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
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 333-91178
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Park National Corporation
Employees Stock Ownership Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Park National Corporation
50 North Third Street
Newark, Ohio 43055
REQUIRED INFORMATION
The following financial statements and supplemental schedules for the Park
National Corporation Employees Stock Ownership Plan are being filed herewith:
Audited Financial Statements:
Report of Independent Auditors - Ernst & Young LLP
Statements of Net Assets Available
for Benefits at December 31, 2002 and 2001
Statements of Changes in Net Assets Available
for Benefits for the Years Ended December 31 2002 and 2001
Notes to Financial Statements - December 31, 2002
Supplemental Schedules:
Schedule of Assets Held for Investment
Purposes, Schedule H, Line 4(i) - December 31, 2002
Schedule of Reportable Transactions,
Schedule H, Line 4(j) - December 31, 2002
The following exhibits are being filed herewith:
Exhibit No. Description
23.1 Consent of Ernst & Young LLP
99.1 Certification Pursuant to Title 18, United States Code, Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
-2-
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.
PARK NATIONAL CORPORATION
EMPLOYEES STOCK OWNERSHIP PLAN
By THE PARK NATIONAL BANK, Trustee
Date: June 26, 2003 By: /s/ Stuart N. Parsons
----------------------------------------
Printed Name: Stuart N. Parsons
Title: Senior Vice President
-3-
Audited Financial Statements
And Supplemental Schedules
Park National Corporation Employees
Stock Ownership Plan
Years ended December 31, 2002 and 2001
with Report of Independent Auditors
Park National Corporation Employees
Stock Ownership Plan
Audited Financial Statements
Years ended December 31, 2002 and 2001
CONTENTS
Audited Financial Statements
Report of Independent Auditors............................................... 1
Statements of Net Assets Available for Benefits.............................. 2
Statements of Changes in Net Assets Available for Benefits................... 3
Notes to Financial Statements................................................ 4
Supplemental Schedules
Schedule H, Line 4(i) - Assets Held for Investment Purposes.................. 9
Schedule H, Line 4(j) - Reportable Transactions.............................. 10
Report of Independent Auditors
Executive Committee of the Board of Directors
Park National Corporation
We have audited the accompanying statements of net assets available for benefits
of the Park National Corporation Employees Stock Ownership Plan (the Plan) as of
December 31, 2002 and 2001, and the related statements of changes in net assets
available for benefits 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 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
audits 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
statements 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 then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule of assets held for
investment purposes and schedule of reportable transactions are presented for
the purpose of additional analysis and are not a required part of the basic
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. The supplemental schedules
are the responsibility of the Plan's management. The supplemental schedules 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 financial statements taken as a whole.
/s/ Ernst & Young LLP
Columbus, Ohio
May 30, 2003
1
Park National Corporation Employees
Stock Ownership Plan
Statements of Net Assets Available for Benefits
DECEMBER 31,
2002 2001
----------------------------
ASSETS
Cash and cash equivalents $ 263,188 $ 112,932
Investments:
Park National Corporation Common Stock 44,070,827 30,034,027
Mutual Funds 8,992,444 6,758,907
Certificates of Deposit,
issued by Park National Corporation
bank affiliates 3,284,643 2,274,699
----------------------------
56,347,914 39,067,633
Contributions receivable:
Employer 900 938,455
Employee -- --
----------------------------
900 938,455
Accrued interest and dividends 429,390 275,346
Receivable from Security Banc Corporation
401(k) Profit Sharing Savings Plan -- 12,633,172
----------------------------
429,390 12,908,518
----------------------------
Net assets available for benefits $57,041,392 $53,027,538
============================
See accompanying notes.
2
Park National Corporation Employees
Stock Ownership Plan
Statements of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31,
2002 2001
-----------------------------
Additions
Investment Income:
Net realized and unrealized
appreciation in fair value
of investments $ 657,835 $ 278,794
Interest and dividends 1,745,932 1,423,833
-----------------------------
2,403,767 1,702,627
Contributions:
Employer 1,378,751 959,826
Employee 3,081,381 2,081,147
-----------------------------
4,460,132 3,040,973
Plan Merger - Security Banc Corporation -- 12,633,172
-----------------------------
Total additions 6,863,899 17,376,772
Deductions:
Benefit payments to participants 2,850,045 1,729,211
-----------------------------
Net increase in net assets available
for benefits 4,013,854 15,647,561
Net assets available for benefits at
beginning of year 53,027,538 37,379,977
-----------------------------
Net assets available for benefits at
end of year $57,041,392 $53,027,538
=============================
See accompanying notes.
3
Park National Corporation
Employees Stock Ownership Plan
Notes to Financial Statements
December 31, 2002
1. DESCRIPTION OF THE PLAN
The following description of the Park National Corporation Employees Stock
Ownership Plan (the Plan) provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions.
GENERAL
The Plan is a defined contribution plan covering full-time or part-time
employees of Park National Corporation and subsidiaries (Park) who have one year
of service, age twenty-one or older, and worked at least 1,000 hours. It is
subject to the provision of the Employee Retirement Income Security Act of 1974
(ERISA).
CONTRIBUTIONS
Each year, participants may contribute up to 25% of their pretax annual
compensation, as defined in the Plan. Participants may also contribute rollover
amounts representing distributions from other qualified defined contribution
plans. The maximum salary deferral permitted by the Internal Revenue Code (Code)
for 2002 and 2001 was $11,000 and $10,500.
Park provides a matching contribution at a level established annually by Park.
For 2002, Park matched 50% up to the first 15% of compensation. In 2001, up to
the first 14% of compensation, Park matched 20% of officers' contributions and
40% of non-officers' contributions in investments other than Park National
Corporation common stock. The match was 50% for officers and non-officers for
investments in Park National Corporation common stock.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's salary deferral
and allocation of Park's contribution and Plan earnings. 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.
VESTING
Participants' accounts are 100% vested at all times.
4
Park National Corporation
Employees Stock Ownership Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
PAYMENTS OF BENEFITS
On termination of service and before age 59 1/2, a participant may elect to
receive either a lump sum or rollover amount equal to the value of his or her
account. After age 59 1/2, a participant may elect lump sum, rollover, or
installments over a period certain not to exceed the participant's (and his
designated beneficiary's) life expectancy.
KSOP
Effective January 1, 2002, the Plan was amended and restated to become a KSOP
Plan that invests in Park National Corporation common stock. The Plan is
unleveraged and all new contributions (both employer and employee) will be used
to purchase Park National Corporation common stock only. Participants have the
ability to diversify their investments upon reaching age 55. The Plan has
changed its name from Park National Corporation Employees Voluntary Salary
Deferral Plan and Trust to Park National Corporation Employees Stock Ownership
Plan. All other provisions of the Plan remain the same.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements of the Plan are prepared on the accrual basis.
VALUATION OF INVESTMENTS
Investments are stated at fair value. Park National Corporation common stock is
valued at its quoted market price. Shares of mutual funds are valued at quoted
market prices which represent the net asset value of shares held by the Plan at
year end.
5
Park National Corporation
Employees Stock Ownership Plan
Notes to Financial Statements (continued)
2. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
ADMINISTRATIVE EXPENSES
All administrative expenses charged to the Plan are borne by Park. Trustee fees
for the Plan are waived each year. Park also provides other accounting and
administrative services to the Plan.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities at the
date of the financial statements, and the reported amounts of investment income
and expenses during the reporting period. Actual results could differ from those
estimates.
RECLASSIFICATIONS
Certain amounts in the prior year financial statements have been reclassified to
conform with the current year presentation. These reclassifications had no
effect on net assets available for benefits as previously reported.
3. PLAN MERGER
On December 31, 2001, Security Banc Corporation 401(k) Profit Sharing Savings
Plan (the Security Plan) merged into the Plan as of December 31, 2001.
Participants previously eligible for the Security Plan were immediately eligible
to participate in the Plan. As a result of the merger, cash of $4,958,851 and
shares of Park National Corporation common stock (Ticker Symbol PRK) with a
market value of $7,674,321, totaling $12,633,172 were transferred to the Plan on
January 2, 2002 which is reflected as a receivable at December 31, 2001.
4. PLAN TERMINATION
Although Park has not expressed any intent to do so, it has the right under the
Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA.
6
Park National Corporation
Employees Stock Ownership Plan
Notes to Financial Statements (continued)
5. INVESTMENTS
The Plan's investments are held in trust by The Park National Bank, a wholly
owned subsidiary of Park National Corporation. The Plan's investments (including
investments bought and sold as well as held during the year) appreciated
(depreciated) in fair value during the years ended December 31, 2002 and 2001 as
follows:
DECEMBER 31,
2002 2001
----------------------------
Park National Corporation Common Stock $ 2,619,639 $ 1,073,064
Vanguard Institutional Index 500 Portfolio Fund (1,415,297) (518,500)
Vanguard Fixed-Income Securities Short-term Corporate Fund (2,283) 13,260
Vanguard Growth Index Fund (164,082) (94,027)
Vanguard Institutional Extended Market Fund (172,638) (76,923)
Vanguard Balanced Index Fund (149,758) (48,473)
Vanguard Total International Stock Index Fund (95,997) (76,312)
Vanguard Intermediate-Term Bond Index Fund 38,251 6,705
----------------------------
$ 657,835 $ 278,794
============================
The following table represents the fair value of those investments that
represent 5 percent or more of the Plan's net assets available for benefits as
of December 31, 2002 and 2001:
DECEMBER 31,
2002 2001
---------------------------
Park National Corporation Common Stock $44,070,827 $30,034,027
Vanguard Institutional Index 500 Portfolio Fund 4,439,862 3,359,456
---------------------------
$48,510,689 $33,393,483
===========================
6. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated January 3, 1994, stating that the Plan is qualified under Section 401(a)
of the Code and, therefore, the related trust is exempt from taxation. However,
subsequent to the issuance of the favorable determination letter, the Plan has
been amended. The Plan has requested a new determination letter from the
Internal Revenue Service.
7
Park National Corporation
Employees Stock Ownership Plan
Notes to Financial Statements (continued)
6. INCOME TAX STATUS (CONTINUED)
The Plan administrator believes the Plan, as amended, is being operated in
compliance with the applicable requirements of the Code and, therefore, believes
that the Plan is qualified and the related trust is tax exempt.
7. PARTY IN INTEREST
The Plan held the following party-in-interest investments (at fair value):
DECEMBER 31,
2002 2001
-------------------------------
Park National Corporation Common Stock $44,070,827 $30,034,027
Costs and expenses incurred in administering the Plan are paid by Park, which
totaled $101,689 and $105,446 for 2002 and 2001, respectively.
8. FORM 5500 RECONCILIATION
Net assets available for benefits do not agree to the Form 5500 for 2002 and
2001. The Form 5500 total for net assets available for benefits does not include
accrued interest and dividends of $429,390 in 2002 and $275,346 in 2001.
8
PARK NATIONAL CORPORATION
EMPLOYEES STOCK OWNERSHIP PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
SCHEDULE H, LINE 4(i)
EIN 31-1179518
Plan 002
DESCRIPTION OF INVESTMENT UNITS MARKET VALUE
Cash and Equivalents:
Northern Institutional Government Portfolio 263,188 $ 263,188
-----------
Total Cash and Equivalents 263,188
Common Stock:
Park National Corporation Common Stock 446,061 44,070,827
-----------
Total Common Stock: 44,070,827
Mutual Funds:
Vanguard Stock Index Fund 55,187 4,439,862
Vanguard Short-Term Corp Bond Fund 95,646 1,032,023
Vanguard Growth Fund 26,796 534,588
Vanguard Extended Market Fund 36,323 680,694
Vanguard Intermediate-Term Bond Fund 77,138 829,239
Vanguard Balanced Fund 67,179 1,051,353
Vanguard International Fund 55,011 424,685
-----------
Total Mutual Funds: 8,992,444
Certificates of Deposit, issued by Park National
Corporation bank affiliates:
The Park National Bank 2,353,421
Second National Bank 333,705
The Richland Trust Company 597,517
-----------
Total Certificates of Deposit, issued by Park
National Corporation affiliates: 3,284,643
Total Assets Held for Investment Purposes: $56,611,102
===========
9
PARK NATIONAL CORPORATION EMPLOYEES
STOCK OWNERSHIP PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
SCHEDULE H, LINE 4(j)
DECEMBER 31, 2002
EI # - 31-1179518
Plan # 002
(b) (h)
DESCRIPTION OF ASSET CURRENT VALUE
INCLUDING MATURITY DATE, (c) (d) (g) OF ASSET ON (i)
(a) RATE OF INTEREST, PURCHASE SELLING COST OF TRANSACTION NET GAIN
IDENTITY OR PARTY INVOLVED PAR OR MATURITY VALUE PRICE PRICE ASSET DATE OR (LOSS)
-----------------------------------------------------------------------------------------------------------------------------------
CATEGORY (iii) - A SERIES OF TRANSACTIONS IN A SECURITY ISSUE AGGREGATING 5.0% OR MORE OF PLAN ASSETS
Federated Government
Obligations Fund Money Market Fund, 65 purchases $6,716,725 $ -- $6,717,725 $ --
Federated Government
Obligations Fund Money Market Fund, 69 sales -- 6,829,657 6,829,657 --
Northern Government
Portfolio Money Market Fund, 157 purchases 4,936,182 -- 4,936,182 --
Northern Government
Portfolio Money Market Fund, 161 sales -- 4,672,994 4,672,994 --
Park National Corporation Common Stock, 129 purchases 4,682,249 -- 4,682,249 --
Vanguard Institutional Index Mutual Fund, 12 purchases 2,763,434 -- 2,763,434 --
Vanguard Institutional Index Mutual Fund, 21 sales -- 267,732 411,332 (143,600)
There were no Category (i), (ii) or (iv) reportable transactions
during the year ended December 31, 2002.
10
PARK NATIONAL CORPORATION
EMPLOYEES STOCK OWNERSHIP PLAN
ANNUAL REPORT ON FORM 11-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2002
INDEX TO EXHIBITS
Exhibit No. Description
23.1 Consent of Ernst & Young LLP
99.1 Certification Pursuant to Title 18, United States Code, Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
E-1