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
(Mark One):
| x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended: December 31, 2003
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 0-4466
Artesyn Technologies, Inc.
Employees’ Tax-Favored Thrift and Savings Plan
(Full title of Plan)
Artesyn Technologies, Inc.
(Name of issuer of securities held pursuant to the Plan)
7900 Glades Road, Suite 500
Boca Raton, Florida 33434
(Address of principal executive office)
| PAGE | ||
| 1 | ||
• Statements of Net Assets Available for Benefits as of December 31, 2003 and 2002 | 2 | |
• Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2003 | 3 | |
| 4-8 | ||
• Schedule: | ||
Schedule I - Schedule H, Part IV, Line 4i – Schedule of Assets (Held at End of Year) | 9 | |
| 10 | ||
• Exhibit 23.1 | ||
Consent of Independent Registered Public Accounting Firm | ||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Plan Administrator
Artesyn Technologies, Inc. Employees’
Tax-Favored Thrift and Savings Plan
We have audited the accompanying statements of net assets available for benefits of the Artesyn Technologies, Inc. Employees’ Tax-Favored Thrift and Savings Plan (“the Plan”) as of December 31, 2003 and 2002, and the related statement of changes in net assets available for benefits for the year ended December 31, 2003. 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 benefits of the Plan at December 31, 2003 and 2002, and the changes in its net assets available for benefits for the year ended December 31, 2003, in conformity with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental Schedule of Assets (Held at End of Year) as of December 31, 2003 is presented for purposes of additional analysis and is not a required part of the 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 our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
Certified Public Accountants
West Palm Beach, Florida
June 25, 2004
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Employees’ Tax-Favored Thrift and Savings Plan
Statements of Net Assets Available for Benefits
As of December 31, 2003 and 2002
(In thousands)
| 2003 | 2002 | |||||
| ASSETS: | ||||||
Investments, at fair value | $ | 47,790 | $ | 38,572 | ||
Cash | 36 | — | ||||
Receivables: | ||||||
Employer contributions: | ||||||
Common stock | 864 | 902 | ||||
Participant contributions | — | 222 | ||||
Total receivables | 864 | 1,124 | ||||
Net assets available for benefits | $ | 48,690 | $ | 39,696 | ||
See accompanying notes to financial statements.
2
Employees’ Tax-Favored Thrift and Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 2003
(In thousands)
| ADDITIONS: | ||||
Contributions: | ||||
Employer common stock | $ | 864 | ||
Participant | 2,523 | |||
Total contributions | 3,387 | |||
Net appreciation in fair value of investments | 9,831 | |||
Dividends | 847 | |||
Other | 57 | |||
Total additions | 14,122 | |||
| DEDUCTIONS: | ||||
Benefits paid to participants | (5,117 | ) | ||
Fees and other charges | (11 | ) | ||
Total deductions | (5,128 | ) | ||
| NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS | 8,994 | |||
| NET ASSETS AVAILABLE FOR BENEFITS | ||||
Beginning of year | 39,696 | |||
End of year | $ | 48,690 | ||
See accompanying notes to financial statements.
3
Employees’ Tax-Favored Thrift and Savings Plan
Notes to Financial Statements
As of December 31, 2003
| 1. | PLAN DESCRIPTION |
The following description of the Artesyn Technologies, Inc. Employees’ Tax-Favored Thrift and Savings Plan (“the Plan”) provides only general information. Participants should refer to the plan document for a more complete description of its provisions.
General
The Plan was established in January 1979. During 1993, we adopted a prototype plan established by Connecticut General Life Insurance Company, which changed to a custom plan in 1999 due to changes dictated by our merger with Zytec Corporation. During 2003, we restated to a non-standardized prototype plan established by Putnam Fiduciary Trust Company. The Plan provides that all employees who have attained the age of 18 by the Plan entrance date are eligible to participate immediately following their date of employment. Up until March 1, 2003, the entry date was quarterly. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended.
Plan Administration
As of January 1, 1999, the Plan entered into an agreement whereby Putnam Fiduciary Trust Company was appointed Trustee of the Plan. Under the terms of the agreement, the Trustee holds and determines available investment options for the Plan subject to the direction of the Plan Administrator. Management of Artesyn serves as the Plan Administrator, and for purposes of clarity, as used herein, shall be referred to as “we,” “us,” “our” and “Plan Administrator.”
Contributions and Vesting
Each year, participants may elect to contribute up to 75% of their pretax annual compensation, as defined in the Plan agreement, through payroll deductions subject to certain limitations. Participants are immediately vested in their contributions and earnings thereon. In 2003, eligible employees could contribute up to $12,000, plus an additional $2,000 if the employee was over the age of 50 years, as limited by the Internal Revenue Code. We can make matching contributions to the Plan at the discretion of our Board of Directors. In 2003, employee contributions were matched at the rate of 50% of the first 6% of a participant’s annual compensation (as defined in the Plan) that a participant elects to contribute to the Plan. Matching contributions to the Plan were funded by contributions of Artesyn Technologies Inc. common stock.
The Plan is intended to meet the requirements of a participant-directed plan in accordance with Section 404(c) of ERISA and the related regulations. That means, under the Plan, participants may direct the investment of their contributions into a number of different diversified and non-diversified investment options, including the purchase of Artesyn common stock, and the Plan fiduciaries generally will have limited responsibility for such participant-directed investments. The Plan Administrator has the right to direct the initial investment of the matching contribution and has, in the past, directed 100% of such contribution to be invested in Artesyn common stock. Participants may direct the investment of the matching contribution to other investment options available under the Plan following its initial allocation. Vesting in matching contributions plus earnings thereon occurs at a rate of 20% for each year in which an employee completes 1,000 hours of service, except that such amounts become fully vested upon a participant’s retirement, termination of employment because of death or the inability to work due to total or permanent disability. The forfeited, non-vested interest in participants’ accounts may be used to reduce our
4
Artesyn Technologies, Inc.
Employees’ Tax-Favored Thrift and Savings Plan
Notes to Financial Statements
As of December 31, 2003
matching contribution or reduce the reasonable expenses of plan administration. The forfeited balances as of December 31, 2002 and 2003 are $38,515 and $56,635 respectively, and are included in Plan assets.
Participant Accounts
Individual accounts are maintained for each of the Plan’s participants to reflect each participant’s share of the Plan’s income (losses), matching contributions and the participant’s contributions. Allocations of the Plan’s income (losses) and administrative expenses are based on participant account balances, as defined.
Loans to Participants
Participants may borrow the lesser of $50,000 or 50% of their vested account balances with a minimum loan amount of $1,000. Loans are repayable primarily through payroll deductions over periods ranging up to 60 months unless the loan is for the purchase of a primary residence, in which case a reasonable period is determined at the time of the loan. The interest rate is determined by the Plan Administrator based on prevailing market conditions and is fixed over the life of the loan. The interest rates on outstanding loans at December 31, 2003 range from 5.00% to 11.25%.
Benefits
Upon termination of a participant’s services for any reason, including death, disability or retirement, if the amount to be distributed is less than $5,000, the participant’s account will be distributed in a single lump-sum payment equal to his or her vested account balance. If the amount to be distributed exceeds $5,000, the participant is not required to take a distribution. If the participant does not request the distribution, the participant’s account shall remain in the Plan and may be distributed at the participant’s request or as minimum required distributions when the participant attains age 70½. In addition, participants may be eligible to take in-service withdrawals of their vested Plan account balance after reaching age 59½ and in the event of certain specified financial hardships, if certain criteria are met.
Plan Termination
Although we have not expressed any intent to do so, we maintain the right to discontinue our contributions at any time and to terminate the Plan, subject to the provisions of ERISA. In the event of plan termination, participants will become fully vested in their accounts and the Plan will continue until all accounts have been distributed.
| 2. | SIGNIFICANT ACCOUNTING POLICIES |
Basis of Accounting
The accompanying financial statements are prepared on the accrual basis of accounting.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates that affect the reported amounts of assets and liabilities and changes therein and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
5
Artesyn Technologies, Inc.
Employees’ Tax-Favored Thrift and Savings Plan
Notes to Financial Statements
As of December 31, 2003
Valuation of Investments and Income Recognition
Investments in Artesyn common stock are stated at fair value based on the last reported sales price on the last business day of the year. Shares of listed mutual funds are valued at their quoted market prices, which represent the net asset value of shares held by the Plan at year-end. The unit price of collective investment trusts is established by the trustee based on current market values of the underlying assets of the funds. Investments in participant loans are recorded at carrying value, which approximates fair value.
Purchases and sales of securities are recorded on a trade date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
Risks and Uncertainties
Investments held by the Plan are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities, it is at least reasonably 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.
Payment of Benefits
Benefits are recorded when paid.
Administrative Expenses
Except for certain investment fees and charges, we pay the expenses of the Plan for legal, accounting and other administrative services. For 2003, we paid $6,742 in administrative expenses on behalf of the Plan.
6
Artesyn Technologies, Inc.
Employees’ Tax-Favored Thrift and Savings Plan
Notes to Financial Statements
As of December 31, 2003
| 3. | INVESTMENTS |
The following table presents individual investment securities that exceeded 5% of the Plan’s net assets available for benefits at December 31, 2003 and 2002 (in thousands, except share information):
| 2003 | 2002 | |||||
Participant Directed Investments: | ||||||
Putnam Stable Value Fund, 12,874,530 shares in 2003 and 14,079,711 shares in 2002 | $ | 12,875 | $ | 14,080 | ||
Artesyn common stock, 937,912 shares in 2003 and 806,017 shares in 2002 | 7,991 | 3,095 | ||||
Putnam Fund for Growth and Income, 258,421 shares in 2003 and 279,937 shares in 2002 | 4,574 | 3,958 | ||||
Putnam Investors Fund, 379,250 shares in 2003 and 425,544 shares in 2002 | 4,240 | 3,745 | ||||
Putnam International Equity Fund, 154,314 shares in 2003 and 169,024 shares in 2002 | 3,188 | 2,774 | ||||
Putnam S&P 500 Index Fund, 105,896 shares in 2003 and 97,264 shares in 2002 | 2,942 | 2,105 | ||||
Putnam New Opportunities Fund, 67,859 shares in 2003 and 72,365 shares in 2002 | 2,560 | 2,057 | ||||
Putnam OTC and Emerging Growth Fund, 357,448 shares in 2003 and 335,090 shares in 2002 | 2,434 | * | ||||
George Putnam Fund of Boston, 136,049 shares in 2003 and 151,798 shares in 2002 | * | 2,247 | ||||
| * | balance is less than 5% of Plan’s net assets |
During 2003, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $9.8 million as follows (in thousands):
Mutual funds | $ | 4,492 | |
Artesyn common stock | 4,686 | ||
Collective investment trust | 653 | ||
| $ | 9,831 | ||
| 4. | INCOME TAX STATUS |
The underlying non-standardized prototype plan has received an opinion letter from the Internal Revenue Service (IRS) dated August 9, 2002, stating that the form of the plan is qualified under Section 401 (a) of the Internal Revenue Code, and therefore, the related trust is tax exempt. In accordance with Revenue Procedure 2002-6 and Announcement 2001-77, we have determined that we are eligible to and have chosen to rely on the current IRS prototype plan opinion letter. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. We have indicated that we will take the necessary steps, if any, to bring the Plan’s operations into compliance with the code.
7
Artesyn Technologies, Inc.
Employees’ Tax-Favored Thrift and Savings Plan
Notes to Financial Statements
As of December 31, 2003
| 5. | RELATED PARTY TRANSACTIONS |
The Plan regularly invests in common trust funds and mutual funds managed by the Trustee. These transactions are considered exempt party-in-interest transactions by statutory exemptions under ERISA regulations.
| 6. | SUBSEQUENT EVENTS |
Effective August 2, 2004, the Trustee of the Plan will change from Putnam Fiduciary Trust Company to Fidelity Investments Company. The change was approved by the Plan Investment Committee on April 2, 2004 and presented to the Board of Directors in May 2004.
8
Artesyn Technologies, Inc.
Employees’ Tax-Favored Thrift and Savings Plan
Schedule H, Part IV, Line 4i - Schedule of Assets (Held at End of Year)
As of December 31, 2003
EIN: 59-1205269
Plan No: 751237
(a) | (b) Identity of Issue, Borrower, Lessor or Similar Party | (c) Description of Investment Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value | (e) Current Value | ||||
* | Putnam Stable Value Fund | Collective investment trust, variable rate and maturity | $ | 12,874,530 | |||
* | Artesyn Technologies, Inc. | Common stock | 7,991,006 | ||||
* | Putnam Fund for Growth and Income | Mutual fund | 4,574,049 | ||||
* | Putnam Investors Fund | Mutual fund | 4,240,017 | ||||
* | Putnam International Equity Fund | Mutual fund | 3,188,135 | ||||
* | Putnam S&P 500 Index Fund | Collective investment trust, variable rate and maturity | 2,941,801 | ||||
* | Putnam New Opportunities Fund | Mutual fund | 2,559,660 | ||||
* | Putnam OTC and Emerging Growth Fund | Mutual fund | 2,434,218 | ||||
* | George Putnam Fund of Boston | Mutual fund | 2,310,116 | ||||
* | Putnam Income Fund | Mutual fund | 849,346 | ||||
* | Participant loans | Loans from participants, 5.00% to 11.25% rates, variable maturity | 829,272 | ||||
Liberty Acorn Fund | Mutual fund | 801,558 | |||||
* | Putnam Bond Index Fund | Collective investment trust, variable rate and maturity | 634,982 | ||||
Lord Abbett Mid Cap Value | Mutual fund | 562,827 | |||||
Loomis Sayles Small Cap Value Fund | Mutual fund | 358,423 | |||||
Growth Fund of America | Mutual fund | 326,859 | |||||
AIM Mid Cap Equity Fund | Mutual fund | 313,447 | |||||
| TOTAL | $ | 47,790,246 | |||||
| * | Represents a party-in-interest investment. |
Historical cost is not required to be presented as the investments are all participant directed.
9
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrators have duly caused this annual report to be signed by the undersigned, thereunto duly authorized.
Artesyn Technologies, Inc. | ||
Employees’ Tax-Favored | ||
Thrift And Savings Plan | ||
(Name of Plan) | ||
By: | /s/ Richard J. Thompson | |
Richard J. Thompson | ||
Vice President Finance | ||
Chief Financial Officer | ||
Artesyn Technologies, Inc. | ||
Date: June 25, 2004
10
EXHIBIT INDEX
| Exhibit No. | Description | |
| 23.1 | CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
