1
As filed with the Securities and Exchange Commission on June 26, 1998.
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)B OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ____________
Commission file number 013147
------
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.
20005 Lake Road
Rocky River, Ohio 44116
REQUIRED INFORMATION
See attached financial statements for the Plan for the year ended
December 31, 1997.
Date: June 26, 1998
2
Annual Report
December 31, 1997
LESCO, INC. STOCK INVESTMENT AND
SALARY SAVINGS PLAN AND TRUST
PLAN SPONSOR AND ADMINISTRATOR
LESCO, Inc.
20005 Lake Road
Rocky River, Ohio 44116
(216) 333-9250
3
Audited Financial Statements and Supplemental
Schedules
LESCO, INC. STOCK INVESTMENT AND SALARY SAVINGS
PLAN AND TRUST
DECEMBER 31, 1997 AND 1996
PLAN SPONSOR AND ADMINISTRATOR
LESCO, Inc.
20005 Lake Road
Rocky River, Ohio 44116
(440) 333-9250
Employee Identification Number: 34-0904517
4
[ERNST & YOUNG LLP LETTERHEAD]
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, 1997 and 1996, and the related statement of changes in net assets available
for benefits for the year ended December 31, 1997. 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 generally accepted auditing
standards. 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, 1997 and 1996, and the changes in its net assets available for
benefits for the year ended December 31, 1997 in conformity with generally
accepted accounting principles.
1
5
[ERNST & YOUNG LLP LETTERHEAD]
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1997 and reportable transactions
for the year then ended are presented for the purpose of additional analysis and
are not a required part of the 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 Fund Information in the statements of net assets available for
benefits and the statement of changes in net assets available for benefits is
presented for purposes of additional analysis rather than to present the net
assets available for benefits and changes in net assets available for benefits
of each fund. The supplemental schedules and Fund Information have been
subjected to the auditing procedures applied in our audit of the basic financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
The schedule of assets held for investment purposes that accompanies the Plan's
financial statements does not disclose the historical cost of certain plan
assets held by the Plan trustee. Disclosure of this information is required by
the Department of Labor's Rules and Regulations for reporting and disclosure
under the Employee Retirement Income Security Act of 1974.
/s/ ERNST & YOUNG LLP
May 29, 1998
2
6
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
Statements of Net Assets Available for Benefits, with Fund Information
December 31, 1997
Fidelity Invesco PNC EBT
Advisor PNC Index Total Investment
Overseas Fund Equity Fund Return Fund Contract Fund
----------------------------------------------------------------
ASSETS
Investments, at fair value:
LESCO, Inc. common stock (431,121 shares)
Fidelity Advisor Overseas Fund $ 579,797
Compass Index Equity Fund $ 7,574,694
Invesco Total Return Fund $ 2,686,574
PNC EBT Investment Contract Fund $ 5,077,944
Participant loans
----------------------------------------------------------------
Total investments 579,797 7,574,694 2,686,574 5,077,944
Receivables:
Participant contribution receivable 7,475 40,912 17,655 23,595
Employer contribution receivable 31,273 157,849 69,980 109,304
----------------------------------------------------------------
Total receivables 38,748 198,761 87,645 132,899
----------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 618,545 $ 7,773,455 $ 2,774,219 $ 5,210,843
================================================================
LESCO, Inc.
Company
Stock Fund Loan Fund Total
-------------------------------------------
ASSETS
Investments, at fair value:
LESCO, Inc. common stock (431,121 shares) $ 8,999,656 $ 8,999,656
Fidelity Advisor Overseas Fund 579,797
Compass Index Equity Fund 7,574,694
Invesco Total Return Fund 2,686,574
PNC EBT Investment Contract Fund 5,077,944
Participant loans $ 730,258 730,258
-------------------------------------------
Total investments 8,999,656 730,258 25,648,923
Receivables:
Participant contribution receivable 26,846 116,493
Employer contribution receivable 104,651 473,057
-------------------------------------------
Total receivables 131,497 589,550
-------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 9,131,153 $ 730,258 $26,238,473
===========================================
See notes to financial statements.
3
7
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
Statements of Assets Available for Benefits, with Fund Information
December 31, 1996
Fidelity Invesco PNC EBT
Advisor PNC Index Total Investment
Overseas Fund Equity Fund Return Fund Contract Fund
-----------------------------------------------------------------
ASSETS
Investments at fair value:
LESCO, Inc. common stock (633,093 shares)
Fidelity Advisor Overseas Fund $ 578,838
Compass Index Equity Fund $ 5,055,361
Invesco Total Return Fund $ 2,069,218
PNC EBT Investment Contract Fund $ 6,082,835
Participant loans
-----------------------------------------------------------------
Total investments 578,838 5,055,361 2,069,218 6,082,835
Receivables:
Participant contribution receivable 6,907 37,457 15,915 38,949
Employer contribution receivable 26,731 135,143 59,200 131,788
-----------------------------------------------------------------
Total receivables 33,638 172,600 75,115 170,737
-----------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 612,476 $ 5,227,961 $ 2,144,333 $ 6,253,572
=================================================================
LESCO, Inc.
Company
Stock Fund Loan Fund Total
---------------------------------------------
ASSETS
Investments at fair value:
LESCO, Inc. common stock (633,093 shares) $10,446,041 $10,446,041
Fidelity Advisor Overseas Fund 578,838
Compass Index Equity Fund 5,055,361
Invesco Total Return Fund 2,069,218
PNC EBT Investment Contract Fund 6,082,835
Participant loans $ 722,480 722,480
---------------------------------------------
Total investments 10,446,041 722,480 24,954,773
Receivables:
Participant contribution receivable 25,440 124,668
Employer contribution receivable 99,622 452,484
---------------------------------------------
Total receivables 125,062 577,152
---------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $10,571,103 $ 722,480 $25,531,925
==============================================
See notes to financial statements.
4
8
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year Ended December 31, 1997
Fidelity Invesco PNC EBT
Advisor PNC Index Total Investment
Overseas Fund Equity Fund Return Fund Contract Fund
---------------------------------------------------------------
Additions to net assets attributed to:
Investment income:
Net appreciation $ 15,546 $ 1,627,047 $ 433,066 $ 351,123
Investment income 40,795 102,737 122,741 -
---------------------------------------------------------------
56,341 1,729,784 555,807 351,123
Contributions:
Participant 165,398 731,809 371,833 567,965
Employer 31,273 157,849 69,980 109,304
---------------------------------------------------------------
196,671 889,658 441,813 677,269
---------------------------------------------------------------
Total additions 253,012 2,619,442 997,620 1,028,392
Deductions from net assets attributed to:
Benefits paid to participants 63,328 407,409 256,431 2,261,750
Administrative costs 27,935
---------------------------------------------------------------
Total deductions 63,328 407,409 256,431 2,289,685
---------------------------------------------------------------
Net increase prior to interfund transfers 189,684 2,212,033 741,189 (1,261,293)
Interfund transfers (net) (183,615) 333,461 (111,303) 218,564
---------------------------------------------------------------
Net increase in net assets available for benefits 6,069 2,545,494 629,886 (1,042,729)
Net assets available for benefits
at beginning of year 612,476 5,227,961 2,144,333 6,253,572
---------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 618,545 $ 7,773,455 $ 2,774,219 $ 5,210,843
===============================================================
LESCO, Inc.
Company
Stock Fund Loan Fund Total
--------------------------------------------
Additions to net assets attributed to:
Investment income:
Net appreciation $ 3,224,444 $ 5,651,226
Investment income $ 63,926 330,199
--------------------------------------------
3,224,444 63,926 5,981,425
Contributions:
Participant 499,625 2,336,630
Employer 104,651 473,057
--------------------------------------------
604,276 2,809,687
--------------------------------------------
Total additions 3,828,720 63,926 8,791,112
Deductions from net assets attributed to:
Benefits paid to participants 5,007,121 60,590 8,056,629
Administrative costs 27,935
--------------------------------------------
Total deductions 5,007,121 60,590 8,084,564
--------------------------------------------
Net increase prior to interfund transfers (1,178,401) 3,336 706,548
Interfund transfers (net) (261,549) 4,442
--------------------------------------------
Net increase in net assets available for benefits (1,439,950) 7,778 706,548
Net assets available for benefits
at beginning of year 10,571,103 722,480 25,531,925
--------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 9,131,153 $ 730,258 $ 26,238,473
============================================
5
9
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
Notes to Financial Statements
December 31, 1997 and 1996
A. SUMMARY OF ACCOUNTING POLICIES
Investments are stated at fair value. The 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. The
participant notes receivable are valued at their outstanding balances, which
approximate fair value.
Administrative expenses of the Plan may, at the discretion of the Company, be
paid by the Company. Any expenses not paid by the Company will be paid out of
Plan assets.
The accounting records of the Plan are maintained on the accrual basis.
The preparation of financial statements in conformity with generally accepted
accounting principles requires estimates and assumptions by management and
actual results may differ from these estimates.
B. DESCRIPTION OF PLAN
The following brief description of the LESCO, Inc. Stock Investment and Salary
Savings Plan and Trust (Plan) provides only general information. Participants
should refer to the plan agreement for a more complete description of the Plan's
provisions.
The Plan covers all eligible employees, as defined, of the Company. A
participant may, pursuant to a Salary Deferral Agreement, annually elect to have
the Company contribute a percentage of his or her compensation to the Plan in
accordance with the Internal Revenue Code (IRC). Subject to provisions of the
Plan, the Company will contribute a specified amount for each participant for
each plan year. A participant for whose account a contribution referred to above
is made shall have the right to direct the Trustee to invest such contribution,
in one or more permitted investment funds, as defined by the Plan as they may
choose.
6
10
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
Notes to Financial Statements--Continued
B. DESCRIPTION OF PLAN--CONTINUED
In addition, the Company at its discretion may for any Plan year, contribute an
additional amount (discretionary contribution) either in the form of cash or
employer stock or both which would be allocated to each active participant's
account pro-rata based on the participant's annual compensation received.
Plan participants are fully vested in all contributions to their accounts, with
the exception of the discretionary contributions, which vest at the rate of 10%
per year for the first four years and 20% per year thereafter, until fully
vested.
Under the Plan, the Company has the right to discontinue such contributions and
terminate the Plan at any time. In the event of termination, all participants'
accounts become fully vested, and are to be distributed to the participants
according to the directions of the Plan Advisory Committee administering the
Plan.
The five funds currently available for investment are the Fidelity Advisor
Overseas Fund, Invesco Total Return Fund, PNC Index Equity Fund, PNC EBT
Investment Contract Fund, and LESCO, Inc. Company Stock Fund. The investment in
the Lesco, Inc. Company Stock Fund assigns units to its investment. At December
31, 1997 and 1996 participants owned 609,120 and 899,353 units, respectively, at
$14.77 and $11.61 per unit, respectively.
C. BENEFITS/PARTICIPANT ACCOUNTS
Individual accounts are maintained for all participants, the sum of which equals
the fair value of Plan assets less unallocated forfeitures (no unallocated
forfeitures at December 31, 1997 or 1996). Each participant's account is
credited with earnings, based on account balance, as defined. The liability of
the Plan for benefits to participants is limited to the fair value of Plan
assets. A participant is entitled to receive the full value of his or her
account at age 65, death or disability prior to retirement, or upon termination
of employment. Upon retirement or termination, the participant may elect to
receive his or her distribution in a lump sum or a series of installments, as
determined by the Plan Advisory Committee and commencing in accordance with the
terms of the Plan.
7
11
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
Notes to Financial Statements--Continued
D. INVESTMENTS
The Plan's investments which represented 5% or more of the fair value of assets
available for benefits are as follows:
Fair Value
-----------
December 31, 1997:
LESCO, Inc. common stock $ 8,999,656
PNC EBT Investment Contract Fund 5,077,944
Compass Index Equity Fund 7,574,694
Invesco Total Return Fund 2,686,574
December 31, 1996:
LESCO, Inc. common stock 10,446,041
PNC EBT Investment
Contract Fund 6,082,835
Compass Index Equity Fund 5,055,361
Invesco Total Return Fund 2,069,218
E. INCOME TAX STATUS
The Internal Revenue Service has ruled that the Plan qualifies under Section
401(a) of the IRC. Therefore, the related Trust is tax exempt under Section
501(a) of the IRC. Once qualified, the Plan is required to operate in conformity
with the IRC to maintain its qualification. The Plan administrator is not aware
of any course of action or series of events that have occurred that might
adversely affect the Plan's qualified status.
F. YEAR 2000 (UNAUDITED)
The Plan Sponsor has developed a plan to modify its internal information
technology to be ready for the year 2000 and has begun converting critical data
processing systems. The project also includes determining whether third party
service providers have reasonable plans in place to become year 2000 compliant.
The Plan Sponsor currently expects the project to be substantially complete by
early 1999. The Plan Sponsor does not expect this project to have a significant
effect on plan operations.
8
12
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
EIN 34-0904517 Plan 002
Line 27(a)--Schedule of Assets Held for Investment Purposes
December 31, 1997
Identity of Issue Description of Assets Cost Current Value
- ------------------------------------------------------------------------------------------------------------
LESCO, Inc. Common Stock* 431,121 shares A $ 8,999,656
PNC EBT Investment Contract Fund* Common/Collective
Fund--2,711,129 units $4,632,995 5,077,944
Registered Investment Companies:
Compass Index Equity Fund 405,064 shares 5,698,307 7,574,694
Invesco Total Return Fund 92,354 shares 2,173,732 2,686,574
Fidelity Advisor Overseas Fund 36,283 shares 567,119 579,797
Participants loans at various
interest rates Loans to participants 0 730,258
-----------------------------------
$13,072,153 $25,648,923
===================================
(A) This information is not available
* Indicates party-in-interest to the Plan.
9
13
LESCO, Inc. Stock Investment and Salary Savings Plan and Trust
EIN 34-0904517 Plan 002
Line 27(d)--Schedule of Reportable Transactions
Year Ended December 31, 1997
Purchase Selling Net
Description Price Price Cost Gain
- -----------------------------------------------------------------------------------------------------------
CATEGORY (I)--SINGLE TRANSACTIONS IN EXCESS OF 5% OF
PLAN ASSETS
LESCO, Inc. common stock $4,469,373 $ 245,695 $4,223,678
CATEGORY (iii)--SERIES OF TRANSACTIONS IN EXCESS OF 5%
OF PLAN ASSETS
Compass Index Equity Fund
purchases 1,824,809 1,824,809
sales 932,525 783,996 148,529
PNC Investment Contract Fund*
purchases 1,705,443 1,705,443
sales 3,061,450 2,902,468 158,982
LESCO, Inc. common stock*
purchases 762,913 762,913
sales 5,433,763 798,038 4,635,725
Invesco Total Return Fund
purchases 973,422 973,422
sales 789,138 672,148 116,990
There were no category (ii) or (iv) reportable transactions for the year ended
December 31, 1997.
* Indicates party-in-interest to the Plan.
10
14
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.
LESCO, Inc. Stock Investment and
Salary Savings Plan and Trust
/s/ Ware H. Grove
--------------------------------
Ware H. Grove, Vice-President/CFO
LESCO, Inc.
INDEX TO EXHIBITS
-----------------
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- -------------- -----------------------
Ex 23 Consent of Independent Auditors