UNITED STATES
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 [FEE REQUIRED]
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 2002 Commission file Number 0-13147
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
B. Name of the Issuer of the securities held pursuant to the plan and the
address of its principal executive office:
LESCO, Inc.
15885 Sprague Road
Strongsville, Ohio 44136
REQUIRED INFORMATION
See attached financial statements for the Plan for the year ended December
31, 2002.
SIGNATURE
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 anual report to be signed on its behalf by the undersigned
here unto duly authorized.
LESCO, Inc. Stock Investment
and Salary Saving Plan and Trust
/s/ Jeffrey L. Rutherford
May 2, 2003 ------------------------------------
Senior Vice President,
Chief Financial Officer,
Treasurer and Secretary
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
December 31, 2002 and 2001 and the Year ended December 31, 2002
with Report of Independent Auditors
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
Audited Financial Statements and Supplemental Schedule
December 31, 2002 and 2001 and
Year ended December 31, 2002
CONTENTS
Report of Independent Auditors............................................1
Audited Financial Statements
Statements of Net Assets Available for Benefits...........................2
Statement of Changes in Net Assets Available for Benefits.................3
Notes to Financial Statements ............................................4
Supplemental Schedule
Schedule H, Line 4(i) -- Schedule of Assets (Held at End of Year).........8
Report of Independent Auditors
Plan Administrator
LESCO, Inc. Stock Investment and
Salary Savings Plan and Trust
We have audited the accompanying statements of net assets available for benefits
of LESCO, Inc. Stock Investment and Salary Savings Plan and Trust as of December
31, 2002 and 2001, and the related statement of changes in net assets available
for benefits for the year ended December 31, 2002. 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. 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 benefits of the Plan at
December 31, 2002 and 2001, and the changes in its net assets available for
benefits for the year ended December 31, 2002 in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2002 is presented for purposes 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. This supplemental schedule is the responsibility of the
Plan's management. This supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements 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
Cleveland, Ohio
April 25, 2003
1
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
Statements of Net Assets Available for Benefits
DECEMBER 31
2002 2001
----------- -----------
ASSETS
Investments, at fair value $31,684,137 $29,387,512
Receivables:
Participant contributions 80,730 161,762
Employer contribution 27,342 170,584
----------- -----------
Total receivables 108,072 332,346
----------- -----------
Net assets available for benefits $31,792,209 $29,719,858
=========== ===========
See notes to financial statements.
2
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2002
ADDITIONS
Investment income:
Interest and dividend income $ 339,434
Contributions:
Participants 3,368,457
Employer 1,167,485
Rollover 206,433
-----------
4,742,375
-----------
Total additions 5,081,809
DEDUCTIONS
Net depreciation in fair value of investments 444,428
Distributions to participants 2,516,249
Investment management fees 48,781
-----------
Total deductions 3,009,458
-----------
Net increase 2,072,351
Net assets available for benefits at beginning of year 29,719,858
-----------
Net assets available for benefits at end of year $31,792,209
===========
See notes to financial statements.
3
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
Notes to Financial Statements
December 31, 2002 and 2001 and
Year ended December 31, 2002
1. DESCRIPTION OF THE PLAN
The LESCO, Inc. Stock Investment and Salary Savings Plan and Trust (the Plan) is
a defined contribution plan covering substantially all employees of LESCO, Inc.
(the Company). The Plan 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 plan document for a more complete description
of the Plan's provisions.
CONTRIBUTIONS
An employee electing to become a participant in the Plan authorizes a payroll
deduction from eligible earnings for contributions to the Plan in accordance
with the Plan document and the Internal Revenue Code (the Code). A participant
may direct contributions to be invested in any or all of the investment options
offered by the Plan.
The Plan provides that the Company shall contribute to the Plan an amount equal
to 50% of the first 6% of eligible compensation that a participant contributes
to the Plan. The Company may contribute an additional amount to the Plan at its
discretion either in the form of cash or Company stock which would be allocated
to each active participant's account based on the participant's annual
compensation. There were no discretionary contributions during 2002. Employer
contributions are allocated among the investment options offered by the Plan
according to the participant's election.
The Plan provides for the acceptance of rollover contributions from other plans
qualified under the Code.
VESTING
Participant and Company matching contributions are fully vested immediately.
Company discretionary contributions vest at the rate of 10% per year for the
first four years following contribution and 20% per year thereafter, until fully
vested. All contributions are fully vested when the participant reaches age 65.
Upon termination of employment with the Company, the nonvested portion of the
participant's account is forfeited. Forfeited account balances are allocated
amongst active participants.
4
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
PARTICIPANT ACCOUNTS
Individual accounts are maintained for participants which are adjusted for
contributions and allocation of Plan earnings. Plan earnings are allocated to
participant accounts in proportion to the value of account balances.
LOANS
Participants may borrow from their fund accounts up to an amount equal to the
lesser of $50,000 or 50% of the value of their vested account balance at the
date the loan is made. Loans are secured by the balance in the participant's
account and bear interest at the prime rate in effect at the date of the loan,
plus one percent. Loan terms range from one to five years. Repayment of loan
principal and interest is made through payroll deductions over the term of the
loan.
PAYMENT OF BENEFITS
A participant is entitled to receive the vested full value of his or her account
at age 65, upon death or disability prior to retirement, or upon termination of
employment. Upon retirement or termination, the participant may elect to receive
the distribution in a lump sum or a series of installments.
PLAN TERMINATION
Although it has not expressed an intent to do so, the Company has the right to
discontinue its contributions to the Plan at any time and to terminate the Plan
subject to the provisions of ERISA. In the event of termination of the Plan, all
participants' accounts become fully vested, and will be distributed to the
participants according to the directions of the Plan Advisory Committee
administering the Plan.
ADMINISTRATIVE EXPENSES
All significant accounting and administrative fees are paid by the Company at
the Company's discretion. Expenses not paid by the Company are paid out of Plan
assets.
5
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES
The Plan's financial statements are reported on the accrual basis of accounting.
Investments are stated at fair value. The investment in LESCO, Inc. Common
Stock, which is traded on a national securities exchange, is valued at the last
reported sales price on the last business day of the year. The shares of
registered investment companies are valued at quoted market prices which
represent the net asset values of shares held by the Plan at year-end. The
investment in the common trust fund is valued based on the redemption price of
units in the fund, which is based on the market values of the underlying assets
of the fund. Participant loans are valued at their outstanding balances, which
approximate fair value.
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. Actual results may differ from these estimates.
3. INVESTMENTS
The Plan's investments are held by a bank-administered trust fund. Net realized
and unrealized (depreciation) appreciation in the fair value of investments for
the year ended December 31, 2002 is as follows:
Common stock $ 2,904,326
Shares of registered investment companies (3,668,003)
Common trust fund 319,249
-----------
$ (444,428)
===========
6
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The fair value of individual investments that represent 5% or more of the Plan's
net assets available for benefits are as follows:
DECEMBER 31
2002 2001
---------- ----------
LESCO, Inc. Common Stock $7,359,142 $4,711,828
PNC Investment Contract Fund 6,966,214 6,293,983
Federated Max-Cap Index Fund 6,519,447 8,648,109
Janus Adviser Worldwide Fund 2,628,440 3,347,482
American Balanced Fund 2,933,960 3,100,291
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated January 16, 1996, stating that the Plan is qualified under Section 401(a)
of the Code and, therefore, the related trust is exempt from taxation.
Subsequent to this issuance of the letter, the Plan was amended. Once qualified,
the Plan is required to operate in conformity with the Code to maintain its
qualification. The Plan administrator believes the Plan is being operated in
compliance with the applicable requirements of the Code and therefore, believes
that the Plan, as amended, is qualified and the related trust is tax exempt.
7
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
EIN: 34-0904517 Plan Number: 002
Schedule H, Line 4(i) -- Schedule of Assets
(Held at End of Year)
December 31, 2002
IDENTITY OF ISSUE DESCRIPTION OF ASSET CURRENT VALUE
----------------- -------------------- -------------
LESCO, Inc. Common Stock* 528,295 shares $ 7,359,142
PNC Investment Contract Fund* Common Trust Fund -- 6,966,214
2,798,351 units
Registered Investment Companies:
Federated Max-Cap Index Fund 366,467 shares 6,519,447
Federated Total Return Fund 83,571 shares 901,734
Fidelity Advisor Mid-Cap Fund 31,712 shares 494,397
American Balanced Fund 203,465 shares 2,933,960
American Century Aggressive Fund 23,508 shares 129,291
American Century Conservative Fund 7,057 shares 34,228
American Century Equity Income Fund 94,754 shares 618,742
American Century Moderate Fund 7,273 shares 38,112
Janus Adviser Worldwide Fund 121,631 shares 2,628,440
Janus Adviser Capital Appreciation Fund 24,448 shares 438,100
Growth Fund of America 15,379 shares 284,054
MFS Value Fund 79,449 shares 1,312,496
Blackrock Money Market Fund* 40,262 shares 40,262
Participant loans* At interest rates ranging
from 5.25% to 10.50% 985,518
------------
$ 31,684,137
============
* Indicates party-in-interest to the Plan.
8