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, 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: 001-10607
---------
-------------
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
-------------
OLD REPUBLIC INTERNATIONAL CORPORATION
307 NORTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60601
Total Pages: 17
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 11-K
---------------
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For The Years Ended December 31, 2005 and 2004
---------------
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
---------------
OLD REPUBLIC INTERNATIONAL CORPORATION
307 NORTH MICHIGAN AVE
CHICAGO, ILLINOIS 60601
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
Pages
Report of Independent Registered Public Accounting Firm 1
Financial Statements:
Statements of Net Assets Available for Benefits as of
December 31, 2005 and 2004 2
Statements of Changes in Net Assets Available for Benefits for the
years ended December 31, 2005 and 2004 3
Notes to Financial Statements 4-9
Supplemental Schedules:
Schedule of Assets (Held at End of Year) at December 31, 2005 10
Schedule of Reportable Transactions
for the Year Ended December 31, 2005 11
Schedule of Delinquent Participant Contributions
for the Year Ended December 31, 2005 12
Note
----
Supplemental schedules required by the Employee Retirement Income Security Act
of 1974, as amended, that have not been included herein are not applicable.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Committee Members have duly caused this annual report to be signed on behalf of
the undersigned, thereunto duly authorized.
OLD REPUBLIC INTERNATIONAL CORPORATION EMPLOYEES
SAVINGS AND STOCK OWNERSHIP PLAN, Registrant
By /s/ A.C. Zucaro
--------------------------------------
A.C. Zucaro, Member of the
Administration Committee
Dated: June 28, 2006
Report of Independent Registered Public Accounting Firm
To the Participants and the Administration Committee of the
Old Republic International Corporation
Employees Savings and Stock Ownership Plan:
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Old Republic International Corporation Employees Savings and Stock
Ownership Plan (the "Plan") at December 31, 2005 and 2004, and the changes in
net assets available for benefits for the years then ended in conformity with
accounting principles generally accepted in the United States of America. 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 of these statements 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, 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.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules as of and for
the year ended December 31, 2005 listed in the accompanying index 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. The supplemental schedules have
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers, LLP
Chicago, Illinois
June 26, 2006
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 2005 and 2004
--------------------------------
2005
---------------------------------------------------------------
Participant Non-Participant
Directed Directed Combined
Account Account Account
----------------- ------------------- -------------------
ASSETS
Investments, at fair value:
Old Republic International Corporation
Common shares $ - $ 239,044,705 $ 239,044,705
Mutual funds 134,403,728 - 134,403,728
----------------- ------------------- -------------------
134,403,728 239,044,705 373,448,433
Contributions receivable from employers - 6,451,155 6,451,155
Accrued dividends receivable - 5,971,633 5,971,633
Interfund receivable - - -
----------------- ------------------- -------------------
Total assets $ 134,403,728 $ 251,467,493 $ 385,871,221
================= =================== ===================
LIABILITIES
Unpaid anti-discrimination refunds $ 174,917 $ - $ 174,917
Unpaid administrative expenses - 34,137 34,137
----------------- ------------------- -------------------
Total liabilities 174,917 34,137 209,054
----------------- ------------------- -------------------
NET ASSETS AVAILABLE FOR BENEFITS 134,228,811 251,433,356 385,662,167
----------------- ------------------- -------------------
Total liabilities and net assets
available for benefits $ 134,403,728 $ 251,467,493 $ 385,871,221
================= =================== ===================
The accompanying notes are an integral part of the financial statements.
2
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31, 2005 and 2004
--------------------------------
2004
---------------------------------------------------------------
Participant Non-Participant
Directed Directed Combined
Account Account Account
----------------- ------------------- -------------------
ASSETS
Investments, at fair value:
Old Republic International Corporation
Common shares $ - $ 238,024,071 $ 238,024,071
Mutual funds 121,310,729 - 121,310,729
----------------- ------------------- -------------------
121,310,729 238,024,071 359,334,800
Contributions receivable from employers - 5,758,729 5,758,729
Accrued dividends receivable - - -
Interfund receivable 75,116 - 75,116
----------------- ------------------- -------------------
Total assets $ 121,385,845 $ 243,782,800 $ 365,168,645
================= =================== ===================
LIABILITIES
Unpaid anti-discrimination refunds $ 1,295,189 $ - $ 1,295,189
Unpaid administrative expenses - 6,788 6,788
----------------- ------------------- -------------------
Total liabilities 1,295,189 6,788 1,301,977
----------------- ------------------- -------------------
NET ASSETS AVAILABLE FOR BENEFITS 120,090,656 243,776,012 363,866,668
----------------- ------------------- -------------------
Total liabilities and net assets
available for benefits $ 121,385,845 $ 243,782,800 $ 365,168,645
================= =================== ===================
The accompanying notes are an integral part of the financial statements.
2
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
for the years ended December 31, 2005 and 2004
----------------------------------------------
2005
---------------------------------------------------------------
Participant Non-Participant
Directed Directed Combined
Account Account Account
----------------- ------------------- -------------------
Additions:
Employer contributions $ - $ 6,452,506 $ 6,452,506
Employee contributions 17,825,540 - 17,825,540
Interfund transfers 3,594,654 (3,594,654) -
Interest income 2,006 13,600 15,606
Dividend income 4,476,441 14,867,916 19,344,357
Net appreciation (depreciation) in
fair value of investments 4,355,983 8,530,770 12,886,753
----------------- ------------------- -------------------
30,254,624 26,270,138 56,524,762
----------------- ------------------- -------------------
Deductions:
Termination and withdrawal benefits 15,866,521 18,474,381 34,340,902
Anti-discrimination refunds 174,916 - 174,916
Administrative expenses 75,032 138,413 213,445
----------------- ------------------- -------------------
16,116,469 18,612,794 34,729,263
----------------- ------------------- -------------------
NET ADDITIONS (DEDUCTIONS) 14,138,155 7,657,344 21,795,499
Net assets available for plan benefits,
beginning of year 120,090,656 243,776,012 363,866,668
----------------- ------------------- -------------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, END OF YEAR $ 134,228,811 $ 251,433,356 $ 385,662,167
================= =================== ===================
The accompanying notes are an integral part of the financial statements.
3
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
for the years ended December 31, 2005 and 2004
----------------------------------------------
2004
---------------------------------------------------------------
Participant Non-Participant
Directed Directed Combined
Account Account Account
----------------- ------------------- -------------------
Additions:
Employer contributions $ - $ 5,761,498 $ 5,761,498
Employee contributions 15,971,885 - 15,971,885
Interfund transfers 3,183,955 (3,183,955) -
Interest income 1,824 10,000 11,824
Dividend income 2,858,917 4,831,293 7,690,210
Net appreciation (depreciation) in
fair value of investments 6,772,210 (976,441) 5,795,769
----------------- ------------------- -------------------
28,788,791 6,442,395 35,231,186
----------------- ------------------- -------------------
Deductions:
Termination and withdrawal benefits 12,689,396 14,360,374 27,049,770
Anti-discrimination refunds 1,295,189 - 1,295,189
Administrative expenses 68,143 118,769 186,912
----------------- ------------------- -------------------
14,052,728 14,479,143 28,531,871
----------------- ------------------- -------------------
NET ADDITIONS (DEDUCTIONS) 14,736,063 (8,036,748) 6,699,315
Net assets available for plan benefits,
beginning of year 105,354,593 251,812,760 357,167,353
----------------- ------------------- -------------------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, END OF YEAR $ 120,090,656 $ 243,776,012 $ 363,866,668
================= =================== ===================
The accompanying notes are an integral part of the financial statements.
3
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
-------------------
1. Description of Plan
-------------------
A. Basis of Presentation
---------------------
The accompanying financial statements of the Old Republic International
Corporation Employees Savings and Stock Ownership Plan (the Plan)
include plan assets for employees of Old Republic International
Corporation and participating subsidiaries [the Corporation, the Plan
Sponsor, the Company(ies) or the Employers]. These financial statements
and accompanying notes together provide only general information about
the Plan. The Plan Agreement must be referred to for a complete
description of the Plan's provisions.
B. General
-------
The Plan is a defined contribution plan covering a majority of
employees of the Corporation and is subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended (ERISA).
Effective January 1, 2005, the Plan was amended to become a 401-K plan.
All aspects of the Plan remained unchanged except that employee
contributions are now made on a pre-tax basis up to the first $14,000.
For 2005 and prior, employees became participants in the Plan on the
first January 1, they were employees and elected to make contributions
to the Plan. Beginning January 1, 2006, employees become participants
as soon as they elect to make contributions to the Plan.
C. Contributions
-------------
Contributions from employees (savings) are made on a pre-tax basis up
to a limit of $14,000. Participants may elect to contribute up to a
maximum of 100% of recognized compensation as defined in the Plan not
to exceed the limits set by Section 415 of the Internal Revenue Code as
stated below. All contributions are recorded in the period in which the
Companies make payroll deductions from Plan participants. Any employee
who does not contribute to the Plan does not receive a Company matching
contribution. Only employee contributions up to 6% are matched.
However, the maximum amount of contribution which can be matched per
employee cannot exceed $9,000 (6% of $150,000) per Plan year. The
maximum amount which can be withheld is limited to $31,500 (15% of
$210,000). Contributions are also subject to other Internal Revenue
Code limitations (including the limits imposed by Internal Revenue Code
Section 415).
Employees may also roll over into the Plan qualified distributions from
their previous employer(s)' qualified plan(s). In addition, employees
who are 50 years of age or older at any time during the Plan year, may
make catch-up contributions subject to Internal Revenue Code
limitations. Rollovers and catch-up contributions are not eligible for
company matching.
Participants direct the investment of their contributions into various
mutual funds offered by the Plan, of which there are currently twenty.
4
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
-------------------
1. Description of Plan, Continued
------------------------------
The Company matching contribution is based on the following formula:
Percentage of If the percentage increase in the Corporation's
Recognized Compen- average operating earnings per share for the
sation Contributed most recent five year period is:
------------------ -------------------------------------------------
Less Than 6.00% 9.01% 15.01% Over
6% to 9% to 15% to 20% 20%
--------- ----- ------ ------ ----
The Resulting Employer Matching Contribution
on the First 6% of Employee Savings Will Be:
-------------------------------------------------
1.00% 30% 40% 65% 100% 140%
1.01 to 2.00% 28% 38% 63% 98% 138%
2.01 to 3.00% 26% 36% 61% 96% 136%
3.01 to 4.00% 24% 34% 59% 94% 134%
4.01 to 5.00% 22% 32% 57% 92% 132%
5.01 to 6.00% 20% 30% 55% 90% 130%
6.01 to 15.00% None None None None None
-------------------------------------------------
* The percentage increase in the Corporation's average operating
earnings per share is obtained by comparing the average diluted
operating earnings per share for the Corporation for the five
years ending with the calculation year, with the same average for
the five years ending the year prior to the calculation year.
Operating earnings per share are equal to net income per share
exclusive of realized capital gains or losses and extraordinary
items and income taxes applicable thereto.
Company matching contributions are allocated on December 31, and a Plan
participant receives a matching contribution only if:
* the Companies meet certain minimum profit objectives;
* the participant completes 1,000 or more hours of service during
the year; and
* the participant is employed by one of the Companies on December 31
of that year, died or became fully disabled during the year, or
retired during the year after attaining age 65.
Additional amounts from consolidated annual net profits after taxes or
accumulated earnings as the Board of Directors of the Companies may
determine from time to time may be added to the contributions resulting
from the above formula. The amount of the Companies' contributions are
subject to the following limitations:
* No contribution shall be made if the Companies' consolidated
annual net profit before extraordinary items and taxes is less
than $2,500,000.
* No contribution shall be made by any Employer for any fiscal year
which exceeds the maximum amount currently deductible by that
Employer under section 404 of the Internal Revenue Code.
* No contribution shall be made by any Employer for any fiscal year
which would cause its total contribution to exceed the amount of
its annual net profit before taxes and its accumulated earnings.
5
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
-------------------
1. Description of Plan, Continued
------------------------------
D. Employee Account
----------------
When a plan participant makes employee contributions, the contributions
are allocated to the mutual fund(s) designated by the participant.
These funds constitute the participants Employee Account (Participant
Directed Account). Earnings inure to each plan participant's Employee
Account on a daily basis, based upon the performance of the mutual
fund(s) that the plan participant selected. Following termination of
service for any reason, a plan participant receives all amounts in
his/her Employee Account.
For contributions made to the Plan prior to 2005, participants may make
in-service withdrawals from their Employee Account no more than twice
during a plan year. The minimum amount of such in-service withdrawal
shall be the lower of $500 or the balance of the Participant's Employee
Account as of the last day of the prior plan year. A participant may
not withdraw contributions made during the year of withdrawal as an
in-service withdrawal. For contributions made to the Plan during 2005
and after, participants may make in-service withdrawals only if they
meet the hardship provisions outlined in the Internal Revenue Service
Regulations.
E. Company Account
---------------
Each year, the matching contributions and any discretionary
contributions are allocated to the Company Account (Non-participant
Directed Account) of plan participants. If a plan participant
terminates service with the Companies, the amount that he/she receives
from his/her Company Account depends upon his/her vested interest in
such account. A plan participant vests in his/her Company Account based
on his/her "Years of Service," over a six year period.
A plan participant earns a Year of Service for each calendar year
during which he/she completes 1,000 or more hours of service for the
Companies. However, a plan participant will become 100% vested in
his/her Company Account prior to six years of service if:
* the plan participant has reached age 65, or
* termination is caused by death, or
* termination is caused by total and permanent disability which
renders the employee incapable of performing satisfactory service
for the Companies.
Upon meeting any of the above, the participant may elect to receive
his/her benefits in the form of cash or Old Republic International
Corporation common shares (Company stock). If a participant elects a
cash distribution of his/her Company Account, both his/her Company
Account and Employee Account may, at the election of the participant,
be paid:
* in one lump sum, or
* in a direct rollover to an eligible retirement plan specified by
the participant, or
* in substantially equal annual or more frequent installments paid
over a reasonable period of time not to exceed the life expectancy
of the participant or the joint life expectancy of the participant
and his/her spouse or designated beneficiary.
The amount a plan participant receives from his/her Company Account is
also affected by forfeitures and earnings. If a plan participant
terminates service prior to full vesting, the non-vested portion of
his/her Company Account is forfeited. Forfeited amounts are
re-allocated to remaining participants who made
6
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
-------------------
1. Description of Plan, Continued
------------------------------
employee contributions, completed 1,000 or more hours of service for
the Companies during the year, and are employed by the Companies on
December 31 or terminated service due to retirement on or after age 65,
death, or total and permanent disability. Forfeitures are allocated
based upon the ratio of the plan participant's recognized compensation
to the recognized compensation of all eligible plan participants.
Forfeitures allocated in the 2005 and 2004 plan years were $99,317 and
$116,772, respectively.
Effective January 1, 1989, the Tax Reform Act provided that plan
participants who reach age 55 and have 10 years of participation in the
Plan are provided with the option of diversifying a portion of their
Company Account balance out of Company stock and into alternative
investment funds. Participants become eligible to diversify in the
calendar year following the calendar year in which they attain age 55
and have also completed 10 years of participation.
The following table shows what percentage of a participant's cumulative
Company Account can be diversified:
For the Following Plan Year
During the Election Period
---------------------------
First Plan Year 25.0%
Second Plan Year 25.0%
Third Plan Year 25.0%
Fourth Plan Year 25.0%
Fifth Plan Year 50.0%
Sixth Plan Year 57.5%
Seventh Plan Year 65.0%
Eighth Plan Year 72.5%
Ninth Plan Year 80.0%
Tenth Plan Year 87.5%
Eleventh Plan Year 95.0%
Twelfth Plan Year 100.0%
The investment options available for diversification are the same
mutual funds available for investment of Employee contributions.
Diversified funds are included in the Participant Directed Account in
the financial statements.
2. Summary of Accounting Policies
------------------------------
A. Use of Estimates
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
the Plan's 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 additions and deductions during
the reporting period. Actual results can differ from those estimates.
7
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
-------------------
2. Summary of Accounting Policies, Continued
-----------------------------------------
B. Risks and Uncertainties
-----------------------
Besides the investment of matching contributions into common stock of
the Corporation, the Plan provides participants with various investment
alternatives for their savings contributions and or diversifications.
These investment alternatives are made up of various types of Fidelity
Investment's mutual funds which can be equity based, fixed income based
or a combination thereof.
All of the above investment alternatives are exposed to various market
risks including the level of interest rates, economic conditions and
individual credit profiles. Due to these risks and the uncertainty
related to changes in the market value of underlying investment
securities, it is possible that participants' account balances and the
amounts reported in the statements of net assets available for benefits
and the statements of changes in net assets available for benefits
could be materially affected.
C. Investment Valuation and Income Recognition
-------------------------------------------
The Plan's investments are stated at fair value. Shares of mutual funds
are valued at the net asset value of shares held by the Plan at the
valuation date. Old Republic International Corporation common shares
(Company Stock) are traded on a national securities exchange and are
valued at the last reported sales price on the last business day of the
year.
The statements of changes in net assets available for benefits reflect
the net appreciation (depreciation) in fair value of the Plan's
investments, which consists of realized gains or losses and the
unrealized appreciation (depreciation) on those investments. Interest
income is recorded as earned and dividend income is recorded as earned
on the ex-dividend date. Purchases and sales are recorded on a
trade-date basis.
D. Termination and Withdrawal Benefit Payments
-------------------------------------------
Termination and withdrawal benefit payments are recorded upon
distribution.
3. Investments
-----------
The following presents investments, the fair value of which are 5 percent
or more of Plan assets at December 31:
2005 2004
--------------- --------------
Mutual Funds:
Fidelity Short-term Bond Fund $ 16,903,884 ** $ 18,843,716
Old Republic International
Corporation Common
Stock (9,102,997 and
9,408,066 shares,
respectively) 239,044,705 * 238,024,071 *
* Non-participant directed.
** Less than 5%. Presented for comparative purposes only.
8
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
-------------------
3. Investments, Continued
----------------------
Net appreciation (depreciation) in the fair value of investments is broken
down as follows for the years ended December 31:
2005 2004
------------- -------------
Old Republic International
Corporation Common Stock $ 8,530,770 $ (976,441)
Mutual funds 4,355,983 6,772,210
------------- -------------
$12,886,753 $ 5,795,769
============= =============
4. Parties in Interest
-------------------
Old Republic International Corporation and participating subsidiaries are
parties in interest. The Plan's Non-Participant Directed Account (Company
Account) is made up of the Corporation's common stock as noted in Note 3.
Also, office personnel, space and equipment are furnished by the Companies
at no charge to the Plan.
Inter Capital Corporation of Chicago, an affiliate, is the Plan's Trustee to
whom trustee fees ($36,000 per annum) are paid by the Plan.
Fidelity Investments Institutional Services Company, Inc. (Fidelity
Investments), a subsidiary of FMR Corporation, is the Plan's custodian,
record keeper and provider of educational information to plan participants.
All mutual funds are managed by subsidiaries of FMR Corporation, which make
FMR Corporation a party in interest. Fees paid by the Plan to Fidelity
Investments for custodianship, transaction and maintenance were $127,178 and
$131,745 during 2005 and 2004, respectively.
5. Termination Priorities
----------------------
Although the Corporation does not have plans to terminate, the Corporation
reserves the right, either with or without formal action, to terminate the
Plan. Each Employer reserves the right to permanently discontinue its
contributions to the Plan. In the event that an Employer permanently
discontinues its contributions to the Plan, or the Corporation terminates
the Plan, or the Plan is partially terminated under operation of law, the
accounts of the affected participants shall be fully vested and
non-forfeitable. In addition, because the Plan is a defined contribution
plan and not a defined benefit plan, no termination priorities apply to the
Plan under ERISA.
6. Tax Status
----------
The Plan has filed an application with the Internal Revenue Service to
obtain a determination letter reflecting changes to the Plan principally to
become a 401-K plan. Prior to these changes, the Internal Revenue Service on
October 21, 2002, issued a determination letter stating that the Plan, as
amended through December 7, 2001, was qualified under Section 401 of the
Internal Revenue Code and therefore the Plan was exempt under the provisions
of Section 501(a). The Plan's Sponsor believes that the Plan is designed and
is currently being operated in compliance with the applicable requirements
of the Internal Revenue Code and that a favorable determination letter will
be obtained from the Internal Revenue Service.
7. Anti-discrimination Refunds
---------------------------
Due to limits imposed by Internal Revenue Code Section 415 and ERISA, tests
are performed annually to determine that the Plan has not discriminated
between highly compensated employees and non- highly compensated employees.
In most years, initial tests indicate that there is an excess differential
between contributions by highly compensated employees and non-highly
compensated employees. To bring the Plan into compliance, a determination is
made as to how much contributions need to be returned to highly compensated
employees so the Plan can meet the "Actual Contribution Percentage Test for
Non-excludable Employees." This amount represents the anti-discrimination
refunds payable at any given year-end.
9
SUPPLEMENTAL SCHEDULES
OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS & STOCK OWNERSHIP PLAN
FORM 5500-ANNUAL RETURN/REPORT OF EMPLOYEE BENEFIT PLAN
SCHEDULE H, LINE 4i-SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2005
(c)
DESCRIPTION OF INVESTMENT INCLUDING MATURITY DATE, RATE
OF INTEREST, COLLATERAL, SHARES, PAR OR MATURITY VALUE
-------------------------------------------------------
(b) RATE OF SHARES, PAR, (e)
IDENTITY OF ISSUE, BORROWER, MATURITY INTEREST OR MATURITY (d) CURRENT
(a) LESSOR, OR SIMILAR PARTY DATE DIVIDENDS COLLATERAL VALUE COST VALUE
----------------------------------------- ------------------------------------------------------- ---------- ---------------
MUTUAL FUNDS:
FIDELITY FUND N/A VARIABLE N/A 311,896 sh # 9,924,545
FIDELITY EQUITY-INCOME FUND N/A VARIABLE N/A 258,123 sh # 13,623,747
FIDELITY INVESTMENT GRADE BOND FUND N/A VARIABLE N/A 342,651 sh # 2,525,336
FIDELITY INTERMEDIATE TERM BOND FUND N/A VARIABLE N/A 328,402 sh # 3,379,255
FIDELITY CAPITAL & INCOME FUND N/A VARIABLE N/A 264,872 sh # 2,216,979
FIDELITY VALUE FUND N/A VARIABLE N/A 221,167 sh # 16,782,185
FIDELITY CASH RESERVES N/A VARIABLE N/A 8,299,559 sh # 8,299,559
SPARTAN MARKET INDEX FUND N/A VARIABLE N/A 156,580 sh # 13,468,980
FIDELITY AGGRESSIVE GROWTH FUND N/A VARIABLE N/A 278,493 sh # 4,927,170
FIDELITY DIVERSIFIED INTERNATIONAL FUND N/A VARIABLE N/A 347,231 sh # 11,298,881
FIDELITY DIVIDEND GROWTH FUND N/A VARIABLE N/A 565,812 sh # 16,289,731
FIDELITY SMALL CAP INDEPENDENCE FUND N/A VARIABLE N/A 49,134 sh # 1,006,268
FIDELITY MID-CAP STOCK FUND N/A VARIABLE N/A 305,432 sh # 8,115,340
FIDELITY SHORT-TERM BOND FUND N/A VARIABLE N/A 1,907,888 sh # 16,903,884
FIDELITY FREEDOM INCOME FUND N/A VARIABLE N/A 20,672 sh # 235,038
FIDELITY FREEDOM 2000 FUND N/A VARIABLE N/A 29,523 sh # 360,478
FIDELITY FREEDOM 2010 FUND N/A VARIABLE N/A 214,607 sh # 3,015,232
FIDELITY FREEDOM 2020 FUND N/A VARIABLE N/A 92,744 sh # 1,364,259
FIDELITY FREEDOM 2030 FUND N/A VARIABLE N/A 26,203 sh # 393,575
FIDELITY FREEDOM 2040 FUND N/A VARIABLE N/A 27,552 sh # 243,286
-------------
134,403,728
-------------
EMPLOYER SECURITIES:
OLD REPUBLIC INTERNATIONAL CORP.:
COMMON STOCK N/A N/A N/A 9,102,997 sh $77,321,074 239,044,705
=========== -------------
TOTAL INVESTMENTS HELD $373,448,433
=============
Note:
----
All parties above are "Parties in Interest."
# Participant directed funds.
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OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
FORM 5500-ANNUAL RETURN/REPORT OF EMPLOYEE BENEFIT PLAN
SCHEDULE H, LINE 4j-SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
------------------------------------------------------------------
(h)
(f) Current Value
(a) (b) (c) (d) (e) Expense (g) of Asset on (i)
Identity of Party or Purchase Selling Lease Incurred with Cost of Transaction Net Gain
Investment Involved Price Price Rental Transaction Asset Date or Loss
------------------- ----- ----- ------ ------------- ------- ------------- --------
Description of Asset
--------------------
Purchases of Investments
------------------------
Old Republic International
Corporation Common Stock
(586,435 shares) $14,782,886 N/A N/A N/A $14,782,886 $14,782,886 -
Sales of Investments
--------------------
Old Republic International
Corporation Common Stock
(891,504 shares) N/A $22,293,022 N/A N/A $ 7,022,776 $22,293,022 $15,270,246
Notes:
-----
This schedule lists all non-participant directed transactions or series of
transactions which aggregate in excess of 5% of the Fund assets at the beginning
of the current year, as required by the Department of Labor.
Old Republic International Corporation is a "Party in Interest."
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OLD REPUBLIC INTERNATIONAL CORPORATION
EMPLOYEES SAVINGS AND STOCK OWNERSHIP PLAN
FORM 5500-ANNUAL RETURN/REPORT OF EMPLOYEE BENEFIT PLAN
SCHEDULE H, PART IV-TRANSACTIONS DURING THE PLAN YEAR
LINE 4a: SCHEDULE OF DELINQUENT PARTICIPANT CONTRIBUTIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
--------------------------------------------------------------------------------------------------------------------------
PARTICIPANT CONTRIBUTIONS TOTAL THAT CONSTITUTE
TRANSFERRED LATE TO PLAN @ NONEXEMPT PROHIBITED TRANSACTIONS @
-------------------------- -----------------------------------
$121,581 $121,581
========================================== =========================================================
Employee contributions withheld
from employee wages between
March 15, 2005 and September 15,
2005 but not transferred to the
Plan nor allocated to partici-
pant's accounts until September 28, 2005.
@ - THE ABOVE CONTRIBUTIONS WERE CORRECTED OUTSIDE THE VOLUNTARY
FIDUCIARY CORRECTION PROGRAM (VFCP) DURING 2005.
Notes:
------
This schedule lists all nonexempt transactions subject to reporting in Schedule
H, Line 4a of Form 5500.
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