United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[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
SECURITY EXCHANGE ACT OF 1934
Commission file number 1-8422
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
| Countrywide Financial Corporation 401(k)
Savings And Investment Plan
c/o Countrywide Financial Corporation
Human Resources: Benefits Department
MSN: RM-55-56
55 South Lake Avenue
Pasadena, CA 91101
|
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
| Countrywide Financial Corporation
4500 Park Granada
Calabasas, CA 91302
SIGNATURES |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized.
| Countrywide Financial Corporation
401(k) Savings and Investment Plan
/s/ Angelo R. Mozilo
Chairman of the Board of Directors
and Chief Executive Officer
Countrywide Financial Corporation
|
Date: June 25, 2004
Financial Statements and Report of
Independent Registered Public Accounting Firm
COUNTRYWIDE FINANCIAL CORPORATION
401(k) SAVINGS AND INVESTMENT PLAN
December 31, 2003 and 2002 | |
TABLE OF C O N T E N T S
Page
----
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS 3-4
FINANCIAL STATEMENTS:
STATEMENTS OF NET ASSETS AVAILABLE FOR
BENEFITS - DECEMBER 31, 2003 and 2002 5
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS - YEAR ENDED DECEMBER
31, 2003 6
NOTES TO FINANCIAL STATEMENTS 7
SUPPLEMENTAL SCHEDULE:
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR) - DECEMBER 31, 2003 12
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Trustees
Countrywide Financial Corporation 401(k) Savings and Investment Plan
We have audited the accompanying statement of net assets available for benefits of Countrywide Financial Corporation 401(k) Savings and Investment Plan (the “Plan”) as of December 31, 2003 and the related statement of changes in net assets available for plan benefits for the year 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 audit. Other auditors were engaged to audit the financial statements of the Plan as of December 31, 2002, whose report dated June 20, 2003 expressed an unqualified opinion on those financial statements.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the 2003 financial statements referred to above present fairly, in all material respects, the net assets available for benefits of Countrywide Financial Corporation 401(k) Savings and Investment Plan as of December 31, 2003, and the changes in net assets available for benefits for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Our audit was performed for the purpose of forming an opinion on the 2003 basic financial statements taken as a whole. The supplemental Schedule H, line 4i – schedule of assets (held at end of year), is presented for purposes of additional analysis and is not a required part of the 2003 basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the 2003 basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the 2003 basic financial statements taken as a whole.
/s/KPMG LLP
Los Angeles, California
June 4, 2004
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Trustees
Countrywide Financial Corporation 401(k) Savings and Investment Plan
We have audited the accompanying statement of net assets available for benefits of Countrywide Financial Corporation 401(k) Savings and Investment Plan as of December 31, 2002. This financial statement is the responsibility of the Plan's management. Our responsibility is to express an opinion on this financial statement based on our audit.
We conducted our audit 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 statement is 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in all material respects, the net assets available for benefits of Countrywide Financial Corporation 401(k) Savings and Investment Plan as of December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.
/s/ Grant Thornton LLP
Los Angeles, CA
June 20, 2003
Countrywide Financial Corporation
401(k) Savings and Investment Plan
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(Dollar amounts in thousands)
December 31,
------------------------------------
2003 2002
----------------- ---------------
ASSETS
Investments, at fair value:
Participant directed investments:
Mutual funds $ 223,910 $ 120,216
Money market funds 33,528 24,206
Countrywide Financial Corporation Common Stock 32,991 17,239
Participant loans 12,870 8,791
----------------- ---------------
303,299 170,452
Non-Participant directed investments:
Countrywide Financial Corporation Common Stock 139,690 64,645
----------------- ---------------
Total investments 442,989 235,097
----------------- ---------------
Receivables:
Employer's contribution 6,165 5,092
Participants' contribution 2,686 2,166
----------------- ---------------
Total receivables 8,851 7,258
----------------- ---------------
Total assets 451,840 242,355
----------------- ---------------
LIABILITIES
Excess contributions payable 1,093 -
----------------- ---------------
Total liabilities 1,093 -
----------------- ---------------
Net assets available for benefits $ 450,747 $ 242,355
================= ===============
The accompanying notes are an integral part of these financial statements.
Countrywide Financial Corporation
401(k) Savings and Investment Plan
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2003
(Dollar amounts in thousands)
Participant Non-Participant
Directed: Directed:
Consolidated CFC
Investments Common Stock Accruals Total
--------------- -------------------- ---------------- ---------------
Additions:
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value of
investments $ 61,199 $ 60,172 $ - $ 121,371
Interest 590 111 -
701
Dividends 3,871 303 -
4,174
--------------- -------------------- ---------------- ---------------
65,660 60,586 - 126,246
--------------- -------------------- ---------------- ---------------
Contributions:
Participants' 67,279 - 1,593 68,872
Participant rollover 8,013 - - 8,013
Employer's - 15,894 6,165 22,059
--------------- -------------------- ---------------- ----------------
75,292 15,894 7,758 98,944
--------------- -------------------- ---------------- ---------------
Total additions 140,952 76,480 7,758 225,190
--------------- -------------------- ---------------- ---------------
Deductions:
Deductions from net assets attributed to:
Benefits paid to participants (12,199) (4,526) - (16,725)
Administrative expenses - -
(73) (73)
--------------- -------------------- ---------------- ---------------
Total deductions (12,272) (4,526) - (16,798)
--------------- -------------------- ---------------- ---------------
Net increase prior to inter-fund
transfer 128,680 71,954 7,758 208,392
Inter-fund transfers 4,167 3,091 (7,258) -
--------------- -------------------- ---------------- ---------------
Net increase 132,847 75,045 500 208,392
Net assets available for benefits:
Beginning of year 170,452 64,645 7,258 242,355
--------------- -------------------- ---------------- ---------------
End of year $ 303,299 $ 139,690 $ 7,758 $ 450,747
=============== ==================== ================ ===============
The accompanying notes are an integral part of these financial statements.
Countrywide Financial Corporation
401(k) Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2003 and 2002
NOTE 1 - DESCRIPTION OF PLAN
| | The following description of the Countrywide Financial Corporation (the Company) 401(k) Savings and Investment Plan (the Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions. |
| | The Plan is a defined contribution plan covering all full-time employees of the Company who have completed at least three months of service and are age 21 or older (See Note 7). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). |
| | Each year, participants may contribute up to 40 percent of pretax annual compensation, as defined in the Plan. Participants may also contribute, at the discretion of the Plan administrator, amounts representing distributions from other qualified defined benefit or defined contribution plans. The Company makes a discretionary matching contribution equal to 50 percent of the participant contributions up to a maximum of 6 percent of the participants’ eligible earnings, as defined in the Plan. Contributions are subject to certain limitations. During the year ended December 31, 2003 the Company’s matching contribution was made entirely in Company common stock. |
| | Each participant’s account is credited with the participant’s contribution, discretionary matching contribution and an allocation of Plan earnings. Allocations of Plan earnings are based on account balances. 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 their voluntary contributions plus actual earnings thereon. Vesting in the Company’s discretionary matching contribution portion of their accounts plus actual earnings thereon is based on years of continuous service. Participants begin vesting in Company contributions after one year of credited service and are fully vested after five years of credited service. |
Countrywide Financial Corporation
401(k) Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2003 and 2002
NOTE 1 - DESCRIPTION OF PLAN - Continued
| | E. Participant Loans Receivable |
| | Participants may borrow from their accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50 percent of their total vested account balances. Loan terms may range up to 15 years for the purpose of purchasing a primary residence, and up to five years for all other purposes. The loans are secured by the balance in the participant’s account and earn interest at prime plus two percent. The current interest rates of participant loans receivable ranges from 4% to 11.5%. Principal and interest is paid ratably through semi-monthly payroll deductions. |
| | On termination of service before the normal retirement age of 65, a participant may elect to defer distribution until normal retirement age or receive a lump sum payment equal to the vested share of the participant’s account. However, if the participant’s total vested benefit value is less than $5,000, the Plan requires the administrator to direct the trustee to pay the entire vested benefit to the participant in a lump sum. |
| | On termination of service due to death, disability or normal retirement, participants or their beneficiaries may elect to receive a lump sum amount equal to the value of the participant’s vested interest in his or her account. |
| | G. Forfeited Matching Contributions |
| | Forfeitures of non-vested accounts were $939,201 during the year ended December 31, 2003. Of the cumulative amounts forfeited, $1,950,819 had not yet been used to reduce the Company matching contribution as of December 31, 2003. |
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
| | The financial statements of the Plan are prepared under the accrual method of accounting. The employer pays administrative expenses of the Plan, with the exception of costs incurred for loans, which are paid for by participants who have loans. Certain reclassifications have been made to the 2002 financial statements to be consistent with the current year presentation. |
Countrywide Financial Corporation
401(k) Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2003 and 2002
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES - Continued
| | B. Investment Valuation and Income Recognition |
| | The Plan’s investments are stated at fair value. Shares of registered investment companies are valued at quoted market prices, which represent the net asset value of shares held by the Plan at year-end. The Company’s common stock is valued at its quoted market price. Participant loans receivable are valued at cost which approximates estimated fair value. |
| | Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. |
| | Benefits are recorded when paid. |
| | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. |
| | E. Risks and Uncertainties |
| | The Plan invests in various types of investment securities, including mutual funds, actively managed funds and Countrywide Financial Corporation common stock. Investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statement of net assets available for benefits. |
| | Additionally, certain mutual funds offered by the Plan invest in the securities of foreign companies, which involves special risks and considerations not typically associated with investing in U.S. companies. These risks include devaluation of currencies, less reliable information about issuers, different securities transaction clearance and settlement practices, and possible adverse political and economic developments. Moreover, securities of many foreign companies and their markets may be less liquid and their prices more volatile than similar types of securities of comparable U.S. companies. |
| | As of December 31, 2003 and 2002, approximately 39% and 35%, respectively, of total Plan investments were invested in Countrywide Corporation common stock. |
Countrywide Financial Corporation
401(k) Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2003 and 2002
NOTE 3 - INVESTMENTS
| | The Plan’s investments are held in a trust fund administered by Fidelity Investments. The fair values of investments that represented five percent or more of the Plan’s net assets consisted of the following: |
----------------------------------------------------- --- ---------------------------------- -- -----------------------------
December 31,
2003 2002
Investment Name Investment Description Fair Value Fair Value
----------------------------------------------------- ---------------------------------- ------------- ---------------
(Dollar amount in thousands)
Countrywide Financial Corporation,
Common Stock * Stock $ 172,681 $ 81,884
Spartan U.S. Equity Index Fund Mutual Fund 36,630 19,898
Fidelity Equity-Income Fund Mutual Fund 34,126 19,666
Fidelity Retirement Money Market Money Market Mutual Fund 33,528 24,206
PIMCO Total Return Fund Mutual Fund 32,657 24,734
Touchstone Growth/Value Fund Mutual Fund 24,254 12,610
AXP New Dimensions Fund Mutual Fund 22,883 15,278
All investments less than 5% of Plan assets Various 86,230 36,821
------------- ---------------
Total investments $ 442,989 $ 235,097
============= ===============
* Participant and nonparticipant-directed
| | During 2003, the Plan’s investments (including gains and losses on investments bought and sold during the year) appreciated in value by approximately $121,371,000, as follows: |
Year Ended
December 31,
2003
-------------------
(Dollar amount in
thousands)
Mutual funds $ 36,909
Countrywide Financial Corporation, Common Stock * 84,462
-------------------
Net appreciation in fair value of investments $ 121,371
===================
* Participant and nonparticipant-directed
NOTE 4 – RELATED PARTY TRANSACTIONS
| | Certain Plan investments are shares of mutual funds managed by Fidelity Investments and shares of common stock of Countrywide Financial Corporation. Fidelity Investments is the trustee and Countrywide Financial Corporation is the plan sponsor as defined by the Plan, and therefore, these transactions qualify as party-in-interest transactions. |
Countrywide Financial Corporation
401(k) Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2003 and 2002
NOTE 5 - PLAN TERMINATION
| | Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100 percent vested in their accounts. |
NOTE 6 - TAX STATUS
| | The Internal Revenue Service (IRS) has determined and informed the Company by a letter dated June 5, 2002, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (Code). Amendments to the Plan have been made subsequent to the date of the IRS determination letter. However, the Company believes that the Plan is designed and is currently being operated in compliance with the requirements of the Code. |
NOTE 7 – SUBSEQUENT EVENT
| | Effective January 1, 2004, the Plan was amended to cover all full-time employees of the Company who have completed their first hour of service for the Company. |
Countrywide Financial Corporation
401(k) Savings and Investment Plan
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2003
(Dollar amounts in thousands)
Description Fair
Identity of Investment of Investment Cost Value
- ------------------------------------------- ---------------------------------------------------- ------------ ------------
Interest-earning Cash (including
money market accounts, certificates
of deposit, and cash equivalents):
Fidelity Investments * Fidelity Retirement Money Market Portfolio $ 33,528 $ 33,528
------------ ------------
Subtotal Interest-earning Cash 33,528 33,528
------------ ------------
Mutual Funds:
Fidelity Investments * 929,452 shares Spartan U.S. Equity Index Fund 34,275 36,630
Fidelity Investments * 685,943 shares Fidelity Equity-Income Fund 31,716 34,126
Pacific Investment Management Company 3,049,163 shares PIMCO Total Return Fund 32,434 32,657
Touchstone 1,396,326 shares Touchstone Growth/Value Fund 23,862 24,254
American Express Funds 958,231 shares of AXP New Dimensions Fund 15,107 22,883
Fidelity Investments * 793,782 shares Fidelity Diversified International 15,384 19,146
Fund
Wasatch Funds 398,362 shares Wasatch Small Cap Growth Fund 12,302 14,186
Fidelity Investments * 668,305 shares Fidelity Freedom 2030 Fund 7,740 8,655
Fidelity Investments * 630,816 shares Fidelity Freedom 2020 Fund 7,495 8,213
Trust Company of the West 428,956 shares TCW Galileo Select Equities Fund 6,363 7,322
Fidelity Investments * 437,231 shares Fidelity Freedom 2010 Fund 5,352 5,694
Alliance Bernstein 1,059,788 shares Alliance Bernstein Growth and 3,143 3,582
Income Fund
Fidelity Investments * 445,001 shares Fidelity Freedom 2040 Fund 2,995 3,364
Fidelity Investments * 161,225 shares Fidelity Freedom Income Fund 1,744 1,787
Fidelity Investments * 119,765 shares Fidelity Freedom 2000 Fund 1,362 1,411
------------ ------------
Subtotal Mutual Funds 201,274 223,910
------------ ------------
Corporate Stock:
Countrywide Financial Common Stock, 7,918,305 shares 82,567 172,681
Corporation *
------------ ------------
Subtotal Corporate Stock 82,567 172,681
------------ ------------
Participant Loans:
Participant Loans * 2,585 participation loans with annual interest - 12,870
rates ranging from 4% to 11.5%
------------ ------------
Subtotal Participant Loans - 12,870
------------ ------------
Total Investments $ 317,369 $ 442,989
============ ============
* Party-in-interest
See accompanying independent auditors' report.
