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
For the year ended December 31, 2000
Commission File Number
0-12490
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
ACR GROUP, INC. 401(K) PLAN
B. Name of issuer of securities held pursuant to the plan and the address of
its principal executive office:
ACR GROUP, INC.
3200 WILCREST DRIVE, SUITE 440
HOUSTON, TEXAS 77042-6039
1
ACR Group, Inc. 401(k) Plan
Financial Statements and Supplemental Schedule
Year ended December 31, 2000
CONTENTS
Report of Independent Auditors.............................................2
Financial Statements
Statements of Net Assets Available for Benefits............................5
Statement of Changes in Net Assets Available for Benefits..................6
Notes to Financial Statements..............................................7
Supplemental Schedule
Schedule H Line 4(i) - Schedule of Assets (Held At End of Year)...........13
Signatures................................................................14
Exhibit
Consent of Independent Auditors...........................................15
2
Report of Independent Auditors
Plan Administrator
ACR Group, Inc. 401(k) Plan
We have audited the accompanying statements of net assets available for benefits
of ACR Group, Inc. 401(k) Plan as of December 31, 2000 and 1999, and the related
statement of changes in net assets available for benefits for the year ended
December 31, 2000. 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.
Except as explained in the following paragraph, we conducted our audits in
accordance with auditing standards generally accepted in the 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.
As permitted by 29 CFR 2520.103-8 of the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, investment assets held by A.G. Edwards Trust Company, the
trustee of the Plan, and transactions in those assets were excluded from the
scope of our audit of the Plan's 1999 financial statements, except for comparing
the information provided by the trustee, which is summarized in Note 3, with the
related information included in the financial statements.
Because of the significance of the information that we did not audit, we are
unable to, and do not, express an opinion on the Plan's financial statements as
of December 31, 1999. The form and content of the information included in the
1999 financial statements, other than that derived from the investment
information certified by the trustee, have been audited by us and, in our
opinion, are presented in compliance with the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974.
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, 2000, and changes in its net assets available for benefits for the
year then ended in conformity with accounting principles generally accepted in
the United States.
Our audit of the Plan's financial statements as of and for the year ended
December 31, 2000, was made for the purpose of forming an opinion on the
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) as of December 31,
3
2000 is presented for the purpose 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. 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 financial statements for the year ended December 31, 2000, 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
Houston, Texas
May 17, 2001
4
ACR Group, Inc. 401(k) Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2000 1999
---------------------------
ASSETS
Cash $ - $ 380
Receivables:
Employer contributions 17,367 12,319
Participant contributions 41,989 37,971
Sales pending 43,693 -
Accrued income 1,557 1,983
----------------------------
Total receivables 104,606 52,273
Investments 2,855,226 2,996,751
----------------------------
Net assets available for benefits $ 2,959,832 $ 3,049,404
============================
See accompanying notes.
5
ACR Group, Inc. 401(k) Plan
Statement of Changes in Net Assets Available for
Benefits
Year ended December 31, 2000
Additions:
Employer contributions $ 216,104
Participant contributions 575,262
Participant rollovers 8,855
Investment income 38,852
-------------
Total additions 839,073
-------------
Deductions:
Benefits paid to participants 355,467
Net depreciation in fair value of investments 566,626
Administrative expenses 6,552
-------------
Total deductions 928,645
-------------
Net decrease (89,572)
Net assets available for benefits at:
Beginning of year 3,049,404
-------------
End of year $ 2,959,832
=============
See accompanying notes.
6
ACR Group, Inc. 401(k) Plan
Notes to Financial Statements
December 31, 2000
1. DESCRIPTION OF PLAN
GENERAL
The ACR Group, Inc. 401(k) Plan (the "Plan") is a defined contribution profit
sharing plan covering all eligible employees of ACR Group, Inc. and its
participating employers (collectively, the "Company"). The Plan was adopted
effective March 1, 1991 and is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
The following description of the Plan provides only general information.
Participants should refer to the Summary Plan Description for a more complete
description of the Plan's provisions, a copy of which is available from the
Company.
ELIGIBILITY
Each salaried or hourly employee of the Company who has completed at least six
months of service and is at least 19 years of age is eligible to participate in
the Plan.
CONTRIBUTIONS
Participants may contribute, with certain limitations, up to 16% of their
eligible annual compensation on a pretax basis. Qualified rollover contributions
are also accepted by the Plan at the discretion of the Company.
Prior to October 1, 2000, the Company matched 50% of pretax contributions up to
6% of a participant's compensation. Effective October 1, 2000, the Company may
determine annually what percent of the first 6% of a participant's pretax
contributions will be matched. For the 2000 plan year, the Company elected to
match 50% of 6% of a participant's compensation. Also, at its sole discretion,
the Company may elect to make an additional contribution to the Plan from time
to time. No additional contribution was made for 2000.
All participant contributions and employer matching contribution accounts are
participant-directed.
7
ACR Group, Inc. 401(k) Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
ADMINISTRATIVE EXPENSES
Certain administrative expenses of the Plan are paid by the Company.
VESTING
Participants are immediately 100% vested in their contributions plus earnings
thereon.
Vesting in the Company contributions portion of their account plus actual
earnings thereon is based on years of credited service at 25% per year with 100%
vesting after four years. Participants also become 100% vested upon death,
disability, or the attainment of normal retirement age (65). Forfeitures of
account balances by participants not fully vested are used to reduce future
employer contributions.
BENEFIT PAYMENTS
To meet certain financial hardships as defined by the Internal Revenue Service
("IRS"), participants may make withdrawals from the portion of their accounts
attributable to employee pretax contributions and the vested employer
contributions. Distributions of a participant's accrued benefits are also made
upon termination of employment, total and permanent disability, or death.
Participants with $5,000 or less nonforfeitable interest in their accounts will
receive a lump-sum distribution as soon as practicable after separation from
service. Participants with more than $5,000 of nonforfeitable interest in their
accounts may receive either annuity payments or a lump-sum distribution upon the
participant's request, but no later than the participant's normal retirement
age.
PLAN TERMINATION
Although there is no current intention to do so, the Company has the right to
discontinue its contributions at any time and to terminate the Plan subject to
the provisions of ERISA. In the event the Plan is terminated, participants will
become 100% vested in their accounts.
8
ACR Group, Inc. 401(k) Plan
Notes to Financial Statements (continued)
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements have been prepared on the accrual basis of accounting
in accordance with accounting principles generally accepted in the United
States. Benefits are recorded when paid.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
that affect the amounts reported in the financial statements and accompanying
notes and supplemental schedule. Actual results could differ from those
estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The mutual funds and common stock are stated at fair value based on quoted
market prices obtained from national securities exchanges. The investment in the
common collective trust fund is based on quoted market values of the fund's
underlying investments as determined by the issuer. 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.
3. INVESTMENTS
All investment information disclosed in the accompanying 1999 financial
statements, including investments held at December 31, 1999, was obtained or
derived from information supplied to the plan administrator and certified as
complete and accurate by A.G. Edwards Trust Company, the trustee.
9
ACR Group, Inc. 401(k) Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
Individual investments that represent 5% or more of the Plan's net assets are as
follows:
DECEMBER 31
2000 1999
-----------------------------
Evergreen Growth and Income Fund $ - $728,345
Evergreen Fund Inc. - 636,067
Evergreen Global Leader Fund - 395,579
Evergreen Foundation Fund - 330,373
Evergreen Money Market Fund - 262,250
Evergreen Strategic Income Fund - 192,363
ACR Group, Inc. common stock 205,834 451,774
Prime Obligations Fund 2,649,392 -
During 2000, the Plan's investments (including investments bought, sold, and
held during the year) depreciated in value as follows:
Common stock $ 316,011
Mutual funds 250,615
------------
$ 566,626
============
4. INCOME TAX STATUS
Effective January 1, 1998, the Plan was completely restated as an A.G. Edwards
& Sons, Inc. standardized prototype. The prototype plan has received an opinion
letter from the IRS dated April 21, 1995 stating that the written form of the
underlying prototype plan document is qualified under Section 401(a) of the
Internal Revenue Code ("Code"). Any employer adopting this form of the Plan will
be considered to have a plan qualified under Section 401(a) of the Code. The
Plan was amended and restated effective October 1, 2000. However, the Company
believes that the Plan continues to operate in compliance with the Code and that
the related trust is tax-exempt under Section 501(a) of the Code.
5. SUBSEQUENT EVENTS
Effective January 1, 2001, the Plan was amended and restated.
10
ACR Group, Inc. 401(k) Plan
Notes to Financial Statements (continued)
5. SUBSEQUENT EVENTS (CONTINUED)
Effective January 1, 2001, the Plan's trustee and recordkeeper changed from
A.G. Edwards Trust Company and Texas Pension Consultants to Allfirst Trust
Company, N.A. and Hartford Life Insurance Company, respectively.
11
SUPPLEMENTAL SCHEDULE
12
ACR Group, Inc. 401(k) Plan
Schedule H Line 4(i) - Schedule of Assets (Held At End of Year)
December 31, 2000
EIN: 74-2008473 PN: 001
IDENTITY OF
ISSUE, BORROWER
LESSOR OR DESCRIPTION OF CURRENT
SIMILAR PARTY INVESTMENT VALUE
- --------------------------------------------------------------------------------
*ACR Group, Inc. Common stock $ 205,834
*A.G. Edwards Trust
Company Prime Obligations Fund 2,649,392
-------------
$ 2,855,226
=============
*Party-in-interest
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACR Group, Inc. 401(k) Plan
Date: June 28, 2001 /s/ A. Stephen Trevino
-----------------------
Secretary
14