REGISTRATION AND REPORTING UNDER
THE SECURITIES EXCHANGE ACT OF 1934
ANNUAL REPORTS ON FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
| x | ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the year ended December 31, 2005
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 0-18050
PW EAGLE EMPLOYEES’ SAVINGS PLAN
(Title of Plan)
PW EAGLE, INC.
1550 VALLEY RIVER DRIVE
EUGENE, OREGON 97401
(Name and Address of Principal Executive Offices of Employer Issuer)
PW Eagle Employees’ Savings Plan
Index
| Page(s) | ||
| 3 | ||
Financial Statements | ||
Statement of Assets Available for Benefits December 31, 2005 and 2004 | 4 | |
Statement of Changes in Assets Available for Benefits Year Ended December 31, 2005 | 5 | |
| 6-9 | ||
| 10 | ||
| 11 | ||
| 12 | ||
| Note: | Other schedules required by 29 CFR 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable. |
2
Report of Independent Registered Public Accounting Firm
Participants and Plan Administrator
PW Eagle Employees’ Savings Plan
We have audited the accompanying statement of assets available for benefits of the PW Eagle Employees’ Savings Plan (the Plan) as of December 31, 2005 and 2004, and the related statement of changes in assets available for benefits for the year ended December 31, 2005. 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.
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. The Plan is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 assets available for benefits of the Plan as of December 31, 2005 and 2004, and the changes in assets available for benefits for the year ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America.
Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets (Held at End of Year) and Schedule of Delinquent Participant Contributions 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 management. The supplemental schedules have been subjected to the auditing procedures applied in the audit 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.
/s/ GRANT THORNTON LLP
Portland, Oregon
June 14, 2006
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PW Eagle Employees’ Savings Plan
Statement of Assets Available for Benefits
December 31, 2005 and 2004
| 2005 | 2004 | |||||
Registered investment companies/mutual funds | $ | 37,038,457 | $ | 30,767,607 | ||
Guaranteed Interest Account | 9,729,506 | 7,780,200 | ||||
PW Eagle, Inc. common stock, 56,053 and 86,105 shares, respectively | 1,149,090 | 342,785 | ||||
Participant loans receivable | 3,514,497 | 3,421,380 | ||||
| 51,431,550 | 42,311,972 | |||||
Contributions receivable | ||||||
Participants | 200,429 | 59,869 | ||||
Employer | 1,194,318 | 23,491 | ||||
| 1,394,747 | 83,360 | |||||
Assets available for benefits | $ | 52,826,297 | $ | 42,395,332 | ||
4
PW Eagle Employees’ Savings Plan
Statement of Changes in Assets Available for Benefits
Year Ended December 31, 2005
Investment Income | ||||
Interest and dividend income | $ | 849,549 | ||
Net appreciation of fair value of investments | 3,861,629 | |||
| 4,711,178 | ||||
Contributions | ||||
Participants | 2,017,747 | |||
Employer | 1,958,098 | |||
| 3,975,845 | ||||
Deductions | ||||
Benefits paid to participants | (3,124,278 | ) | ||
Administrative expenses | (28,742 | ) | ||
| (3,153,020 | ) | |||
Transfers | ||||
Assets transferred | 4,896,962 | |||
Net increase in assets available for benefits | 10,430,965 | |||
Assets available for benefits | ||||
Beginning of year | 42,395,332 | |||
End of year | $ | 52,826,297 | ||
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PW Eagle Employees’ Savings Plan
Notes to Financial Statements
December 31, 2005 and 2004
| 1. | Description of Plan |
The following description of the PW Eagle Employees’ Savings Plan (the “Plan”) is provided for general information purposes only. Participants should refer to the Plan agreement for more complete information regarding the Plan’s definitions, eligibility and other matters.
General
The Plan is a contributory defined contribution plan covering all qualified employees of PW Eagle, Inc. (the “Company”) who are at least 18 years old, who have been employed for at least three months. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the Internal Revenue Code of 1986, as amended (the “Code”). Prudential Insurance Company of America is the Trustee of the Plan.
Asset Transfers
The Company merged the operations of its majority-owned subsidiary, US Poly Company, into a wholly-owned subsidiary of PW Eagle on October 18, 2005. In connection with this merger, the Company made a decision to merge the US Poly Employees’ Savings Plan (US Poly Plan) with the PW Eagle Employees’ Savings Plan. In December, 2005, assets totaling $4.36 million were transferred into the Plan from the US Poly Plan, thereby completing the merger of the two plans.
Contributions
Each year, eligible participants may contribute up to 25% of their pre-tax annual compensation, as defined by the Plan. Participants may also contribute amounts representing rollover distributions from other qualified retirement plans with approval of the Administrative Committee.
The Company makes matching contributions of 50% of the eligible participants’ pre-tax contributions up to the first 6% of compensation. Discretionary supplemental contributions may also be made by the Company. The Plan provides for overall contribution limitations as prescribed by Internal Revenue Service (“IRS”) regulations.
A supplemental contribution of 3% was made for the year ended December 31, 2005.
Participant Accounts
Participants direct the investment of their contributions into various investment options offered by the Plan. If an employee does not allocate their contributions, the amounts are placed in the Prudential American Balanced Fund. Employer contributions are allocated among the investment options in the same manner as participant’s contributions.
The allocation of the participant’s contributions to these investment funds may be changed daily. Each participant’s account is credited with the participant’s contributions and his or her share of employer contributions, and an allocation of related investment earnings thereon. Allocation of investment income is based on the value of participant’s account at the close of each day.
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PW Eagle Employees’ Savings Plan
Notes to Financial Statements
December 31, 2005 and 2004
Vesting
Participants are 100% vested in their own contributions, any Company contributions and related investment income at all times.
Payment of Benefits
On termination of service due to death, disability or retirement, a participant may elect to receive either a lump sum amount, installments or combination of the two equal to the value of the participant’s vested interest in his or her account, provided the vested account balance is greater than $1,000. All vested account balances of less than $1,000 will be distributed through a lump sum payment.
Participant Loans
In accordance with the Plan document, participants may borrow up to 50% of their vested account balance, not to exceed $50,000. Loans must be repaid by the participant within five years unless the loan is used to acquire a participant’s primary residence, in which case the term may not exceed 20 years. The loan interest rate is 1% over prime lending rate on the 15th day of the month (or next business day) prior to the beginning of the calendar quarter in which the loan originates. Interest rates on outstanding loans at December 31, 2005, ranged from 4.0% to 10.5%. Loans mature at various dates through November 2023 and are generally paid through monthly payroll deductions.
Plan Forfeitures
Participant forfeitures at December 31, 2005, totaled $104,401. Forfeiture amounts, if unclaimed, will reduce future employer contributions.
Plan Termination
The Company intends to continue the Plan without interruption but reserves the right to amend or terminate the Plan at any time. In the event of termination of the Plan, the Plan document provides that the assets of the Plan shall be allocated for the exclusive benefit of participants, their beneficiaries, survivors or estates.
| 2. | Summary of Significant Accounting Policies |
The accompanying financial statements have been prepared on an accrual basis. The following is a summary of significant policies that are in conformity with accounting principles generally accepted in the United States of America and are consistently followed by the Plan in the preparation of its financial statements.
Valuation of Investments
Investments in mutual funds and common stock are stated at fair value based on quoted market prices. The Guaranteed Interest Account is composed of guaranteed investment contracts that are deemed fully benefit responsive by the plan administrator and Prudential Insurance Company of America and are carried at contract value that approximates fair value. Participant loans are valued at estimated fair value, consisting of principal outstanding and any related accrued interest.
Investment Earnings
Interest income is recorded as earned. Dividend income is recorded on the ex-dividend date. The Plan presents the net appreciation (depreciation) in the fair value of its investments in the Statement of Changes in Assets Available for Benefits, which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments.
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PW Eagle Employees’ Savings Plan
Notes to Financial Statements
December 31, 2005 and 2004
Contributions
Participant contributions are recorded in the period the employer makes the payroll deductions. Employer matching contributions are accrued based on participant contributions. Employer supplemental contributions are recorded in the period in which they are approved by the Company.
Benefits Paid to Participants
Benefits paid to participants are recorded when paid.
Plan Expenses
Substantially all expenses related to maintaining the Plan are paid by the Company, except for fees related to participant loans.
Risks and Uncertainties
The Plan provides for various investment options in various combinations of investment securities. Investment securities are exposed to various factors including, but not limited to, interest rates, market conditions and credit risks. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of 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 participants’ account balances and the amounts reported in the Statement of Assets Available for Benefits in future periods.
Use of Estimates
In preparing financial statements in conformity with accounting principles generally accepted in the United States of America (US GAAP), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
| 3. | Investments |
The Plan’s investments appreciated in value for the year ended December 31, 2005, as follows:
Registered investment companies | $ | 2,480,827 | |
PW Eagle, Inc. common stock | 1,380,802 | ||
| $ | 3,861,629 | ||
The Prudential Guaranteed Interest Account consists of investment in fixed income securities having short to intermediate maturities. The interest rate for the Guaranteed Interest Account was 3.50% and 3.00% at December 31, 2005 and 2004, respectively. During the year ended December 31, 2005, the Guaranteed Interest Account had an effective yield of approximately 3.33%. Interest on money invested in the Guaranteed Interest Account is credited daily. The announced interest rate stays in effect through the end of the following calendar year and the renewal interest rate is revised quarterly.
8
PW Eagle Employees’ Savings Plan
Notes to Financial Statements
December 31, 2005 and 2004
The following schedule presents investments that exceed 5% of Plan assets.
Investment | Description of Investment | 2005 | 2004 | |||||
Prudential Funds | ||||||||
Dryden Stock Index Fund Z | Mutual fund | $ | — | $ | 4,454,604 | |||
Dryden Stock Index Fund I | Mutual fund | 4,451,296 | — | |||||
Jennison Growth Fund | Mutual fund | 7,987,943 | 6,843,105 | |||||
PIMCO Total Return Fund | Mutual fund | — | 2,431,942 | |||||
PIMCO Total Return Bond Fund | Mutual fund | 3,385,400 | — | |||||
MFS Value Fund | Mutual fund | — | 3,299,975 | |||||
American Balanced Fund | Mutual fund | 4,826,433 | 4,179,305 | |||||
American Europacific Growth | Mutual fund | 3,922,180 | 3,016,250 | |||||
Victory Special Value | Mutual fund | 4,009,376 | 3,082,645 | |||||
Hotchkis & Wiley LC Value | Mutual fund | 4,296,791 | — | |||||
Prudential Insurance | Guaranteed Interest Account | 9,729,506 | 7,780,200 | |||||
| 4. | Tax Status |
The Plan received a favorable determination letter from the Internal Revenue Service, dated June 24, 2004, indicating that the Plan is designed in accordance with applicable sections of the Code and is therefore generally exempt from federal income taxes under provisions of Section 501(a). The Plan has been amended since receiving the determination letter. However, the plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan’s financial statements.
| 5. | Related Party Transactions |
The Trustee is authorized, under contract provisions and by exemption under 29 CFR 408(b) of ERISA regulations, to invest in securities under its control and in securities of the Company. For the year ended December 31, 2005, purchases and sales of securities under the Trustee’s control were $20,962,358 and $17,728,332, respectively. For the year ended December 31, 2005, purchases and sales of securities of the Company were $215,689 and $785,343, respectively.
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10
PW Eagle Employees’ Savings Plan
Schedule of Assets (Held at End of Year)
December 31, 2005 | Schedule I |
(a) | (b) Identity of Issue, Borrower, Lessor or Similar Party | (c) Description of Investment | (d) Cost ** | (e) Current Value | |||||
| Prudential Funds | |||||||||
| * | Dryden Government Income Fund | Mutual fund, 207,301 units | $ | 1,842,909 | |||||
* | Dryden Stock Index Fund I | Mutual fund, 160,349 units | 4,451,296 | ||||||
* | Jennison Growth Fund | Mutual fund, 480,045 units | 7,987,943 | ||||||
| PIMCO Total Return Bond Fund | Mutual fund, 322,419 units | 3,385,400 | |||||||
| American Balanced Fund | Mutual fund, 271,606 units | 4,826,433 | |||||||
| American Europacific Growth | Mutual fund, 96,582 units | 3,922,180 | |||||||
| Victory Special Value | Mutual fund, 260,688 units | 4,009,376 | |||||||
| Oppenheimer Main ST Small Cap | Mutual fund, 112,270 units | 2,316,129 | |||||||
| Hotchkis & Wiley LC Value | Mutual fund, 184,096 units | 4,296,791 | |||||||
* | PW Eagle, Inc. | Common stock, 56,053 units | 1,149,090 | ||||||
* | Prudential Insurance | Guaranteed Interest Account | 9,729,506 | ||||||
* | Participant loans | 4% - 10.5%, payable through November 2023 | 3,514,497 | ||||||
| $ | 51,431,550 | ||||||||
| * | Denotes party-in-interest |
| ** | Historical cost information is omitted as it is no longer required by the Department of Labor under the instructions to the Form 5500. |
11
PW Eagle Employees’ Savings Plan
Schedule of Delinquent Participant Contributions
December 31, 2005 | Schedule H, Part IV, Line 4a |
Participant Contributions Transferred Late to Plan | Total that Constitute Nonexempt Prohibited Transactions | |||||
| $ 4,715 | $4,715 |
Amount includes $1,174 for loan repayments, $2,581 for employee contributions and $960 for employer match. Employee contributions were withheld from employee wages on December 30, 2005 but not transferred to the Plan nor allocated to participant’s accounts until January 20, 2006. The above contributions were corrected outside the voluntary fiduciary correction program (VFCP) during 2006.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Trustee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| PW EAGLE EMPLOYEES’ SAVINGS PLAN |
/s/ Neil R. Chinn |
| Neil R. Chinn |
| Plan Administrator |
| Vice President Human Resources |
| PW Eagle, Inc. |
Date: June 26, 2006
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EXHIBIT INDEX
| Number | Description | |
| 99.1 | Consent of Independent Registered Public Accounting Firm. | |
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