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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, 1999
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, Inc. 401(k) 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, 1999, consists of the audited financial statements of the Unitrin,
Inc. 401(k) Savings Plan for the year ended December 31, 1999, and the related
schedule thereto. The Unitrin, Inc. 401(k) 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 schedule
furnished herewith have been prepared in accordance with the financial reporting
requirements of ERISA, in lieu of the requirements of Items 1-3 of that section
of the General Instructions. Schedules I, II and III are not submitted because
they are either not applicable, the required information is included in the
financial statements or notes thereto, or are not required under ERISA.
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Pages
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Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits
at December 31, 1999 and 1998 2
Statement of Changes in Net Assets Available for Plan
Benefits for the Year Ended December 31, 1999 3
Notes to the Financial Statements 4 - 6
Schedule of Assets Held for Investments Purposes at End of Year 7
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Independent Auditors' Report
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The Plan Administrative Committee
Unitrin, Inc. 401(k) Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Unitrin, Inc. 401(k) Savings Plan (the "Plan") as of December
31, 1999 and 1998, and the related statement of changes in net assets available
for plan benefits for the year ended December 31, 1999. 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, 1999 and 1998, and the changes in net assets available for plan
benefits for the year ended December 31, 1999, 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 accompanying supplemental schedule of
assets held for investment purposes at end of year is presented for the purpose
of additional analysis and is not a required part of the basic 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 has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Effective August 2, 1999, Unitrin, Inc. merged the 401(k) plans of The Reliable
Life Insurance Company and Trinity Universal Insurance Company, both wholly
owned subsidiaries of Unitrin, Inc., into the Plan.
/s/ KPMG LLP
Chicago, Illinois
June 23, 2000
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Unitrin, Inc. 401(k) Savings Plan
Statements of Net Assets Available for Plan Benefits
As of December 31, 1999 and 1998
(Dollars in Thousands)
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1999 1998
ASSETS ------------ -------------
<S> <C> <C>
Investments (see Note 3) $ 170,819 $ 85,500
Other Assets 1,629 751
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Net Assets Available for Plan Benefits $ 172,448 $ 86,251
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The Notes to the Financial Statements are an integral part of these financial
statements.
2
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Unitrin, Inc. 401(k) Savings Plan
Statement of Changes in Net Assets Available for Plan Benefits
For the Year Ended December 31, 1999
(Dollars in Thousands)
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Year Ended
December 31, 1999
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Additions to Net Assets Attributed to:
Investment Income:
Net Appreciation (Depreciation)
in Fair Value $ 7,888
Interest and Dividends 6,938
Investment Expenses (144)
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Net Investment Income 14,682
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Contributions: Employer 2,871
Participant 11,279
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Total Contributions 14,150
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Transfers from Other Funds 79,808
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Transfers from Other Benefit Plans (see Note 2) 66,880
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Total Additions to Net Assets 175,520
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Deductions From Net Assets Attributed to:
Benefits Paid to Participants 9,515
Transfers to Other Funds 79,808
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Total Deductions from Net Assets 89,323
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Change in Net Assets Available
for Plan Benefits 86,197
Net Assets Available for Plan
Benefits, Beginning of the Year 86,251
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Net Assets Available for
Plan Benefits, End of the Year $172,448
========
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The notes to the Financial Statements are an integral part of these financial
statements.
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UNITRIN, INC. 401(k) SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1999 and 1998
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 (collectively the
"Companies"). Employees of the Companies become eligible to participate in the
Plan on the first day of employment.
Subject to Internal Revenue Code limitations, participants are allowed to defer
and contribute between 1% and 15% of their compensation to the Plan. Effective
January 1, 1999 for certain plan participants, Unitrin began to provide a
matching contribution of 50% of the first 6% of compensation contributed by each
participant, monthly. For all other plan participants, the Company 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. For
participants hired after January 1, 1997, Company contributions will be 100%
vested after 5 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 Invesco group of companies, The Dreyfus Corporation ("Dreyfus"), Fidelity
Investments 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. In addition, a
participant may make an in-service withdrawal from his Employee Contribution
Account.
A more detailed description of the Plan provisions is found in the formal Plan
documents and in summary materials distributed to Plan participants.
Effective August 2, 1999, Unitrin merged the 401(k) plans of The Reliable Life
Insurance Company and Trinity Universal Insurance Company, both wholly owned
subsidiaries of Unitrin, into the Plan and replaced the Plan's recordkeeper with
Invesco Retirement Plan Services. Prior to the replacement, Dreyfus was the
Plan's recordkeeper.
For the year ended December 31, 1999, all direct expenses associated with
administering the Plan were paid by Unitrin.
4
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Note 3 - Investments
All investments are directed by participants and held by the Plan's Trustee,
Institutional Trust Company. 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, 1999 was:
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Investment Investment Advisor Shares
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Invesco Dynamics Invesco Funds Group 208,745
Invesco Total Return Invesco Capital Management 407,725
IRT 500 Index Institutional Trust Company 345,796
IRT Stable Value Institutional Trust Company 47,616,645
AIM Value AIM Advisors, Inc. 630,344
Berger Small Cap Value Berger Funds 26,072
PIMCO Total Return Fund Pacific Investment Management Co. 138,627
Janus Overseas Fund Janus Mutual Funds 104,047
Fidelity Advisor Growth Fund Fidelity Management & Research Co. 185,294
Dreyfus Appreciation Fund, Inc. Dreyfus 599,817
Unitrin, Inc. N/A 345,120
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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. Additional information concerning the
participant-directed investments is contained in the prospectuses and financial
statements of the funds.
The following presents investments that represent 5 percent or more of the
Plan's net assets at December 31, 1999 and 1998:
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(Dollars in Thousands)
Investment 1999 1998
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<S> <C> <C>
Invesco Total Return $11,808 -
IRT 500 Index 12,061 -
IRT Stable Value 47,617 -
AIM Value 30,780 -
Fidelity Advisor Growth Fund 8,646 -
Dreyfus Appreciation Fund, Inc. 27,430 25,758
Unitrin, Inc. 12,985 11,278
Capital Preservation Fund - 18,075
Dreyfus Balanced Fund, Inc. - 9,128
Fidelity Magellan Fund - 6,862
Fidelity Contrafund - 7,399
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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. Subsequent to the receipt of the
determination letter, the Plan was amended and is in process of seeking a
determination letter for the amended plan. The Plan anticipates receiving a
favorable determination.
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Note 4 - Federal Income Tax Status (continued)
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. Except for certain contributions made prior to April 1,
1993, contributions are considered pre-tax deposits and are not subject to
Federal income taxes at the time of contribution. Prior to April 1, 1993 certain
contributions 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. 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.
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.
Note 5 - Subsequent Event
Effective April 1, 2000, Valley Group Employees' 401(k) Savings Plan was merged
into the Plan.
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Unitrin, Inc. 401(k) Savings Plan
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 1999
(Dollars in Thousands)
EIN # : 95-4255452
PLAN #: 003
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Identity of Issuer,
Party-in- Borrower, Lessor Current
interest or Similar Party Description of Investment Cost Value
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Invesco Dymanics Mutual Fund Shares $ 4,786 $ 5,398
Invesco Total Return Mutual Fund Shares 12,938 11,808
IRT 500 Index Collective Trust 10,922 12,061
IRT Stable Value Collective Trust 47,617 47,617
AIM Value Mutual Fund Shares 28,444 30,780
Berger Small Cap Value Mutual Fund Shares 546 564
PIMCO Total Return Fund Mutual Fund Shares 1,389 1,372
Janus Overseas Fund Mutual Fund Shares 2,794 3,871
Fidelity Advisor Growth Fund Mutual Fund Shares 9,515 8,646
* Dreyfus Appreciation Fund, Inc. Mutual Fund Shares 26,215 27,430
* Unitrin, Inc. Common Stock 9,779 12,985
Participants Participant Loans (6.5% - 10.0%) 8,287 8,287
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$ 163,232 $ 170,819
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* This party involved is known to be a party-in-interest to the Plan
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See Accompanying Independent Auditors' Report
7
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Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrative Committee of the Unitrin, Inc. 401(k) 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/ RICHARD ROESKE
June 27, 2000 ------------------
Richard Roeske
Corporate Controller
(Principal Accounting Officer)
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