SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
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[X] Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of
1934 For the Fiscal Year Ended December 31, 2004
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
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BITUMINOUS 401(K) SAVINGS PLAN
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OLD REPUBLIC INTERNATIONAL CORPORATION
307 NORTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60601
Total Pages: 12
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.
BITUMINOUS 401(K) SAVINGS PLAN, Registrant
By /s/ Greg Ator
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Greg Ator, Committee Member
By /s/ Janine Happ
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Janine Happ, Committee Member
By /s/ Robert Rainey
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Robert Rainey, Committee Member
Dated: June 15, 2005
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
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ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For The Years Ended December 31, 2004 and 2003
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BITUMINOUS 401(k) SAVINGS PLAN
(Formerly Known as BITCO Savings Plan)
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OLD REPUBLIC INTERNATIONAL CORPORATION
307 NORTH MICHIGAN AVE
CHICAGO, ILLINOIS 60601
BITUMINOUS 401(k) SAVINGS PLAN
Index to Financial Statements
Page No.
Report of Independent Registered Public Accounting Firm 1
Financial Statements:
Statements of Net Assets Available for Benefits at
December 31, 2004 and 2003 2
Statements of Changes in Net Assets Available for Benefits
for the years ended December 31, 2004 and 2003 3
Notes to Financial Statements 4 - 7
Supplemental Schedule:
Schedule of Assets (Held at End of Year) 8
Report of Independent Registered Public Accounting Firm
To the Participants and Administrator of
Bituminous 401(k) Savings 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 Bituminous 401(k) Savings Plan (the "Plan") at December 31, 2004 and
2003, 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 schedule of assets (held
at end of year) as of December 31, 2004 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. The 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.
/s/ PricewaterhouseCoopers LLP
Chicago, Illinois
June 15, 2005
BITUMINOUS 401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2004 and 2003
ASSETS 2004 2003
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Investments, at fair value:
Old Republic International Corporation
common stock $ 6,041,777 $ 6,444,652
Pooled separate accounts 14,048,250 12,537,950
Participant loans 434,874 379,906
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Net assets available for benefits $20,524,901 $19,362,508
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The accompanying notes are an integral part of these financial statements.
2
BITUMINOUS 401(k) SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
For the years ended December 31, 2004 and 2003
2004 2003
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Additions:
Contributions:
Employer $ 210,706 $ 221,089
Employee 1,164,011 1,116,857
Rollover 10,904 43,555
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Total contributions 1,385,621 1,381,501
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Investment income (loss):
Dividends from ORI common stock 120,981 273,568
Net investment gain from
pooled separate accounts 1,071,520 1,848,701
Net appreciation of common stock (40,799) 1,623,735
Interest from participant loans 21,960 21,130
Adjustments 11 -
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Total investment income 1,173,673 3,767,134
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Total additions 2,559,294 5,148,635
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Deductions:
Benefits paid to participants 1,386,786 769,885
Administrative expenses 10,115 8,886
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Total deductions 1,396,901 778,771
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Net increase 1,162,393 4,369,864
Net assets available for benefits:
Beginning of year 19,362,508 14,992,644
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End of year $20,524,901 $19,362,508
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The accompanying notes are an integral part of these financial statements.
3
BITUMINOUS 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. Description of Plan
The following description of the Bituminous 401(k) Savings Plan (the
"Plan") provides only general information. Participants should refer to
the Plan document for a more complete description of the Plan's
provisions.
A. General
The Plan is a defined contribution plan covering substantially all of
the employees of Bituminous Casualty Corporation (the "Company"), who
prior to October 1, 1997, had completed one year of service, attained
age twenty-one and had completed 1,000 hours of service during the 12
month period commencing on their date of hire or during a plan year.
Subsequent to October 1, 1997, employees are eligible to participate in
the plan on the last to occur: (A) date of hire or (B) the start of the
payroll period in which the employee attains age twenty-one.
Participation in the Plan is optional. If an employee does not elect to
join the Plan on the first date he/she is eligible to do so, he/she may
join the Plan at the start of any subsequent payroll period. The Plan
is subject to the provisions of the Employee Retirement Income Security
Act of 1974 (ERISA), as amended.
B. Contributions
Participants may contribute up to 12 percent of their annual
compensation on a before-tax basis. The Company provides a matching
contribution equal to 25 percent of the participant's contribution on
the first 6 percent of earnings. Participants may elect to have their
voluntary contributions invested in any one or more of the ten Pooled
Separate Accounts as well as the ORI Stock Account. Company matching
contributions are invested in the same manner as participant's have
elected for their contributions.
C. Participant Accounts
Each participant's account is credited with the participant's
contributions, an allocation of the Company's contribution and Plan
earnings. The Pooled Separate Accounts are each divided into units of
participation. When an amount is allocated or transferred to the Pooled
Separate Accounts, the number of units is increased and when an amount
is withdrawn from the Pooled Separate Accounts, the number of units is
decreased. Such increase or decrease in the number of units is
determined by dividing the amount allocated to or withdrawn from the
Pooled Separate Accounts by the then current Pooled Separate Account
unit value. Cash dividends received with respect to Old Republic
International Corporation ("ORI") stock previously credited to
participants shall be applied to purchase additional shares of ORI
stock in the ORI Stock Account. Such dividends and the additional
shares (including fractional shares) subsequently purchased with the
dividends shall be allocated and credited to the accounts of
participants, pro rata, according to the shares (including fractional
shares) credited to the accounts of participants on the applicable
dividend record date. Any ORI stock received as a stock split or stock
dividend or as a result of a reorganization or recapitalization of ORI
shall be allocated and credited to the accounts of participants in
proportion to the ORI stock previously credited to their accounts.
4
BITUMINOUS 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. Description of Plan (continued)
D. Vesting
Participants are immediately vested in their voluntary contributions
plus actual earnings thereon. Participants are immediately vested in
the remainder of their accounts upon death, disability, attainment of
normal retirement age or based on the participant's number of years of
service using the following table for the years ended December 31,
2004:
Years of Service Vested Percentage
Fewer than 1 0%
1 10%
2 20%
3 40%
4 60%
5 80%
6 or More 100%
E. Payment of Benefits
On termination of service, retirement, or death, a participant or
his/her beneficiary may elect to leave funds in the Plan or receive
either a single-sum payment or purchase of a single premium life
annuity contract. Net assets at December 31, 2004 and 2003, include
funds totaling $2,777,429 and $2,827,863, respectively, which represent
the account balance of retired and terminated participants who have
elected to leave the funds in the Plan upon retirement or termination.
F. Forfeitures
All forfeitures are segregated annually. At that time, forfeitures are
used as an offset to the Company's matching contribution. There were
unallocated assets of $14,000 and $0 at December 31, 2004 and 2003,
respectively, related to these forfeitures.
G. Participant Loans
Participants may elect to borrow from their accounts a maximum amount
equal to the lesser of $50,000 or 50% of their vested account balance.
Loan transactions are treated as a transfer to (from) the investment
account from (to) the Participant Loans account. Loan terms shall not
extend beyond five years. The loans are secured by the balance in the
participant's account and bear interest at a rate which is based on the
prevailing prime rate as published in The Wall Street Journal on the
first business day of the month in which the loan is made plus one
percentage point. Interest rates range from 5.00 percent to 10.50
percent. Principal and interest are paid ratably through bi-weekly
payroll deductions.
H. Administrative Expenses
It is the policy of the Company to provide administrative support to
the Plan and to pay for certain administrative and trustee fees.
5
BITUMINOUS 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies
A. Basis of Accounting
The accompanying financial statements have been prepared on the accrual
basis of accounting.
B. Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits and disclosures of
contingent assets and liabilities at the date of the financial
statements and the changes in net assets available for benefits during
the reporting period. Actual results could differ from those estimates.
C. Risks and Uncertainties
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds, or other
investment securities. Investment securities are exposed to various
risks, such as interest rate, market and credit. Due to the level of
risk associated with certain investment securities and the level of
uncertainty related to changes in the value of investment securities,
it is possible that changes in risks in the near term could materially
affect participants' account balances and the amounts reported in the
statement of net assets available for benefits and the statement of
changes in net assets available for benefits.
D. Investments
ORI stock is stated at the closing market value on the last business
day of the year. The Plan presents in the statements of changes in net
assets available for benefits the net appreciation (depreciation) in
the fair value of the ORI Stock Account, which consists of realized
gains or losses and the unrealized appreciation (depreciation) of this
investment.
Prior to April 1, 2004, the Plan had a group annuity contract with
Connecticut General Life Insurance Company (CGLIC), where CGLIC
maintained contributions in a contract holder's account and such
contributions were allocated to ten Pooled Participant investment funds
according to participant elections. With effect from April 1, 2004,
CGLIC agreed to transfer its retirement business to Prudential
Retirement Insurance and Annuity Company (Prudential) as a result of
the sale of CIGNA Retirement & Investments division to Prudential
Insurance Company. Prudential has therefore replaced CGLIC as the
insurer of the group annuity contract. As of this date, the ten Pooled
Participant investment funds remain the same with the exception of the
fund name changes.
The ten Pooled Separate Accounts are credited with earnings on the
underlying investments and charged for Plan benefits paid and
deductions for investment expenses, risk, profit and annual management
fees charged by Prudential. As reported by the Plan in 2004 by
Prudential and 2003 by CGLIC, the Pooled Separate Accounts are included
in the financial statements at fair value at December 31, 2004 and
2003. Realized investment gains and losses in the Pooled Separate
Accounts are recognized in the year of sale.
6
BITUMINOUS 401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
E. Benefit Payments
Benefit payments to participants are recorded upon distribution.
3. Assets Greater Than 5% of Plan Assets
Investments that represent 5% or more of plan assets at December 31,
2004 and 2003, are as follows:
December 31,
2004 2003
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Dryden S&P 500 Index $2,064,668 $1,651,106
Prudential Short-term Bond Fund 3,125,186 3,413,406
Prudential Balanced I Fund / Wellington Management Co. 1,885,893 1,614,716
Prudential Large Cap Value/John A. Levin & Co. Fund 1,967,553 1,562,673
ORI Stock Account 6,041,777 6,444,652
Prudential Small Cap Value/Perkins, Wolf, McDonnell Fund 1,435,697 1,144,596
4. Tax Status
The Internal Revenue Service has issued a determination letter, dated
May 29, 2002, stating that the Plan is designed in accordance with
applicable sections of the Internal Revenue Code (IRC). The Plan has
been amended since receiving the determination letter. However, the
Plan's Committee Members still believe that the Plan is designed and is
currently being operated in compliance with the applicable requirements
of the IRC.
5. 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 shall become 100 percent vested in
their accounts and are entitled to a distribution of their account
balances.
6. Related-Party Transactions
The ORI stock account is invested in common or preferred stock of ORI,
the ultimate parent of the Company.
Plan assets include investments in ten Pooled Separate Accounts. These
funds are managed by related parties of Prudential which is the record
keeper and custodian of Plan assets.
7
BITUMINOUS 401(K) SAVINGS PLAN
SUPPLEMENTAL SCHEDULE
SCHEDULE H, LINE 4I
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2004
Description of investment Contract/
Identity of issue including interest rate current value
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Dryden S&P 500 Index Pooled separate account $2,064,668
Prudential Short-term Pooled separate account 3,125,186
Bond Fund *
Prudential Balanced I Fund / Pooled separate account 1,885,893
Wellington Management Co. *
Prudential Large Cap Growth / Pooled separate account 619,062
Goldman Sachs Fund *
Prudential Large Cap Value / Pooled separate account 1,967,553
John A. Levin & Co. Fund *
Prudential Small Cap Value / Pooled separate account 1,435,697
Perkins, Wolf, McDonnell Fund *
Prudential Small Cap Growth / Pooled separate account 921,099
TimesSquare Fund *
Prudential Global Value / Pooled separate account 491,814
Morgan Stanley Fund *
State Street Global Advisors Pooled separate account 592,418
Intermediate Bond Account
AIM Dynamics Account Pooled separate account 944,860
ORI Stock Account * Common stock 6,041,777
Participant Loans ** Participant loans, interest
rates range from
5.00% to 10.50% 434,874
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$20,524,901
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* Party in interest
** Loans are paid in a series of substantially equal payments over the term of the loan.
8