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 fiscal year ended December 31, 2002 |
OR
| ¨ | | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| | | For the transition period from to |
Commission File Number: 33-76290
| A. | | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
DOMINION HOMES, INC.
RETIREMENT PLAN AND TRUST
| B. | | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
DOMINION HOMES, INC.
5501 FRANTZ ROAD
DUBLIN, OH 43017
Dominion Homes, Inc.
Retirement Plan and Trust
Financial Statements
December 31, 2002 and 2001
Report of Independent Auditors
To the Participants and Administrator of
Dominion Homes, Inc. Retirement Plan and Trust
In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of Dominion Homes, Inc. Retirement Plan and Trust (the Plan) at December 31, 2002 and 2001, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. 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 of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held for investment purposes 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/ PricewaterhouseCoopers LLP
Columbus, Ohio
June 9, 2003
Dominion Homes, Inc. Retirement Plan and Trust
Statements of Net Assets Available for Benefits
For the Years Ended December 31, 2002 and 2001
| | | 2002
| | 2001
|
Assets | | | | | | |
Investments, at fair value | | $ | 8,754,072 | | $ | 9,328,204 |
Outstanding participants’ loans | | | 137,883 | | | 152,362 |
Employer contributions receivables | | | 117,392 | | | 22,791 |
Employee contributions receivables | | | 29,709 | | | — |
Accrued interest and dividends receivable | | | — | | | 706 |
| | |
|
| |
|
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Total assets | | | 9,039,056 | | | 9,504,063 |
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Liabilities | | | | | | |
Accrued expenses | | | 13,876 | | | 12,010 |
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Total liabilities | | | 13,876 | | | 12,010 |
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Net assets available for benefits | | $ | 9,025,180 | | $ | 9,492,053 |
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The accompanying notes are an integral part of these financial statements.
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Dominion Homes, Inc. Retirement Plan and Trust
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 2002 and 2001
| | | 2002
| | | 2001
| |
Additions | | | | | | | | |
Employee contributions | | $ | 1,217,298 | | | $ | 1,018,686 | |
Employer contributions | | | 771,182 | | | | 629,963 | |
Interest and dividend income | | | 49,037 | | | | 274,262 | |
| | |
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| |
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Total additions | | | 2,037,517 | | | | 1,922,911 | |
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Deductions | | | | | | | | |
Participant benefits | | | (943,944 | ) | | | (509,188 | ) |
Net depreciation in the fair value of investments | | | (1,504,605 | ) | | | (114,151 | ) |
Administrative expenses | | | (55,841 | ) | | | (47,095 | ) |
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Total deductions | | | (2,504,390 | ) | | | (670,434 | ) |
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Net (deductions) additions | | | (466,873 | ) | | | 1,252,477 | |
Net assets available for benefits, beginning of year | | | 9,492,053 | | | | 8,239,576 | |
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Net assets available for benefits, end of year | | $ | 9,025,180 | | | $ | 9,492,053 | |
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The accompanying notes are an integral part of these financial statements.
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Dominion Homes, Inc. Retirement Plan and Trust
Notes to Financial Statements
December 31, 2002 and 2001
| 1. | | Description of the Plan |
Dominion Homes, Inc. (the Employer) established Dominion Homes, Inc. Retirement Plan and Trust (the Plan) effective July 1, 1985. The Plan is a defined contribution plan designed to comply with Sections 401(a) and (k) of the Internal Revenue Code. The following is a brief description of the Plan. Participants should refer to the plan document for a complete explanation of the Plan’s provisions.
Employees are eligible to participate in the Plan upon the latest of: a) the attainment of age 21; b) the completion of six months of service; and c) classification as a regular full-time employee, exclusive of employees for whom retirement benefits have been the subject of good faith collective bargaining. Effective September 1, 2002, the Plan was amended to include employees eligible to participate in the Plan on the first day of the calendar quarter following the completion of 30 days of service. In addition, a part-time employee is eligible to participate in the Plan on the first day of the calendar quarter after the end of a 12 month period in which such person is credited with at least 1,000 hours of service.
Participants designate the percentage of employer and participant contributions invested in the 22 investment fund options. These options include:
| | • | | Principal Stable Value Fund |
| | • | | Fidelity Advisor Mortgage Securities (T) Fund |
| | • | | Principal Bond and Mortgage Separate Account |
| | • | | Principal Large Cap Stock Index Separate Account |
| | • | | Putnam Research (A) Fund |
| | • | | American Funds Growth Fund of Americas (R3) Fund |
| | • | | Principal Partners Large-Cap Growth I Separate Account |
| | • | | Principal Partners Large-Cap Value Separate Account |
| | • | | Principal Mid-Cap Stock Index Separate Account |
| | • | | Principal Partners Mid-Cap Growth Separate Account |
| | • | | American Century Equity Income (Adv) Fund |
| | • | | Principal Small Cap Stock Index Separate Account |
| | • | | Fidelity Advisor Small Cap (T) Fund |
| | • | | Principal Partners Small-Cap Value Separate Account |
| | • | | Principal International Stock Separate Account |
| | • | | Russell Lifepoints®Aggressive Strategy (D) Separate Account |
| | • | | Russell Lifepoints®Balanced Strategy (D) Separate Account |
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Dominion Homes, Inc. Retirement Plan and Trust
Notes to Financial Statements
December 31, 2002 and 2001
| | • | | Russell Lifepoints® Conservative Strategy (D) Separate Account |
| | • | | Russell Lifepoints® Equity Aggressive Strategy (D) Separate Account |
| | • | | Principal Real Estate Separate Account |
| | • | | American Funds New Perspective (R3) Fund |
Participants may change their investment options on a daily basis.
A participant in the Plan may enter into a salary reduction agreement with the Employer, authorizing the Employer to withhold a percentage of such participant’s compensation and to contribute such amount to the Plan on their behalf. If a participant has not authorized the Employer to withhold at the maximum rate and desires to increase the total amount withheld for a plan year, such participant may authorize the Employer to withhold a supplemental amount up to 100% of their compensation for one or more pay periods. In no event may the sum of the amounts withheld under the Salary Reduction Agreement plus the supplemental withholding in any calendar year exceed $11,000, the maximum allowable. In accordance with Section 401(k) of the Internal Revenue Code, all amounts withheld from a participant’s compensation in accordance with this section and contributed to their salary reduction account are not to be included in the gross income of the participant for federal income tax purposes and are deemed, for tax purposes, to be an employee contribution to the Plan.
The Employer makes matching contributions to the Plan from its current or accumulated profits, if any, equal to 100% of salary reduction contributions based on 3% of eligible compensation made by participants and 50% of salary reduction contributions based on the next 2% of eligible compensation, provided that the participant is employed on the last day of the plan year, subject to the limitations as published from time to time by the Internal Revenue Service. In no event may the sum of the amounts credited to a participant’s salary reduction account and matching contribution account in any plan year exceed the lesser of 25% of the participant’s compensation for the plan year or $30,000. Effective for plan years after December 31, 2001, the Plan was amended to increase the maximum limitation of amounts credited to a participant’s salary reduction account and matching contribution account in any plan year to the lesser of 100% of the participant’s compensation for the plan year or $40,000.
A participant’s interest in their salary reduction account, rollover account, and matching contribution account shall be fully vested and nonforfeitable at all times.
Participants may borrow from their participant accounts a minimum of $1,000 up to a maximum amount equal to the lesser of 50% of their vested account balance or $50,000. Loan terms are not to exceed five years with the interest rate based on the rates available for similar loans from commercial lending institutions. The loans are collateralized by an assignment, pledge, or other security interest in the participant’s vested account balance. Repayment of a loan is required to be made through payroll deductions on an aftertax basis in level payments of principal and interest.
Benefits under the Plan are generally payable upon the earliest occurrence of a participant’s death, disability or retirement at or after attainment of normal retirement age. On termination of service due to death, disability or retirement, a participant may elect to receive either a lump-sum amount equal to the value of the participant’s vested interest in their account, or in equal monthly,
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Dominion Homes, Inc. Retirement Plan and Trust
Notes to Financial Statements
December 31, 2002 and 2001
quarterly, semiannual or annual installments over a period not to exceed ten years. For termination of service due to other reasons, a participant may receive the value of the vested interest in their account as a lump-sum distribution. Notwithstanding the foregoing, a participant’s salary reduction account may also be distributed in the event of certain financial hardships or the attainment of age 55.
The Employer reserves the right at any time to amend or terminate this plan or to suspend contributions thereto, provided that no such amendment, termination or suspension shall have the effect of giving the Employer any right or interest, or of revoking or diminishing the rights and interests of any participant in the funds then held by the trustee.
Effective November 25, 2002, the Employer engaged Principal Financial Group to be the Plan’s trustee and investment advisor. For the period ended November 24, 2002, Key Trust Company acted as the Plan trustee. As a result, funds available for investment by plan participants changed November 25, 2002.
The following is a summary of significant accounting policies followed in the preparation of the financial statements. The policies conform to accounting principles generally accepted in the United States of America.
Investment Valuation and Income Recognition
The Plan’s investments that are traded on a national exchange are stated at fair value, which are measured from quoted market prices as of the last business day of the plan year. Certain investments are not currently traded in a public market and are carried at estimated fair value as determined by the investment advisor after giving consideration to pertinent information, including discounted future cash flows of mortgages and private placement bonds, estimated market values of real estate properties and results of independent appraisals, and other factors. Because of the inherent uncertainty of valuations, however, those estimated values may differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material.
At December 31, 2002, the statement of net assets available for benefits includes investments valued at approximately $6,589,557 for which their fair values have been estimated by the investment advisor in the absence of readily ascertainable market values.
Security transactions are reflected on a trade-date basis, which is not materially different from a settlement-date basis. Dividends are recorded on the ex-dividend date. Interest is recorded on the accrual basis.
In the statements of changes in net assets available for plan benefits, the Plan presents the net depreciation in the fair value of its investments, which consists of the net realized gains or losses and the net unrealized appreciation or depreciation on those investments.
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Dominion Homes, Inc. Retirement Plan and Trust
Notes to Financial Statements
December 31, 2002 and 2001
Administrative Expenses
Administrative expenses are paid by the trustee from the net assets of the Plan. Approximately $55,800 and $47,100 in administrative expenses were incurred for the years ended December 31, 2002 and 2001, respectively.
Use of Estimates
The preparation of the Plan’s financial statements in conformity with accounting principles generally accepted in the United States of America requires the plan administrator to make estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and the changes in the net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Risks and Uncertainties
The Plan provides for various investment options in any combination of stocks, mutual funds, and other investment securities. 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 participants’ account balances and the amounts reported in the statements of net assets available for plan benefits.
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Dominion Homes, Inc. Retirement Plan and Trust
Notes to Financial Statements
December 31, 2002 and 2001
The following are investments that represent five percent or more of the Plan’s net assets available for benefits at December 31, 2002 and 2001:
Investments
| | 2002 Fair Value
|
| |
Dominion Homes, Inc. | | $ | 1,445,622 |
Principal Stable Value Fund | | | 1,404,844 |
Principal Partners Large-Cap Growth I Separate Account | | | 1,225,602 |
Russell Lifepoints® Balanced Strategy (D) Separate Account | | | 885,116 |
Principal Partners Large-Cap Value Separate Account | | | 750,743 |
Principal Partners Mid-Cap Growth Separate Account | | | 626,081 |
Principal Large Cap Stock Index Separate Account | | | 618,049 |
Russell Lifepoints® Aggressive Strategy (D) Separate Account | | | 615,055 |
American Funds New Perspective (R3) Fund | | | 545,838 |
| | | | |
Investments
| | 2001 Fair Value
|
| |
Dominion Homes Stock Fund | | $ | 2,263,388 |
Victory LifeChoice Moderate Investor Fund | | | 1,108,720 |
Victory LifeChoice Growth Investor Fund | | | 1,031,243 |
Janus Twenty Fund | | | 911,664 |
Victory Diversified Stock Fund | | | 801,268 |
Victory Stock Index Fund | | | 769,164 |
Victory DCS MaGIC Fund | | | 596,024 |
Janus Worldwide Fund | | | 495,902 |
The Plan has been designed to meet the requirements of Sections 401(a), 401(k) and 501(a) of the Internal Revenue Code, as amended by the Employee Retirement Income Security Act of 1974 (ERISA). The Plan has been granted favorable determination of tax-exempt status under Section 501(a).
The Plan obtained its latest determination letter on January 21, 2002, in which the Internal Revenue Service (IRS) stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the plan administrator and the Plan’s tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan’s financial statements.
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Dominion Homes, Inc. Retirement Plan and Trust
Notes to Financial Statements
December 31, 2002 and 2001
| 5. | | Transactions With Parties-In-Interest |
The Plan held, at fair value, $1,445,622 and $2,263,388 of Dominion Homes, Inc. common shares (Employer Securities) at December 31, 2002 and 2001, respectively. The Plan purchased 20,883 and 20,998 shares of Dominion Homes, Inc. common shares at a cost of $346,206 and $236,395 in 2002 and 2001, respectively. The Plan sold 69,664 and 29,902 Dominion Homes, Inc. common shares for $1,164,059 and $345,100 with a realized gain of $73,157 and $87,973 in 2002 and 2001, respectively.
Certain Plan investments are units of common/collective trusts and money market funds managed by Principal Global Investors, an affiliate of Principal Financial Group, in 2002 and Key Bank, an affiliate of Victory Capital Management, Inc. in 2001. Victory Capital Management, Inc. was the trustee as defined by the Plan during 2002 and 2001. Effective November 25, 2002, Principal Financial Group was engaged as the Plan’s Trustee. Therefore, these transactions with Principal Global Investors and Key Bank qualify as party-in-interest transactions. Fees paid by the Plan for investment management services amounted to $28,651 and $24,394 for the plan years ended December 31, 2002 and 2001, respectively.
| 6. | | Reconciliation of the Financial Statements to Form 5500 |
Net assets available for benefits and benefits paid to participants per the financial statements differ from the Form 5500 due to amounts allocated to withdrawing participants. Amounts allocated to withdrawing participants are recorded as liabilities on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31 but not paid as of that date. Such amounts are not liabilities for financial reporting purposes and are not material.
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Dominion Homes, Inc. Retirement Plan and Trust
Line 4i—Schedule of Assets (Held at End of Year)
December 31, 2002
| | | | | Identity of Issuer, Borrower, Lessor, or Similar Party
| | Description of Investment
| | Shares
| | Fair Value
|
* | | | | Dominion Homes, Inc. | | Common Shares | | 101,447 | | $ | 1,445,622 |
* | | | | Principal Global Investors | | Principal Stable Value Fund | | 101,882 | | | 1,404,844 |
* | | | | Principal Global Investors | | Principal Partners Large-Cap Growth I Separate Account | | 200,068 | | | 1,225,602 |
* | | | | Principal Global Investors | | Russell Lifepoints® Balanced Strategy (D) Separate Account | | 87,263 | | | 885,116 |
* | | | | Principal Global Investors | | Principal Partners Large-Cap Value Separate Account | | 83,186 | | | 750,743 |
* | | | | Principal Global Investors | | Principal Partners Mid-Cap Growth Separate Account | | 94,002 | | | 626,081 |
* | | | | Principal Global Investors | | Principal Large Cap Stock Index Separate Account | | 20,891 | | | 618,049 |
* | | | | Principal Global Investors | | Russell Lifepoints® Aggressive Strategy (D) Separate Account | | 68,889 | | | 615,055 |
| | | | | Capital Research and Management Company | | American Funds New Perspective (R3) Fund | | 30,358 | | | 545,838 |
* | | | | Principal Global Investors | | Principal Bond and Mortgage Separate Account | | 658 | | | 383,813 |
| | | | | Capital Research and Management Company | | American Funds Growth Fund of America (R3) Fund | | 4,631 | | | 85,255 |
* | | | | Principal Global Investors | | Fidelity Advisor Mortgage Securites (T) Fund | | 5,851 | | | 65,820 |
* | | | | Principal Global Investors | | Principal International Stock Separate Account | | 1,496 | | | 33,709 |
| | | | | American Century Investment Management | | American Century Equity Income (Adv) Fund | | 2,534 | | | 16,545 |
* | | | | Principal Global Investors | | Principal Small Cap Stock Index Separate Account | | 1,432 | | | 15,631 |
* | | | | Principal Global Investors | | Principal Real Estate Separate Account | | 38 | | | 12,948 |
* | | | | Principal Global Investors | | Principal Partners Small Cap Value Separate Account | | 1,224 | | | 12,882 |
* | | | | Principal Global Investors | | Principal Mid-Cap Stock Index Separate Account | | 452 | | | 4,872 |
| | | | | Fidelity Advisor | | Fidelity Advisor Small Cap (T) Fund | | 305 | | | 4,376 |
| | | | | Putnam Investment Management, Inc. | | Putnam Research (A) Fund | | 103 | | | 1,058 |
* | | | | Principal Global Investors | | Russell Lifepoints® Conservative Strategy (D) Separate Account | | 10 | | | 115 |
* | | | | Principal Global Investors | | Russell Lifepoints® Equity Aggressive Strategy (D) Separate Account | | 12 | | | 98 |
| | | | | | | | | | |
|
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| | | | | Total Investments | | | | | | $ | 8,754,072 |
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* | | | | Participant Loans | | Participant Loans (4.75%–9.75%) | | 137,883 | | | 137,883 |
| | | | | | | | | | |
|
|
| | | | | Total Participant Loans | | | | | | $ | 137,883 |
| | | | | | | | | | |
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| * | | Denotes a party-in-interest transaction |
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SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on the Plan’s behalf by the undersigned hereunto duly authorized.
Date: June 30, 2003 | | | | DOMINION HOMES, INC. RETIREMENT PLANAND TRUST |
| | | |
| | | | | | | /s/ TERRY E. GEORGE
|
| | | | | | | Terry E. George Co-Trustee |
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DOMINION HOMES, INC. RETIREMENT PLAN AND TRUST
ANNUAL REPORT ON FORM 11-K FOR FISCAL YEAR ENDED DECEMBER 31, 2002
INDEX TO EXHIBITS ————————-
Exhibit No.
| | Description
| | Page
No.
|
| | |
| 1 | | Consent of Independent Public Accountants | | 13 |
| | |
| 99.1 | | Sarbanes-Oxley Certification of Chief Financial Officer of Dominion Homes, Inc. and Co-Trustee of the Dominion Homes, Inc. Retirement Plan and Trust | | 14 |
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