Audited Financial Statements and Supplemental Schedules
Jefferson-Pilot Corporation Teamshare Plan
Years ended December 31, 2003 and 2002
with Report of Independent Registered Public Accounting Firm
Jefferson-Pilot Corporation
Teamshare Plan
Audited Financial Statements
and Supplemental Schedules
Years ended December 31, 2003 and 2002
CONTENTS
Report of Independent Registered Public Accounting Firm 1
Audited Financial Statements
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
Supplemental Schedules
Schedule H Line 4i - Schedule of Assets (Held at End of Year) 10
Schedule H Line 4j - Schedule of Reportable Transactions 11
Report of Independent Registered Public Accounting Firm
To the Plan Administrator and Participants
Jefferson-Pilot Corporation Teamshare Plan
We have audited the accompanying statements of net assets available for benefits
of Jefferson-Pilot Corporation Teamshare Plan as of December 31, 2003 and 2002,
and the related statements of changes in net assets available for benefits for
the years 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 audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 as of
December 31, 2003 and 2002, and the changes in its net assets available for
benefits for the years then ended, in conformity with U.S. 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 at end of year) as of December 31, 2003, and reportable transactions for
the year then ended are presented for purposes 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.
June 18, 2004
Jefferson-Pilot Corporation
Teamshare Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2003 2002
---------------------------
ASSETS
Investments, at fair value $117,506,371 $ 82,559,297
Investments, at contract value 12,847,600 12,570,914
Receivables:
Employer's matching contribution 6,309 6,437
Employer's gainshare contribution 1,471,821 1,503,618
Participants' contributions 88,645 96,247
Loan interest - 1,452
---------------------------
Total receivables 1,566,775 1,607,754
---------------------------
Total assets 131,920,746 96,737,965
LIABILITIES
Excess contributions payable 314 -
---------------------------
Net assets available for benefits $131,920,432 $ 96,737,965
===========================
See accompanying notes.
Jefferson-Pilot Corporation
Teamshare Plan
Statements of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31
2003 2002
----------------------------
ADDITIONS
Investment income:
Interest $ 609,419 $ 598,470
Net appreciation in fair value of
investments 26,423,004 -
Contributions:
Participants 11,084,969 10,678,398
Rollovers 631,315 502,482
Employer matching 690,196 774,936
Gainshare 1,471,821 1,503,618
----------------------------
13,878,301 13,459,434
----------------------------
Total additions 40,910,724 14,057,904
DEDUCTIONS
Benefits paid to participants 5,577,093 5,722,170
Administrative expenses 151,164 148,759
----------------------------
5,728,257 5,870,929
----------------------------
Net depreciation in fair value of
investments - 17,073,743
----------------------------
Total deductions 5,728,257 22,944,672
Net increase (decrease) 35,182,467 (8,886,768)
Net assets available for benefits:
Beginning of year 96,737,965 105,624,733
----------------------------
End of year $131,920,432 $ 96,737,965
============================
See accompanying notes.
Jefferson-Pilot Corporation
Teamshare Plan
Notes to Financial Statements
December 31, 2003
1. DESCRIPTION OF PLAN
The following description of the Jefferson-Pilot Corporation (the "Company")
Teamshare Plan (the "Plan") provides only general information. Participants
should refer to the Plan agreement for a more complete description of the Plan's
provisions.
GENERAL
The Plan is a defined contribution and profit sharing plan covering all
employees and career agents of the Company and the following subsidiaries
(collectively, the "Plan Sponsor") who are age twenty-one or older with one
year of service:
Jefferson-Pilot Life Insurance Company
Jefferson-Pilot Communications Company
Jefferson-Pilot Communications Company of Virginia
WCSC, Inc.
Jefferson Pilot Financial Insurance Company
Jefferson Pilot Securities Corporation
The Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA"), as amended. The Company serves as Plan
administrator and named fiduciary.
CONTRIBUTIONS
Eligible participants may contribute up to 70% of pre-tax compensation, as
defined in the Plan. Participants may also contribute amounts representing
distributions from other qualified plans. The Company matches 10% of a
participant's total pre-tax contributions for the Plan year that do not exceed
6% of a participant's compensation for the portion of the year during which the
participant elected to make pre-tax contributions.
1. DESCRIPTION OF PLAN (CONTINUED)
Gainshare contributions are subject to approval by the Compensation Committee of
the Company's Board of Directors. Gainshare contributions are made by the
Plan Sponsor on behalf of participants (1) who meet certain eligibility
requirements specified in the Plan agreement and (2) whose employer,
business unit and, if applicable, business subunit satisfy predetermined
financial performance standards, in amounts of up to 4% of compensation.
Employees in Puerto Rico and the U.S. Virgin Islands are not eligible for pre-
tax or matching contributions, but may participate in Gainshare contributions
when the eligibility requirements and performance standards are met.
Gainshare contributions for 2003 and 2002 were disbursed 50% in cash and 50% in
the Jefferson-Pilot Common Stock Fund. For individual Gainshare amounts of $200
and less, the total was disbursed in the Jefferson-Pilot Common Stock Fund.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions and
allocations of (a) the Company's contributions and (b) Plan earnings.
Allocations are based upon participant earnings as defined in the Plan document.
Investment income, including net (depreciation) appreciation in value of the
Plan's investments, is allocated to individual participant accounts in the same
ratio that the value of the individual account bears to the sum of the values of
all participants' accounts. Forfeited balances of terminated participants'
nonvested accounts are used to reduce Company Gainshare contributions and to pay
administrative expenses. The balance of forfeited nonvested accounts was
$266,747 and $56,674 for 2003 and 2002, respectively. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's account.
VESTING
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the Company contribution portion of their accounts plus
actual earnings thereon is based on years of service. A participant is 100%
vested after three years of credited service.
1. DESCRIPTION OF PLAN (CONTINUED)
PARTICPANT LOANS
Participants may borrow from their accounts if (1) there is an immediate and
heavy financial need and (2) at least two years have elapsed since the member
first made contributions to the Plan. Participant loans may range from a minimum
amount of $1,000 up to a maximum amount equal to the lesser of (1) 50% of their
vested account balance or (2) $50,000 reduced by the highest outstanding balance
of prior loans from the Plan or any other qualified retirement plan maintained
by a sponsoring employer during the one-year period ending on the day prior to
the loan. Loan terms range from 1 - 5 years. The loans are secured by the
balance in the participant's account and bear interest at a rate equal to the
prime lending rate reported in the Wall Street Journal on the last business day
of the calendar quarter, plus one percentage point. Principal and interest are
paid ratably through weekly, bi-weekly or bi-monthly payroll deductions.
PAYMENT OF BENEFITS
Upon termination of service, a participant may receive the vested value of
his/her account in either a lump sum payment, periodic installments in
substantially equal amounts for a period not to exceed 15 years or direct
rollover to an eligible retirement plan. Distributions from the Jefferson-Pilot
Common Stock Fund may be distributed in cash or in shares of the Company's
common stock, if so elected.
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.
2. SUMMARY OF ACCOUNTING POLICIES
INVESTMENT VALUATION
The Plan's investments in mutual funds and common stock are stated at fair value
based on quoted market prices. The investment contract is stated at contract
value, representing contributions made to the Fund, plus earnings credited, less
benefits paid and any expense charges. The participant loans are valued at their
outstanding balances, which approximate fair value.
2. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis.
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates that affect
the amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
3. INVESTMENTS
During 2003 and 2002, the Plan's investments (including investments purchased,
sold as well as held during the year) appreciated (depreciated) in fair value as
determined by quoted market prices as follows:
NET REALIZED AND
UNREALIZED
APPRECIATION
(DEPRECIATION) IN
FAIR VALUE OF
INVESTMENTS
--------------------------
YEAR ENDED DECEMBER 31
2003 2002
--------------------------
Mutual Funds $12,433,491 $(10,338,128)
Common Stock 13,989,513 (6,735,615)
--------------------------
$26,423,004 $(17,073,743)
==========================
Investments that represent 5% or more of net assets are as follows:
DECEMBER 31
2003 2002
--------------------------
Investments at fair value:
Jefferson-Pilot Common Stock* $51,768,802 $ 37.480,675
Fidelity Advisor Equity-Income Fund 16,011,465 11,733,712
MFS Capital Opportunities Fund 12,905,708 9,247,094
Franklin Small-Mid Cap Growth Fund 8,887,636 -
Evergreen Equity Index Fund 9,722,470 -
PIMCO Total Return - 5,107,798
Munder Index 500 Fund - 6,627,285
JP Life Guaranteed Account 12,847,600 12,570,914
*Nonparticipant-directed
3. INVESTMENTS (CONTINUED)
The average yield of the JP Life Guaranteed Fund for 2003 and 2002 approximated
4.10% and 4.85%, respectively, and the crediting interest rates as of December
31, 2003 and 2002 were 3.85% and 4.60%, respectively. Crediting interest rates
are normally adjusted annually and a minimum crediting rate of 3.5% applies. The
fair value approximates contract value.
4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of changes in
net assets related to the nonparticipant-directed investment is as follows:
DECEMBER 31
2003 2002
--------------------------
Investments, at fair value:
Jefferson-Pilot Common Stock $51,768,802 $37,480,675
YEAR ENDED
DECEMBER 31, 2003
------------------
Change in net assets:
Contributions $ 4,428,013
Transfers to participant directed
investments (2,258,678)
Net realized and unrealized appreciation
in fair value 13,989,513
Loan principal (99,276)
Loan interest 22,200
Forfeiture receipts 396
Distributions to participants (1,794,041)
------------------
$14,288,127
==================
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated February 6, 2004, 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. Subsequent to this determination by the Internal Revenue
Service, the Plan was amended. Once qualified, the Plan is required to operate
in conformity with the Code to maintain its qualification. The Plan sponsor has
indicated that it will take the necessary steps, if any, to bring the Plan's
operations into compliance with the Code.
6. ADMINISTRATION AND PLAN EXPENSES
The Plan provides that investment and administrative expenses of the Plan will
be paid from the Plan's assets unless paid by the Sponsor. During 2003 and 2002,
most expenses associated with the Plan were paid for by the Sponsor.
7. RELATED PARTY TRANSACTIONS
The Plan invests in common stock of Jefferson-Pilot Corporation and a Jefferson-
Pilot Life Insurance Company managed guaranteed fund.
8. RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities are
exposed to various risks such as interest rate, market and credit risks. Due to
the level of risk associated with certain investment securities, it is at least
reasonably possible that changes in the values of investment securities will
occur in the near term and that such changes could materially affect
participants' account balances and the amounts reported in the statements of net
assets available for benefits.
SUPPLEMENTAL SCHEDULES
Jefferson-Pilot Corporation
Teamshare Plan
EIN: 56-0896180 Plan Number: 002
Schedule H, Line 4i
Schedule of Assets (Held At End of Year)
December 31, 2003
(C)
DESCRIPTION OF INVESTMENT,
(B) INCLUDING MATURITY DATE,
IDENTITY OF ISSUE, RATE OF INTEREST, (E)
BORROWER, LESSOR COLLATERAL, PAR OR (D) CURRENT
(A) OR SIMILAR PARTY MATURITY VALUE COST VALUE
-------------------------------------------------------------------------------
* Jefferson-Pilot
Corporation Common Stock $43,249,232 $ 51,768,802
Fidelity Advisor Equity-Income Fund + 16,011,465
Templeton Foreign Fund + 6,371,667
Franklin Advisor Small-Mid Cap Growth Fund + 8,887,636
PIMCO Money Market Fund + 1,149,061
PIMCO Total Return Fund + 5,935,139
MFS Capital Opportunities Fund + 12,905,708
Evergreen Equity Index Fund + 9,722,470
America Growth Fund of America + 739,224
PIMCO Small Cap Value Fund + 391,132
Salomon Brothers Cash Management + 69,911
Salomon Brothers Short Term Bond Fund + 211,615
Principal Limited Term Bond Fund + 279,752
Eaton Vance Government Obligations
Fund + 276,568
John Hancock Bond Fund + 143,582
Weiss, Peck and Greer Money Market Fund + 896,319
Pioneer Money Market Fund + 266,747
------------
116,026,798
* JP Life Guaranteed
Account Investment contract, 3.85% + 12,847,600
Participant Loans Interest rates ranging
from 5.00-12.50% 1,479,573
------------
$130,353,971
============
*Represents party-in-interest.
+ Cost information is not presented, as investment is participant directed
Jefferson-Pilot Corporation
Teamshare Plan
EIN: 56-0896180 Plan Number: 002
Schedule H, Line 4j
Schedule of Reportable Transactions
Year ended December 31, 2003
(B) (H)
DESCRIPTION OF ASSET CURRENT (I)
(A) INCLUDING INTEREST (C) (D) (G) VALUE OF NET
IDENTITY OF PARTY RATE AND MATURITY IN PURCHASE SELLING COST ASSET ON GAIN OR
INVOLVED CASE OF A LOAN PRICE PRICE OF ASSET TRANSACTION DATE LOSS
----------------------------------------------------------------------------------------------------------------
Category (iii) - Series of transactions in excess of 5% of plan assets
----------------------------------------------------------------------
Jefferson-Pilot
Corporation Common Stock
Purchases $5,227,277 $ - $5,227,277 $5,227,277 $ -
Sales - 4,928,663 4,869,483 4,928,663 59,180
There were no category (i), (ii) or (iv) reportable transactions during 2003.
Columns (e) and (f) are not applicable.