Jefferson Pilot 11K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
 
 
Washington, D.C. 20549
 
FORM 11-K 
 
 
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
(Mark One)
 
|X|  ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
 
OR
 
|_| TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ________ to ________
 
Commission File Number 1-6028
 
A.     Full title of the plan and the address of the plan, if different from that of the issuer named below:
 
JEFFERSON PILOT CORPORATION TEAMSHARE PLAN
 
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
 
 
Lincoln National Corporation
1500 Market Street, Suite 3900
Centre Square West Tower
Philadelphia, PA 19102
 
 
 
 

REQUIRED INFORMATION 
 
Financial statements and schedules for the Jefferson Pilot Corporation TeamShare Plan, prepared in accordance with the financial reporting requirements of the Employee Retirement Income Security Act of 1974, are contained in this Annual Report on Form 11-K.
 

 
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
 
Jefferson-Pilot Corporation TeamShare Plan
Years Ended December 31, 2005 and 2004
 
 
 
 


 
Jefferson-Pilot Corporation
TeamShare Plan
 
 
Financial Statements
and Supplemental Schedule
 
Years ended December 31, 2005 and 2004



Contents

   
Financial Statements
  
   
   
Supplemental Schedule
  
   
   
Exhibit
  
15








Report of Independent Registered Public Accounting Firm

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, 2005 and 2004, 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. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and 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 at December 31, 2005 and 2004, 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 schedule of assets (held at end of year) as of December 31, 2005, is presented for purposes of additional analysis and is not a required part of the 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 our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
 
Greensboro, North Carolina
June 22, 2006        
/s/Ernst & Young LLP
 

1


Jefferson-Pilot Corporation
TeamShare Plan

Statements of Net Assets Available for Benefits


   
December 31
  
   
2005
  
2004
  
Assets
          
Investments, at fair value
 
$
149,529,153
  
$
132,128,312
  
               
Investments, at contract value
   
15,046,610
    
13,319,755
  
               
Receivables:
             
Employer’s matching contribution
    
21,085
    
6
  
Employer’s gainshare contribution
    
2,605,057
    
1,713,178
  
Employer’s rollover contribution
    
976
    
-
  
Participants’ contributions
    
350,105
    
131
  
Total receivables
    
2,977,223
    
1,713,315
  
Net assets available for benefits
  
$
167,552,986
  
$
147,161,382
  


See Accompanying Notes to Financial Statements.


2


Jefferson-Pilot Corporation
TeamShare Plan

Statements of Changes in Net Assets Available for Benefits


   
Year Ended December 31
  
   
2005
  
2004
  
Additions
          
Investment income:
              
Interest
  
$
695,299
  
$
585,996
  
               
Net appreciation in fair value of investments
    
12,061,217
    
9,656,972
  
               
Contributions:
              
Participants
    
13,463,009
    
12,271,877
  
Rollovers
    
1,780,771
    
1,174,110
  
Employer matching
    
679,891
    
640,167
  
Gainshare
    
2,605,057
    
1,713,178
  
     
18,528,728
    
15,799,332
  
               
Total additions
    
31,285,244
    
26,042,300
  
               
Deductions
              
Benefits paid to participants
    
10,773,789
    
10,695,106
  
Administrative expenses
    
119,851
    
106,244
  
Total deductions
    
10,893,640
    
10,801,350
  
               
Net increase
    
20,391,604
    
15,240,950
  
Net assets available for benefits:
              
Beginning of year
    
147,161,382
    
131,920,432
  
End of year
  
$
167,552,986
  
$
147,161,382
  


See Accompanying Notes to Financial Statements.

3


Jefferson-Pilot Corporation
TeamShare Plan

Notes to Financial Statements

December 31, 2005

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 document for a more complete description of the Plan’s provisions.
 
General
 
The Plan is a defined contribution and profit sharing plan covering substantially all employees and career agents of the Company and the following subsidiaries (collectively, the Plan Sponsor):
 
Jefferson-Pilot Life Insurance Company
 
Jefferson-Pilot Communications Company
 
Jefferson-Pilot Communications Company of Virginia
 
WCSC, Inc
 
Jefferson-Pilot Communications Company of North Carolina
 
Jefferson-Pilot Communications/WBTV, Inc.
 
Jefferson-Pilot Communications Company of California
 
Jefferson-Pilot Sports, Inc.
 
Jefferson-Pilot Communications Company of Colorado
 
Jefferson-Pilot Communications Company of Florida
 
Jefferson-Pilot Communications Company of Georgia
 
Jefferson-Pilot LifeAmerica Insurance Company
 
Jefferson Pilot Securities Corporation
 


4
 
Jefferson-Pilot Corporation
TeamShare Plan

Notes to Financial Statements (continued)


1. Description of Plan (continued)
 
Employees and career agents who are age twenty-one or older participate in the Plan upon initial employment. One must have one year of service to participate in the Company matching and gainshare contributions.
 
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 eligible compensation for the portion of the year during which the participant elected to make pre-tax contributions.
 
Gainshare contributions are subject to approval by the Compensation Committee of the Company’s Board of Directors. Gainshare contributions are discretionary and made by the Plan Sponsor on behalf of participants (1) who meet certain eligibility requirements specified in the Plan and (2) whose employer, business unit and, if applicable, business subunit satisfy predetermined financial performance standards. Gainshare contributions are made in amounts of up to 4% of compensation.
 
Gainshare contributions for 2005 and 2004 were disbursed 50% in cash and 50% in Jefferson-Pilot Common Stock. For individual Gainshare amounts of $200 and less, the total was contributed to the Jefferson-Pilot Common Stock Fund.
 
5
 
Jefferson-Pilot Corporation
TeamShare Plan

Notes to Financial Statements (continued)
 
1. Description of Plan (continued)
 
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. Allocation of Company contributions are based upon participant earnings as defined in the Plan. 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 first used to pay administrative expenses and then used to reduce matching contributions. During 2005, $91,008 of the forfeited balances was used to pay administrative expenses and $116,907 was used to reduce matching contributions. The balance of forfeited nonvested accounts was $137,401 and $102,340 for 2005 and 2004, 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.
 
Participant Loans
 
Participants may borrow from their accounts if there is an immediate and heavy financial need. 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 pre-tax contributions account and rollover contributions 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.
 

6

Jefferson-Pilot Corporation
TeamShare Plan

Notes to Financial Statements (continued)

 
1. Description of Plan (continued)
 
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.
 
Nature of Operation
 
Effective April 3, 2006, Jefferson Pilot Corporation was merged into a wholly owned subsidiary of Lincoln National Corporation (“LNC”). Under the terms of the merger, the Plan received cash at the conversion amount of $55.96 for approximately 17.5% of its shares, with the remainder being converted to LNC common stock at the rate of 1.0906 per Jefferson Pilot common share. Effective June 1, 2006, the Plan merged with the Lincoln National Corporation Profit Sharing Plan.
 

7

Jefferson-Pilot Corporation
TeamShare Plan

Notes to Financial Statements (continued)

 
2. Summary of Accounting Policies
 
Investment Valuation
 
The Plan’s investments in mutual funds and Jefferson Pilot 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.
 
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.
 
New Accounting Pronouncements
 
On December 29, 2005, The Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) AAG INV-1 and SOP 94-4-1, “Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans.” AAG INV-1 and SOP 94-4-1 describes the limited circumstances in which certain investment contracts are to be reported at contract value rather than fair value and prescribes financial statement presentation and disclosure guidance for such contracts. This FSP applies to investment companies that issue fully benefit-responsive investment contracts. The presentation and disclosure guidance in the FSP is effective for annual periods ending after December 15, 2006. The definition of a fully benefit-responsive investment contract is effective as of the last day of the annual period ending after December 15, 2006. The FSP guidance is to be applied retroactively if comparative information is presented.
 

8

Jefferson-Pilot Corporation
TeamShare Plan

Notes to Financial Statements (continued)

 
3. Investments
 
During 2005 and 2004, the Plan’s total net investments (including investments purchased, sold as well as held during the year) appreciated in fair value as determined by quoted market prices as follows:
 
   
Net Realized and Unrealized Appreciation in Fair Value of Investments
  
   
Year Ended December 31
  
   
2005
  
2004
  
Mutual Funds
 
$
5,332,412
  
$
6,848,089
  
Common Stock
   
6,728,805
    
2,808,883
  
   
$
12,061,217
  
$
9,656,972
  

Investments that represent 5% or more of net assets are as follows:
 
   
December 31
  
   
2005
  
2004
  
Investments at fair value:
              
Jefferson-Pilot Common Stock*
  
$
58,557,668
  
$
53,280,553
  
Fidelity Advisor Equity-Income Fund
    
19,742,129
   
18,369,642
  
JP Life Guaranteed Account
   
15,046,610
    
13,319,755
  
Fidelity Advisor Dividend Growth
   
13,551,180
    
13,406,927
  
Franklin Small-Mid Cap Growth Fund
    
12,860,821
    
11,015,320
  
Evergreen Equity Index Fund
    
12,291,647
    
11,414,935
  
Templeton Foreign Fund
    
9,729,777
    
7,989,417
  

*Nonparticipant-directed
 
The average yield of the JP Life Guaranteed Account for 2005 and 2004 approximated 3.60% and 3.68%, respectively, and the crediting interest rates as of December 31, 2005 and 2004 were 3.60% and 3.60%, respectively. Crediting interest rates are normally adjusted annually and a minimum crediting rate of 3.0% applies. The fair value approximates contract value.
 

 

9
 
Jefferson-Pilot Corporation
TeamShare Plan

Notes to Financial Statements (continued)


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
  
   
2005
  
2004
  
Investments, at fair value:
              
Jefferson-Pilot Common Stock
  
$
58,557,668
  
$
53,280,553
  

   
Year Ended
December 31,
2005
  
Change in net assets:
        
Contributions
  
$
4,704,324
  
Transfers to participant directed investments
    
(2,549,711
)
Net realized and unrealized appreciation in fair value
    
6,728,805
  
Loan principal
    
(106,950
)
Loan interest
    
23,854
  
Distributions to participants
    
(3,523,207
)
   
$
5,277,115
 

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.
 

10
 
Jefferson-Pilot Corporation
TeamShare Plan

Notes to Financial Statements (continued)


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 Plan Sponsor. During 2005 and 2004, most expenses associated with the Plan were paid for by the Plan Sponsor.
 
7. Related-Party Transactions
 
The Plan invests in common stock of Jefferson-Pilot Corporation and in 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.
 




11


Supplemental Schedule

12


Jefferson-Pilot Corporation
TeamShare Plan

Schedule H, Line 4i - Schedule of Assets
(Held At End of Year)

EIN #56-0896180 Plan # 002

December 31, 2005


(a)
(b)
Identity of Issue, Borrower, Lessor or Similar Party
(c)
Description of Investment, Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value
(d)
Cost
(e)
Current
Value
         
*
Jefferson-Pilot Corporation
Common Stock
$50,869,020
$ 58,557,668
 
Fidelity Advisor
Equity-Income Fund
+
19,742,129
 
Fidelity Advisor
Dividend Growth
+
13,551,180
 
Franklin Advisor
Small-Mid Cap Growth Fund
+
12,860,821
 
Evergreen
Equity Index Fund
+
12,291,647
 
Templeton
Foreign Fund
+
9,729,777
 
PIMCO
Total Return Fund
+
7,098,237
 
American Funds
Growth Fund of America
+
5,984,651
 
Allianz
Small Cap Value Fund
+
3,849,921
 
PIMCO
Money Market Fund
+
1,528,425
 
ABN AMRO
Money Market Fund
+
597,585
 
Eaton Vance
Government Obligations Fund
+
441,598
 
Principal
Limited Term Bond Fund
+
436,950
 
Salomon Brothers
Short Term Bond Fund
+
331,367
 
John Hancock
Bond Fund
+
226,115
 
Pioneer
Money Market Fund
+
137,401
 
Salomon Brothers
Cash Management
+
109,427
       
147,474,899
       
 
*
JP Life Guaranteed Account
Investment contract, 3.60%
+
15,046,610
 
Participant Loans
Interest rates ranging from 5.00-12.50%
  
2,054,254
       
$164,575,763  

*
Represents party-in-interest.
 
+
Cost information is not presented, as investment is participant directed.
 

 

 
 
13

SIGNATURE
   
THE PLAN: Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrator of the Jefferson Pilot Corporation TeamShare Plan has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
   
   
   
 
Jefferson Pilot Corporation TeamShare Plan
 
By: /s/Joanne Savitsky
Date: June 28 , 2006
Joanne Savitsky
 
Plan Administrator
 
 14