UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2003
OR
[ ] TRANSITIONAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______ to _____.
Commission file number 1-313
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
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(Full title of the plan)
THE LAMSON & SESSIONS CO., 25701 Science Park Drive, Cleveland, Ohio 44122
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(Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office)
THE LAMSON & SESSIONS CO.
DEFERRED SAVINGS PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
CIUNI & PANICHI
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CERTIFIED PUBLIC ACCOUNTANTS
2
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
TABLE OF CONTENTS
Page
Independent Auditor's Report 4
Financial Statements
Statements of Net Assets Available for Benefits 5
- Modified Cash Basis
Statements of Changes in Net Assets Available for Benefits 6
- Modified Cash Basis
Notes to the Financial Statements 7
Schedule of Assets Held at End of Year 16
3
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
The Lamson & Sessions Co.
We have audited the accompanying statement of net assets available for benefits
-- modified cash basis of The Lamson & Sessions Co. (the "Company") Deferred
Savings Plan (the "Plan") as of December 31, 2003 and the related statement of
changes in net assets available for benefits -- modified cash basis for the year
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 audit. The financial statements of The Lamson & Sessions
Co. Deferred Savings Plan as of December 31, 2002, were audited by other
auditors whose report dated May 29, 2003, expressed an unqualified opinion on
those statements.
We conducted our audit in accordance with auditing standards of the Public
Company Accounting Oversight Board (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
audit provides 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 Lamson &
Sessions Co. Deferred Savings Plan as of December 31, 2003 and changes in its
net assets available for benefits for the year then ended in conformity with the
modified cash basis of accounting.
As described in Note B, these financial statements were prepared on a modified
cash basis of accounting, which is a comprehensive basis of accounting other
than generally accepted accounting principles in the United States.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
at end of year is presented for the purpose 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 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/ Ciuni & Panichi, Inc.
Cleveland, Ohio
June 10, 2004
4
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS -
MODIFIED CASH BASIS
DECEMBER 31, 2003 2002
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ASSETS
CASH $ 121,934 $ 22,160
INVESTMENTS, AT FAIR VALUE:
Common/collective trust fund 6,578,183 5,954,505
Registered investment companies 25,210,619 18,437,684
Lamson & Sessions Company stock 2,679,263 1,384,633
INVESTMENTS, AT ESTIMATED FAIR VALUE:
Participant loans 736,838 790,297
Cash surrender value of life insurance 121,400 121,400
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Total investments 35,326,303 26,688,519
RECEIVABLES:
Employer's contribution -- 281,136
Participant's contributions -- 79,325
Other -- 1,687
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-- 362,148
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Total Assets 35,448,237 27,072,827
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LIABILITIES
Accounts payable 110,952 25,058
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NET ASSETS AVAILABLE FOR BENEFITS $35,337,285 $27,047,769
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The accompanying notes are an integral part of these financial statements.
5
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS - MODIFIED CASH BASIS
YEARS ENDED DECEMBER 31, 2003 2002
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ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment income
Interest and dividends $ 701,200 $ 792,891
Net appreciation in fair value of investments 6,453,667 --
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7,154,867 792,891
Contributions
Employee salary deferrals 2,204,379 2,134,263
Employer matching and profit sharing 995,171 1,256,693
Rollover contributions 58,241 24,627
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3,257,791 3,415,583
Assets from merged plan -- 888,245
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TOTAL ADDITIONS 10,412,658 5,096,719
DEDUCTIONS FROM NET ASSETS ATTRIBUTABLE TO:
Benefits paid to participants 2,120,389 2,208,084
Net depreciation in fair value of investments -- 4,166,228
Insurance premiums 2,753 3,351
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TOTAL DEDUCTIONS 2,123,142 6,377,663
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NET INCREASE (DECREASE) IN NET ASSETS 8,289,516 (1,280,944)
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 27,047,769 28,328,713
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END OF YEAR $ 35,337,285 $ 27,047,769
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The accompanying notes are an integral part of these financial statements.
6
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
NOTE A - DESCRIPTION OF PLAN
The following description of The Lamson & Sessions Co. (the "Company")
Deferred Savings Plan (the "Plan") provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
1. GENERAL
The Plan is a defined contribution plan covering substantially all
employees of the Company. Employees are eligible to participate in the
Plan on the first day of the calendar quarter after which they have
attained the age of 21 (age 18 for Pyramid Industries II, Inc. salaried
and non-union hourly employees) and completed one-half (1/2) year of
service. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA) as amended. The Company is the Plan's
administrator. The 401(k) Company is the Plan's record keeper. The Plan's
custodian is the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corporation ("Pershing").
2. CONTRIBUTIONS
Each year, participants contribute 1% to 15% of their eligible
compensation (pre-tax contributions), as defined in the Plan. The Company
contributes a matching contribution equal to 50% of the participant's
contribution, not to exceed 6% of the participant's compensation for any
plan year.
For each salaried participant for whom a salary reduction contribution has
been made, the employer shall also contribute an additional matching
contribution equal to 25% of such salary reduction contribution, up to the
first 6% of the participant's contribution. This additional contribution
is required to be contributed or initially invested in the Lamson &
Sessions Stock Fund. Immediately following such contribution or initial
investment in stock, the participant shall have the ongoing option to
redirect the investment of such matching contributions among the
investment options available under the Plan.
7
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
NOTE A - DESCRIPTION OF PLAN - CONTINUED
2. CONTRIBUTIONS - CONTINUED
In addition, the Company can make discretionary matching contributions.
Based on the Company's annual financial performance, the Company may make
an additional matching contribution. This additional matching
contribution, if any, will be a percentage as determined by the Board of
Directors or its delegate and is initially invested in Lamson & Sessions
stock. Participants are also eligible to receive an additional
discretionary matching contribution if they were employed with the Company
on the last day of the Plan year for which the contribution is made and
they have completed one year of service during the Plan year.
3. PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's elective
contributions, allocations of the Company's contributions and earnings on
those contributions. Forfeitures due to the distribution of a
participant's account before the participant has become fully vested
reduce subsequent Company contributions. 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 vested account.
4. VESTING
Participants are immediately vested in their voluntary contributions plus
actual earnings thereon. Vesting in the Company's matching and
discretionary contribution portions of their accounts plus actual earnings
thereon is based on Years of Service as defined by Plan provisions. A
participant is fully vested after five years.
8
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
NOTE A - DESCRIPTION OF PLAN - CONTINUED
5. PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $1,000 and a
maximum equal to the lesser of $50,000 or 50 percent of their vested
balance in all their accounts reduced by their highest outstanding loan
balance within the twelve (12) preceding months. Loan transactions are
treated as transfers to (from) the investment fund from (to) the
Participant Notes fund. A loan must be repaid through payroll withholding,
the repayments must be periodic, and the term must not exceed five (5)
years unless the proceeds are used to acquire a home. Such loans can be
repaid over a maximum of fifteen (15) years. 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 the trustees on
the date the loan is made. Interest rates currently charged on outstanding
balances range from 5.10 percent to 10.74 percent.
6. PAYMENT OF BENEFITS
On termination of service due to death, disability or retirement, a
participant may elect to receive an amount equal to the value of the
participant's vested interest in his or her account in either a lump-sum
amount, or in annual installments. Withdrawals from a participant's
account may be made prior to termination, subject to certain restrictions
as defined by the Plan.
7. PLAN EXPENSES
The Lamson & Sessions Co. absorbs substantially all costs to administer
the Plan.
8. FORFEITURES
Forfeited non-vested accounts are used to reduce employer contributions.
In 2003 and 2002, the amount of forfeited non-vested accounts which were
applied to reduce such contributions were $62,179 and $68,689,
respectively.
9
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
NOTE A - DESCRIPTION OF PLAN - CONTINUED
9. OTHER
Prior to January 1, 1998, the Plan also offered participants the option to
invest in life insurance. Participants with portions of their accounts
invested in life insurance at January 1, 1998 have the option of keeping
the insurance in place. Additional investments in insurance are no longer
permitted.
Effective January 1, 2002 salaried and non-union hourly employees of
Pyramid Industries II, Inc., a subsidiary of the Company, who attained age
18 and had completed six months of service became eligible to participate
in the Plan. Effective July 1, 2002 union hourly employees of Pyramid
Industries II, Inc. who obtained age 21 and had completed six months of
service became eligible to participate in the Plan. Effective August 1,
2002, the Pyramid Industries II, Inc. Retirement Plan and the Pyramid
Industries II, Inc. Union Employees Profit Sharing Plan were merged with
and into the Plan to form a single plan. Total assets merged from the
Pyramid Plans were $888,245 for the year ended December 31, 2002.
10
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
NOTE B - SUMMARY OF ACCOUNTING POLICIES
1. BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the modified cash
basis of accounting. Under this basis, contributions which are withheld by
the Plan sponsor but not allocated to participant accounts at year-end are
recorded as a receivable. In addition pending trades and certain
withholdings are included in accrued expenses.
2. INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value except for participant
loans and life insurance contracts. Shares of registered investment
companies are valued at quoted market prices which represent the net asset
value of shares held by the Plan at year-end. The Company stock is valued
at its quoted market price. Participant loans are valued at their
outstanding principal balance, which approximates fair value. Life
insurance contracts are valued at cash surrender value.
Purchases and sales of securities are recorded on a trade-date basis.
Interest and dividend income is recorded when received.
3. PAYMENT OF BENEFITS
Benefits are recorded when paid.
4. USE OF ESTIMATES
The preparation of financial statements, in conformity with the modified
cash basis of accounting, requires the Plan administrator to make
estimates and assumptions that affect certain reported amounts of assets,
liabilities and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
5. RECLASSIFICATION
Certain accounts in the prior year financial statements have been
reclassified for comparative purposes to conform with the presentation in
the current year financial statements.
11
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
NOTE C - INVESTMENTS
The following presents investments at December 31, 2003 and 2002 that
represent 5% or more of the Plan's net assets.
2003 2002
---- ----
Bond Fund of America $3,635,956 $3,239,761
EuroPacific Growth Fund 2,584,245 1,753,291
Stable Value Fund 6,578,183 5,954,505
Fundamental Investors 6,874,560 4,917,710
Franklin Balance Sheet Investment Fund 2,919,135 2,108,506
Fidelity Advisor Equity Growth Fund 4,631,629 3,364,264
Lamson & Sessions Company Stock Fund 2,679,263 1,384,633
During 2003 and 2002, the Plan's investments, including investments
bought, sold and held during the year, appreciated (depreciated) in value
by $6,453,667 and ($4,166,228), respectively, as follows:
2003 2002
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Mutual funds at fair value as determined $ 5,288,295 $(3,448,221)
by quoted market prices
Life insurance contracts at cash surrender value -- (16,322)
The Lamson & Sessions Co. stock at
fair value as determined by quoted market
prices 1,165,372 (701,685)
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$ 6,453,667 $(4,166,228)
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12
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
NOTE D - TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated May 7, 2002, that the Plan was designed in accordance with
applicable sections of the Internal Revenue Code (IRC). Although the Plan
has been amended since receiving the determination letter, the Plan
administrator and Plan's tax counsel believe the Plan is designed and is
currently operated in compliance with applicable requirements of the IRC.
Therefore, no provision for income taxes has been included in the Plan's
financial statements.
NOTE E - PLAN TERMINATION
Although it has not expressed any intent to do so, the Company 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 immediately become 100% vested in
their accounts.
NOTE F - RELATED PARTY TRANSACTIONS
The Lamson & Sessions Stock Fund invests in Lamson & Sessions Co. common
stock, which is traded on the New York Stock Exchange under the symbol
LMS. The fund maintains short-term cash sufficient to meet its estimated
daily cash needs. The fund purchases shares of Lamson & Sessions Co.
common stock on the open market at open market prices. Transactions in the
fund qualify as permitted party-in-interest transactions.
NOTE G - RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities
are exposed to various risks such as interest rate, market, and credit
risks. Due to the level of risk associated with certain investment
securities, it is at least reasonably possible that changes in the values
of investment securities will occur in the near term and that such changes
could materially affect participants' account balances and the amounts
reported in the statement of net assets available for benefits.
13
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
NOTE H - AMENDMENT
The Plan was amended on December 22, 2003 to allow, effective January 1, 2003,
certain hourly associates to be included in discretionary matching
contributions.
NOTE I - RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements at December 31, 2003 to Form 5500:
Net assets available for benefits per the
financial statements $35,337,285
Amounts allocated to withdrawing
participants (650,215)
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Net assets available for benefits per the
Form 5500 $34,687,070
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The following is a reconciliation of benefits paid to participants per the
financial statements for the year ended December 31, 2003 to Form 5500:
Benefits paid to participants per the
financial statements $ 2,120,389
Add: Amounts allocated to withdrawing
participants at December 31, 2003 650,215
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Benefits paid to participants per form
5500 $ 2,770,604
===========
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31, 2003, but not yet paid as of that date.
14
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SUPPLEMENTAL INFORMATION
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15
THE LAMSON & SESSIONS CO. DEFERRED SAVINGS PLAN
SCHEDULE H, LINE 4i SCHEDULE OF ASSETS HELD AT END OF YEAR EIN: 34-0349210
PLAN:028
DECEMBER 31, 2003
COLUMN A COLUMN B COLUMN C COLUMN E
-------- -------- -------- --------
IDENTITY OF ISSUE,
BORROWER,
LESSOR OR DESCRIPTION OF CURRENT
SIMILAR PARTY INVESTMENT(1) VALUE
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American Funds Bond Fund of America $ 3,635,956
EuroPacific Growth Fund 2,584,245
Fundamental Investors 6,874,560
Franklin Templeton Developing Markets Fund 542,562
Balance Sheet Investment Fund 2,919,135
Real Estate Securities 1,686,362
Fidelity Advisor Equity Growth Fund 4,631,629
Lord Abbett Developing Growth A 1,616,673
Invesco Stable Value Fund 6,578,183
New England Cash Value of Insurance 121,400
Putnam International Capital Opportunities Fund 719,497
* Lamson & Sessions Stock Fund 2,679,263
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34,589,465
Participant Loans Participant loans with various rates
of interest from 5.10% to 10.74%
and various maturity dates
through 2017 736,838
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TOTAL ASSETS HELD AT END OF YEAR $ 35,326,303
============
*Party-In-Interest
(1) Including maturity date, rate of interest, collateral, par or maturity
value, where applicable.
16
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other person who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
THE LAMSON & SESSIONS CO.
DEFERRED SAVINGS PLAN
Date: June 29, 2004 By: /s/ James J. Abel
-------------------------------
James J. Abel
Trustee
17
EXHIBIT INDEX
EXHIBIT EXHIBIT
NUMBER DESCRIPTION
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23 Consent of Ciuni & Panichi
18