SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
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x
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2007
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¨
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TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
Commission File Number: 1-10777
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A.
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Full title of the plan and the address of the plan, if different from that of the issuer named below:
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Ambac Financial Group, Inc.
Savings Incentive Plan
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B.
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Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
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Ambac Financial Group, Inc.
One State Street Plaza
New York, New York 10004
AMBAC FINANCIAL GROUP, INC.
SAVINGS INCENTIVE PLAN
Financial Statements and Supplemental Schedule
December 31, 2007 and 2006
(With Report of
Independent Registered Public Accounting Firm Thereon)
Ambac Financial Group, Inc.
Savings Incentive Plan
INDEX
Report of Independent Registered Public Accounting Firm
The Administrator
Ambac Financial Group, Inc. Savings Incentive Plan:
We have audited the accompanying statements of net assets available for plan benefits of the Ambac Financial Group, Inc. Savings Incentive Plan (the Plan) as of
December 31, 2007 and 2006, and the related statements of changes in net assets available for plan benefits for the years then ended. 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 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 plan benefits as of December 31, 2007 and 2006, and the changes in net assets available for plan 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 Schedule H,
line 4i – schedule of assets (held at end of year) as of December 31, 2007 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.
/s/ KPMG LLP
New York, New York
June 25, 2008
2
Ambac Financial Group, Inc.
Savings Incentive Plan
Statements of Net Assets Available for Plan Benefits
December 31, 2007 and 2006
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2007
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2006
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Assets:
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Investments, at fair value (see note 3):
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Ambac Financial Group, Inc. Stock Fund
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$
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11,360,423
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$
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23,526,585
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Mutual funds
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70,849,639
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61,644,420
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Loans to participants
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837,809
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760,415
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Total investments
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83,047,871
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85,931,420
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Receivables:
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Employer contributions receivable (see note 1(b))
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2,670,804
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2,213,598
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Participant contributions receivable
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177,186
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169,915
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Total receivables
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2,847,990
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2,383,513
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Net assets available for plan benefits
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$
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85,895,861
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$
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88,314,933
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See Accompanying Notes to the Financial Statements
3
Ambac Financial Group, Inc.
Savings Incentive Plan
Statements of Changes in Net Assets Available for Plan Benefits
For the years ended December 31, 2007 and 2006
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2007
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2006
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Additions to net assets attributed to:
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Contributions:
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Employer contributions
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$
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4,544,939
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$
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3,067,836
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Participant contributions
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3,453,195
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3,103,009
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Rollovers
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10,210,774
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799,068
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Total contributions
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18,208,908
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6,969,913
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Investment Income:
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Dividends
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4,932,367
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3,089,844
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Interest on participant loans
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52,127
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44,675
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Net (depreciation) appreciation in fair value of investments (see note 3)
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(21,202,576
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)
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7,057,341
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Total investment (loss) income
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(16,218,082
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10,191,860
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Total additions
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1,990,826
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17,161,773
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Deductions from net assets attributed to:
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Benefit payments
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4,404,855
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4,300,078
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Administrative expenses
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5,043
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1,419
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Total deductions
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4,409,898
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4,301,497
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Net (decrease) increase
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(2,419,072
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)
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12,860,276
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Net assets available for plan benefits:
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Beginning of year
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88,314,933
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75,454,657
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End of year
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$
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85,895,861
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$
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88,314,933
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See Accompanying Notes to the Financial Statements
4
AMBAC FINANCIAL GROUP, INC.
SAVINGS INCENTIVE PLAN
Notes to Financial Statements
December 31, 2007 and 2006
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(1)
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Description of the Plan
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The following description of the Ambac
Financial Group, Inc. Savings Incentive Plan (the “Plan”) provides only general information. Participants should refer to the Summary Plan Description or Plan document for more complete information of the Plan’s provisions.
The Plan is a defined contribution plan covering all
regular employees of Ambac Financial Group, Inc. (“Ambac”) who have completed at least six months of service in which the employee is credited with at least 500 hours of service. Ambac is the Plan sponsor. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended.
The Plan is a program designed to encourage
long-term savings by eligible employees of Ambac. These savings are achieved through a systematic program of salary deferrals. The employee’s salary is reduced by the amount elected to be saved on a pre-tax basis. The pre-tax
“deferred” part of the employee’s salary is not taxable to the employee until distribution, unless such distribution is to another eligible retirement plan.
Each participant in the Plan directs Ambac to
defer on a pre-tax basis a certain percentage of his or her compensation. Employee contributions are accrued when deducted from employee pay and are invested after receipt by the trustee. Eligible participants age 50 or over may also elect
additional catch-up contributions subject to the dollar limits in the Economic Growth and Tax Relief Reconciliation Act (“EGTRRA”) of 2001. These catch-up contributions are not matched by Ambac. Employees may contribute to the Plan up to
20% of base compensation. The maximum annual contribution is $15,500 for 2007 and $15,000 for 2006. Ambac makes an employer matching contribution of 100% of the employee’s contributions up to 6% of such participants’ base compensation,
subject to limits set by the Internal Revenue Code. Ambac may also make a Basic Profit Sharing contribution of 3% of base compensation and a Supplemental Profit Sharing contribution of an additional 3% of base compensation in the subsequent year to
eligible employees. Additionally, Ambac may make a Discretionary Profit Sharing contribution equal to an amount determined by Ambac, in its sole discretion, for the taxable year with or within which the applicable Plan year ends. In 2008 and 2007,
Ambac made a $2,559,465 and $2,161,131 contribution for its Basic and Supplemental Profit Sharing Contribution for 2007 and 2006, respectively. All contributions are invested as directed by the participant.
5
AMBAC FINANCIAL GROUP, INC.
SAVINGS INCENTIVE PLAN
Notes to Financial Statements
December 31, 2007 and 2006
(1), Continued
During 2006, the Compensation Committee of the Board of Directors of Ambac approved an amendment to the Ambac Pension Plan that terminated the Pension Plan
effective December 31, 2006. Participants of the Pension Plan were offered several different methods to receive their vested benefit, one of which included rolling the amount into their Saving Incentive Plan’s account.
Each participant’s account is
credited with the participant’s contribution and allocation of (a) Ambac’s contributions, and (b) Plan earnings or losses. The benefit to which a participant is entitled is the benefit that can be provided from the
participant’s vested account.
Participants are immediately vested in all
contributions plus actual earnings or losses thereon.
On termination of employment, retirement, total and permanent disability, or death, a participant or participant’s beneficiary may elect to receive an immediate lump-sum amount equal to the value of his or her account, or
may elect to defer receipt of such lump sum payment until such participant attains the age of 70
1
/
2
. If the participant’s amount is
less than $5,000, a lump sum distribution is made following termination of employment.
Participants may borrow, subject to
limitations relative to prior loans, up to one-half of their vested account balances, but not to exceed $50,000. The minimum loan amount is $500. The loan will bear a fixed rate of interest as determined by the Plan Administrative Committee.
Participants may have up to three outstanding loans at any one time. Repayment of the loan shall be made through payroll deductions over a term not to exceed five years. However, if the loan is used to acquire a principal residence, the term of the
loan may be for up to 15 years. All outstanding loans shall be due and payable at the time of any distribution of all or any portion of the value of a participant’s account.
6
AMBAC FINANCIAL GROUP, INC.
SAVINGS INCENTIVE PLAN
Notes to Financial Statements
December 31, 2007 and 2006
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(2)
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Summary of Significant Accounting Policies
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The following are the
significant accounting policies followed by the Plan:
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(a)
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Basis of Accounting and Use of Estimates
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The financial
statements of the Plan are prepared under the accrual method of accounting. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and changes therein, as well as disclosures of contingent assets and liabilities. Actual results could differ from those estimates and assumptions.
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(b)
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Investment Valuation and Income Recognition
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The Plan’s
investments are stated at fair value. Shares of registered investment companies (mutual funds) are valued at quoted market prices, which represent the net asset value of shares held by the Plan at year-end. The Ambac Financial Group, Inc. Stock Fund
is valued at its year-end unit closing price. The Ambac Financial Group, Inc. Stock Fund consists of Ambac Financial Group, Inc. common stock as well as small amounts of cash. The Ambac Financial Group, Inc. common stock in the stock fund is valued
using quoted market prices. Participant loans are valued at cost which approximates fair value. Purchases and sales of investments are recorded on a trade date basis. Interest income is accrued when earned. Dividend income is recorded on the
ex-dividend date. Capital gain distributions are included in dividend income.
It is Ambac’s present practice to pay
routine administrative, accounting, legal and investment advisory expenses of the Plan.
Benefits are recorded when paid.
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(e)
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Risks and Uncertainties
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The Plan offers a number of investment
options including the Ambac Financial Group, Inc. Stock Fund and a variety of mutual funds. The investment funds consist of U.S. equities, international equities, and fixed income securities. Investment securities, in general, are exposed to various
risks, such as interest rate, credit, and overall market volatility risk. Due to the level of risk associated with certain investment securities, it is reasonable to expect that changes in the
7
AMBAC FINANCIAL GROUP, INC.
SAVINGS INCENTIVE PLAN
Notes to Financial Statements
December 31, 2007 and 2006
(2), Continued
values of investment securities will occur in the near term and that such changes could materially affect participant account balances.
The Plan’s exposure to a concentration of credit risk is limited by the diversification of investments across all fund elections. Additionally, the investments
within each fund election are further diversified into varied financial instruments, with the exception of the Ambac Financial Group, Inc. Stock Fund, which principally invests in the securities of a single issuer. The Ambac Financial Group, Inc.
Stock Fund was impacted by the decline in the share price of Ambac. This decline was a result of residential mortgage-backed exposures and other financial market disruption-related losses. Ambac’s stock price has continued to decline during
2008. Participant’s abilities to make decisions in investment activities in the Ambac Financial Group, Inc. Stock Fund are suspended during the “black-out” periods that are part of Ambac’s procedures designed to avoid violations
of applicable securities laws.
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(f)
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Adoption of New Accounting Pronouncement
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Effective
January 1, 2007, the Plan adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”),
Accounting for Uncertainty in Income Taxes
, an interpretation of FASB Statement
No. 109,
Accounting for Income Taxes
. FIN 48 establishes financial accounting and disclosure requirements for recognition and measurement of tax positions taken or expected to be taken on an income tax return. The adoption
of FIN 48 had no impact on the Plan’s net assets available for plan benefits as of December 31, 2007 or changes of net assets available for plan benefits for the year then ended.
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(g)
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New Accounting Standard
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In September 2006, the FASB issued
Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157”). FAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosure about fair value measurements. It applies
to other pronouncements that require or permit fair value but does not require any new fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007
.
Ambac does not expect the provisions of FAS 157 to
have a material effect on the Plan’s financial statements.
8
AMBAC FINANCIAL GROUP, INC.
SAVINGS INCENTIVE PLAN
Notes to Financial Statements
December 31, 2007 and 2006
The following investments represent 5 percent or more of
the Plan’s net assets.
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2007
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2006
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Ambac Financial Group, Inc. Stock Fund
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$
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11,360,423
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$
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23,526,585
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Vanguard International Growth Mutual Fund
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10,116,233
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7,915,990
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Vanguard Prime Money Market Mutual Fund
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8,837,890
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6,211,961
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Vanguard 500 Index Mutual Fund
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8,543,247
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7,948,376
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Vanguard Growth & Income Mutual Fund
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7,824,080
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7,695,804
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Vanguard Windsor II Mutual Fund
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6,197,167
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6,793,385
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Vanguard Explorer Mutual Fund
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—
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4,981,764
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Vanguard U.S. Growth Mutual Fund
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—
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4,456,077
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The net (depreciation) appreciation of investments (including gains and losses on investments bought and
sold, as well as held) for the years ended December 31, 2007 and 2006 is as follows:
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2007
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2006
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Ambac Financial Group, Inc. Stock Fund
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$
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(20,190,049
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$
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3,239,910
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Mutual Funds
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(1,012,527
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3,817,431
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Total
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$
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(21,202,576
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$
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7,057,341
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The Internal Revenue Service has determined and
informed Ambac by a letter dated December 7, 2007 that the Plan, and related trust are designed in accordance with applicable sections of the Internal Revenue Code. Although the Plan has been amended since receiving the determination letter,
the Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Internal Revenue Code.
9
AMBAC FINANCIAL GROUP, INC.
SAVINGS INCENTIVE PLAN
Notes to Financial Statements
December 31, 2007 and 2006
Although it has not expressed any intention to do so,
Ambac has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions set forth in ERISA. In the event the Plan was terminated, the net assets of the Plan would be allocated as prescribed
by ERISA and its related regulations, generally to provide benefits, after all expenses, to the participants and beneficiaries of the Plan.
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(6)
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Related Party Transactions
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Certain Plan investments are shares of
mutual funds managed by an affiliate of Vanguard Fiduciary Trust Company (“Vanguard”). Vanguard is the trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions.
10
Schedule 1
Ambac Financial Group, Inc.
Savings Incentive Plan
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2007
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Identity of Issue
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Description
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Current
Value
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* Ambac Financial Group, Inc. Stock Fund
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Common Stock Fund; 472,841 shares at cost of $19,453,589
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$
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11,360,423
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* Vanguard International Growth Mutual Fund
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Mutual Fund; 407,584 shares
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10,116,233
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* Vanguard Prime Money Market Mutual Fund
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Mutual Fund; 8,837,890 shares
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8,837,890
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* Vanguard 500 Index Mutual Fund
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Mutual Fund; 63,213 shares
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8,543,247
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* Vanguard Growth & Income Mutual Fund
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Mutual Fund; 244,350 shares
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7,824,080
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* Vanguard Windsor II Mutual Fund
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Mutual Fund; 198,246 shares
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6,197,167
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* Vanguard U.S. Growth Mutual Fund
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Mutual Fund; 192,052 shares
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3,823,758
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* Vanguard Wellington Mutual Fund
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Mutual Fund; 108,888 shares
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3,551,940
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* Vanguard Explorer Mutual Fund
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Mutual Fund; 49,488 shares
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3,523,018
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* Vanguard Inflation-Protected Securities Mutual Fund
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Mutual Fund; 258,679 shares
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3,220,558
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* Vanguard Long-Term Investment Grade
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Mutual Fund; 293,324 shares
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2,657,516
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* Vanguard Total Bond Market Index Mutual Fund
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Mutual Fund; 253,366 shares
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2,574,197
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* Vanguard REIT Index Mutual Fund
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Mutual Fund; 73,040 shares
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1,493,677
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* Vanguard GNMA Mutual Fund
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Mutual Fund; 123,649 shares
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1,282,240
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* Vanguard Morgan Growth Investment Mutual Fund
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Mutual Fund; 55,245 shares
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1,079,481
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* Vanguard Target Retirement 2025 Mutual Fund
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Mutual Fund; 75,541 shares
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1,036,419
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* Vanguard LifeStrategy Growth Mutual Fund
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Mutual Fund; 30,293 shares
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759,444
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* Vanguard Short-term Bond Index Mutual Fund
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Mutual Fund; 60,633 shares
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614,215
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* Vanguard Target Retirement 2020 Mutual Fund
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Mutual Fund; 21,093 shares
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495,046
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* Vanguard Target Retirement 2005 Mutual Fund
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Mutual Fund; 36,834 shares
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442,746
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* Vanguard International Value Mutual Fund
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Mutual Fund; 10,231 shares
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429,497
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* Vanguard Target Retirement 2040 Mutual Fund
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Mutual Fund; 17,614 shares
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418,687
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* Vanguard Target Retirement 2030 Mutual Fund
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Mutual Fund; 15,842 shares
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377,993
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* Vanguard LifeStrategy Conservative Growth Mutual Fund
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Mutual Fund; 19,613 shares
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336,165
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* Vanguard Target Retirement 2015 Mutual Fund
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Mutual Fund; 25,005 shares
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326,564
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* Vanguard LifeStrategy Moderate Growth Mutual Fund
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Mutual Fund; 12,763 shares
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270,700
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* Vanguard Target Retirement 2035 Mutual Fund
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Mutual Fund; 13,773 shares
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201,364
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* Vanguard Calvert Social Index Mutual Fund
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Mutual Fund; 15,274 shares
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135,324
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* Vanguard LifeStrategy Income Mutual Fund
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Mutual Fund; 8,484 shares
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120,807
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* Vanguard Target Retirement 2045 Mutual Fund
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Mutual Fund; 4,304 shares
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64,953
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* Vanguard Target Retirement Income Mutual Fund
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Mutual Fund; 5,784 shares
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64,376
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* Vanguard Target Retirement 2050 Mutual Fund
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Mutual Fund; 831 shares
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19,840
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* Vanguard Target Retirement 2010 Mutual Fund
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Mutual Fund; 455 shares
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10,497
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* Participant Loans
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90 participants loans (Interest rate range 5.00% to 10.5%)
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837,809
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$
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83,047,871
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*
party-in-interest as defined by ERISA
See accompanying report of Independent Registered Public Accounting Firm
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administrator the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
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Ambac Financial Group, Inc.
Savings Incentive
Plan
|
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|
|
|
|
Dated: June 27, 2008
|
|
By:
|
|
/s/ Sean T. Leonard
|
|
|
|
|
|
Sean T. Leonard
Senior Vice President and Chief
Financial Officer
|
|
|
|
|
|
Dated: June 27, 2008
|
|
By:
|
|
/s/ Gregg L. Bienstock
|
|
|
|
|
|
Gregg L. Bienstock, Esq.
Senior Vice President,
Chief Administrative Officer and
Employment Counsel
Plan Administrator
|
12
EXHIBIT INDEX
|
|
|
|
|
Exhibit
Number
|
|
Document
|
|
|
|
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm.
|
13
Grafico Azioni AMBAC (NYSE:ABK)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni AMBAC (NYSE:ABK)
Storico
Da Lug 2023 a Lug 2024
