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 (Fee Required)
or
Transition Report Pursuant to Section 15(d) of
--- the Securities Exchange Act of 1934(no fee required)
for the transition period from to .
--------- ----------
For the fiscal year ended December 31, 2003
Commission file number 001-10898
---------------------------------
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
THE ST. PAUL COMPANIES, INC.
385 WASHINGTON STREET
ST. PAUL MINNESOTA 55102
(Full title of the Plan and address of the Plan)
------------------------------
THE ST. PAUL COMPANIES, INC.
385 WASHINGTON STREET
ST. PAUL, MINNESOTA 55102
(Name and address of principal executive
offices of the issuer of the securities)
-------------------------------
REQUIRED INFORMATION
--------------------
The St. Paul Companies, Inc. Stock Ownership Plan (the "Plan") is
subject to the provisions of the Employee Retirement Income
Securities Act of 1974, as amended ("ERISA"), and for purposes
of satisfying the requirements of Form 11-K has included for
filing herewith the Plan financial statements and schedule
prepared in accordance with the financial reporting requirements
of ERISA.
Financial Statements and Schedule Page
--------------------------------- ----
Stock Ownership Plan:
Independent Auditors' Report for Stock Ownership Plan . 17
Statements of Net Assets Available for Benefits
under Stock Ownership Plan . . . . . . . . . . . . . . 18-19
Statements of Changes in Net Assets Available for
Benefits under Stock Ownership Plan . . . . . . . . . . 20-21
Notes to Financial Statements for Stock Ownership Plan . . 22-30
Schedule H, Line 4i-Schedule of Assets
(Held at End of Year) for Stock Ownership Plan . . . . . 31
Schedule H, Line 4j-Schedule of Reportable Transactions
for Stock Ownership Plan . . . . . . . . . . . . . . . . 32
Signature for Stock Ownership Plan . . . . . . . . . . . . 33
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . 34
Report of Independent Registered Public Accounting Firm
-------------------------------------------------------
The Plan Administrative Committee and Plan Participants
The St. Paul Companies, Inc. Stock Ownership Plan:
We have audited the accompanying statements of net assets
available for benefits of The St. Paul Companies, Inc. Stock
Ownership Plan (the Plan) as of December 31, 2003 and 2002, 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 administrator.
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. 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 St. Paul Companies, Inc. Stock
Ownership Plan as of December 31, 2003 and 2002, and the changes
in the 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 basic financial statements taken as a whole. The
supplemental schedules of assets (held at end of year) and
reportable transactions 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. These supplemental schedules are the responsibility of
the Plan's administrator. 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.
KPMG LLP
--------
KPMG LLP
Minneapolis, Minnesota
June 25, 2004
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Statement of Net Assets Available for Benefits
December 31, 2003
Allocated
-------------------------------
Assets: Non-Participant Participant
Directed Directed Unallocated Total
--------------- ----------- ----------- ------------
Investments:
-----------
Preferred stock of The
St. Paul Companies, Inc. $192,198,139 $ - $24,443,556 $216,641,695
Common stock of The
St. Paul Companies, Inc. 166,992,795 66,308,123 - 233,300,918
Cash and short-term
investments 1,726,807 612,355 2,015,987 4,355,149
----------- ---------- ---------- -----------
Total investments 360,917,741 66,920,478 26,459,543 454,297,762
Receivables:
-----------
Participating companies'
contributions - - 5,443,145 5,443,145
Accrued dividends and
interest 1,224,643 484,977 1,712 1,711,332
Investments sold but not
delivered 194,332 - - 194,332
----------- ---------- ---------- -----------
Total receivables 1,418,975 484,977 5,444,857 7,348,809
----------- ---------- ---------- -----------
Total assets 362,336,716 67,405,455 31,904,400 461,646,571
----------- ---------- ---------- -----------
Liabilities:
-----------
Long-term debt - - 22,664,215 22,664,215
Accrued expenses 65,745 - 887,682 953,427
Other payable 8,124 490,517 - 498,641
----------- ---------- ---------- -----------
Total liabilities 73,869 490,517 23,551,897 24,116,283
----------- ---------- ---------- -----------
Net assets available for
benefits $362,262,847 $66,914,938 $8,352,503 $437,530,288
=========== ========== ========== ===========
See accompanying notes to financial statements.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Statement of Net Assets Available for Benefits
December 31, 2002
Allocated
-------------------------------
Assets: Non-Participant Participant
Directed Directed Unallocated Total
--------------- ----------- ----------- ------------
Investments:
-----------
Preferred stock of The
St. Paul Companies, Inc. $154,061,804 $ - $47,288,353 $201,350,157
Common stock of The
St. Paul Companies, Inc. 161,439,222 60,341,605 - 221,780,827
Cash and short-term
investments 1,910,368 450,544 2,174,782 4,535,694
----------- ---------- ---------- -----------
Total investments 317,411,394 60,792,149 49,463,135 427,666,678
Receivables:
-----------
Participating companies'
contributions - - 5,337,124 5,337,124
Accrued dividends and
interest 1,380,539 515,286 2,490 1,898,315
Other receivable 400,037 - - 400,037
----------- --------- ---------- -----------
Total receivables 1,780,576 515,286 5,339,614 7,635,476
----------- ---------- ---------- -----------
Total assets 319,191,970 61,307,435 54,802,749 435,302,154
----------- ---------- ---------- -----------
Liabilities:
-----------
Long-term debt - - 40,469,582 40,469,582
Accrued expenses 69,365 - 1,585,058 1,654,423
Other payable 48,287 366,213 - 414,500
----------- ---------- ---------- -----------
Total liabilities 117,652 366,213 42,054,640 42,538,505
----------- ---------- ---------- -----------
Net assets available for
benefits $319,074,318 $ 60,941,222 $12,748,109 $392,763,649
=========== =========== ========== ===========
See accompanying notes to financial statements.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2003
Allocated
----------------------------
Non-Participant Participant
Directed Directed Unallocated Total
--------------- ----------- ----------- ------------
Additions:
---------------------
Investment income:
Dividends $11,709,760 $1,976,580 $1,677,529 $15,363,869
Interest 23,293 7,297 14,731 45,321
Net appreciation
in market value
of investments 48,681,351 9,687,310 5,688,294 64,056,955
----------- ---------- ---------- -----------
Net investment
income 60,414,404 11,671,187 7,380,554 79,466,145
Participating companies'
contributions - - 12,896,541 12,896,541
Transfer from St. Paul
Companies, Inc Savings
Plus Plan - 16,954,672 - 16,954,672
----------- ---------- ---------- -----------
Total additions 60,414,404 28,625,859 20,277,095 109,317,358
----------- ---------- ---------- -----------
Deductions:
----------
Interest expense - - 2,742,647 2,742,647
Administrative expenses 241,215 - - 241,215
Other expense 690 2,130 - 2,820
Paid to participants
in cash 25,575,444 2,650,988 - 28,226,432
Common stock distributed
at market value 8,187,603 1,457,092 - 9,644,695
Transfer to St. Paul
Companies, Inc. Savings
Plus Plan 5,150,977 18,541,933 - 23,692,910
----------- ---------- ---------- -----------
Total deductions 39,155,929 22,652,143 2,742,647 64,550,719
----------- ---------- ---------- -----------
Net increase
prior to interfund
transfers 21,258,475 5,973,716 17,534,448 44,766,639
Interfund transfers:
-------------------
Allocation of 95,246 shares
of preferred stock,
at market 28,533,091 - (28,533,091) -
Transfer of dividend income
for debt service (6,603,037) - 6,603,037 -
------------ --------- ---------- -----------
Net increase (decrease) 43,188,529 5,973,716 (4,395,606) 44,766,639
Net assets available for
benefits:
Beginning of year 319,074,318 60,941,222 12,748,109 392,763,649
----------- ---------- ---------- ------------
End of year $362,262,847 $66,914,938 $ 8,352,503 $437,530,288
=========== ========== ========== ============
See accompanying notes to financial statements.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2002
Allocated
----------------------------
Non-Participant Participant
Directed Directed Unallocated Total
--------------- ----------- ----------- ------------
Additions (reductions):
---------------------
Investment income (loss):
Dividends $ 11,794,868 $ 2,016,588 $ 2,707,940 $16,519,396
Interest 46,084 15,894 25,313 87,291
Net depreciation in
in market value
of investments (88,630,403) (18,757,739) (19,575,570) (126,963,712)
------------ ---------- ---------- -----------
Net investment
loss (76,789,451) (16,725,257) (16,842,317) (110,357,025)
Participating companies'
contributions - - 11,190,849 11,190,849
Other income 2,276 - - 2,276
Transfer from St. Paul
Companies, Inc.
Savings Plus Plan - 81,817,119 - 81,817,119
----------- ---------- ---------- -----------
Total additions
(reductions) (76,787,175) 65,091,862 (5,651,468) (17,346,781)
----------- ---------- ---------- -----------
Deductions:
----------
Interest expense - - 4,283,118 4,283,118
Administrative expenses 205,655 - - 205,655
Other expense - 6,977 - 6,977
Paid to participants
in cash 24,697,001 2,808,812 - 27,505,813
Common stock distributed
at market value 9,636,369 1,393,511 - 11,029,880
Transfer to St. Paul
Companies, Inc.
Savings Plus Plan 781,388 1,912,259 - 2,693,647
----------- ---------- ---------- -----------
Total deductions 35,320,413 6,121,559 4,283,118 45,725,090
----------- ---------- ---------- -----------
Net increase (decrease)
prior to interfund
transfers (112,107,588) 58,970,303 (9,934,586) (63,071,871)
Interfund transfers:
-------------------
Allocation of 82,383 shares
of preferred stock,
at market 23,277,838 - (23,277,838) -
Transfer of dividend income
for debt service (6,132,360) - 6,132,360 -
----------- ---------- ---------- -----------
Net increase (decrease) (94,962,110) 58,970,303 (27,080,064) (63,071,871)
Net assets available for
benefits:
Beginning of year 414,036,428 1,970,919 39,828,173 455,835,520
----------- ---------- ---------- -----------
End of year $319,074,318 $60,941,222 $12,748,109 $392,763,649
=========== ========== ========== ===========
See accompanying notes to financial statements.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2003 and 2002
Note 1 Description of the Plan
-----------------------
General Provisions
------------------
The following brief description of the St. Paul Companies,
Inc. Stock Ownership Plan (the Plan) is provided for
general information purposes. Plan participants should
refer to the Plan document for more complete information.
Effective January 1, 1998, The St. Paul Companies, Inc.
Savings Plus Preferred Stock Plan (PSOP) and The St. Paul
Companies, Inc. Employee Stock Ownership Plan (ESOP) were
merged into one plan, thereby creating the Plan. The Plan
is a defined contribution plan under which guaranteed
matching contributions are made, with respect to employees'
pretax 401(k) contributions to The St. Paul Companies, Inc.
Savings Plus Plan (Savings Plus Plan). The St. Paul Companies,
Inc. (The Company) and certain of its subsidiaries, St. Paul
Fire and Marine Insurance Company and St. Paul Reinsurance
Management Corporation currently participate in the Plan.
Octagon Risk Services, Inc. withdrew from the Plan effective
October 5, 2003,pursuant to its sale by the Company.
U.S. Bank National Association is the Trustee for the ESOP
Common Stock Fund portion of The St. Paul Companies, Inc.
Stock Ownership Trust (Trust). Fidelity Management Trust
Company (FMTC) is the Trustee for the remaining portion of
the Trust. The Company has appointed an Administrative
Committee which acts as Plan Administrator.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2003 and 2002
Note 1 Description of the Plan (continued)
----------------------------------
Participation, Vesting and Allocations
--------------------------------------
Employees of the Company and participating subsidiaries,
who participated in the ESOP or PSOP on December 31, 1997
became Plan participants on January 1, 1998. Employees of
the Company and participating subsidiaries, who were not
participants in the ESOP or PSOP on December 31, 1997
become participants as of the later of January 1, 1998 or
their employment date.
Participants are fully vested in their pre-1999 matching,
performance-based and ESOP allocations after six years of
service. Participants become 20 percent vested in these
allocations of Company stock after two years of service
increasing an additional 20 percent for each additional year
of service. Participants are immediately vested in their
1999-2002 matching allocations. Beginning January 1, 2003,
participants are fully vested after three years of service.
Participants also become fully vested in full upon retirement,
permanent and total disability, death, or upon termination of
the Plan or a change in control of the Company, as defined by
the Plan.
The Plan allocates shares of the Company's Series B
Convertible Preferred Stock (preferred stock) to those
employees participating in the Savings Plus Plan. Shares
of the Company's preferred stock are allocated to eligible
participants semi-annually based on their Savings Plus Plan
contributions through June 30 and December 31. Effective
January 1, 2003, the Company increased the matching contribution
of one dollar for every dollar of participant salary
conversion contribution from four to six percent of their base
salary. This matching contribution made in the form of The
St. Paul Companies, Inc. Preferred Stock is subject to a
three-year cliff vesting provision. Except for cases of
retirement, permanent and total disability, or death, this
matching allocation is made only to participants actively
employed on the last working day of June or December,
respectively.
Over a period of ten years, shares of the Company's common
stock were allocated, from the former ESOP, to participants
based on compensation. The final ESOP allocation was made
as of December 31, 1997. Except for cases of death,
retirement or permanent and total disability, the
allocation was made only to participants actively employed
on the last working day of the calendar year.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2003 and 2002
Note 1 Description of the Plan (continued)
----------------------------------
Voting Rights
-------------
Each participant is entitled to exercise voting rights
attributable to the shares allocated to his or her account
and is notified by the Trustee prior to the time that such
rights are to be exercised. The Trustee is not permitted to
vote any allocated share for which instructions have not been
given by a participant. The Trustee is required, however, to
vote any unallocated shares on behalf of the collective
best interest of the plan participants and beneficiaries.
Long Term Debt
--------------
Prior to the merger that created the Plan, the PSOP had
obtained long-term financing from St. Paul Fire and Marine
Insurance Company to purchase Company preferred stock for
future allocation to PSOP participants. This loan
principal and interest continues to repaid by the Plan
using participating Company contributions and dividends
received on allocated and unallocated shares of Company
preferred stock held by the Trust. See Note 7 for more
information.
Distribution of Benefits
------------------------
Distribution of vested benefits from the Trust is made upon
a participant's retirement, permanent and total disability,
death or employment termination. Distribution of vested
benefits from the Preferred Stock or ESOP Common Stock
Funds, at the participant's election, will be either in the
form of cash, or full shares of Company common stock and
cash in lieu of any fractional shares of such stock.
ESOP Common Stock Fund dividends are distributed to
participants as soon as practicable following the dividend
pay date. As of October 2003 participants are able to
reinvest dividends in the Plan if they so choose.
Diversification
---------------
Participants do not have investment discretion regarding
the Preferred Stock Fund. Participants who have
attained age 55 may elect to diversify a portion of their
Preferred Stock balance, once a year for six years, up to a
maximum amount. Diversifications are made through transfers out
of the Plan for investment in The St. Paul Companies, Inc.
Savings Plus Plan.
Beginning in 2003, a participant who has an ESOP account in the
Plan has the ability to move money out of the ESOP account into
other investment options. ESOP diversification was phased in
during 2003 according to the following schedule:
February 1, 2003 Up to 25% of ESOP shares can be diversified
April 1, 2003 Up to 50% of original ESOP shares can be diversified
June 1, 2003 Up to 75% of original ESOP shares can be diversified
August 1, 2003 Full ESOP balance can be diversified
Diversifications are made through transfers out of the Plan
for investment in The St. Paul Companies, Inc. Savings Plus
Plan.
Forfeitures
-----------
Under the Plan, forfeitures are used in the following
priority:
- to restore benefits to participants returning to the Plan;
- to make any necessary corrective allocations or
distributions to participants;
- to pay administrative expenses, and;
- any remaining forfeitures are reallocated to participants as
described in the Plan.
Under those terms the Company plans to utilize a portion of
these forfeitures to reduce future employer contributions.
Forfeited non-vested accounts totaled $5.4 million and $3.2
million at December 31, 2003 and 2002, respectively. Forfeitures
used to reduce employer contributions totaled $1.6 million in
2003 and zero in 2002, respectively.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2003 and 2002
Note 1 Description of the Plan (continued)
----------------------------------
Plan Termination
----------------
Although the Company expects to continue the Plan
indefinitely, it has reserved the right to terminate the
Plan at any time. Upon such termination, the Plan
Administrative Committee would consider directing the
Trustee to distribute participant account balances. Upon
termination of the Plan participant account balances would
vest in full.
Tax Status
----------
The Internal Revenue Service has determined and informed
the Company by letter dated December 31, 2003, that the Plan as
designed is in accordance with applicable Section 401-
1(b)(3) and the Trust is qualified under Section 501(a) of
the Internal Revenue Code.
Note 2 Significant Accounting Policies
-------------------------------
The accompanying Plan financial statements are prepared in
conformity with United States generally accepted accounting
principles (GAAP).
The preparation of these financial statements requires
management to rely on estimates and assumptions that affect
the reported amounts of assets and liabilities and changes
therein, and disclosure of contingent assets and
liabilities. We continually review our estimates and make
adjustments as necessary, but actual results could turn out
to be significantly different from what we expected when we
made these estimates.
The Plan provides for investment in St. Paul Preferred and
Common Stock funds. Investments in general are exposed to
various risks, such as interest rate, credit and overall market
volatility. Due to the level of risk associated with
investments, it is reasonably possible that changes in the values
of investments 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.
The investment in preferred and common stock of the Comapany
are carried at market value as discussed in Note 8.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2003 and 2002
Note 2 Significant Accounting Policies (continued)
------------------------------------------
Realized gains or losses on the sales of investments
and the change in unrealized appreciation or depreciation
in the market value of investments are presented in
total in the statements of changes in net assets available
for plan benefits. The average cost method is used to
determine cost of shares sold or distributed. Purchases
and sales of investments are recorded on a trade-date
basis. Dividends are recorded on the ex-dividend date.
Interest is recorded when earned.
Money market portfolios and short-term investments
are carried at cost plus accrued interest or
amortized discount, which approximates market value.
A portion of administrative expenses of the Plan are paid
by the participating companies and are not reflected in the
accompanying financial statements. Plan administrative
expenses paid by the Plan are paid out of forfeitures.
Benefits are recorded when paid.
Note 3 Investment in Preferred Stock of the Company
--------------------------------------------
Information regarding the Plan's investment in preferred
stock of the Company follows:
Allocated Unallocated Total
---------- ----------- --------
December 31, 2003
-----------------
Number of shares 601,164 76,455 677,619
Cost $86,747,964 $11,032,514 $97,780,478
Market value $192,198,139 $24,443,556 $216,641,695
Market value per share $319.71
December 31, 2002
-----------------
Number of shares 559,391 171,701 731,092
Cost $80,720,084 $24,776,549 $105,496,633
Market value $154,061,804 $47,288,353 $201,350,157
Market value per share $275.41
Each share of the Company's preferred stock has a
guaranteed minimum value of $144.30, a dividend rate of
$11.724 annually and is convertible into eight shares of
the Company's common stock.
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2003 and 2002
Note 4 Investment in Common Stock of the Company
-----------------------------------------
Information regarding the Plan's investment in common stock
of the Company follows. All shares are considered
allocated.
Total
December 31, 2003 ------------
-----------------
Number of shares 5,884,008
Cost $102,152,889
Market value $233,300,918
Percent of total Company shares outstanding 2.6%
Market value per share $39.65
December 31, 2002
-----------------
Number of shares 6,513,387
Cost $109,415,823
Market value $221,780,827
Percent of total Company shares outstanding 2.9%
Market value per share $34.05
Note 5 Net Appreciation (Depreciation) in Market Value of Investments
--------------------------------------------------------------
Plan investments, including gains and losses on investments
bought and sold as well as held during the year,
appreciated (depreciated) as follows:
December 31, 2003 December 31, 2002
----------------- -----------------
Preferred Stocks $ 30,531,658 $ (59,843,734)
Common Stocks 33,525,297 (67,134,258)
Mutual Funds - 13,216
Common Trust Fund - 1,064
------------ ------------
Net Appreciation
(Depreciation) $ 64,056,955 $(126,963,712)
============ ============
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2003 and 2002
Note 6 Party-in-Interest Transactions
------------------------------
Transactions resulting in Plan assets being transferred to
or used by a related party are prohibited under the
Employee Retirement Income Security Act of 1974 (ERISA)
unless a specific exemption applied. U.S. Bank National
Association (U.S. Bank) and Fidelity Management Trust
Company (FMTC), are parties-in-interest as defined by ERISA
as a result of being trustees of the Plan. U.S. Bank and
FMTC are investing plan assets in their respective short-
term investment fund. Certain Plan investments were in
shares of mutual funds or a commingled pool managed by
Fidelity Investments. The Plan also engages in
transactions involving the acquisition or disposition of
units of participation in preferred and common stock of The
St. Paul Companies, Inc., a party-in-interest with respect
to the Plan. These transactions are covered by an
exemption from the "prohibited transactions" provisions of
ERISA and the Internal Revenue Code.
Note 7 Long Term Debt
--------------
To finance the preferred stock purchase for future
allocation to qualified employees, the Trust (formerly the
PSOP) borrowed $150 million from St. Paul Fire and Marine
Insurance Company, at an interest rate of 9.4 percent. This
long-term debt matures on January 31, 2005, and requires
semiannual interest payments. Payments of principal will
be made in order to provide the targeted benefits of the
Plan. Any remaining unpaid balance is due on maturity
date. Each participating company's cash contribution to
the Trust is based on its percentage of the total Company
match and performance-based allocation. When these loan
payments are made, a pro rata amount of preferred stock is
allocated from unallocated shares to Participants' Plan
accounts. These allocations are characterized as either
matching contributions, performance-based contributions or
as dividends on participants' allocated preferred shares.
Repayment of this loan is guaranteed by the Company. The
outstanding balance of this debt was $22,664,215 and
$40,469,582, as of December 31, 2003 and 2002,
respectively.
Future maturities of long-term debt are as follows:
Year ending December 31
-----------------------
2004 $ 8,373,088
2005 14,291,127
----------
$22,664,215
==========
PAGE>
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2003 and 2002
Note 8 Disclosures About Fair Value of Financial Instruments
-----------------------------------------------------
The following methods and assumptions were used to estimate
the fair value of each class of financial instrument for
which it is practicable to estimate that value.
Cash and Short-term Investments are carried at cost plus
accrued interest or amortized discount, which approximates
the fair value.
Preferred stock is based on a valuation model provided by an
independent appraiser.
Common stock of The Company is based on published market prices.
The fair values of the Plan's long-term debt is based
primarily on the fair value of debt securities in the
market that have terms similar to the Plan's debt.
The carrying amounts and estimated fair values of the
Plan's financial instruments at December 31 are as follows:
2003 2002
------------------------ -----------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
--------- ------- --------- ------
Cash and short-term
investments $ 4,355,149 $ 4,355,149 $ 4,535,694 $ 4,535,694
Preferred stock of
The St. Paul
Companies, Inc. 216,641,695 216,641,695 201,350,157 201,350,157
Common stock of
The St. Paul
Companies, Inc. 233,300,918 233,300,918 221,780,827 221,780,827
----------- ----------- ----------- -----------
Total Investments $454,297,762 $454,297,762 $427,666,678 $427,666,678
=========== =========== =========== ===========
Long-term debt $ 22,664,215 $ 24,226,913 $ 40,469,582 $ 45,466,361
=========== =========== =========== ===========
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2003 and 2002
Note 9 Subsequent Event
----------------
On November 17, 2003, the Company announced the proposed business
combination with Travelers Property Casualty Corporation an closing
took place on April 1, 2004. The name of the registrant was changed
from "The St. Paul Companies, Inc." to "The St. Paul Travelers
Companies, Inc." in connection with the merger and St. Paul Travelers
Common and Series B Convertible Preferred Stock was issued. This
business combination is considered a change-in-control for the Plan
therefore all company contributions allocated to active participants
before April 1, 2004 became full vested. Company contributions
allocated to participants after April 1, 2004 vest after three years
of service. The Plan, St. Paul Companies, Inc. Savings Plus Plan and
Travelers 401(k) Savings Plans are expected to merge into one plan
on or near January 1, 2005.
SCHEDULE 1
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2003
Identity of Issue Description of Investment Cost Current Value
----------------- ------------------------- ---------- -------------
*The St. Paul Series B Convertible
Companies, Inc. Preferred Stock, no par
value, 677,619 shares $ 97,780,478 $ 216,641,695
*The St. Paul Common stock, no par
Companies, Inc. value, 5,884,008 shares 102,152,889 233,300,918
*U.S. Bank N.A. First American
Prime Obligation,
Class Y
Institutional Fund 633,558 633,558
*Fidelity Management Institutional Cash
Trust Company Portfolio MM Fund
shares 3,721,591 3,721,591
----------- -----------
Total Investments $ 204,288,516 $ 454,297,762
=========== ===========
* Party-in-interest
See accompanying report of independent registered public accounting firm.
SCHEDULE 2
THE ST. PAUL COMPANIES, INC. STOCK OWNERSHIP PLAN
Schedule H, Line 4j - Schedule of Reportable Transactions
Year Ended December 31, 2003
(a) (b) (c) (d) (f)
Expenses
Description Incurred
Identity of of Purchase Selling with
Issuer Investment Price Price Transaction
-------------- ---------- -------- ------- -----------
* The St. Paul
Companies, Common $15,054,091 $ - $ -
Inc. Stock - 34,697,934 24,703
* U.S. Bank,
N.A. First
American Prime
Obligation
Class Y
Institutional 20,475,797 - -
Fund - 20,930,127 -
* Fidelity Institutional
Management Cash
Trust Company Portfolio MM
Fund Class I 36,866,492 - -
Shares - 36,754,517 -
(g) (h) (i)
Current
Value
Description on
Identity of of Distribution
Issuer Investment Cost Date Net Gain
-------------- ---------- -------- ------- -----------
* The St. Paul
Companies, Common $15,054,091 $15,054,091 $ -
Inc. Stock 22,443,204 34,697,934 12,254,730
* U.S. Bank,
N.A. First
American Prime
Obligation
Class Y
Institutional 20,475,797 20,475,797 -
Fund 20,930,127 20,930,127 -
* Fidelity Institutional
Management Cash
Trust Company Portfolio MM
Fund Class I 36,866,492 36,866,492 -
Shares 36,754,517 36,754,517 -
* Party-in-interest
See accompanying report of independent registered public accounting firm.
SIGNATURE
---------
The Plan. 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
hereunto duly authorized.
June 25, 2004 THE ST. PAUL COMPANIES, INC.
SAVINGS PLUS PLAN
(The Plan)
By John P. Clifford Jr.
--------------------
John P. Clifford Jr.
Senior Vice President, Human Resources
Member of the Administrative
Committee for The St. Paul
Companies, Inc. Stock
Ownership Plan
Exhibit Index
-------------
Exhibit Number Description
-------------- ----------------------------------------
23.1 Consent of KPMG LLP, Independent Auditors