U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934 (No Fee Required)
For the fiscal year ended December 31, 2001
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from ______________ to ______________
Commission File Number 1-12432
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
American Power Conversion Corporation 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
American Power Conversion Corporation
132 Fairgrounds Road
West Kingston, Rhode Island 02892
1
REQUIRED INFORMATION
A. Financial Statements and Schedules Page
Independent Auditors' Report 5
Statements of Net Assets Available for Plan Benefits
as of December 31, 2001 and 2000 6
Statements of Changes in Net Assets Available for Plan
Benefits for the Years Ended December 31, 2001 and 2000 7
Notes to Financial Statements 8-12
Schedule I - Schedule of Assets Held for Investment
Purposes as of December 31, 2001 13
Schedule II - Schedule of Nonexempt Transactions 14
B. Exhibit Listing
Exhibit
Number Description
23 Consent of KPMG LLP
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefitplan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
AMERICAN POWER CONVERSION CORPORATION 401(K) PLAN
(Name of Plan)
Date: July 1, 2002
/s/ Donald M. Muir
-------------------------------------------------
Donald M. Muir, Chief Financial Officer
(principal financial and accounting officer)
2
AMERICAN POWER CONVERSION CORPORATION
401(K) PLAN
Financial Statements and Schedules
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)
3
AMERICAN POWER CONVERSION CORPORATION
401(K) PLAN
December 31, 2001 and 2000
Table of Contents
Page
Independent Auditors' Report 5
Statements of Net Assets Available for Plan Benefits 6
Statements of Changes in Net Assets Available for Plan Benefits 7
Notes to Financial Statements 8-12
Schedules
1 Schedule of Assets Held for Investment Purposes at End of Year 13
2 Schedule of Nonexempt Transactions 14
Note: Certain schedules as required by Section 103(b)(3) of the
Employee Retirement Income Security Act of 1974, have not been
included herein as the information is not applicable.
4
Independent Auditors' Report
The 401(k) Plan Committee
American Power Conversion Corporation:
We have audited the accompanying statements of net assets available for plan
benefits of the American Power Conversion Corporation 401(k) Plan as of
December 31, 2001 and 2000, 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 auditing standards generally accepted
in the United States of America. 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 of the
American Power Conversion Corporation 401(k) Plan as of December 31, 2001 and
2000, and the changes in net assets available for plan benefits for the years
then ended, in conformity with accounting principles generally accepted in the
United States of America.
Our audits were made 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 Nonexempt Transactions 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 as of December 31, 2001, and in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
Providence, Rhode Island
May 17, 2002
5
AMERICAN POWER CONVERSION CORPORATION
401(k) PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2001 and 2000
2001 2000
Cash $16,576 $5,551
Receivables:
Employer's contribution 231,031 337,605
Accrued income 28,098 24,260
Participants' contributions 25,719 15,796
301,424 383,212
Investments (note 3):
American Power Conversion Corporation
common stock 11,577,849 6,553,135
Investments in common/collective
trusts:
Merrill Lynch Equity Index Trust 1,585,608 1,255,357
Merrill Lynch Retirement
Preservation Trust 1,494,006 1,060,211
3,079,614 2,315,568
Mutual Funds:
Blackrock Small Cap Growth 1,797,916 1,941,468
Alliance Bond Fund Corporate 895,651 524,851
Merrill Lynch Equity Income Fund
Class A 1,456,492 1,114,505
Merrill Lynch Growth Fund
Class A - 2,902,256
Merrill Lynch Fundamental Growth Fund
Class A 2,645,505 -
Ivy International Fund 1,541,169 1,589,755
MFS Massachusetts Investors Growth 2,405,264 2,302,778
Merrill Lynch Basic Value Fund
Class A 2,388,714 2,011,108
13,130,711 12,386,721
Loans to participants 607,400 454,899
Total investments 28,395,574 21,710,323
Net assets available for
plan benefits $28,696,998 $22,093,535
See accompanying notes to financial statements.
6
AMERICAN POWER CONVERSION CORPORATION
401(k) PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 2001 and 2000
2001 2000
Additions (deductions) to net assets
attributed to:
Investment income (loss):
Net realized gains (losses) $(113,874) $763,599
Net unrealized losses (1,437,293) (10,734,214)
Interest 45,287 39,964
Dividends 433,634 2,116,864
(1,072,246) (7,813,787)
Contributions:
Participants 6,153,265 5,817,167
Employer 3,332,109 3,320,992
9,485,374 9,138,159
Total additions 8,413,128 1,324,372
Deductions from net assets
attributed to:
Benefits paid to participants 1,805,572 2,067,839
Total deductions 1,805,572 2,067,839
Net increase (decrease)
prior to other 6,607,556 (743,467)
Other (4,093) (26,461)
Net increase (decrease) in net
assets available for benefits 6,603,463 (769,928)
Net assets available for benefits:
Beginning of year 22,093,535 22,863,463
End of year $28,696,998 $22,093,535
See accompanying notes to financial statements.
7
AMERICAN POWER CONVERSION CORPORATION
401(K) PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(1) Description of Plan
The following brief description of the American Power Conversion Corporation
401(k) Plan (the Plan) provides only general information. Participants
should refer to the Plan agreement for a more complete description of the
Plan's provisions.
(a) General
The Plan is a qualified defined contribution plan covering American
Power Conversion Corporation (the Company) employees who have completed
at least 45 days of service with the Company. The Plan covers all
employees working for the Company and the Participating Affiliates, APC
America, Inc., APC Sales and Service Corporation and Systems Enhancement
Corporation, except those employees who are members of a union who
bargained separately for retirement benefits during negotiations.
Beginning on January 1, 2001, the Plan also covers the U.S. employees of
Advanced Power, Inc., ABL Electronics Corp. and Airflow Company. The
assets of any plans previously covering the employees of the acquired
entities have not been transferred to the Plan as of the end of the 2001
plan year. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
(b) Contributions
The maximum salary savings (pre-tax) contribution that an employee may
elect to contribute to the Plan is the lesser of 15% of annual gross
compensation or the limit established by the IRS ($10,500 for 2001 and
$10,500 for 2000). The Company may match this salary savings
contribution at a rate of up to 100% of the first 3%, and during 1999,
the Plan was amended to match up to 50% of the next 3% of the
participant's salary and wage compensation, excluding bonuses,
commissions, incentive compensation, taxable fringe benefits, moving
expenses, auto and other allowances, and disqualifying dispositions.
Matching contributions are subject to a maximum amount of 6% per
participant. The Company may also make discretionary profit-sharing
contributions to the Plan. All employer matching and profit-sharing
contributions are deposited to the American Power Conversion Corporation
common stock Fund.
There were no discretionary contributions made for the 2001 or 2000 Plan
year.
(c) Vesting
Participants are fully vested to the extent of their salary savings
contributions and earnings on those contributions. Furthermore, the Plan
was amended in 1999, such that participants are immediately vested in
employer matching contributions and the related earnings. However, any
discretionary (profit-sharing) contributions vest on a schedule of 25%
after 2 years of service, and an additional 25% per year thereafter
until 100% vesting is reached after 5 years of service.
8
(d) Loans to Participants
Participants may borrow from their vested account balance under certain
circumstances as provided in the Plan agreement. The minimum loan amount
is $1,000 and participants may borrow the lesser of 50% of their vested
account balance or $50,000. Interest on loans is charged at the
prevailing commercial interest rate for loans of a similar type (Prime
plus 1%) with a repayment term not to exceed five years. This term can
be extended if the loan is used for the purchase of the participant's
primary residence. A participant may not have more than one loan
outstanding at any time.
(e) Payment of Benefits
Upon termination from the Plan, a participant's vested accrued benefits
in his or her account shall be distributed, as elected by the
participant, in either a single lump-sum payment, or, provided the
participant's vested account exceeds $5,000, in periodic installments
not to exceed the participant's lifetime, or the joint lifetime of the
participant and his/her spouse. Distributions may also be made in cash
or in kind, or part cash and part in kind over a period not to exceed
the participant's lifetime, or the joint lifetime of the participant and
his/her spouse.
(f) Hardship Withdrawal
The Plan provides for hardship withdrawals, as defined by the Plan, from
the participant's account. Participants who take a hardship withdrawal
must be suspended from contributing to the Plan for a period of 12
months following the date of the withdrawal.
(g) Forfeitures
Forfeitures related to discretionary contributions are allocated to
remaining participants in the succeeding plan year in the ratio that the
compensation of each participant for the plan year bears to the total
compensation of all participants entitled to share in the contributions
so long as the forfeiture allocation group meets the requirements of
Code Section 410(b). If the forfeiture allocation group does not meet
the requirements of Code Section 410(b), then the trustee shall allocate
non-highly compensated participants in the forfeiture allocation group
an amount in the ratio that such non-highly compensation of all non-
highly compensated participants in the group. No forfeiture allocations
are made to highly compensated employees.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements of the Plan have been prepared
using the accrual basis of accounting in accordance with accounting
principles generally accepted in the United States of America.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of additions
and deductions to net assets available for plan benefits during the
reporting period. Actual results could differ from those estimates.
9
(b) Investments
Investments are stated at aggregate fair market values. Loans are valued
at cost, which approximates fair value. Quoted market prices are used to
value investments.
Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded on the ex-dividend date.
(c) Expenses
All expenses of the Plan are paid by the Company in accordance with the
Plan agreement, with the exception of loan set-up fees, which are paid
by each participant receiving a loan, and are paid out of the
participant's account. In 2001 and 2000, these administrative expenses
totaled $4,093 and $3,854, respectively, and are included in the
"Statement of Changes in Net Assets Available for Plan Benefits" under
the heading "Other".
(d) Payment of Benefits
Benefits are recorded when paid.
(3) Investments
The Plan's investments are held in trust and managed by Merrill Lynch.
Participants may direct employer and employee contributions into any of the
investment options listed below. The following table summarizes the
investments held by Merrill Lynch at December 31, 2001 and 2000. Investments
representing 5% or more of net assets available for plan benefits are
indicated by an asterisk (*).
2001 2000
Number of Fair market Number of Fair market
shares value shares value
American Power Conversion
Corporation common stock
(See note 4) 800,681 $11,577,849 * 529,546 $6,553,135 *
Merrill Lynch Equity Index
Trust 19,672 1,585,608 * 13,679 1,255,357 *
Merrill Lynch Retirement
Preservation Trust 1,494,006 1,494,006 * 1,060,211 1,060,211
Blackrock Small Cap Growth 143,718 1,797,916 * 101,382 1,941,468 *
Alliance Bond Fund 73,114 895,651 42,880 524,851
Corporate
Merrill Lynch Equity Income
Fund Class A 125,776 1,456,492 * 87,139 1,114,505 *
Merrill Lynch Growth Fund
Class A - - 139,599 2,902,256 *
Merrill Lynch Fundamental
Growth Fund Class A 146,080 2,645,505 * - -
Ivy International Fund 74,489 1,541,169 * 60,678 1,589,755 *
MFS Massachusetts
Investor Growth 186,599 2,405,264 * 134,351 2,302,778 *
Merrill Lynch Basic Value
Fund Class A 81,582 2,388,714 * 61,277 2,011,108 *
10
A brief description of each fund's investment objective follows:
Merrill Lynch Equity Index Trust invests primarily in a portfolio of
equity securities designed to match the performance of the S&P 500
Index.
Merrill Lynch Retirement Preservation Trust seeks to provide
preservation of capital, liquidity, and current income at levels that
are typically higher than those provided by money market funds.
Blackrock Small Cap Growth is designed for investors aggressively
seeking long-term growth from small company stocks, which may exhibit a
higher degree of price volatility than stocks of larger companies with
longer earnings histories.
Alliance Bond Fund Corporate seeks income; capital appreciation is
secondary. The fund normally invests at least 65% of assets in
investment-grade debt securities. It may hold corporate bonds,
convertibles, US government obligations, and dollar denominated foreign
debt.
Merrill Lynch Equity Income Fund Class A provides shareholders with long-
term total return by investing primarily in a diversified portfolio of
dividend-paying common stocks that yield more than the Standard & Poor's
500 Composite Stock Price Index. Total return is the aggregate of income
and capital value changes.
Merrill Lynch Fundamental Growth Fund, Inc. Class A seeks long-term
growth of capital by investing in a diversified portfolio of equity
securities, placing particular emphasis on companies that have exhibited
above-average growth rates in earnings.
Ivy International Fund seeks long-term capital growth; current income is
a secondary consideration. The Fund normally invests at least 65% of
assets in common stocks issued in at least three countries.
MFS Massachusetts Investors Growth seeks to provide long-term growth of
capital and future income rather than current income. The fund may
invest up to 50% of its total assets in foreign securities, including
securities of issuers located in developing markets.
Merrill Lynch Basic Value Fund Class A seeks capital appreciation, and
secondarily, income, by investing primarily in equities that appear to
be undervalued.
American Power Conversion Corporation common stock is offered to Plan
participants as an additional investment option. Merrill Lynch purchases the
shares in the open market at the time contributions are received. The timing
of all stock transactions is subject to the availability of American Power
Conversion Corporation common stock on the open market, and prices are set
by the market.
11
(4) Nonparticipant-Directed Investments
The employer matching contribution is entirely directed to purchasing shares
of common stock of American Power Conversion Corporation. However, once the
employer match is invested in this fund the participant may reallocate the
investment to any of the other funds in the plan restricted only by the
closed employee stock trading periods. Furthermore, employees may elect to
direct a portion of their 401(k) contribution towards purchasing shares of
common stock of American Power Conversion Corporation.
Information about the net assets and the components of the changes in net
assets relating to shares of common stock of American Power Conversion
Corporation is as follows:
December 31,
2001 2000
Net assets:
American Power Conversion Corp.
common stock $11,811,194 $6,893,030
Changes in net assets:
Contributions $4,453,629 $4,205,991
Net realized gains 180,933 648,231
Net unrealized gains (losses) 1,273,783 (7,074,647)
Benefits paid to participants (711,566) (790,779)
Interest on outstanding
participant loans 10,285 6,992
Net interfund transfers (out) in (346,620) 288,159
Loan repayments 57,720 37,144
$4,918,164 $(2,678,909)
(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 be fully vested in their accounts.
(6) Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated October 6, 2000, that the Plan and related trust are designed
in accordance with applicable sections of the Internal Revenue Code (IRC).
Although the Plan has been amended since receiving the determination letter,
the Plan administrator and the Plan's tax counsel believe that the Plan is
designed and is currently being operated in compliance with the applicable
requirements of the IRC.
(7) Related-Party Transactions
Certain Plan investments are shares of mutual funds managed by Merrill
Lynch. Merrill Lynch is the trustee as defined by the Plan and, therefore,
these transactions qualify as party-in-interest transactions.
(8) Realized/Unrealized Gains and Losses
Net realized and unrealized gains and (losses) by investment type for the
year ended December 31, 2001 were comprised of the following:
Realized Unrealized
Common stocks $180,932 $1,273,783
Common/collective trusts (16,666) (141,705)
Mutual funds (278,140) (2,569,371)
Total $(113,874) $(1,437,293)
12
Schedule 1
AMERICAN POWER CONVERSION CORPORATION
401(k) PLAN
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 2001
Identity of issuer,
borrower, lessor, Description of Current
or similar party Investment Cost Value
*American Power
Conversion Corp. Common Stock $10,255,473 $11,577,849
*Merrill Lynch Equity Index Trust 1,727,312 1,585,608
*Merrill Lynch Retirement Preservation Trust 1,494,049 1,494,006
Blackrock Small Cap Growth 2,475,511 1,797,916
Alliance Bond Fund Corporate 899,386 895,651
*Merrill Lynch Equity Income Fund Class A 1,562,308 1,456,492
*Merrill Lynch Fundamental Growth Fund Class A 3,896,899 2,645,505
Ivy International Fund 1,846,499 1,541,169
MFS Massachusetts Investors Growth 2,925,904 2,405,264
*Merrill Lynch Basic Value Fund Class A 2,609,159 2,388,714
*Loans to participants Various loans with
(192 loans) interest rates
of 6.00% to 10.5% - 607,400
$29,692,500 $28,395,574
* Indicates a party-in-interest to the Plan.
See accompanying independent auditors' report.
13
Schedule 2
AMERICAN POWER CONVERSION CORPORATION
401(k) PLAN
Schedule of Nonexempt Transactions
Year ended December 31, 2001
Relationship
of plan
employer Expenses Current Net
Identity or other Description incurred Cost value gain
of party party-in- of Purchase Selling Lease with of of or
involved interest transaction price price rental transaction asset asset (loss)
Overdue
employee
American contributions
Power not timely
Conversion Plan remitted to
Corporation Sponsor the plan $64,655 * N/A N/A N/A N/A N/A N/A
* This represents total amount of contributions that were withheld from employees, but not
remitted timely into trust by the plan sponsor. The contributions were subsequently remitted
to the trust.
See accompanying independent auditors' report.
14
Exhibit 23
Accountants' Consent
The Board of Directors
American Power Conversion Corporation:
We consent to incorporation by reference in the registration statements of
American Power Conversion Corporation on Form S-8 (File Nos. 33-25873, 33-54416,
333-32563, 333-78595, 333-80541, and 333-80569) of our report dated May 17,
2002, relating to the statements of net assets available for plan benefits of
the American Power Conversion Corporation 401(k) Plan as of December 31, 2001
and 2000, and the related statements of changes in net assets available for plan
benefits for the years ended December 31, 2001 and 2000, and the related
supplementary schedules, which report appears in the December 31, 2001 annual
report on Form 11-K of the American Power Conversion Corporation 401(k) Plan.
Providence, Rhode Island /s/ KPMG LLP
June 25, 2002
15