Prepared by R.R. Donnelley Financial -- Form 11-K
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 [FEE REQUIRED] |
For the fiscal year ended December 31, 2001
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 000-11773
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
Savings and Profit Sharing Plan and Trust Agreement
of Alfa Mutual Insurance Company
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive officer:
Alfa Corporation
2108 E. South Blvd
Montgomery, Al 36106
SIGNATURES
Pursuant to the requirements of the Securities and 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 its behalf by the
undersigned thereunto duly authorized.
| SAVINGS AND PROFIT SHARING PLAN AND TRUST
AGREEMENT OF ALFA MUTUAL INSURANCE COMPANY |
| |
| By: |
|
/s/ JERRY A.
NEWBY
|
| |
|
Jerry A. Newby President and
CEO |
Date: June 26, 2002
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
Financial Statements
and Supplemental Schedule
December 30, 2001 and 2000
(With Independent Auditors’ Report Thereon)
3
INDEPENDENT AUDITORS’ REPORT
The Plan Administrator
Savings and Profit
Sharing Plan and Trust Agreement
of Alfa Mutual Insurance Company:
We have audited the accompanying statements of net assets available for benefits of the Savings and Profit Sharing Plan and Trust Agreement of Alfa Mutual Insurance
Company as of December 30, 2001 and 2000 and the related statement of changes in net assets available for benefits for the year ended December 30, 2001. 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 of America. 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 Savings and Profit Sharing Plan and Trust Agreement of Alfa Mutual Insurance
Company as of December 30, 2001 and 2000 and the changes in net assets available for benefits for the year ended December 30, 2001 in conformity with accounting principles generally accepted in the United States of America.
Our audit of the Plan’s financial statements as of and for the year ended December 30, 2001 was made for the purpose of forming an
opinion on the basic financial statements taken as a whole. The supplemental schedule of assets as of December 30, 2001 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. This supplemental schedule is the responsibility of the Plan’s
management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements for the year ended December 30, 2001 and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
June 25, 2002
Atlanta, Georgia
4
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 30, 2001 and 2000
| |
|
2001
|
|
2000
|
| ASSETS |
|
|
|
|
|
|
| Investments: |
|
|
|
|
|
|
| At fair value: |
|
|
|
|
|
|
| Alfa Corporation Common Stock Fund |
|
$ |
11,820,092 |
|
|
9,107,411 |
| Loans to participants |
|
|
2,585,675 |
|
|
2,691,252 |
| Mutual funds |
|
|
58,560,647 |
|
|
87,496,461 |
| Common/collective trusts |
|
|
18,132,414 |
|
|
— |
| |
|
|
|
|
|
|
| |
|
|
91,098,828 |
|
|
99,295,124 |
| At contract values which approximates fair value: |
|
|
|
|
|
|
| Principal Mutual Life Insurance Company Guaranteed Investment Contract #4-08487, matures May 31, 2001
|
|
|
— |
|
|
2,214,179 |
| Receivables: |
|
|
|
|
|
|
| Contributions receivable—employee |
|
|
6,984 |
|
|
4,497 |
| Contributions receivable—employer |
|
|
3,116 |
|
|
7,096 |
| |
|
|
|
|
|
|
| Net assets available for plan benefits |
|
$ |
91,108,928 |
|
$ |
101,520,896 |
| |
|
|
|
|
|
|
See accompanying notes to financial
statements.
5
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN
BENEFITS
Year ended December 30, 2001
| Investment income: |
|
|
|
|
| Interest and dividends |
|
$ |
1,426,324 |
|
| Net (depreciation) appreciation in fair value of investments |
|
|
(14,061,064 |
) |
| |
|
|
|
|
| Total investment loss |
|
|
(12,634,740 |
) |
| Contributions by employees |
|
|
5,851,230 |
|
| Contributions by employer |
|
|
3,455,250 |
|
| Rollovers |
|
|
42,471 |
|
| Distributions to participants |
|
|
(7,064,246 |
) |
| Administrative expenses |
|
|
(61,933 |
) |
| |
|
|
|
|
| Net decrease in net assets |
|
|
(10,411,968 |
) |
| Net assets available for plan benefits: |
|
|
|
|
| Beginning of year |
|
|
101,520,896 |
|
| |
|
|
|
|
| End of year |
|
$ |
91,108,928 |
|
| |
|
|
|
|
See accompanying notes to financial statements.
6
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
December 30, 2001 and 2000
(1) Plan Description
The Alfa Mutual Insurance Company’s (the
Company) board of directors approved the Savings and Profit Sharing Plan and Trust Agreement of Alfa Mutual Insurance Company (the Plan) to provide retirement benefits for eligible employees of the Company, Alfa Services, Inc., and Creative
Consultants, Inc.
The following brief description of the Plan is provided for general information only.
Participants should refer to the Plan agreement for more complete information.
(a) General
The Plan is subject to certain provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The
Plan is a defined contribution plan funded by voluntary employee and employer contributions.
Participation in the
Plan is available to all eligible employees of the Company and its affiliates, hereinafter referred to as “Employer”.
(b) Contributions
Contributions to the Plan are made by both participants and
the Employer. Participants may elect to contribute a whole percentage of their gross payroll which is not less than 2% and not greater than 20%, subject to regulatory limitations. The Employer makes discretionary matching contributions to the Plan
based on all or a portion of the employees’ pre-tax contribution. The Employer’s board of directors adopts a resolution each year which determines the Employer’s matching contributions.
For 2001, the Employer match was the greater of the employee’s contribution (up to $1,000) or 100% of the first 3% of eligible
compensation and 50% of the next 2% of eligible compensation.
(c) Participant Accounts
An account is maintained for each participant in the Plan. The participants’ accounts are credited with
the participants’ contributions, their allocated portion of the Employer contributions, and investment earnings. Distributions, withdrawals, investment losses, and allocated expenses are subtracted from the account balances. Participants who
withdraw their account balances forfeit the non-vested portion of their account. Such forfeitures are offset against the Employer’s contributions.
7
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS—(Continued)
(d) Vesting
Participants’ contributions are fully vested at the date of deposit. Employer contributions are vested as follows, with service prior to the inception of the Plan
counting toward vesting.
| Years of service
|
|
Vesting %
|
|
| Less than 1 |
|
0 |
% |
| 1 |
|
10 |
% |
| 2 |
|
20 |
% |
| 3 |
|
30 |
% |
| 4 |
|
40 |
% |
| 5 or more |
|
100 |
% |
A participant’s interest in the Employer’s contributions
is also vested upon termination either because of death or disability or after attaining his/her early retirement date or normal retirement age.
Participants’ vested account balances represent the benefits available to the participants upon retirement, disability, death, or termination from the Plan. The amount of a terminated
participant’s account which is not vested is credited to a suspense account which shares in the gains and losses of the Plan and which is subsequently used to reduce Employer contributions to the Plan.
(e) Distributions
Participants may receive a distribution equal to the vested value of their account upon death, disability, retirement, or termination of either the participant’s employment or the Plan.
Distributions may be made in the form of a lump-sum cash payment, partial lump-sum payment and part installment payments, or installment payments over a specified period of time.
(f) Loans
Participants may borrow funds from their accounts in the Plan subject to limitations set forth in the Plan agreement. A loan may not be for less than $1,000 and not more than the lesser of either one-half of the employee’s
vested account balance or $50,000 reduced by the highest outstanding loan balance during the one-year period preceding the loan date. Interest rates are determined by the Plan using the prime rate plus one percentage point at the time the loan is
requested.
(g) Agreement with Trustee
AMVESCAP National Trust Company is the Plan trustee. The Company pays most administrative expenses incurred by the Plan.
8
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS—(Continued)
(h) Investment Funds
Participating employees authorize the Company to withhold amounts from their salaries and invest the amounts in any of the following funds. The funds and their primary
investment objectives are as follows:
a) IRT Stable Value—to preserve
principal value while providing consistently high levels of current income and liquidity. The Fund invests in a diversified portfolio of investment contracts issued by large insurance companies, banks and other financial institutions.
b) INVESCO Select Income Fund—to achieve high current income as a primary objective, and
long-term capital appreciation as a secondary objective through investments in both corporate and U.S. government fixed-income securities.
c) IRT 500 Index—to achieve investment returns that closely replicate the total returns generated by the Standard & Poor’s 500 Composite Stock Index, an unmanaged index
comprised of U.S. common stocks weighted to companies with large market capitalizations.
d) AIM Blue Chip Fund—to achieve long-term growth of capital. Current income is secondary. The Fund normally invests at least 65% of assets in common stocks of blue chip companies.
e) Goldman Sachs CORE Large Cap Growth Fund—invests at least 90% of assets in equities of
large-capitalization U.S. issuers, including foreign issuers that are traded in the United States.
f) INVESCO Dynamics Fund—to achieve high total return and long-term capital appreciation. Aggressive investment policies focus generally on a diversified mix of medium-sized equity securities which are believed
to present possibilities for long-term growth. Current income is not an objective of the Fund.
g) AIM Small Cap Growth Fund—invests at least 80% of net assets in equity securities of small capitalization companies.
h) Janus Worldwide Fund—pursues its objective primarily through investments in common stocks of foreign issuers. The Fund is designed
for long-term investors who seek growth of capital and who can tolerate greater risks associated with investments in foreign and domestic common stocks.
i) INVESCO Balanced Fund—to achieve high total return through capital growth and current income.
j) Goldman Sachs International Equity Fund—long-term capital appreciation through investment in
selected foreign companies located primarily in Western Europe and Japan.
k) Alfa
Corporation Common Stock Fund—invests in shares of common stock of Alfa Corporation (Alfa). The Company is a significant stockholder of Alfa Corporation.
9
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS—(Continued)
(2) Summary of Significant Accounting Policies
(a) Basis of Financial Statements
The financial statements of the Plan have been prepared in conformity with accounting principles generally accepted in the United States of America using the accrual method of accounting.
(b) Investments
Investments are stated at estimated fair value, except for the guaranteed investment contract, which is valued at contract value (see note 7). Investments in securities traded on a national exchange
are valued at the last reported sales price on the last business day of the Plan year; securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the mean between the last
reported bid and asked prices.
Purchases and sales of securities are reflected on a trade-date basis. Gain or
loss on sales of securities is based on the specific identification method. Dividends and interest are recorded when earned. The Plan presents in the statement of changes in net assets available for benefits the appreciation (depreciation) in the
fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments.
(c) Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the plan administrator 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.
(4) Plan Administration Expenses
Expenses of plan administration paid by the Company for the years ended December 30, 2001 and 2000, were $61,933 and $20,533, respectively, including consulting, legal,
accounting, and trustee fees.
10
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS—(Continued)
(5) Investments
Investment securities representing 5% or more of the net assets available for plan benefits at December 31, 2001 and 2000 are as follows:
| |
|
2001
|
|
2000
|
| Alfa Corporation Common Stock Fund |
|
$ |
11,820,092 |
|
9,107,411 |
| Fidelity Advisor Stable Value fund |
|
|
— |
|
13,503,647 |
| Goldman Sachs Large Cap Value Fund |
|
|
26,990,392 |
|
33,822,767 |
| INVESCO Dynamics Fund |
|
|
8,509,986 |
|
12,048,257 |
| INVESCO Balanced Fund |
|
|
6,803,175 |
|
7,294,198 |
| Janus Worldwide Fund |
|
|
5,967,336 |
|
7,731,142 |
| Franklin Small Cap Fund |
|
|
— |
|
7,439,579 |
| IRT Stable Value |
|
|
16,064,491 |
|
— |
| AIM Small Cap Growth Fund |
|
|
5,874,923 |
|
— |
During 2001, the Plan’s investments (including gains and
losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value as follows:
| Collective/common trust |
|
$ |
(200,665 |
) |
| Mutual funds |
|
|
(16,194,002 |
) |
| Alfa Corporation Common Stock |
|
|
2,333,603 |
|
| |
|
|
|
|
| Total investments |
|
$ |
(14,061,064 |
) |
| |
|
|
|
|
(6) Related Party Transactions
Certain Plan investments are invested in shares of mutual funds managed by INVESCO Retirement, Inc. INVESCO Retirement, Inc. is the parent
of AMVESCAP, the trustee of the Plan. Such investments qualify as party-in-interest transactions. Fees paid by the Plan for the investment management services amounted to $61,953 for the year ended December 30, 2001.
(7) Contract With Insurance Company
In 1986, the Plan entered into an investment contract with the Principal Mutual Life Insurance Company (Principal). Principal maintains the contributions in an unallocated fund and credits interest
based on the rates guaranteed in the applicable contract years. Each contract year, a new interest rate is determined and all deposits made within that year are guaranteed at the agreed-upon rate for five years. At December 30, 2000, guaranteed
interest rates ranged from 6.72% to 6.40%. The contract is included in the financial statements at the December 30, 2000 contract value, as reported to the Plan by Principal. The contract period for the last investment contact expired on May
31, 2001. The Plan does not currently offer or plan to offer another investment contract.
11
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS—(Continued)
(8) Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject
to the provisions of ERISA. In the event of plan termination, participants will become 100% vested in their accounts.
(9) Tax Status
The Internal Revenue Service has determined and
informed the Company by a letter dated April 21, 1992, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code. No tax determination letter has been obtained regarding certain plan amendments
enacted subsequent to the date of the most recent determination; however, the plan administrator believes that the plan has operated within the terms of the Plan, as amended, and remains qualified under the provisions of the Internal Revenue Code.
Participants in the Plan are not subject to federal income taxes on their contributions, on amounts contributed
by the Employer, or on earnings or appreciation of investments held by the Plan until withdrawn by the participant or distributed to the participant’s named beneficiary in the event of death.
12
Schedule 1
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
SCHEDULE H, LINE 4i—SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 30, 2001
| Identity of issue, borrower lessor, or similar party
|
|
Description of investment including maturity date, rate of interest, collateral, par, or maturity value
|
|
Fair value
|
| Common/collective trusts: |
|
|
|
|
|
| IRT Stable Value* |
|
16,064,491 shares |
|
$ |
16,064,491 |
| IRT 500 Index* |
|
73,278
shares |
|
|
2,067,923 |
| Mutual funds: |
|
|
|
|
|
| AIM Blue Chip Fund |
|
177,883
shares |
|
|
2,193,302 |
| AIM Small Cap Growth Fund |
|
226,831
shares |
|
|
5,874,923 |
| Goldman Sachs Core Large Cap Growth Fund |
|
2,214,142
shares |
|
|
26,990,392 |
| Goldman Sachs International Equity Fund |
|
9,313
shares |
|
|
142,398 |
| Janus Worldwide Fund |
|
135,590
shares |
|
|
5,967,336 |
| INVESCO Balanced Fund* |
|
462,486
shares |
|
|
6,803,175 |
| INVESCO Dynamics Fund* |
|
526,934
shares |
|
|
8,509,986 |
| INVESCO Select Income Fund* |
|
387,898
shares |
|
|
2,079,135 |
| Stocks: |
|
|
|
|
|
| Alfa Corporation Common Stock* |
|
708,656
shares |
|
|
11,820,092 |
| Loans to participants* |
|
Interest rates range from 6% to 10.5% and various maturities from <1 to 29
years |
|
|
2,585,675 |
* |
|
Indicates party-in-interest to the Plan. |
13