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 For the fiscal year ended December 15, 2001.
Or
|_| Transition report pursuant to Section 15(d) of the Securities Exchange
Act of 1934 for the transition period from _________ to __________
Commission File Number 0-15083
The South Financial Group 401(k) Plan (formerly Carolina First 401(k) Plan)
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(Full title of the plan)
The South Financial Group, Inc.
102 South Main Street
Greenville, SC, 29601
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(Name of Issuer of the securities held pursuant to the
plan and address of its principal executive office)
REQUIRED INFORMATION
Page
A. Financial Statements
Independent Auditors' Report F-2
Statements of Net Assets Available for Benefits F-3
Statements of Changes in Net Assets Available for Benefits F-4
Notes to Financial Statements F-5
Schedule of Assets (Held at End of Year) F-9
B. Exhibits
Exhibit 23.1 Independent Auditor's Consent B-1
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 report to be signed on its behalf by the undersigned hereunto
duly authorized.
The South Financial Group 401(k) Plan
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(Name of Plan)
Date: June 28, 2002 By: /s/ William S. Hummers III
-----------------------------------
William S. Hummers III
Executive Vice President
2
CAROLINA FIRST 401(K) PLAN
Financial Statements
December 15, 2001 and 2000
(With Independent Auditors' Report Thereon)
Table of Contents
PAGE
Independent Auditors' Report F-2
Financial Statements:
Statements of Net Assets Available for Benefits as of
December 15, 2001 and 2000 F-3
Statements of Changes in Net Assets Available for Benefits
for the years ended December 15, 2001 and 2000 F-4
Notes to Financial Statements F-5
Supplemental Schedule F-9
F-1
INDEPENDENT AUDITORS' REPORT
Administrative Committee
Carolina First 401(k) Plan
We have audited the accompanying statements of net assets available for benefits
of Carolina First 401(k) Plan (the Plan) as of December 15, 2001 and 2000, and
the related statements of changes in net assets available for 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 from material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit includes assessing the accounting principles used and
significant estimates made by the Plan's 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 15, 2001 and 2000, and the changes in net assets available for benefits
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included in
Schedule 1 is presented for purposes of additional analysis and is not a
required part of the basic 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. The
supplemental schedule has been subjected to the auditing procedures applied in
the audit 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.
Greenville, South Carolina /s/KPMG LLP
June 21, 2002
F-2
CAROLINA FIRST 401(k) PLAN
Statements of Net Assets Available for Benefits
December 15, 2001 and 2000
2001 2000
------------------- -------------------
Assets:
Investments, at fair value $ 25,128,714 20,481,553
Employer contributions receivable 340,871 429,303
Accrued interest and dividends 12,706 189,604
Cash 68,271 -
------------------- -------------------
Total assets 25,550,562 21,100,460
Liabilities:
Refund payable for excess contributions - 7,436
Overdraft - 77,234
------------------- -------------------
Net assets available for benefits $ 25,550,562 21,015,790
=================== ===================
See accompanying notes to financial statements.
F-3
CAROLINA FIRST 401(k) PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 15, 2001 and 2000
2001 2000
------------------- -------------------
Additions to net assets attributed to:
Investment income (loss):
Net realized and unrealized appreciation (depreciation)
in fair value of investments $ 1,357,376 (2,894,117)
Interest and dividends 477,398 795,972
------------------- -------------------
Total investment income (loss) 1,834,774 (2,098,145)
Contributions:
Employer 2,225,448 2,091,704
Participant 3,083,581 2,916,347
Rollovers 312,659 314,204
------------------- -------------------
Total contributions 5,621,688 5,322,255
Merger of Anchor Financial Corporation 401(k) Plan - 5,179,617
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Total additions 7,456,462 8,403,727
Deductions:
Distributions to participants 2,754,232 2,893,078
Administrative expenses 167,458 -
------------------- -------------------
Total deductions 2,921,690 2,893,078
Net increase in net assets 4,534,772 5,510,649
Net assets available for benefits at beginning of period 21,015,790 15,505,141
------------------- -------------------
Net assets available for benefits at end of period $ 25,550,562 21,015,790
=================== ===================
See accompanying notes to financial statements.
F-4
(1) DESCRIPTION OF PLAN
The following description of Carolina First 401(k) Plan (the Plan)
provides only general information. Participants should refer to the Plan
Document and Summary Plan Description for a more complete description of
the Plan's provisions.
(A) GENERAL
The Plan, which was formed in January, 1989, is a defined
contribution plan with a cash-or-deferred arrangement subject to
the provisions of the Employee Retirement Income Security Act of
1974 (ERISA). It covers all eligible employees of The South
Financial Group (formerly Carolina First Corporation) and its
subsidiaries (collectively Plan Sponsor, Employer) who are age 18
or older. Effective January 1, 2001, employees are eligible to
begin participation in the Plan on the first day of the month
coincident with or following the attainment of one year of service
(1,000 hours). Prior to January 1, 2001, employees were
automatically eligible at the attainment of age 18.
(B) FISCAL YEAR
During 1999, the Plan adopted an amendment which changed its
fiscal year end from December 31, to December 15.
(C) CONTRIBUTIONS
Each year, participants may defer up to 16% of pretax annual
compensation, as defined in the Plan. Participants may also
contribute amounts representing distributions from other qualified
defined benefit or defined contribution plans. The Plan Sponsor
will contribute a discretionary matching contribution of a
percentage of the participants' compensation that a participant
contributes to the Plan. The Plan Sponsor may also contribute a
discretionary non-elective Employer contribution.
Upon enrollment in the Plan, an employee may direct employee and
employer contributions to any of the Plan's fund options.
Participants may change their investment options daily.
(D) FORFEITURES
Forfeited balances of terminated participants' nonvested accounts
are used to reduce future Employer contributions. Forfeited
balances were $270,165 in 2001 and $120,119 in 2000. Of the total
funds forfeited in 2001, $46,783 will be used to reduce Employer
contributions in 2002.
(E) PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contributions and allocations of (a) the Employer's contributions
and (b) Plan investment results. Allocations are based on
participant earnings or account balances, as defined. The benefit
to which a participant is entitled is the benefit that can be
provided from the participant's account.
F-5
(F) VESTING
Participants are immediately vested in their own contributions
plus actual earnings thereon. Vesting of employer contributions
plus actual earnings thereon is based upon years of continuous
service. A year of service is defined as working a minimum of
1,000 hours in a plan year after reaching age 18. A participant is
100% vested after five years of credited service, according to the
following schedule:
PERCENT OF
NONFORFEITABLE
INTEREST
------------------------
Years of service:
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 or more 100%
Notwithstanding the aforementioned, upon reaching normal
retirement age or upon death or disability, participants become
100% vested.
(G) PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of
$1,000 up to a maximum equal to the lesser of $50,000 of 50% of
their vested account balances. Loan terms range from one to five
years or up to 20 years for the purchase of a primary residence.
The loans are secured by the balance in the participant's account
and bear interest at a rate commensurate with local prevailing
rates as determined by Carolina First Bank (Trustee). Principal
and interest are paid ratably through payroll deductions.
(H) PAYMENT OF BENEFITS
Participants are entitled to receive a distribution of their
vested accounts upon the occurrence of retirement, death, total
and permanent disability, or termination of employment for any
other reason. Vested participants are also entitled to leave their
benefits in the Plan until retirement. The method of payment is a
lump-sum distribution.
(I) PLAN TERMINATION
Although it has not expressed any intent to do so, the Employer
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 become
100% vested in their accounts.
(J) ADMINISTRATIVE EXPENSES
Expenses incurred by the Plan Administrator or the Trustee in the
administration of the Plan and the Trust, including fees for legal
services rendered, agreed upon compensation to the Trustee, and
all other proper charges and expenses of the Plan Administrator,
Trustee, and their agents and counsel, were paid by the Plan
Sponsor during 2000. During 2001, these expenses were charged
against the assets of the Trust, as allowed by the Plan Document.
F-6
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
The financial statements have been prepared on an accrual basis of
accounting in accordance with accounting principles generally
accepted in the United States of America.
(B) INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. Fair value is
determined by the quoted market prices on the last business day of
the plan year. The participant loans are valued at their
outstanding balances, which approximate fair value. 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.
Refunds payable to participants at December 15, 2000 were $7,436.
This refund is due to excess contributions, which were refunded to
participants in 2001 for the year ended December 15, 2000. There
were no refunds payable by the Plan at December 15, 2001.
(C) PAYMENT OF BENEFITS
Benefits are recorded when paid.
(D) USE OF ESTIMATES
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, and changes
therein and the disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
(3) INVESTMENTS
The fair values of individual investments that represent 5% or more of
the Plan's net assets at December 15, 2001 and 2000 are as follows:
2001 2000
--------------------- --------------------
Investments, at fair value as determined by quoted market price:
Dow Jones Global Portfolio Index Fund V $ * 1,165,016
Federated Prime Obligations Fund 2,406,900 1,706,204
Putnam International Growth * 1,223,444
SEI Diversified U.S. Stock Fund 1,529,469 1,667,548
The South Financial Group Common Stock 10,931,519 7,204,395
Vanguard 500 Index Admiral Shares 4,812,589 4,915,027
* Less than 5% of Plan assets
During 2001 and 2000, the Plan's investments (including investments bought, sold
and held during the year) appreciated (depreciated) in value by $1,357,376 and
$(2,894,117), respectively, as follows:
2001 2000
--------------------- -------------------
Investments, at fair value as determined by quoted market price:
Mutual Funds $(1,607,874) (444,854)
Collective Trust Funds (119,725) (136,220)
Employer Common Stock 3,084,975 (2,313,043)
--------------------- -------------------
$ 1,357,376 (2,894,117)
===================== ===================
(4) PARTY-IN-INTEREST TRANSACTIONS
The Plan's investments are held in trust by Carolina First Bank.
F-7
In 2000, all administrative expenses related to the Plan were paid by The
South Financial Group. During 2001, administrative expenses were paid by
the Plan.
During 2001 and 2000, the Plan received dividends of $276,101 and
$198,207, respectively, on its investment in common stock of the
Employer.
Included in Plan net assets available for benefits is $68,271 unallocated
to participants at December 15, 2001 and $77,234 overdraft at December
15, 2000, which are held in an account with Carolina First Bank.
(5) INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue
Service dated September 30, 1991, stating that the Plan is qualified
under Section 401(a) of the Internal Revenue Code (Code) and, therefore,
the related trust is exempt from taxation. The Plan has been amended
since receiving the determination letter. Once qualified, the Plan is
required to operate in conformity with the Code to maintain its
qualification. The Plan Sponsor has indicated that it will take the
necessary steps, if any, to maintain the Plan's qualified status.
(6) ANCHOR FINANCIAL CORPORATION 401(K)
In June 2000, the Plan Sponsor acquired Anchor Financial Corporation. As
a result, the net assets available for benefits totaling $5,179,617 in
the Anchor Financial Corporation 401(k) Plan were merged into the Plan in
August 2000.
(7) SUBSEQUENT EVENT
On December 19, 2001, the Plan executed an Amendment effective January 1,
2002, except as otherwise noted in the Amendment. This Amendment adopted
changes related to the Plan's general provisions, including entry date,
limitation year, eligibility requirements, matching contributions, and
distributions upon severance from employment. The Amendment also adopted
several changes to adhere to new provisions from the Economic Growth and
Tax Relief Reconciliation Act of 2001. These changes do not affect the
information included in these financial statements.
On June 19, 2002, the name of the Plan changed to The South Financial
Group 401(k) Plan.
F-8
SCHEDULE 1
CAROLINA FIRST 401(k) PLAN
Schedule H, Line 4; - Schedule of Assets (Held at End of Year)
December 15, 2001
(A) (B) (C)
PARTY IDENTITY OF ISSUE, DESCRIPTION OF INVESTMENT (E)
IN- BORROWER, LESSOR, INCLUDING MATURITY DATE, RATE OF INTEREST, (D) CURRENT
INTEREST OR SIMILAR PARTY COLLATERAL, PAR OR MATURITY VALUE COST VALUE
- ---------------- ------------------------ ------------------------------------------- -------------- ------------
MONEY MARKET FUNDS
Federated Prime Obligations Fund ** $ 2,406,900
MUTUAL FUNDS
Morgan Keegan Select Capital Growth Fund ** 372,304
Putnam International Growth Fund ** 1,204,512
SEI Core Fixed Income Fund ** 589,533
SEI Diversified Conservative Income Fund ** 651,052
SEI Diversified U.S. Stock Fund ** 1,529,469
Vanguard Total Bond Index Fund ** 179,542
Vanguard Total Stock Market Index Fund 85 ** 45,131
Vanguard 500 Index Admiral Shares ** 4,812,589
Fidelity Contra Fund 022 ** 341,404
COLLECTIVE TRUST FUNDS
Dow Jones Global Portfolio Index Fund III ** 907,399
Dow Jones Global Portfolio Index Fund V ** 747,950
COMMON STOCK
* The South Financial Group The South Financial Group ** 10,931,519
* Participant loans With an interest rate of prime and a range of
maturity dates from 2002 to 2006 409,410
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$25,128,714
============
* Indicates party-in-interest to the Plan
** Cost information has not been included in column (d) because all investments
are participant directed.
See accompanying independent auditors' report.
F-9