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 fiscal year ended December 31, 2001
AMCORE Financial Security Plan
(Full title of the plan)
AMCORE FINANCIAL, INC.
(Name of issuer of the securities held pursuant to the plan)
501 Seventh Street, P.O. Box 1537
Rockford, Illinois 61110-0037
(address of principal executive office)
AMCORE FINANCIAL SECURITY PLAN
Financial Statements and Schedule
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)
AMCORE FINANCIAL SECURITY PLAN
Table of Contents
Page
Independent Auditors' Report 1
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 Schedule
1 Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes 10
Independent Auditors' Report
To the Trustees and Participants
AMCORE Financial Security Plan:
We have audited the accompanying statements of net assets available for benefits
of the AMCORE Financial Security Plan (the Plan) as of December 31, 2001 and
2000, 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 trustees. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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, 2001 and 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.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule of
assets held for investment purposes as of December 31, 2001 is presented for the
purpose of additional analysis and is not a required part of the basic financial
statements, but it 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 trustees. 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/ KPMG LLP
Chicago, Illinois
May 31, 2002
AMCORE FINANCIAL SECURITY PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 2001 and 2000
2001 2000
------------ ------------
Additions:
Additions to (reductions of) net assets
attributed to - investment income:
Net depreciation in fair value of
investments (note 3) $ (7,300,332) (12,346,893)
Interest 16,122 275,356
Dividends 1,277,866 6,982,646
------------ ------------
(6,006,344) (5,088,891)
------------ ------------
Contributions:
Employer 2,939,657 2,628,718
Participant:
Payroll withholding 2,746,767 3,003,005
Rollovers 102,273 136,778
------------ ------------
5,788,697 5,768,501
------------ ------------
Total (decreases) additions (217,647) 679,610
------------ ------------
Deductions:
Deductions from net assets attributed to:
Benefits paid to participants 6,389,842 15,172,417
Administrative expenses 1,887 59,682
------------ ------------
Total deductions 6,391,729 15,232,099
------------ ------------
Net decrease in net assets (6,609,376) (14,552,489)
Net assets available for benefits:
Beginning of year 92,275,808 106,828,297
------------ ------------
End of year $ 85,666,432 92,275,808
============ ============
See accompanying notes to financial statements
2
AMCORE FINANCIAL SECURITY PLAN
Statements of Net Assets Available for Benefits
December 31, 2001 and 2000
2001 2000
----------- -----------
Assets:
Investments, at fair value $85,666,432 92,275,808
----------- -----------
Net assets available for benefits $85,666,432 92,275,808
=========== ===========
See accompanying notes to financial statements.
3
AMCORE FINANCIAL SECURITY PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(1) Significant Accounting Policies
Financial Statement Presentation
Since the AMCORE Financial Security Plan (the Plan) is subject to
the Employee Retirement Income Security Act of 1974 (ERISA), the
Plan prepared its financial statements and schedule in accordance
with the financial reporting requirements of ERISA rather than in
accordance with Regulation S-X.
Valuation of Investments
If available, quoted market prices are used to value investments.
The mutual funds are valued at quoted net asset values.
Participants' notes are valued at face value which approximates
market. Investment in AMCORE Stable Asset Fund is valued at net
asset value which is determined based on the fair value of the
underlying investments. AMCORE Common Stock is valued at the last
reported sales price on the day of valuation.
Security transactions are accounted for on a trade-date basis.
Dividend income is recorded on the ex-dividend date. Interest
income is accounted for on the accrual basis.
Payment of Benefits
Benefits are recorded when paid.
Accounting Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires the plan trustees to make estimates and
assumptions that affect the amounts reported in the financial
statements and the accompanying notes. Actual results could differ
from those estimates.
New Accounting Pronouncement
The Plan adopted Statement of Financial Accounting Standards
(SFAS) No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended by SFAS No. 138, on January 1, 2001. This
Statement outlines accounting and reporting standards for
derivative instruments and hedging activities. The effect of
adoption of SFAS No. 133 on the Plan's 2001 financial statements
is immaterial.
(2) Plan Description
The following description of 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 plan covering substantially all
employees of AMCORE Financial, Inc. (AFI) and participating
subsidiaries, who have completed ninety days of service and have
reached the age of 18. It is subject to the provisions of ERISA.
4
(Continued)
AMCORE FINANCIAL SECURITY PLAN
Notes to Financial Statements
December 31, 2001 and 2000
Contributions
Participants may contribute up to 10%, not to exceed $10,500 of
their annual wages on a pretax basis in 2001 and $10,000 in 2000.
The first 3% of the employee's contribution is matched by the
employer, dollar for dollar, and the next 2% is matched at 50%.
Employer contributions are used to purchase AFI common stock.
The employer contributes 3% of the participants' annual wages each
year to a basic retirement account; these funds are set aside for
retirement and, therefore, are not available for participant
loans. These funds are invested in the same manner as the
participant's contributions.
Participant Accounts
Each participant's account is credited with the participant's
contributions and an allocation of the employer's contribution and
plan earnings. Allocations are based on participant earnings, as
defined. The benefit to which a participant is entitled is the
benefit that can be provided from the participant's vested
account. The Plan provides for a maximum contribution to a
participant's account in any plan year of the lesser of $35,000 or
25% of the participant's compensation.
Payment of Benefits
On termination of service, a participant may select one of several
payment options. Withdrawals by a participant are fully taxable,
except for the return of after tax contributions, if any.
Vesting
Participants are immediately vested in both their contributions
and that of the employer.
Investment Funds
The assets of the Plan are segregated and maintained in fourteen
separate fund accounts consisting of the Vintage U.S. Government
Obligation Fund, Vintage Limited Term Bond Fund, Vintage Equity
Fund, Vintage Balanced Fund, AMCORE Stable Asset Fund, AMCORE
Common Stock Fund, Loan Fund, Vintage Aggressive Growth Stock
Fund, Vintage Technology Fund, Vintage Bond Fund, Gabelli Westwood
Equity, Aetna Small Company, Putnam International Growth and the
Contribution Fund. Participants have the option to invest their
account balance and contributions to their respective account in
these funds except the Loan Fund, Employer Matching Contribution
Stock Fund, and Contribution Fund in increments of 5% of their
participating balance. Participants are limited to a maximum
contribution of 10% to the AMCORE Common Stock Fund. Participants
also have the option to change the allocation of their individual
participant's balance daily.
The Plan provides that fund assets be invested as follows:
Vintage U.S. Government Obligation Fund investments consist
of U.S. government obligations, a money market mutual fund
that invests in U.S. government obligations, bonds,
debentures, commercial paper, bankers' acceptances, bank
certificates of deposit, and savings instruments.
5
(Continued)
AMCORE FINANCIAL SECURITY PLAN
Notes to Financial Statements
December 31, 2001 and 2000
Vintage Limited Term Bond Fund investments consist of a
mutual fund that invests in U.S. government obligations,
bonds, debentures, commercial paper, bankers' acceptances,
mortgages, and savings instruments which mature beyond one
year.
Vintage Equity Fund investments consist of a mutual fund
that invests primarily in large capitalization equity
securities.
Vintage Balanced Fund is a mutual fund that invests in a
blend of large capitalization equity and debt securities.
AMCORE Stable Asset Fund is a common trust fund comprised
primarily of investments in high quality fixed and variable
rate insurance company contracts, as well as short-term
investments. The Plan provides that a minimum of 50% of
assets of this fund can be liquidated in 30 days and the
remainder within 12 months.
AMCORE Common Stock Fund consists solely of AFI common
stock, which is traded in the over-the-counter market under
the symbol "AMFI." The employees have voting rights in all
shares. Temporarily, assets are held in a money market fund
until the AFI stock is purchased.
Vintage Aggressive Growth Stock Fund consists of a mutual
fund that invests in relatively volatile small and
mid-capitalization equity securities that are poised for
above-average growth over the long term.
Contribution Fund serves as a temporary account to
accumulate contributions to be allocated to the other funds.
This fund invests in money market instruments.
Vintage Technology Fund consists of primarily domestic
securities, but also foreign companies in various industries
that are believed to benefit significantly from
technological advances or improvements without regard to
market capitalization.
Vintage Bond Fund primarily invests in bonds, notes, and
debentures of a wide range of domestic fixed-income security
issuers.
Gabelli Westwood Equity is a mutual fund that normally
invests at least 65% of assets in common stocks and
convertible securities of seasoned companies with historical
earnings growth higher than published indexes, and in
smaller companies believed to have outstanding potential for
capital appreciation. The fund may also invest up to 35% of
assets in foreign and domestic debt securities.
Aetna Small Company normally invests at least 65% of assets
in common stocks of companies with market capitalizations of
$1 billion or less. It may also invest in convertible
securities and enter in various derivative transactions. It
may invest up to 25% of assets in foreign securities.
Putnam International Growth normally invests at least 65% of
assets in equity securities of companies located outside of
the United States. It may invest in companies of any size
that it judges to be in a strong growth trend or it believes
to be undervalued. The fund may invest in both developed and
emerging markets. It may engage in hedging strategies.
6
(Continued)
AMCORE FINANCIAL SECURITY PLAN
Notes to Financial Statements
December 31, 2001 and 2000
Participant loans are made to participants for hardship
reasons only such as: to prevent foreclosure, to pay college
tuition, to pay medical expenses not covered by insurance,
and for other unforeseeable hardships as approved by the
Committee.
(3) Investments
The following presents investments that represent 5% or more of the
Plan's net assets:
December 31
----------------------------
2001 2000
------------- -------------
Vintage Equity Fund, 1,888,599 and 1,951,203 shares,
respectively $ 30,670,840 38,126,818
Employer Matching Contribution Stock Fund, AMCORE
Financial, Inc. common stock, 941,901 and 911,371 shares,
respectively* 21,051,484 18,854,443
Vintage Aggressive Growth Stock Fund, 602,081 and 614,729 shares,
respectively 6,677,083 8,446,386
Vintage Balanced Fund, 417,270 and 456,573 shares,
respectively 5,361,917 6,410,285
AMCORE Stable Asset Fund, 338,017 and 330,777 shares,
respectively 7,578,341 7,005,862
Vintage Limited Term Bond Fund, 654,800 and 617,674 shares,
respectively 6,561,094 6,028,501
Vintage U.S. Government Obligation Fund, 5,454,747 and
5,832,903 shares, respectively 5,454,747 5,832,903
============= =============
*Nonparticipant directed
During 2001 and 2000, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
depreciated in value by ($7,300,332) and ($12,346,893), respectively, as
follows:
2001 2000
------------- -------------
AMCORE Financial, Inc. common stock $ 1,509,328 295,003
Shares of mutual funds (9,187,249) (10,509,155)
AMCORE Stable Asset Fund 377,589 (2,132,741)
------------- -------------
$ (7,300,332) (12,346,893)
============= =============
7
(Continued)
AMCORE FINANCIAL SECURITY PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(4) Nonparticipant-directed Investments
Information about the net assets and the significant components of the
change in net assets relating to the nonparticipant-directed investments
is as follows:
December 31
---------------------------
2001 2000
------------ ------------
Net assets - Employer Matching Contribution Stock Fund,
AMCORE Financial, Inc. common stock $ 21,051,484 18,854,443
============ ============
December 31
---------------------------
2001 2000
------------ ------------
Changes in net assets:
Contributions $ 1,870,612 2,628,718
Net appreciation 1,501,111 1,316,560
Benefits paid to participants (1,174,682) (2,028,440)
Administrative expense -- (65)
------------ ------------
$ 2,197,041 1,916,773
============ ============
(5) Transactions with Related Party
Except for the common stock of the employer, Gabelli Westwood Equity,
Aetna Small Company, and Putnam International Growth, all plan
investments are shares of mutual funds, a common trust fund, and money
market deposits which are managed by AMCORE Investment Group N.A., which
is the trustee as defined by the Plan, and, therefore, these transactions
qualify as party-in-interest. Effective June 1, 2000, AMCORE Investment
Group became the Trustee of the Plan. Until June 1, 2000, BISYS served as
the Plan Trustee.
Certain costs of administering the Plan are paid by AMCORE Financial,
Inc. (Plan Sponsor), the sponsor. Administrative expenses totaled $1,887
and $59,682 for the years ended December 31, 2001 and 2000. The
administration of the funds is now performed by the Plan Sponsor.
Accordingly, the majority of the fees to the Plan have been waived.
(6) Plan Termination
Although it has not expressed any intent to do so, the employer 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, the net income or loss to the date of termination, less
any distribution expenses and liquidation costs, shall be distributed
proportionately to the participants' accounts and participants will be
entitled to receive the value of their accounts.
8
(Continued)
AMCORE FINANCIAL SECURITY PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(7) Participant Loans
Participants are eligible to obtain loans from the Plan in the event of
financial hardship as defined by the Plan. The loans are limited to the
lesser of $50,000 or 50% of the accrued benefit of the participant under
the Plan, excluding the participant's accrued benefit attributable to the
basic retirement account. Participants' loans are charged interest at a
rate which is based on prime at the date of the loan and is fixed for the
life of the loan. Loan terms range from 1-5 years or a greater period for
loans made for the acquisition of a primary residence. Loan repayments
are made through automatic payroll deductions from each regular check
received by the participant. The loans are collateralized by the
participants' vested interest in the Plan.
(8) Income Tax Status
The Internal Revenue Service has determined and informed the employer by
letter dated April 28, 1995 that the Plan and related trust are designed
in accordance with applicable sections of the Internal Revenue Code
(IRC). The Internal Revenue Service has also determined and informed the
Company by a letter dated April 28, 1995, that the Plan is qualified and
trust established under the Plan is tax-exempt, under applicable sections
of the Internal Revenue Code. The plan administrator believes that the
Plan is designed and currently being operated in compliance with the
applicable requirements of the IRC.
(9) Additional Investments
During 2001, AMCORE made three additional Mutual Funds available to plan
participants: Gabelli Westwood Equity, Aetna Small Company, and Putnam
International Growth.
(10) Subsequent Events
In January 2002, AMCORE made the PIMCO Innovation Fund, a mutual fund not
affiliated with AFI, available to plan participants. This fund replaced
the AMCORE Vintage Technology Fund.
9
Schedule 1
AMCORE FINANCIAL SECURITY PLAN
Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes
December 31, 2001
Number of
shares or
principal Current
Description amount Cost value
- ------------------------------------------------ ------------ ------------- ----------
Common stock:
AMCORE Financial, Inc. * 941,901 $ 18,314,440 21,051,484
Common trust fund:
AMCORE Stable Asset Fund * 338,017 6,956,692 7,578,341
Money market deposits 67,146 67,146 67,146
Mutual funds:
Vintage Limited Term Bond Fund * 654,800 6,313,369 6,561,094
Vintage Balanced Fund * 417,270 6,410,047 5,361,917
Vintage Equity Fund * 1,888,599 41,969,243 30,670,840
Vintage Aggressive Growth Stock Fund * 602,081 9,629,450 6,677,083
Vintage Technology Fund* 237,319 1,646,671 685,852
Vintage Bond Fund* 69,577 697,797 696,465
Vintage U.S. Government Obligations Fund * 5,454,747 5,454,747 5,454,747
Gabelli Westwood Equity 25,577 233,135 232,751
Aetna Small Company 19,082 258,226 271,729
Putnam International Growth 7,004 144,020 137,066
-------------- -------------
Mutual funds 72,756,705 56,749,544
Participants' loans 219,917 219,917 219,917
-------------- -------------
Total investments $ 98,314,900 85,666,432
============== =============
* Asterisk denotes an investment in an entity which is a "party-in-interest" as
defined by ERISA.
See accompanying independent auditors' report.
10
Consent of Independent Auditors'
--------------------------------
The Board of Directors
AMCORE Financial, Inc.
We consent to incorporation by reference in the Registration Statement (No.
33-10446) on Form S-8 of AMCORE Financial, Inc. of our report dated May 31,
2002, relating to the statements of net assets available for benefits of the
AMCORE Financial Security Plan as of December 31, 2001 and 2000, the related
statements of changes in net assets available for benefits for the years then
ended and the schedule of assets held for investment purposes as of December 31,
2001 which report appears in the December 31, 2001 annual report on Form 11-K of
AMCORE Financial, Inc.
/s/ KPMG LLP
Chicago, Illinois
June 24, 2002
11
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
trustee (or other persons who administer the plan) have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
AMCORE FINANCIAL SECURITY PLAN
/s/ John R. Hecht
---------------------------------------
John R. Hecht
Executive Vice President and Chief Financial Officer
for AMCORE Financial, Inc. Plan Administrator
Date: June 26, 2002