UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
[ ] 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 33-61000l
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THE INTEGON CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN
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(Full title of the plan)
INTEGON CORPORATION
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(Name of the issuer of the securities held pursuant to the plan)
500 West Fifth Street
Winston-Salem, North Carolina 27152
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(Address of Principal Executive Offices)
(910) 770-2000
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(Registrant's Telephone Number, Including Area Code)
This filing contains 11 pages
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THE INTEGON CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
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PAGE
INDEPENDENT AUDITORS' REPORT 2
FINANCIAL STATEMENTS:
Statement of Assets Available for Benefits
December 31, 1996 3
Statement of Changes in Assets Available for Benefits
for the Year Ended December 31, 1996 4
Notes to Financial Statements 5-7
SUPPLEMENTAL SCHEDULES AS OF DECEMBER 31, 1996
AND FOR THE YEAR THEN ENDED:
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1996 8
Item 27d - Schedule of Reportable Transactions
for the Year Ended December 31, 1996 9-10
Supplemental schedules other than those listed above are omitted because of the
absence of the conditions under which they are required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 or because the required information is
included in the financial statements or in the notes thereto.
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INDEPENDENT AUDITORS' REPORT
To the Plan Administrator and Participants of
The Integon Corporation Employee Stock Ownership Plan
Winston-Salem, North Carolina
We have audited the accompanying statement of assets available for benefits of
the Integon Corporation Employee Stock Ownership Plan (the "Plan") as of
December 31, 1996, and the related statement of changes in assets available for
benefits for the year 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the assets available for benefits of the Plan as of December 31, 1996,
and the changes in assets available for benefits for the year ended December 31,
1996 in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
Table of Contents 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 supplemental schedules are the responsibility of the Plan's
management. Such supplemental schedules have been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects when considered in relation
to the basic financial statements taken as a whole.
/s/ Deloitte & Touche LLP
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Deloitte & Touche LLP
June 20, 1997, except for Note 7, as to which the date is June 23, 1997
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THE INTEGON CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1996
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ASSETS: 1996
<S> <C>
Investment in Integon Corporation common stock,
at fair value .............................. $1,073,964
Receivables:
Employer contributions ..................... 99,760
Accrued investment income .................. 21
Cash .......................................... 3
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ASSETS AVAILABLE FOR BENEFITS ................. $1,173,748
==========
</TABLE>
See notes to financial statements.
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THE INTEGON CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1996
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1996
<S> <C>
ADDITIONS:
Investment income (loss):
Net depreciation in fair value
of investments ........................... $ (132,407)
Interest .................................... 890
Dividends ................................... 11,233
Employer contributions ......................... 1,315,271
1,194,987
DEDUCTIONS - benefit payments to participants .. 21,239
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NET INCREASE IN ASSETS AVAILABLE FOR BENEFITS .. 1,173,748
ASSETS AVAILABLE FOR BENEFITS, BEGINNING OF YEAR
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ASSETS AVAILABLE FOR BENEFITS, END OF YEAR ..... $ 1,173,748
===========
</TABLE>
See notes to financial statements.
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THE INTEGON CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
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1. PLAN DESCRIPTION AND BASIS OF PRESENTATION
The following brief description of the Integon Employees Stock Ownership
Plan (the "Plan") is provided for general information purposes only.
Participants should refer to the Plan document for more complete
information.
General - Integon Corporation (the "Sponsor") established the Plan
effective as of January 1, 1996. The Plan is designed to comply with
Section 4975(e)(7) and the regulations thereunder of the Internal Revenue
Code of 1986, as amended (the "Code") and is subject to the applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended (ERISA). The Plan is administered by the Integon Corporation
Employees' Retirement Savings Plan Advisory Committee (the "Committee")
comprising of six persons appointed by the Sponsor's Board of Directors.
The Plan purchases Integon Corporation common shares and holds the stock
in a trust established under the Plan.
Employees of the Sponsor are generally eligible to participate in the Plan
after one year of service providing they have worked at least 1,000 hours
over 12 consecutive months and are twenty-one years of age or older.
Eligible employees participation begins on the next Plan entry date,
January 1, April 1, July 1, or October 1. Participants who do not have at
least 250 hours of service during each quarter of the plan year and are
not employed on the last working day of a plan quarter are generally not
eligible for an allocation of Company contributions for such quarter.
Employer Contributions - All contributions to the Plan are made by the
Sponsor. Each year the Board of Directors of the Sponsor establishes the
contribution amount for the coming year. For the year ended December 31,
1996, the Board of Directors approved a contribution of 2.75% of the
employee compensation. An eligible employee will receive a contribution at
the end of each quarter if the employee had at least 250 hours of service
during the quarter.
Vesting - The Plan has a vesting schedule based on the participants' years
of service with the Sponsor. The participants vest 20% of their account
balance for each year of service with the Sponsor. Participants become
100% vested in their account balance upon the completion of five years of
service, upon reaching the normal retirement age of 65, or upon death or
disability while an active employee.
Forfeitures - The non-vested portion of participants accounts are
forfeited upon termination of employment with the Sponsor. The Plan
provides for partial restoration of forfeitures for those participants
meeting certain service requirements. Forfeitures of unvested amounts are
treated as reductions of the Sponsor's contributions otherwise made for
the plan year. As of December 31, 1996, forfeitures totalled $19,452.
Benefit Payments - Distributions from the Plan upon retirement,
termination, or death are paid to the participant in shares of Integon
Corporation stock unless the participant's balance is less than $3,500
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whereupon the participant is paid in cash. Amounts attributable to partial
shares of stock are paid in cash. Payment of the account balance is made
as soon as administratively possible after the Plan's next quarterly
valuation which begins following the last day of the calendar quarter.
Participant Accounts - A separate account is maintained by the Plan's
record keeper for each participant. These account balances are adjusted
quarterly for the sponsor contributions, cash dividends, investment income
or loss and other additions or deductions. Allocation of the Sponsor's
contribution is based on participant compensation, as defined. Allocation
of Plan earnings is based on the balances of the participants' individual
accounts. The benefit to which a participant is entitled is the benefit
that can be provided from the participant's account.
Voting Rights - Participants of the Plan have certain rights similar to a
shareholder. Among those rights, the participants have voting rights for
the shares of Integon Corporation stock in their accounts. If the
participants do not vote their shares, the Plan's Committee is authorized
to vote the shares.
Termination of the Plan - Although the Sponsor has not expressed any
intent to do so, they reserve the right to terminate the Plan at any time,
subject to Plan provisions. Upon such termination of the Plan, the
interest of each participant in the trust fund will be distributed to such
participant or his or her beneficiary at the time prescribed by the Plan's
terms and the Code.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General - The financial statements of the Plan are prepared under the
accrual method of accounting.
Investment Valuation and Income Recognition - The common stock of the
Sponsor is stated at fair value, based on the closing market price on the
last business day of the year.
Dividend income is accrued on the ex-dividend date.
Purchases and sales of securities are recorded on a trade-date basis.
Gains and losses from security transactions are reported on the average
cost method and are reported in net depreciation in fair value.
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 reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
3. TAX STATUS
The Plan's attorneys are in the process of preparing a determination
letter request. The Plan administrator and the Plan's tax counsel believe
that the Plan is currently designed and being operated in compliance with
the applicable requirements of the Code. Therefore, they believe that the
Plan was qualified and the related trust was tax-exempt as of the
financial statement date. No provision for income taxes has been provided.
4. ADMINISTRATION OF PLAN ASSETS
The trustee of the Plan is Wilmington Trust Company ("Wilmington Trust").
The Plan's assets, which consist principally of the Sponsor's common
shares, are held by the trustee of the Plan. Company contributions are
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held and managed by Wilmington Trust, which invests cash received,
interest, and dividend income and makes distributions to participants.
The administrator and record keeper of the Plan is Aon Consulting, Inc.
("Aon"). Although certain administrative functions are performed by
officers or employees of the Sponsor, no such officer or employee receives
compensation from the Plan. Administrative and trustee fees are paid
directly by the Sponsor.
5. INVESTMENTS
The Plan's investments, at December 31, 1996 are:
Integon Corporation Common Shares:
Number of shares 60,505
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Cost $ 1,204,437
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Market $ 1,073,964
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6. BENEFITS PAYABLE
Assets available for benefits at December 31, 1996 include $14,188
allocated to the accounts of persons who as of or prior to that date had
withdrawn from participating in the earnings and operations of the Plan.
7. SUBSEQUENT EVENTS
On May 15, 1997, the Sponsor's Board of Directors Compensation and
Personnel Committee approved to immediately vest all participants' account
balances in the Plan upon the sale of the Sponsor. On June 23, 1997, the
Sponsor announced its proposed acquisition by General Motors Acceptance
Corporation, a wholly owned subsidiary of General Motors Corporation. The
acquisition is contingent on approval by the Sponsor's shareholders and
regulatory approval.
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THE INTEGON CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
<CAPTION>
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AT DECEMBER 31, 1996
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DESCRIPTION OF INVESTMENT
INCLUDING MATURITY DATE,
IDENTITY OF ISSUE, RATE OF INTEREST
BORROWER, LESSOR, COLLATERAL, PAR OR CURRENT
OR SIMILAR PARTY MATURITY VALUE COST VALUE
<S> <C> <C> <C>
Integon Corporation ....... Common Stock, par $1,204,437 $1,073,964
value $.01 per share,
60,505 shares
</TABLE>
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THE INTEGON CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
<CAPTION>
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
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SINGLE TRANSACTIONS, WHEN AGGREGATED, INVOLVING AN AMOUNT IN EXCESS OF 5 PERCENT OF THE CURRENT
VALUE OF PLAN ASSETS
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(h) CURRENT VALUE OF
ASSET ON
(a) IDENTITY OF (b) DESCRIPTION (c) PURCHASE (d) SELLING (f) EXPENSES (g) COST TRANSACTION (i) NET
PARTY INVOLVED OF ASSET PRICE PRICE INCURRED OF ASSET DATE LOSS
<S> <C> <C> <C> <C> <C> <C> <C>
Pembroke Clearing Integon Corporation
Corporation .. Common Stock $110,295 $570 $110,295
</TABLE>
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THE INTEGON CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN
<TABLE>
<CAPTION>
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
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SERIES TRANSACTIONS, WHEN AGGREGATED, INVOLVING AN AMOUNT IN EXCESS OF 5 PERCENT OF THE CURRENT
VALUE OF PLAN ASSETS
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(h)CURRENT VALUE OF
ASSET ON
(a) IDENTITY OF (b) DESCRIPTION (c) PURCHASE (d) SELLING (f) EXPENSES (g) COST TRANSACTION (i) NET NUMBER OF
PARTY INVOLVED OF ASSET PRICE PRICE INCURRED OF ASSET DATE LOSS TRANSACTIONS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dean Witter Reynolds, Integon Corporation
Inc ............... Common Stock $996,809 $5,067 $996,809 13
$15,637 88 $17,467 15,637 $1,918 2
Merrill Lynch, Pierce, Integon Corporation
Fenner & Smith .... Common Stock 115,362 612 115,362 3
Wilmington Trust ..... Short Term Money
Company ........... Market Fund 1,005,796 1,005,796 27
1,005,792 1,005,792 1,005,792 16
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the plan) have duly caused this annual
report to be signed by the undersigned hereunto duly authorized, on June 30,
1997.
The Integon Corporation Employee Stock Ownership Plan
/s/ Mary Alice Snyder
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Mary Alice Snyder
Manager
Wilmington Trust
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