financial statements are
the responsibility of the Plan's administrative committee. 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 as
of December 31, 1997 and 1996, and the changes in net assets available for plan
benefits for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
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. The Fund Information in
the statements of net assets available for plan benefits and the statement of
changes in net assets available for plan benefits is presented for purposes of
additional analysis rather than to present the net assets available for the plan
benefits and 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 the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
June 24, 1998
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Unitrin 401K Savings Plan
Statements of Net Assets Available for Plan Benefits
As of December 31, 1997 and 1996
(Dollars in Thousands)
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1997 1996
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<S> <C> <C>
Assets
Investments:
Capital Preservation Fund $ 17,752 $ 17,759
Unitrin Common Stock Trust 9,694 7,877
Dreyfus Balanced Fund, Inc. 8,723 6,977
Dreyfus Liquid Assets, Inc. 3,174 2,789
Dreyfus Appreciation Fund, Inc. 18,832 13,190
Fidelity Magellan Fund 4,381 3,198
Fidelity Contrafund 5,342 3,507
Loans to Participants 3,442 2,798
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Total Investments 71,340 58,095
Other Assets 644 569
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Net Assets Available for Plan Benefits $ 71,984 $ 58,664
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</TABLE>
The Notes to the Financial Statements are an integral part of these financial
statements.
2
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Unitrin 401K Savings Plan
Statement of Changes in Net Assets Available for Plan Benefits
For the Year Ended December 31, 1997
(Dollars in Thousands)
<TABLE>
<CAPTION>
Participant Directed Investment Programs
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Unitrin
Capital Common Dreyfus Dreyfus Dreyfus Fidelity
Preservation Stock Balanced Liquid Appreciation Magellan
Fund Trust Fund, Inc. Assets, Inc. Fund, Inc. Fund
------------ ------- ---------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Additions to Net Assets Attributed to:
Investment Income:
Net Appreciation
in Fair Value 1 1,257 1,046 - 3,778 691
Interest and Dividends 931 433 206 148 151 107
Investment Expenses (5) (4) (2) (1) (5) (1)
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Net Investment Income 927 1,686 1,250 147 3,924 797
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Contributions:
Employer 196 208 116 74 251 86
Participant 1,666 1,280 1,020 581 2,231 804
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Total Contributions 1,862 1,488 1,136 655 2,482 890
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Transfers from Other Funds, Net - - 106 - 598 -
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Total Additions to Net Assets 2,789 3,174 2,492 802 7,004 1,687
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Deductions from Net Assets Attributed to:
Benefits Paid to Participants 1,805 773 746 358 1,362 361
Transfers to Other Funds, Net 991 584 - 59 - 143
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Total Deductions from Net Assets 2,796 1,357 746 417 1,362 504
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Change in Net Assets Available
for Plan Benefits (7) 1,817 1,746 385 5,642 1,183
Net Assets Available for Plan
Benefits, Beginning of the Year 17,759 7,877 6,977 2,789 13,190 3,198
----------- ------ --------- ------ -------- --------
Net Assets Available for
Plan Benefits, End of the Year 17,752 9,694 8,723 3,174 18,832 4,381
=========== ====== ========= ====== ======== ========
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Participant Directed Investment Programs
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Loans
Fidelity To Other
Contrafund Participants Assets Total
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<S> <C> <C> <C> <C>
Additions to Net Assets Attributed to:
Investment Income:
Net Appreciation
in Fair Value 791 - 5 7,569
Interest and Dividends 98 204 6 2,284
Investment Expenses (1) - - (19)
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Net Investment Income 888 204 11 9,834
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Contributions:
Employer 76 - - 1,007
Participant 907 - 49 8,538
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Total Contributions 983 - 49 9,545
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Transfers from Other Funds, Net 242 816 15 1,777
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Total Additions to Net Assets 2,113 1,020 75 21,156
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Deductions from Net Assets Attributed to:
Benefits Paid to Participants 278 376 - 6,059
Transfers to Other Funds, Net - - - 1,777
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Total Deductions from Net Assets 278 376 - 7,836
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Change in Net Assets Available
for Plan Benefits 1,835 644 75 13,320
Net Assets Available for Plan
Benefits, Beginning of the Year 3,507 2,798 569 58,664
---------- ------------ ------ ------
Net Assets Available for
Plan Benefits, End of the Year 5,342 3,442 644 71,984
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</TABLE>
The Notes to the Financial Statements are an integral part of these financial
statements.
3
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UNITRIN 401K SAVINGS PLAN
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NOTES TO THE FINANCIAL STATEMENTS
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December 31, 1997 and 1996
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Note 1 - Basis of Presentation
The financial statements included herein have been prepared on the basis of
generally accepted accounting principles.
Note 2 - Plan Description
The Plan is a defined contribution plan which is available to employees of
Unitrin, Inc. ("Unitrin") and certain of its subsidiaries (the "Companies").
Regular full-time employees of the Companies become eligible to participate in
the Plan on the first day following the date that they have completed twelve
consecutive months of employment with the Companies and have attained age 21.
Subject to Internal Revenue Code limitations, participants are allowed to defer
and contribute between 1% and 15% of their compensation to the Plan. Unitrin
provides a matching contribution of 100% of the first $100 contributed by each
participant and 50% of the next $400 contributed by each participant annually.
Participant contributions are 100% vested at all times, and Company
contributions are 100% vested after 2 years of employment. The Plan provides for
100% vesting of Company contributions in the event of a change of control as
defined in the Plan. Subject to certain limitations, participants are permitted
to invest in certain investment funds sponsored by The Dreyfus Corporation
("Dreyfus"), Fidelity Investments ("Fidelity"), LaSalle National Trust, N.A. and
in the Unitrin Common Stock Trust. Dreyfus is a direct subsidiary of Mellon
Bank, N.A. An individual account is maintained for each participant and updated
to reflect the participant's contributions, actual investment income, and
withdrawals. Each participant may suspend, resume, or change the rate of
contribution and withdraw all or a portion of his vested account balance at any
time, subject to certain restrictions. However, a participant may not make an
in-service withdrawal from his Employer Matching Contributions Account.
A more detailed description of the Plan provisions is found in the formal Plan
documents and in summary materials distributed to Plan participants.
All direct and indirect expenses associated with administering the Plan are paid
by Unitrin.
4
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Note 3 - Investments
All investments are directed by participants and held by the Plan's Trustee, The
Dreyfus Trust Company, a subsidiary of Dreyfus. Investments are carried at fair
value based on the reported unit or share value of each investment. The number
of shares comprising the participant-directed investments at December 31, 1997
was:
Investment Shares
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Capital Preservation Fund 17,752,050
Unitrin Common Stock Trust 148,908
Dreyfus Balanced Fund, Inc. 536,167
Dreyfus Liquid Assets, Inc. 3,173,774
Dreyfus Appreciation Fund, Inc. 581,593
Fidelity Magellan Fund 45,981
Fidelity Contrafund 114,573
Dreyfus serves as investment adviser to the Dreyfus Balanced Fund, Inc., Dreyfus
Liquid Assets, Inc., and Dreyfus Appreciation Fund, Inc. Fayez Sarofim & Co. is
a sub-investment adviser of the Dreyfus Appreciation Fund, Inc. Fayez S.
Sarofim, the majority shareholder of Fayez Sarofim & Co., is also a director of
Unitrin. The Capital Preservation Fund is a collective investment fund
established and managed by LaSalle National Trust, N.A. Fidelity Management &
Research Company ("FMR") is the management arm of Fidelity. FMR chooses
investments for the Fidelity Magellan Fund and the Fidelity Contrafund.
Additional information concerning the participant-directed investments is
contained in the prospectuses and financial statements of the funds.
Note 4 - Federal Income Tax Status
The Plan is exempt from income taxes under Section 401(a) of the Internal
Revenue Code. In January 1996, the Plan obtained a favorable determination
letter from the Internal Revenue Service.
Under Federal income tax statutes, regulations and interpretations, income taxes
on amounts that a participant accumulates in the Plan are deferred and therefore
not included in the participant's taxable income until those amounts are
actually distributed. Contributions made after April 1, 1993 are considered pre-
tax deposits and are not subject to Federal income taxes at the time of
contribution. Contributions made prior to April 1, 1993 were made on an after-
tax basis and are not subject to income tax when they are distributed to the
participant because they have already been taxed. A participant's account
balance, except for after-tax contributions made prior to April 1, 1993, is
taxable income and generally is taxed at ordinary income tax rates when
distributed. However, favorable tax treatment through special averaging
provisions may apply to participants of a certain age.
5
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Note 4 - Federal Income Tax Status (continued)
An additional 10 percent Federal income tax penalty may be imposed on all
taxable income distributed to a participant unless the distribution meets
certain requirements contained within Section 72 of the Internal Revenue Code.
Effective January 1, 1993 most taxable distributions from the Plan generally are
subject to a 20% Federal income tax withholding unless directly rolled over into
another qualified plan or Individual Retirement Account. Distributions of
Unitrin common stock generally are not subject to the 20% withholding, and
special tax rules may apply to the calculation of "net unrealized appreciation"
on such stock.
If the Plan's requirements concerning loans to participants are satisfied, the
amount of the loan will not be treated as a taxable distribution. If, however,
the loan requirements are not satisfied and a default occurs, the loan will be
treated as a distribution from the Plan for Federal income tax purposes, and the
tax consequences discussed above for distributions may apply. Interest paid on
the loan is generally not deductible.
6
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Unitrin 401(K) Savings Plan
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
(Amounts in Thousands)
EIN #: 95-4255452
PLAN #: 003
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<CAPTION>
Identity of Issuer,
Party-in- Borrower, Lessor Current
interest or Similar Party Description of Investment Cost Value
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<S> <C> <C> <C> <C>
LaSalle National Trust, N.A. Capital Preservation Fund $ 17,752 $ 17,752
Bank Pooled Trust Fund
* Unitrin, Inc. Common Stock 7,319 9,694
Dreyfus Balanced Fund, Inc. Mutual Fund Shares 9,712 8,723
Dreyfus Liquid Assets, Inc. Mutual Fund Shares 3,174 3,174
* Dreyfus Appreciation Fund, Inc. Mutual Fund Shares 18,705 18,832
Fidelity Magellan Fund Mutual Fund Shares 4,517 4,381
Fidelity Contrafund Mutual Fund Shares 5,677 5,342
Participants Participant Loans 3,442 3,442
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$ 70,298 $ 71,340
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</TABLE>
* This party involved is known to be a party-in-interest to the Plan
See Accompanying Independent Auditors' Report
7
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Unitrin 401(K) Savings Plan
Line 27d - Schedule of Reportable Transactions
For the Year Ended December 31, 1997
(Amounts in Thousands)
EIN #: 95-4255452
PLAN #: 003
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<CAPTION>
Current
Value of
Asset on
Identity of party Purchase Selling Cost of Transaction Net gain
Involved Description of Asset Price Price Asset Date or (Loss)
- ------------------------------- ------------------------- -------- ------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
LaSalle National Trust, N.A. Capital Preservation Fund
Bank Pooled Trust Fund $ 4,354 $ 4,354
LaSalle National Trust, N.A. Capital Preservation Fund
Bank Pooled Trust Fund $ 4,359 $ 4,359 $ 4,359 $ -
Dreyfus Liquid Assets, Inc. Mutual Fund Shares $ 4,864 $ 4,864
Dreyfus Liquid Assets, Inc. Mutual Fund Shares $ 4,446 $ 4,446 $ 4,446 $ -
Dreyfus Balanced Fund, Inc. Mutual Fund Shares $ 2,275 $ 2,275
Dreyfus Balanced Fund, Inc. Mutual Fund Shares $ 1,583 $ 1,342 $ 1,583 $ 241
Dreyfus Appreciation Fund, Inc. Mutual Fund Shares $ 5,313 $ 5,313
Dreyfus Appreciation Fund, Inc. Mutual Fund Shares $ 3,449 $ 2,328 $ 3,449 $ 1,121
Unitrin, Inc. Common Stock $ 2,350 $ 2,350
Unitrin, Inc. Common Stock $ 1,864 $ 1,536 $ 1,864 $ 328
Participants Participant Loans $ 1,966 $ 1,966
Participants Participant Loans $ 1,294 $ 1,294 $ 1,294 $ -
</TABLE>
See Accompanying Independent Auditors' Report
8
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrative Committee of the Unitrin 401K Savings Plan has duly caused this
annual report to be signed on its behalf by Unitrin, Inc., which is hereunto
duly authorized.
UNITRIN 401K SAVINGS PLAN
By: Unitrin, Inc.
/s/ ERIC J. DRAUT
June 24, 1998 __________________________
Eric J. Draut
Vice President, Treasurer
and Chief Financial Officer
(Principal Accounting Officer)
9
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UNITRIN 401K SAVINGS PLAN
-------------------------
FORM 11-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
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EXHIBIT INDEX
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<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- ------ ------------------------------------------------- ------------
<S> <C> <C>
23 Consent of KPMG Peat Marwick LLP 13
</TABLE>
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Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of Unitrin, Inc.:
We consent to incorporation by reference in Registration Statements 333-31423 of
Unitrin, Inc., on Form S-4, and 33-58300, 33-47530 and 333-4530 and 333-38981 of
Unitrin, Inc., on Form S-8 of our report dated June 24, 1998, relating to the
statements of net assets available for plan benefits of Unitrin 401K Savings
Plan ("Plan") as of December 31, 1997 and 1996, and the related statement of
changes in net assets available for plan benefits for the year ended December
31, 1997, which report appears in the December 31, 1997 annual report on Form
11-K of the Plan.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
June 24, 1998
