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
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED].
COMMISSION FILE NUMBER 1-9965
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
KEITHLEY INSTRUMENTS, INC.
RETIREMENT SAVINGS TRUST AND PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
KEITHLEY INSTRUMENTS, INC.
28775 AURORA ROAD
CLEVELAND, OHIO 44139
KEITHLEY INSTRUMENTS, INC.
RETIREMENT SAVINGS TRUST AND PLAN
FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
* * * * *
DECEMBER 31, 2002 AND 2001
KEITHLEY INSTRUMENTS, INC.
RETIREMENT SAVINGS TRUST AND PLAN
INDEX TO FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
PAGE
----
Report of independent accountants 1
Financial statements:
Statement of Net Assets Available for
Plan Benefits as of December 31, 2002 and 2001 2
Statement of Changes in Net Assets Available for
Plan Benefits for the year ended December 31, 2002 3
Notes to financial statements 4-7
Supplemental schedule:
Schedule of assets held for investment purposes
at December 31, 2002 Schedule I
NOTE: Certain schedules required under the Department of Labor Rules and
Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 have been omitted as the
conditions under which they are required are not present.
PricewaterhouseCoopers LLP
BP Tower, 27th Floor
200 Public Square
Cleveland, OH 44114-2301
Telephone (216) 875-3000
Facsimile (216) 566-7846
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator
of the Keithley Instruments, Inc.
Retirement Savings Trust and Plan
In our opinion, the accompanying statement of net assets available for plan
benefits and the related statement of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
plan benefits of the Keithley Instruments, Inc. Retirement Savings Trust and
Plan (the "Plan") at December 31, 2002 and 2001, and the changes in net assets
available for plan benefits for the year ended December 31, 2002 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 performed 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 supplemental
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 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
June 6, 2003
1
KEITHLEY INSTRUMENTS, INC.
RETIREMENT SAVINGS TRUST AND PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 2002 AND 2001
2002 2001
----------- -----------
Investments, at fair value (cost of investments totaled
$35,126,008 and $34,984,949 for the years ended
December 31, 2002 and 2001, respectively) $27,250,673 $31,530,596
Participants' loans 110,666 189,775
----------- -----------
Total investments 27,361,339 31,720,371
----------- -----------
Receivables:
Employer contribution 41,140 436,060
Participant contributions 151,277 167,718
Dividends 2,583 499
----------- -----------
Total receivables 195,000 604,277
Cash -- 16,227
----------- -----------
Net assets available for plan benefits $27,556,339 $32,340,875
=========== ===========
The accompanying notes are an integral part of these financial statements.
2
KEITHLEY INSTRUMENTS, INC.
RETIREMENT SAVINGS TRUST AND PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2002
Additions to net assets attributed to:
Contributions:
Employer $ 393,945
Participants 2,552,694
------------
Total contributions 2,946,639
------------
Investment income:
Dividends and capital gains 155,143
Interest 26,772
------------
Total additions 3,128,554
Deductions from net assets attributed to:
Net depreciation on investments (5,576,885)
Distributions to participants (2,331,366)
Asset-based fees (4,839)
------------
Total deductions (7,913,090)
------------
Net decrease (4,784,536)
------------
Net assets available for plan benefits at beginning of year 32,340,875
------------
Net assets available for plan benefits at end of year $ 27,556,339
============
The accompanying notes are an integral part of these financial statements.
3
KEITHLEY INSTRUMENTS, INC.
RETIREMENT SAVINGS TRUST AND PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - PLAN DESCRIPTION:
The following description of the Keithley Instruments, Inc. Retirement Savings
Trust and Plan (the "Plan") provides only general information. Participants
should refer to the Plan agreement for a more complete description of the Plan's
provisions.
Plan restatement and amendment
In 2002, the Plan was restated and amended. The restatement and amendments were
made in accordance with various changes in applicable benefits laws.
Participation
The Plan is a defined contribution plan, established on January 1, 1988,
covering all domestic employees of Keithley Instruments, Inc. and its
participating subsidiaries (the "Company") who have attained age twenty-one. The
Plan is subject to the provisions of the Employee Retirement Income Security Act
of 1974 (ERISA).
Administration
The Plan is administered by the Company (the "Administrator"). The
administration of the Plan includes exercising all necessary powers as provided
by the Plan to interpret and apply the Plan provisions. The Company is vested
with the right to settle claims or debts and to defend any claims arising from
the operation of the Plan. Schwab Retirement Services, Inc. ("Schwab") is the
trustee and acts as the custodian of the Plan.
Contributions
Participants may elect to contribute up to 25 percent of their compensation and
have the option of contributing their profit sharing award, if any, on a pre-tax
basis subject to certain limitations of the Plan. In 2001, the Company paid a
profit sharing award, which some employees decided to contribute to the Plan. It
is the Company's policy to match at least $.25 of each dollar contributed,
limited to six percent of a participant's compensation during the Plan year.
Additionally, it is the Company's policy to match up to a maximum of $.50 of
each dollar contributed, limited to six percent of a participant's compensation
for the Plan year, based upon the Company's financial performance. For 2002 and
2001, the Company's match was $.25 and $.50, respectively, on each dollar
contributed by participants up to six percent of a participant's
4
compensation. The Company has complete discretion to determine its matching
contribution, if any, each year.
Participant accounts
Each participant has two separate accounts under each fund in which
contributions have been invested on behalf of the participant. One account
represents the participant's contributions and earnings thereon ("Participant
Account") and the other account represents the employer's contributions, made on
behalf of the respective participant, and the earnings thereon ("Employer
Account"). Forfeitures of terminated participants' nonvested account balances
are used to reduce future employer contributions.
Net assets available for Plan benefits of $14,784 and $6,109 were not allocated
to participants' accounts at December 31, 2002 and 2001, respectively, due to
forfeitures during each Plan year.
Vesting
Participants are immediately vested in their voluntary contributions plus
earnings thereon. Vesting of the employer contributions starts after the first
year and is based on years of service. A participant is 100 percent vested after
three years of credited service.
Payment of benefits
Upon termination of service, a participant may elect to receive either a
lump-sum amount equal to the value of his or her account, or installment
payments. In the case of a severe financial hardship, the Administrator at its
sole discretion may direct distribution of all or a portion of a participant's
account, subject to certain restrictions.
Loans
In the case of a financial hardship as defined by the Plan, a participant may
apply to the Administrator for a loan. The Administrator in accordance with a
uniform nondiscriminatory policy, may direct the custodian to make a loan to a
participant from their before-tax contribution account, subject to certain
restrictions. Loans outstanding as of December 31, 2002, bear interest rates
ranging from 6.25 to 11.5 percent per annum. Loans outstanding as of December
31, 2001, bear interest rates ranging from 7.0 to 11.5 percent per annum.
Termination provisions
The Company anticipates and believes that the Plan will continue indefinitely;
however, the Company reserves the right to terminate the Plan at any time by an
action of its Board of Directors. In the event of termination of the Plan, the
assets then remaining will be allocated and distributed to participants in
accordance with the terms and provisions of the Plan.
5
Use of estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires Plan management to
make estimates and assumptions that affect the reported amounts of net assets
available for Plan benefits and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of changes in
net assets available for Plan benefits during the reporting period. Actual
results could differ from those estimates.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Contributions and benefit distributions
Matching contributions from the Company are recognized during the period in
which they are earned. Distributions are recognized during the period in which
they are paid to a Plan participant.
Investment valuation and income recognition
All investment accounts are included in the financial statements at fair value
determined by quoted market prices as reported to the Plan by Schwab. Purchases
and sales of securities are recorded on a settlement date basis. Interest income
is recorded on the accrual basis. Dividends are recorded on the ex-dividend
date. Realized gains or losses on security transactions are recorded in an
amount equal to the difference between net proceeds received and the revalued
cost at the date of sale and are reflected in the Statement of Changes in Net
Assets Available for Plan Benefits.
The Plan presents in the Statement of Changes in Net Assets Available for Plan
Benefits the net appreciation or depreciation in the fair value of its
investments, which consists of the realized gains or losses and the unrealized
appreciation or depreciation on those investments.
Administrative expenses
Participation fees are paid by the Company. Asset-based fees are paid by the
participants.
NOTE 3 - INVESTMENTS:
During 2002, 15 funds were available to participants for investment purposes.
Schwab manages the distribution of assets among funds and provides record
keeping services. Additionally, participants may choose to invest in any stock
listed on a major U.S. exchange, over 1,800 mutual funds, bonds and other
fixed-income investments, and money market funds through the use of a Personal
Choice Retirement Account.
6
The following table presents the fair value of the individual investments that
represent 5 percent or more of the Plan's net assets:
December 31,
2002 2001
---------- ----------
Aim Charter Fund $2,635,364 $3,421,637
American Century Select Fund 2,685,047 3,708,005
American Century Growth Fund 2,230,464 3,180,535
Fidelity Magellan Fund 3,365,049 4,335,833
INVESCO Total Return Fund 1,432,757 1,632,794
Schwab Stable Value Fund 7,118,596 6,964,154
T. Rowe Price Science & Technology Fund 1,505,990 2,264,705
The aggregate proceeds from transactions in the Plan's investments were
$7,456,906 for the year ended December 31, 2002. The related cost of these
transactions was $7,950,013, resulting in a realized loss totaling $493,107 for
the year ended December 31, 2002. Realized gains and losses on investments are
included in the caption Net depreciation on investments in the Statement of
Changes in Net Assets Available for Plan Benefits.
Cost is determined using the revalued cost method. Unrealized depreciation on
Plan assets was $5,083,778 for the year ended December 31, 2002.
NOTE 4 - FEDERAL INCOME TAX STATUS:
On July 17, 2002, the Internal Revenue Service advised that the Plan, as
amended, is qualified and the trust thereunder is exempt from federal income tax
pursuant to Section 401(a) of the Internal Revenue Code (IRC). The Plan has been
amended since receiving the determination letter. However, the Plan's
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
Schedule I
Page 1 of 4
KEITHLEY INSTRUMENTS, INC.
RETIREMENT SAVINGS TRUST AND PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT DECEMBER 31, 2002
(a) (b) Identity of Issue (c) Number of Shares/Units (e) Current Value
- --- --- ----------------- --- ---------------------- --- -------------
Mutual Funds:
Aim Charter Fund 274,231 $ 2,635,364
American Century Growth Fund 154,679 2,230,464
American Century Select Fund 94,212 2,685,047
Bear Stearns S&P Stars Portfolio Fund 7,033 114,217
Fidelity Magellan Fund 42,617 3,365,049
FMA Small Company Portfolio Fund 73,498 1,189,198
INVESCO Total Return Fund 68,553 1,432,757
PIMCO Total Return Fund 74,327 793,071
* Schwab Stable Value Fund 500,731 7,118,596
* Schwab Total Stock Market Index Fund 10,169 144,096
Scudder Global Fund 41,228 734,684
T. Rowe Price New Horizons Fund 71,349 1,185,109
T. Rowe Price Science & Technology Fund 121,158 1,505,990
Van Kampen Comstock Fund 19,617 242,074
Vanguard Index Extended Market Fund 46,406 869,649
----------
Total Mutual Funds 26,245,365
----------
Personal Choice Retirement Account:
Cash and Equivalents 359,823
Common Stocks:
ADC Telecommunications, Inc. 300 627
AcTrade Financial Technologies Ltd. 685 69
AFLAC Inc. 101 3,030
Agere Systems, Inc. Class A 248 357
Agere Systems, Inc. Class B 1,365 1,911
Agilent Technologies, Inc. Class B 100 1,796
Albertsons, Inc. 874 19,461
American Express Co. 101 3,558
American Home Mortgage Holdings 403 4,430
Amkor Technology, Inc. 43 205
ANFI, Inc. 318 4,683
Anworth Mortgage Asset Corp. 150 1,886
Applied Micro Circuits Corp. 600 2,214
Atmel Corp. 250 557
Avaya, Inc. 22 54
Bank One Corp 810 29,606
Banta Corp. 546 17,084
Barr Labs, Inc. 50 3,255
Schedule I
Page 2 of 4
KEITHLEY INSTRUMENTS, INC.
RETIREMENT SAVINGS TRUST AND PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT DECEMBER 31, 2002
(a) (b) Identity of Issue (c) Number of Shares/Units (e) Current Value
- --- --- ----------------- --- ---------------------- --- -------------
Berkshire Hathaway Class B 2 4,846
Black Box Corp. 64 2,867
Bookham, Technology ADR 5,110 5,110
Brush Wellman, Inc. 1,000 5,500
Cadence Design Systems, Inc. 500 5,895
Capital One Financial 100 2,980
Centerpoint Energy, Inc. 387 3,288
Checkpoint Systems, Inc. 150 1,551
CHS Electronics, Inc. 1,000 1
Cisco System, Inc. 1,215 15,917
Com21, Inc. 3,000 660
Cree, Inc. 38 621
CVS Corp. 818 20,435
Cypress Semiconductor Corp. 100 572
EMC Corp. 1,000 6,140
Elan Corp PLC ADR 2,930 7,208
Fidelity National Financial, Inc. 111 3,641
Ford Motor Company 100 930
General Electric Company 72 1,749
Globix Corp 200 1
Home Depot, Inc. 383 9,181
Intel Corp. 306 4,772
IParty Corp. 1,250 263
J P M Company 4,000 4
JDS Uniphase Corp. 60 148
* Keithley Instruments, Inc. 5,915 73,932
Keycorp, Inc. 50 1,257
Kulicke & Soffa Industries, Inc. 100 572
LTV Corp. 5,000 25
Lucent Technologies, Inc. 5,167 6,511
Mattson Technology, Inc. 400 1,144
Metris Companies, Inc. 882 2,178
Micromuse, Inc. 32 122
Mobilepro Corp. 650 72
Motorola, Inc. 1,100 9,523
Nortel Networks Corp. 10,000 16,100
OpenTV Corp. Class A 72 86
Orbital Sciences Corp. 10 42
Schedule I
Page 3 of 4
KEITHLEY INSTRUMENTS, INC.
RETIREMENT SAVINGS TRUST AND PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT DECEMBER 31, 2002
(a) (b) Identity of Issue (c) Number of Shares/Units (e) Current Value
- --- --- ----------------- --- ---------------------- --- -------------
Pfizer, Inc. 103 3,151
PMC-Sierra, Inc. 200 1,112
Pinnacle Data Systems, Inc. 1,000 1,450
Polymedica Corp. 180 5,551
Progressive Corp. 49 2,433
Reliant Resources, Inc. 298 954
RF Micro Devices, Inc. 200 1,466
Solectron Corp. 1,000 3,550
State Street Corp. 800 31,200
Sun Microsystems, Inc. 145 451
Sycamore Networks, Inc. 110 318
Tenet Healthcare Corp. 85 1,394
Texas Instruments, Inc. 1,400 21,014
Transwitch Corp. 60 41
Tripath Technology, Inc. 100 28
Tyco International Ltd. 100 1,709
United Parcel Service Class B 103 6,528
Varco International, Inc. 42 731
Viasystems Group, Inc. 50,314 30
Wells Fargo and Company 266 12,467
Williams Co. Inc. 1,940 5,239
Worldcom, Inc. 2,500 343
Xerox Corp. 2,000 16,100
-------
Total Common Stocks 427,887
-------
Mutual Funds:
Citizens Global Equity Fund 340 4,338
Dreyfus Midcap Value Fund 129 2,258
Federated Kaufman Fund Class K 10,846 37,420
Firsthand Technology Value Fund 122 2,215
Invesco Technology II 204 3,498
Janus Fund 1,220 21,737
Janus Mercury Fund 263 3,886
Midas Fund 27,919 42,716
Oakmark Select Fund 101 2,395
Pimco Real Return Fund Class D 291 3,279
Profunds Ultraotc Fund 851 9,187
Profunds Ultrasmall Cap Investor 101 976
Schedule I
Page 4 of 4
KEITHLEY INSTRUMENTS, INC.
RETIREMENT SAVINGS TRUST AND PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT DECEMBER 31, 2002
(a) (b) Identity of Issue (c) Number of Shares/Units (e) Current Value
- --- --- ----------------- --- ---------------------- --- -------------
Red Oak Technology 2,531 10,857
RS Diversified Growth Fund 296 4,190
Tocqueville Gold Fund 539 13,034
Transamerica Premier Balanced Fund 308 5,106
Value Line Income & Growth Fund 459 3,213
Vanguard Capital Opportunity Fund 1,185 20,145
Vanguard Growth Index Fund 156 3,104
Vanguard Health Care Fund 91 8,772
Vanguard Index Trust Small-Cap Fund 197 3,087
----------
Total Mutual Funds 205,413
----------
Nasdaq 100 Shares Investment Trust 500 12,185
Total Personal Choice Retirement Account 1,005,308
----------
Participant Loans, interest rates from 6.25 to 11.5% per
annum 110,666
----------
Total Assets Held for Investment Purposes $27,361,339
==========
(*) Denotes an allowable party in interest
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 its behalf by the undersigned
hereunto duly authorized.
KEITHLEY INSTRUMENTS, INC.
RETIREMENT SAVINGS TRUST AND PLAN
(Name of Plan)
Date: June 26, 2003 /s/ Mark J. Plush
--------------------------------------------
Mark J. Plush
Vice President and Chief Financial Officer
Keithley Instruments, Inc.