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,
2001 or
( ) TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from __________ to __________
Commission File No. 1-9583
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
MBIA INC.
Employees Profit Sharing and 401 (k) Salary
Deferral Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
MBIA Inc.
113 King Street
Armonk, N. Y. 10504
MBIA INC.
EMPLOYEES PROFIT SHARING AND
401(K) SALARY DEFERRAL PLAN
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 2001 AND 2000
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
FINANCIAL STATEMENTS
INDEX
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Page
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Report of Independent Accountants 2
Financial Statements:
Statements of Net Assets Available for Plan
Benefits as of December 31, 2001 and 2000 3
Statements of Changes in Net Assets Available
for Plan Benefits for the years ended
December 31, 2001 and 2000 4
Notes to Financial Statements 5-9
Schedule of Assets (Held at End of Year) 10
Signatures 11
Schedules other than those listed above have been omitted since they are
either not required or not applicable.
1
Report of Independent Accountants
To the Participants and Administrator of
MBIA Inc. Employees Profit Sharing and 401(k) Salary Deferral Plan:
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statements of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
benefits of MBIA Inc. Employees Profit Sharing and 401 (k) Salary Deferral Plan
(the "Plan") at December 31, 2001 and December 31, 2000, 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
auditing standards generally accepted in the United States of America, which
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 the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
at end of year 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 audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
June 14, 2002
New York, New York
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, December 31,
2001 2000
-------------- --------------
Investments, at fair value $92,557,994 $93,841,942
Participant loans 1,206,893 1,288,730
------------ -------------
Net assets available for
plan benefits $93,764,887 $95,130,672
============ =============
The accompanying notes are an integral part of the financial statements.
3
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
Years ended December 31
-------------------------------------
2001 2000
----------------- ------------------
Contributions:
Employees' salary deferral $ 3,833,070 $ 3,965,002
Employer 2,311,288 2,434,173
Interest and dividends 1,524,606 4,033,150
Net appreciation (depreciation) in
fair value of investments
(3,194,248) 5,633,962
Benefit distributions (5,840,501) (11,099,601)
---------------- ------------------
Net increase (decrease) (1,365,785) 4,966,686
Net assets available for plan
benefits, beginning of year 95,130,672 90,163,986
---------------- ------------------
Net assets available for plan
benefits, end of year $93,764,887 $95,130,672
================ ==================
The accompanying notes are an integral part of the financial statements.
4
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS
1. Plan Description
The MBIA Inc. Employees Profit Sharing and 401(k) Salary Deferral Plan (the
"Plan") is a defined contribution plan for employees of MBIA Inc. and
Subsidiaries (the "Company") who are at least 21 years of age and work a minimum
of 21 hours per week. During 2001, the Plan was amended to no longer require six
months of service before being eligible to participate in the Plan. Effective
April 1, 1987, a 401(k) deferral feature was implemented enabling eligible
participants to defer up to 10% of their total eligible compensation. Matching
contributions are made by the Company, in the form of MBIA Inc. common stock, at
the rate of 100% of the participant's contribution up to a maximum of 5% of the
participant's eligible compensation. Participants may request loans from their
accounts in accordance with established guidelines. Loan balances outstanding
are reflected as assets of the Plan. Interest income on the loans is recorded as
earned.
The Plan's assets are managed by Fidelity Management Trust Company ("Fidelity"),
the investment advisor, trustee and custodian. The participants of the Plan have
the option to direct the investment of their contribution share into one or more
of ten Fidelity funds, one Baron Asset Management Company, Inc. ("Baron") fund,
one or more of three 1838 Investment Advisors, Inc. ("1838") funds and the
Employer Stock Fund. 1838 is a wholly-owned subsidiary of MBIA Inc.
Vesting in employer contributions begins after three years of service and full
vesting is achieved after five years of service. Participants are fully vested
in their salary deferred contributions at all times. Upon reaching the normal
retirement date, death or becoming disabled, a participant becomes fully vested
in the Company's contributions. Nonvested benefits remaining after termination
of employment are forfeited and may serve to reduce future Company
contributions. The forfeiture balance as of December 31, 2001 and 2000, was
$159,667 and $47,814, respectively.
A participant is entitled to the benefit that can be provided by the
contributions and income thereon, including net realized and unrealized
investment gains and losses of each participant's account. Upon retirement,
disability, death or termination, a participant or beneficiary can elect to
receive a lump-sum distribution, installment distributions or purchase a joint
and survivor annuity contract or single life annuity contract.
5
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
The Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA"). Participants should refer to the Summary Plan Description
and Plan Document for specific information regarding Plan provisions.
In July 1999, as a result of the merger with CapMAC Holdings Inc., the CapMAC
Employee Stock Ownership Plan ("ESOP") was merged with the Plan. In conjunction
with the merger of the plans, the unallocated ESOP shares would be used to fund
the Company's match obligations. As of December 31, 2001 and 2000, the
unallocated ESOP balance was $1,982,993 and $2,950,163, respectively.
2. Summary of Significant Accounting Policies
The financial statements have been prepared on the basis of generally accepted
accounting principles ("GAAP"). The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The Plan provides for various investment options in any combination of stocks,
bonds, fixed income securities, mutual funds, and other 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 Plan Benefits.
Significant accounting policies are as follows:
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of
accounting.
6
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
Investments
The Plan's investments are valued at their current fair values based on last
reported sales prices on the last business day of the year. Participant loans
are stated at cost, which approximates fair value.
Gain or loss on the sale of investments is based on specifically identified
cost. Interest income from investments is recorded as earned on the accrual
basis. Dividend income is recorded on the ex-dividend date.
The Plan's net appreciation (depreciation) in the fair value of its investments
consists of the realized gains or losses and the unrealized appreciation
(depreciation) on those investments.
Contributions
Contributions from eligible participants and matching Company contributions are
recorded in the month the related payroll deductions are made.
Participant Accounts
Each participant has an account which is credited with the Company's
contribution, employees' contribution and the income (loss) from the investment
activities of the participant's account.
Payment of Benefits
Benefits are recorded when paid.
Administrative Expenses
Administrative expenses, which consist primarily of investment management,
record keeping and auditing fees, are paid directly by the Company rather than
out of Plan assets. Employee loan fees are paid out of the participants'
accounts.
3. Plan Termination
The Company has not expressed any intent to discontinue its contributions or
terminate the Plan. However, it reserves the right to temporarily suspend
contributions to or amend or terminate the Plan. Upon termination of the Plan,
the accounts of all participants shall become fully vested, and the net assets
of the Plan shall be distributed among the participants and beneficiaries of the
Plan in proportion to their respective account balances.
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MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
4. Investments
The Plan's investments at fair value as of December 31, 2001 and 2000, were as
shown on the following page:
December 31, 2001
---------------------
Employer Stock Fund* $ 28,337,478
ESOP Fund* 17,344,302
Fidelity Puritan Fund 1,079,968
Fidelity Magellan Fund 3,222,978
Fidelity Growth Company Fund 4,533,689
Fidelity Growth and Income Portfolio* 12,128,341
Fidelity Intermediate Bond Fund 2,726,216
Fidelity Value Fund 823,568
Fidelity Overseas Fund 2,547,713
Fidelity Blue Chip Growth Fund* 4,762,742
Fidelity Spartan U.S. Equity Index Fund 4,294,256
Fidelity Managed Income Fund* 6,319,958
Baron Asset Fund 87,279
1838 International Equity Fund 1,038,540
1838 Large Cap Equity Fund 2,791,154
1838 Fixed Income Fund 519,812
---------------------
$ 92,557,994
=====================
Participant Loans 1,206,893
*Each of these investments, at fair value, represents 5% or more of the
Plan's net assets at December 31, 2001.
December 31, 2000
------------------------
Employer Stock Fund* $ 27,081,589
ESOP Fund 15,345,389
Fidelity Puritan Fund 956,822
Fidelity Magellan Fund* 4,100,895
Fidelity Growth Company Fund* 6,232,986
Fidelity Growth and Income Portfolio* 13,612,813
Fidelity Intermediate Bond Fund 1,528,378
Fidelity Value Fund 695,183
Fidelity Overseas Fund 3,234,407
Fidelity Blue Chip Growth Fund* 6,644,112
Fidelity Spartan U.S. Equity Index Fund* 4,865,061
Fidelity Managed Income Fund 5,060,086
Baron Asset Fund 45,501
1838 International Equity Fund 899,245
1838 Large Cap Equity Fund 3,506,287
1838 Fixed Income Fund 33,188
------------------------
$ 93,841,942
========================
Participant Loans 1,288,730
*Each of these investments, at fair value, represents 5% or more of the
Plan's net assets at December 31, 2000.
8
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
NOTES TO FINANCIAL STATEMENTS (Continued)
5. Tax Status
The Internal Revenue Service has advised that the Plan constitutes a qualified
plan under Section 401 (a) of the Internal Revenue Code and is therefore exempt
from federal income taxes under provisions of Section 501 (a).
The Plan obtained its latest determination letter on July 12, 1995 in which the
Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the applicable requirements of the Internal Revenue Code. The
Plan has been amended since receiving the determination letter. However, the
Plan administrator and the Plan's tax counsel believe that the Plan is currently
designed and being operated in compliance with the applicable requirements of
the Internal Revenue Code. Therefore, they believe that the Plan was qualified
and the related Trust was tax-exempt as of the financial statement date.
9
MBIA INC.
EMPLOYEES PROFIT SHARING AND 401(K) SALARY DEFERRAL PLAN
SUPPLEMENTAL SCHEDULE
SCHEDULE OF ASSETS (HELD AT END OF YEAR) /(1)/
Identity of issue Description Cost Current Value
----------------- ----------- ----- -------------
(2)
---
MBIA Common Stock* Common stock $ 45,681,780
Fidelity Puritan Fund* Mutual fund 1,079,968
Fidelity Magellan Fund* Mutual fund 3,222,978
Fidelity Growth Company Fund* Mutual fund 4,533,689
Fidelity Growth and Income Portfolio* Mutual fund 12,128,341
Fidelity Intermediate Bond Fund* Mutual fund 2,726,216
Fidelity Value Fund* Mutual fund 823,568
Fidelity Overseas Fund* Mutual fund 2,547,713
Fidelity Blue Chip Growth Fund* Mutual fund 4,762,742
Fidelity Spartan U.S. Equity Index Fund* Mutual fund 4,294,256
Fidelity Managed Income Fund* Mutual fund 6,319,958
Baron Asset Fund* Mutual fund 87,279
1838 International Equity Fund* Mutual fund 1,038,540
1838 Large Cap Equity Fund* Mutual fund 2,791,154
1838 Fixed Income Fund* 519,812
-------------
$ 92,557,994
Participant loans* Interest rates: 8.0% - 11.5%;
Maturity dates: 2/28/02 -
11/12/11 1,206,893
-------------
Total $ 93,764,887
=============
/(1)/ This schedule has been certified as complete and accurate by the Plan
trustee.
/(2)/ Cost is not required for participant directed investments.
* Fidelity Management Trust Company, 1838 Investment Advisors, Inc., and Baron
Asset Management Company, Inc., are parties in interest.
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Signatures
Pursuant to the requirements of the Securities 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.
MBIA Inc.
Employees Profit Sharing and
401(k) Salary Deferral Plan
Date: June 14, 2002 /s/ NEIL G. BUDNICK
------------------------------
Neil G. Budnick
Chief Financial Officer
Date: June 14, 2002 /s/ KEVIN D. SILVA
-------------------------------
Kevin D. Silva
Chief Administrative Officer
Plan Administrator
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